This equates to an average fine of nearly £175,000 per business. It should be noted that two penalties exceed £1 Million, and the compound settlement for one company was in the region of a £2.7 Million fine. 

The updates on gov.uk do not provide specific details on why the trader did not obtain the necessary approval. Still, it is possible to get an assessment of most of the fines relating to unlicensed exports of Military and Dual-Use Goods.         

In a pre-Brexit world, the UK still applied Export Controls to Strategic Goods, Technology and Software, but the compliance requirements differed. What has not changed is that the trader must know if their goods are classified as Military or Dual Use to ascertain the correct classification. 

If the goods were Military, Brexit has not changed the requirements. Military goods have always required a licence to allow the product to leave the shores of the United Kingdom. In theory, with no Customs Declarations, Military Goods could be loaded onto a trailer and cross the Channel from Dover to Calais to arrive in France for potential onward travel. The UK trader could have arranged this without the appropriate approval in the form of a SPIRE Licence. If an Audit or Customs checks uncovered non-compliance post-Brexit, it would be a logical question to enquire about the UK business activities when the EU membership was 28. A retrospective assessment that a business has been sending goods outside the UK for a more extended period without a licence could help us understand why we are seeing hefty penalties being issued.           

Once the UK left the European Union, goods had to be exported and declared to CHIEF. The licence must be declared in Box 44 of the C88.  This also means physical or documentary checks before goods can leave the UK, highlighting that the exporter hasn’t declared a licence. 

Dual Use goods could move to EU Member States before Brexit without needing a licence. This benefit still had compliance responsibilities. The UK trader was required to carry out Due Diligence by confirming that the end use was within the EU. The commercial documentation had to include a statement to confirm that under EU Legislation, a licence would be required to enable compliance at export from the Customs Union. 

Post-Brexit, everything is an export and Dual-Use Goods to be supplied to the EU is a big adjustment. The trader needs a GB EORI, a new requirement if they were previously solely dealing with EU Markets. A SPIRE account would be required to obtain the relevant licence, which would need to be declared in Box 44. Due Diligence remains the same. If the shipment is destined for an EU consignee for end use in the EU, an OGEL (Open General Export Licence), is available. If the End Use is outside the European Union, that will affect the licence the exporter needs to obtain and declare to HMRC. 

With ECJU and HMRC audits increasing, we must remind ourselves that Export Control and Customs Compliance has always been here and will never go away. Still, there is much more to consider regarding the level of compliance and documentation. Not every activity is licensable, but UK Restrictions on Trade incorporate terms like Infrastructure-related, energy-related and luxury goods, which relate to specific Commodity Codes, which is another area of compliance that wouldn’t necessarily be a consideration for the pre-Brexit UK Trader in terms of their EU transactions. UK trade prohibitions emphasise direct or indirect supply of goods, which underlines the requirement of Due Diligence for more UK Exporters, not just those involved in the shipment of Strategic Goods.         

Link to Notice to Exporters

While you are here you may be interested in some Strong & Herd LLP training courses & live clinics related to this topic:

Russian Sanction Update

Beginners Guide to Export Licensing Controls

Introduction to UK Export Licensing Controls

Focus On: Dual Use Export Compliance - The Dual-Use Exporter