When customs agents may be held liable for VAT: 4 compliance lessons from a recent tribunal case.

Understanding postponed VAT accounting risks and compliance obligations

PVA can be a valuable tool for importers, allowing VAT to be accounted for on the VAT return rather than paid upfront at the border. However, the scheme is only available to VAT-registered businesses.

In this case, the customs agent lodged PVA declarations on behalf of QP Trading Ltd – without confirming that the company’s VAT registration was still valid. The Tribunal found that a simple online check would have shown the VAT number was inactive.

Compliance lesson 1: Customs agents must implement real-time verification checks before using PVA on behalf of any client.

Why formal written authorisation is crucial for customs agents

One of the Tribunal’s key findings was that the agent had no written agreement or formal mandate from QP Trading Ltd to act on their behalf. Instead, the instructions came via a freight forwarder, without direct client confirmation.

Under UK customs law, clear and documented authority is not optional – it is a legal safeguard for both agent and importer. Without it, an agent may still be deemed to have “participated” in any breach, and therefore share liability.

Compliance lesson 2: Always secure a signed, dated authority letter or agency agreement before submitting any declarations.

How ‘ought to have known’ liability can lead to heavy VAT bills

The Tribunal’s ruling hinged on the principle that the customs agent “ought reasonably to have known” that their client was ineligible for PVA. This standard goes beyond intentional wrongdoing – agents can be held liable for failing to spot issues that are obvious or easily discoverable.

This means that even good faith errors can result in joint and several liability for unpaid VAT. In this case, this amounted to over £1.1 million.

Compliance lesson 3: Due diligence is not just best practice – it is a legal duty with financial consequences.

Why human rights arguments don’t override customs compliance duties

The agent argued that the VAT liability breached their rights under Article 1 of Protocol 1 of the European Convention on Human Rights (peaceful enjoyment of possessions).

The Tribunal disagreed, finding that while the liability interfered with property rights, the interference was lawful, proportionate, and justified by the legitimate aim of protecting public revenue.

Compliance lesson 4: Human rights protections will not shield businesses from clear compliance obligations under customs law.

Practical steps businesses can take to avoid similar VAT liability risks

This tribunal case underscores the importance of proactive compliance strategies:

• Verify VAT registration and PVA eligibility before every shipment.
• Secure written authorisation from clients before acting as their customs representative.
• Train staff to recognise red flags and perform quick compliance checks.
• Conduct internal audits to ensure declarations are accurate and supported by evidence.

How we help businesses stay compliant and reduce the risk of disputes

At Gaston Schul, we partner with importers and customs agents to make customs and VAT compliance clear, efficient, and reliable. We take an active role in ensuring your processes meet regulatory requirements and stand up to scrutiny.

We provide:

• Onboarding checks: We verify VAT registration, EORI numbers, and scheme eligibility before declarations are submitted.
• Customs representation agreements: We prepare clear, legally sound authorisations that protect both parties and set out responsibilities.
• Process audits: We identify and resolve compliance gaps before HMRC intervenes.
• Tribunal and dispute support: We guide and represent you if HMRC challenges arise.

By working proactively with our customers, we help them minimise the risk of costly VAT liabilities and stay confident in their compliance.

Compliance is the best defence against VAT tribunal risks

The Roseline Logistics case is a strong reminder that customs agent liability is not limited to deliberate misconduct – lack of checks and formal authority can be just as costly. By adopting strict verification procedures and securing written authorisations, businesses can stay on the right side of the law and avoid multi-million-pound disputes.