ÒÁÈËÖ±²¥

Executive Summary

The Customs Treatment of Post and Parcels Exports – Export Memorandum of Understanding and Extra-Territorial Offices of Exchange consultation aimed to improve the government’s understanding of who utilises the Export Memorandum of Understanding (Export MoU) and Extra-Territorial Offices of Exchange (ETOEs), and why. It sought to identify ways to enhance the UK’s post and parcels export regime.

The objective of this consultation was for HMRC to determine how the customs treatment of low-value post and parcels exports could be developed to facilitate operators’ processes while ensuring a level playing field. HMRC’s aim was to balance facilitation with due diligence to ensure all exported goods are appropriately handled, protecting the countries and territories which operators export to while ensuring that the UK complies with its international obligations.

This document is the response to the Customs Treatment of Post and Parcels Exports consultation. It summarises the consultation’s outputs and outlines the next steps.

Chapter 1: Provides an introduction to the consultation, including background on the facilitations. It explains the significance of the Export MoU and ETOEs and their role in the UK’s post and parcels exports regime.

Chapter 2: Summarises responses to the specific questions tested in the consultation. It highlights key insights and feedback from stakeholders, identifying common themes and views on proposals.

Chapter 3: Details the next steps being taken forward by HMRC. It outlines the proposed changes to the customs treatment of post and parcels exports and key policy and legislative changes which are being introduced. These are:


• a new authorisation scheme which will require foreign designated postal operators who operate ETOEs and their sites to be authorised by HMRC – the authorisation will allow HMRC to proportionately control ETOE exports, similar to other low value exports, whilst still allowing goods to be exported using postal processes

• a further review into the Export MoU and Transhipment MoU to clarify the rules and ensure that both facilitations align with other similar customs facilitations – this will ensure that guidance is clear and users of these facilitations have certainty over the processes they should follow, and HMRC will also investigate de-coupling the Transhipment MOU from the Export MOU

The consultation involved a diverse range of stakeholders and HMRC thanks all respondents for the input they provided. HMRC remains committed to developing and improving the UK’s post and parcels export regime, ensuring it remains competitive, secure and compliant with wider international standards.

1. Introduction

On 27 April 2023, HMRC published a consultation titled ‘Customs treatment of post and parcel exports – Export Memorandum of Understanding and Extra Territorial Offices of Exchange’. The consultation closed on 20 July 2023.

Hundreds of millions of items of post and parcels are exported from the UK each year, making them a significant part of the UK’s export regime.


HMRC is responsible for maintaining an export regime that allows UK businesses to export their goods around the world, while also providing for effective risk assessment, targeting and control of illegitimate exports.

Since the consultation ran in mid-2023, there has been an increase in the number of goods subject to the UK’s sanctions regime, and it remains critically important for the government to enforce these regulations effectively.

Consultation background

The purpose of the consultation was to gather views on the customs treatment of low-value post and parcel exports. The consultation focussed on the Export MoU, including the Transhipment MoU, and ETOEs.

The consultation was aimed at:

• express operators authorised to use the Export and Transhipment MoUs
• designated postal operators and express operators operating ETOEs in the UK

HMRC received 16 written responses to the consultation from express operators, designated postal operators, customs consultancies, intermediaries and one trade association.

Although the number of responses did not reflect the whole of the post and parcels industry, the responses were detailed and comprehensive.

HMRC would like to thank respondents for their input. This response outlines some of the key insights and suggestions that were submitted and next steps.

The Export MoU and Transhipment MoU

The Export MoU is an agreement made between HMRC and express operators. The MoU allows approved express operators to bulk declare qualifying individual consignments up to the value of £900 using the entry in the declarant’s records (EIDR) export process, and to declare goods on behalf of multiple individual traders using a single declaration without providing full item-level information for each consignment.

Traders authorised to use the Export MoU can also apply for a further simplification, the Transhipment MoU.

The Transhipment MoU allows authorised operators to move bulk low-value consignments through the UK, from other countries, storing them for a period of 4 days before moving goods to their final destination, using only Customs Clearance Requests. Each individual consignment within the shipment can be valued up to £5,000.

ETOEs

Under the Universal Postal Union (UPU) Convention, ETOEs are facilities established for commercial purposes and operated by, or in connection with, a designated operator in a territory other than their own. The UPU allows member countries to determine if, and how, ETOEs can operate in their territory.

