LONDON: The recent announcement by the UK’s Export Control Organisation (ECO) of a six-figure compound penalty for unlicensed exports signifies an increase in both export control enforcement and in the penalties being imposed.
Export control breaches are criminal offences but, in this case, the matter was dealt with by way of a compound penalty. So what is a compound penalty, and when are they used?
Under the 1979 Customs and Excise Management Act, it is a criminal offence to ship unlicensed goods. There is a strict liability offence which covers inadvertent breaches, and a more serious offence for deliberate evasion of export controls. However, section 152 of the Act provides HMRC with a discretionary power to “compound” offences. The discretionary power, in essence, means that HMRC can offer an offender the opportunity to avoid prosecution in return for the payment of an administrative penalty. HMRC commonly uses this power to deal with export control, duty and excise breaches.