Foreign designated postal operators move goods on behalf of UK exporters on postal terms, with UPU CN22 and CN23 customs forms attached to each individual parcel subject to conditions. For example, post must be sent to countries that have a declared policy agreeing to accept ETOE items under the UPU Acts. The UPU CN22 and CN23 customs forms contain high-level information about the contents of parcels, such as a description of the goods, the value, and whether the goods are a personal gift. The UPU CN22 and CN23 forms are used in place of a full declaration for low-value, unrestricted goods sent by post.

This lower cost process means ETOEs offer UK exporters additional options when exporting, with tens of millions of exports a year being moved by ETOEs.

2. Responses

The ‘Customs Treatment of Post and Parcels Exports – Export Memorandum of Understanding and Extra-Territorial Offices of Exchange’ consultation proposed several potential amendments to the existing rules, ways of working and requirements for the Export MoU, Transhipment MoU and ETOEs. The following section details the proposals, responses and conclusions drawn from the consultation process.

Throughout this response, various standardised terms are used to describe the proportion of respondents to a particular question that give a specific view. These are set out in the below table:

Term	Statistical Representation
One	1 response
Few	Between 1 response and 20% of responses
Some	Between 21% and 49% of responses
Half	50% of responses
Most	More than 50% of responses

For example, if between 21% to 49% of respondents to a particular question indicated a specific view, the relevant term used would be ‘some’ of the respondents indicated a specific view.

Export MoU

Any change to this threshold will be based on extensive analysis and we are keen to understand your views on this. Please share your views and what you think would be an appropriate threshold (please provide data where possible, such as how many more consignments you could export a year, or the percentage increase in eligible goods if the threshold was raised to a particular amount).

Most respondents who answered this question were in favour of increasing the value cap on individual consignments moved via the Export MoU. A few respondents suggested a higher increase in the threshold, to £3,000. The other respondents to this question said that the value of consignments moved under the Export MoU tended to fall under the current value cap, and therefore there would be no benefit to increasing it.

HMRC understands the view of respondents that increasing the value threshold for movements under the Export MoU would reduce the administrative burden for express operators. However, this must be balanced against increasing the risk of prohibited and restricted goods moving out of the UK under the Export MoU.

Since the consultation, the UK has implemented an extensive system of sanctions and export controls, which restrict certain countries’ such as Russia’s access to critical goods and technologies. For example, over £20 billion of UK trade with Russia is now sanctioned. However, Russia is going to great lengths to secure military goods including circumventing sanctions, for example by using indirect shipping routes.

The data received on an export declaration is key to allowing HMRC to fully implement the sanctions regime and to effectively implement new controls and monitor circumvention.

Therefore, the value cap on individual consignments that can be moved via the Export MoU will remain at the existing threshold of £900 at this point in time.

Most respondents who answered this question were in favour of implementing this proposal. They highlighted this would allow for a more flexible and efficient export process. Other respondents raised concerns, mentioning the potential for abuse, a loss of oversight or control and difficulties with maintaining accurate audit trails.

HMRC recognises that removing the need to route goods via the authorised operator’s facility could allow for a more flexible approach. However, robust compliance and clear liability requirements for the authorised operator are crucial to ensuing HMRC can effectively control exports. After considering feedback regarding the potential loss of oversight and risk of abuse, as well as the identified challenges in maintaining the required audit trails, HMRC has decided, on balance, not to proceed with this change.

Respondents to this question put forward various suggestions for further ways HMRC could improve the facilitations it provides for low-value parcel exports.

Some respondents proposed allowing operators to export goods that have been declared into a customs special procedure via the Export MoU, for example, goods exiting from a customs warehouse or goods re-exported following entry to Inward Processing.

Under customs special procedures, HMRC has strict rules around exporting goods, allowing goods to be present in the UK customs territory with the payment of any duties suspended. As part of these rules, HMRC must have enough supporting evidence to confirm operators have exported goods without them becoming economically active in the UK to ensure compliance with export processes. In practice, this means having their exit recorded on a full export declaration as evidence that they have left the UK. This level of evidence therefore required would not align to the Export MoU process and would negatively impact customs special procedures.

HMRC therefore does not plan to make further changes at this stage to the existing process for special procedures.

Most respondents who answered this question stated they could provide item level information, however raised concerns with the administrative burden and practicality of submitting item-level data before goods leave the UK.

Noting the concern that requiring item level information would increase the administration burden for users, HMRC does not plan to take this proposal forward at this stage. This approach aligns with our commitment to minimising complexity and ensuring practical and efficient processes for users.

Most respondents who answered this question said they generally understand their obligations as an Export MoU operator. Some respondents did, however, suggest ways we could make Export MoU obligations clearer. For example, it was suggested that Export MoU guidance should be updated more regularly and made more easily accessible.

HMRC will use this feedback to fully review the Export and Transhipment MoU guidance and obligations, ensuring that it is up to date, clear and readily available. As part of this work HMRC will also investigate de-coupling the Export and Transhipment MOUs to ensure the obligations for each simplification are clear and aligned with other similar facilitations.

HMRC will continue to work with industry as we review the Export and Transhipment MoUs.

Respondents who answered this question had varied opinions on how due diligence could be improved on low-value parcel exports.

One respondent mentioned an increase in spot-checking processes, data checks and post-departure checks to ensure compliance.

Others suggested an increase in engagement with industry to manage risk processes, including providing a portal for MoU referrals from industry on suspicious goods or consignments.

HMRC will consider these as part of future work aimed at improving due diligence, including updating guidance to aid industry to ensure compliance responsibilities and requirements are aligned.

Transhipment MoU

From the responses provided, there was a wide variation in the number of movements of consignments through the Transhipment MoU, with most respondents moving between 100 to 20,000 consignments each year.

Respondents who answered this question gave examples including having a designated CCTV-monitored area for processing and scanning all goods into and out of warehouses to provide a clear audit trail.

A few respondents to this question suggested an increase to the timeframe for transiting Transhipment MoU goods from 3 days to 7 days, and to increase the time for goods to be held in storage from the current 4 days before re-export.

As these goods are not in free circulation and there is a requirement to have control over the goods when stored, HMRC does not plan to increase these timeframes at this time. However, HMRC will review this as part of the work to clarify the terms and conditions and consider de-coupling the Transhipment MOU from the Export MOU.

The value limit for consignments moved under the terms of the Transhipment MoU is currently £5,000. One respondent suggested an increase in this limit.

However, in response to other questions in this consultation, most respondents told HMRC that most of the consignments they move under the Transhipment MoU are below £1,000, suggesting there is not significant practical demand for an increase to this limit.

Moreover, goods moving under the Transhipment MoU have no declaration data available and move only on Customs Clearance Requests. Therefore, HMRC must balance this facilitation with the wider import and export regime, including HMRC’s ability to risk, identify and control goods.

Therefore, as there is no significant demand for an increase, taking into account the balance between facilitation and control, HMRC will retain the value of the threshold at £5,000.

Most respondents who answered this question said that the consignments they move under the Transhipment MoU are under the value of £1,000, with one respondent stating that they had insufficient data to provide an accurate estimate of goods moved under £1,000.

Respondents to this question outlined various benefits of the Transhipment MoU. These included:

• it is a quick and simplified way to move goods through the UK
• it allows small and medium-sized enterprises without Temporary Storage Facility approval to compete for business
• it offers the temporary storage of goods

Most respondents said there would be a negative impact if HMRC removed the Transhipment MoU, including an increase in costs and burdens on agents and one respondent suggested this would lead to job losses.

HMRC will further review the Transhipment MOU to ensure that it aligns with similar customs facilitations and that the rules and guidance are clear and standardised for all users.

ETOEs

Most of the respondents to this question said they were content with the current £1,000 value cap. In light of the responses and taking into account the need to balance risk with appropriate levels of facilitation, HMRC will maintain the value cap at the existing threshold of £1,000 at this time.

Respondents also highlighted a desire for clarity around the processes for making use of this value cap. The UPU rules set out that there is no upper value cap for UPU CN22 or CN23 customs forms. Instead, the £1,000 value cap is the maximum value of posted goods for which a person can make an export declaration by conduct (Regulation 23(1) of the Customs (Export) (EU Exit) Regulations 2019) (S.I. 2019/108) ^{[footnote 1]}. Goods above this threshold require an export declaration made through the CDS.

The information that respondents said they collect and store on exported goods varied. The majority confirmed they collect consignor and consignee details (including name, address and contact details in some instances), as well as the value, weight and description of the goods. Some respondents mentioned collecting Harmonised System codes. Some respondents stated that they collect data as stipulated by UPU regulations.

Half of respondents who answered this question said they supported or could accommodate this process. Some outlined requirements they would need if HMRC introduced this proposal, including still being able to use ‘CN’ documentation. Some others needed more detail on the proposal to answer or could not see the benefit of a similar declaration process to the Export MoU.

HMRC acknowledges feedback about the additional burden this would place on postal exporters and the minimal benefits of imposing EIDR formalities in addition to postal customs requirements. To keep ETOE practices consistent with postal processes, HMRC will not be moving forward with this proposal at this time.

Most respondents to this question confirmed they do some form of risking to ensure they do not export prohibited or restricted goods. Some mentioned processes to ensure that the CN22 and CN23 forms on exported parcels contain accurate data.

Most respondents mentioned performing randomised data and physical checks, including using x-rays to examine parcels. Most respondents also mentioned removing prohibited and restricted goods or non-compliant shipments and returning them to the sender, or contacting customers or Border Force to take further action.

Most respondents to this question supported this proposal and already do some form of risking.

Suspicious items mainly include goods subject to prohibitions and restrictions and goods that are suspected to be undervalued or misdescribed. Taking into account the nature of the suspicious goods and existing processes, HMRC has decided to introduce a check and referral requirement. This means that foreign designated postal operators will be required to implement procedures for checking their consignments. Foreign designated operators will need to take steps to ensure that goods they carry comply with customs obligations and do not breach a prohibition or restriction. If any items appear suspicious, operators would be required to refer these items to the customs authorities for further inspection and action as appropriate.

HMRC will work with industry partners to implement the check and referral requirement effectively and HMRC will give foreign designated operators at least 12 months from the date the legislation comes into force to prepare for this process.

Most respondents who answered this question raised concerns with this proposal, and some opposed it completely. Reasons respondents gave for this included the need for significant changes to ETOE IT and operational processes, as well as added cost, delay and burden.

HMRC recognises the concerns which respondents had about the operational burden of submitting item-level data to HMRC before items are exported.

HMRC will not take this proposal forward in its current form. Instead, HMRC will introduce a requirement for foreign designated postal operators to grant access to their data when requested by HMRC and Border Force. HMRC will also explore ways to improve data collection from ETOEs to collect and report trade in goods statistics. This will provide a proportionate balance between enabling HMRC controls and ensuring that burdens are minimised.

Most respondents to this question had some form of existing relationship with Border Force. This included Border Force making occasional visits to their sites or ETOE operators referring suspicious items to them directly.

Some respondents did not have an active relationship with Border Force.

Respondents to this question generally had concerns with the 6 to 12-month period HMRC outlined. Some stated they would need a minimum of 12 to 18 months to implement systems changes, especially where they needed to make IT changes. However, many also said the time they needed to prepare would depend on the outcomes of the consultation.

HMRC has taken this feedback into account and designated operators will be given a 12-month period in which to meet the new requirements. Should there be any adjustments to this timetable, HMRC will notify industry accordingly.

A few respondents to this question suggested HMRC should allow operators to ship goods under customs special procedures, including those re-exported from a customs warehouse, via ETOEs.

Customs special procedures allow goods to be present in the UK customs territory with the payment of any duties suspended. Therefore, HMRC must have enough supporting evidence to confirm operators have exported goods without them becoming economically active in the UK. In practice, this means having their exit recorded on a full export declaration as evidence that they have left the UK. HMRC therefore does not plan to change the existing process for special procedures.

3. Next steps

This section sets out the next steps that HMRC will be taking forward as a result of this consultation.

Export and Transhipment MoU

HMRC will retain the value cap on individual consignments exported under the Export MoU at £900, at this time.

HMRC will examine and align the Transhipment MoU and Export MoU terms and conditions, to ensure that obligations are clear for all parties and in line with other customs authorisations and facilitations.

As part of this work HMRC will investigate de-coupling the Transhipment MoU from the Export MoU to ensure that obligations are clear and aligned with other similar facilitations, such as Customs Warehousing.

ETOEs

As part of ongoing efforts to enhance the efficiency and security of export procedures, HMRC plans to introduce legislation requiring foreign designated postal operators and their sites to be authorised by HMRC in the future. Introducing the authorisation scheme aligns with HMRC’s broad objectives to maintain high standards in customs operations and to balance facilitation with a level of proportionate control.

Through this authorisation scheme, HMRC will ensure operators who are approved have a good history of compliance, meet minimum standards in customs competence and record keeping and are of good financial standing, in line with requirements for other similar customs facilitations and authorisations.

Foreign designated postal operators will be able to export using the CN22 and CN23 customs forms from their sites, subject to meeting similar requirements expected of comparable operators.

This will involve giving HMRC and Border Force access to their sites, allowing access to export consignment data when necessary, conducting routine checks on export consignments, and referring any suspicious items to the customs authorities, among other requirements.

This proposal strikes a balance by allowing foreign designated postal operators to continue benefiting from postal simplifications, such as use of the CN22 and CN23 forms, without requiring additional submission of data into HMRC systems. At the same time, it introduces proportionate obligations to ensure a level playing field with comparable operators, mitigating risks to the export framework.

Respondents generally said they would need at least 12 months to implement proposals relating to ETOEs. HMRC intends to introduce legislation enacting the changes mentioned to ETOEs in 2025, but designated operators will be given at least 12 months from the date the legislation comes into force to become authorised under the new scheme. Should there be any adjustments to this timetable, HMRC will notify industry accordingly.

The authorisation changes to ETOEs set out in this document will only apply to those located in Great Britain. ETOEs in Northern Ireland will continue to follow Union Customs Code (UCC) requirements.

Annex A: List of stakeholders consulted

HMRC received input through written responses from the following stakeholders:

• AICES (Association of International Courier and Express Services)
• Air Business
• Australia Post Global eCommerce Solutions
• Asendia UK Limited
• Barbourne Brook
• Bridges Worldwide (UK) Limited
• DHL Global Match UK
• DHL International UK Limited
• Jersey Post
• KPMG
• New Zealand Post Limited
• One World Express Inc. Limited
• PostNL
• Royal Mail
• Spring Global Delivery Solutions
• UKP Worldwide

Annex B: Glossary of Terms

Term	Description
C21	A Customs Clearance Request or C21 is a form traders use to request the release of goods usually at a customs-approved location with an inventory system.
CN22 and CN23 customs forms	CN22 and CN23 forms are customs forms for postal items as described in the Acts of the Universal Postal Union.
Customs Declaration Service (CDS)	The CDS supports making import and export declarations when moving goods into and out of the UK. It has replaced the Customs Handling of Import and Export Freight (CHIEF) system.
Customs intermediary	Customs intermediaries help traders to move goods across borders by ensuring they are meeting their obligations and moving goods efficiently through the customs system. They could be customs brokers or customs agents, express operators, freight forwarders, warehouse operators and hauliers.
Customs special procedures	Customs special procedures allow you to store, temporarily use, process or repair your goods with charges suspended and, in some cases, partially or fully relieved.
Customs warehouse	Customs warehousing is one of the customs special procedures. It is a trade facilitation measure allowing imported goods to be stored with customs duty and import VAT suspended, until the time they are released to free circulation.
Designated Postal Operator	Designated Postal Operators are national postal operators responsible for meeting their government’s obligations under the treaties of the Universal Postal Union.
Entry in the Declarant’s Records (EIDR)	EIDR allows authorised declarants to enter the details of an eligible export consignment into their records before export. Declarants must give a ‘notice of presentation’ (usually using a C21 form) and submit a supplementary declaration.
Express Operator	Express Operators are couriers who specialise in moving parcels at speed. They often complete import and export declarations on behalf of consumers and businesses.
External Temporary Storage Facility (ETSF)	ETSFs are approved places located outside the appointed area of an approved port/airport where chargeable goods may be held until they are assigned to a customs approved treatment or use.
Harmonized System (HS) code	HS codes are codes used by customs authorities internationally (including in the UK) to categorise goods which are imported or exported.
Inward Processing	Inward Processing is a customs special procedure that allows importers to delay or reduce import duties and/or VAT on goods that they process or repair.
Simplified declaration procedure for exports	Simplified declaration procedure for exports allows authorised declarants to submit basic details simplified declaration to customs before export. Declarants must present their goods and declaration on export and submit a supplementary declaration.
Temporary Storage authorisation	Temporary storage authorisation permits goods imported from outside the UK to be temporarily stored under customs control before they are placed under a special procedure, released into free circulation or re-exported from the UK.
Universal Postal Union (UPU)	The UPU is the specialised agency of the United Nations that regulates the universal postal service.