Client Question:
Should we put our UCR on a commercial invoice?
Answer:
The very short answer is, no, unless you are compelled to do so by law.
But if you are interested, here’s a bit more about why this is the answer.
The Unique Consignment Reference (UCR) is a World Customs Organisation mechanism that is intended ultimately to allow any Customs authority to access the export value of goods prior to the corresponding import clearance. The purpose of the UCR is to counter abusive price manipulation in transit.
In South Africa it is not used for this purpose currently, but rather to monitor cross-border payments. To achieve this, the UCR that is recorded on an export bill of entry (in field or ‘box’ 28) is also reported to the receiving bank as part of the resident exporter’s Balance of Payment (BoP) reporting.
Both Customs and the receiving bank in turn report the UCR to the SA Reserve Bank (SARB). These two independent streams of data should match and acquit, ensuring that every export is paid for.
At the default point (nominally 180-days after the export entry date), a UCR captured by Customs that has not yet been reported to the bank is a potential non-compliance, in that the discrepancy highlights an irregularity (such as a non-payment or a payment received outside of the BoP process).
Similarly, a UCR that has been reported to the bank that has not yet been declared to customs (broadly, within 1-year of the inward payment) is equally a potential non-compliance, in that it highlights possible irregular financial activity, or a BoP misdeclaration.
However, a great deal of apparent non-compliance is merely the poor administration of the UCR.
The most fundamental management tool in controlling the UCR is to ensure that ‘finance’ (reporting the payment) and ‘operations’ (declaring the customs entry) use the exact same UCR.
If finance and operations are not using the same reference, the SARB record will be littered with unmatched, and therefore unacquitted events ultimately flagging the resident exporter for an audit.
Given that most exporters do not pass their own customs entries, but use the services of a clearing agent, it is crucial that ‘operations’ verify that the UCR they instructed the agent to declare on the entry was in fact used.
This is true of all exports but is a particular caution in roadfreight as the ‘forwarder’ arranging the transport may sometimes subcontract the ‘clearing’ to a third party at the border, a party with whom the exporter has no direct contact (or relationship).
The UCR is created by the exporter named on the export customs entry (SAD500), using a predetermined format comprising a set sequence of letters and numbers.
This format includes the exporter’s Customs Client Number (CCN) or “exporter’s code” as it is more commonly called. It follows that by writing the UCR on a commercial invoice, the exporter is making their exporter’s code known to a wide range of people, which is not prudent. It invites malpractice and the use of the exporter’s code without the exporter’s knowledge.
This then brings us to the question of how the exporter correctly advises the agent of the required UCR detail.
On this point, note that the UCR sequence alone is insufficient to complete field 28 of the SAD500. The minimum additional information required is as follows (note the sub-fields marked * are left blank if the transaction value is nil – 000.)
The value of the transaction (or 000)
The three-letter code of the transaction currency *
The receiving bank’s name *
The receiving bank’s three-digit Authorised Dealer (AD) code *
The credit period (in days, counted from the export event) **
The VAT sub-field reporting either Y (yes) or N (no) indicating if the event will be included in the vendor’s VAT201 return, or not.
**Alternatively, the credit period field may be endorsed with the letters PPD if the transaction is wholly prepaid, or the letters NEP (No Export Proceeds) should the transaction value equal nil (000).
Broadly, it is the nature of agency that an agent cannot act on behalf of their principal without a written mandate to do so. In the context of exporting (and importing) this mandate is the Clearing Instruction.
The details required to correctly complete the export entry, including field 28 (the whole UCR field as discussed above), should pass from the exporter to the clearing agent only via the completed clearing instruction.
I am generalising (but it is a well-informed generalisation) that exporters are often not asked to complete an export clearing instruction. It is frequently because this instruction is lacking that the commercial invoice is abused inro carrying the information the instruction should carry.
This creates a further non-compliance.
SARS Customs issue guidance on many matters, not least of which is the documentation required to be retained by the exporter for audit purposes. (SARS publication – “Recordkeeping – Imported and Exported Goods.”)
Here’s a short summary of the latest guidance for export compliance –
“…In the case of exported goods, records of transaction (sic) comprising at least of the following must be kept:
• Copies of the export bills of entry
• Invoices
• Bills of lading and other transport documents
• Exporters’ written clearing instructions (my emphasis)
• Any permit, certificate or other authority issued under any other law authorising the exportation of goods
• Such other documents relating to such goods as the Controller may require in each case…”
As stated, the short answer to the question then is – no, the UCR should not appear on the commercial invoice, but rather it should be part of a detailed export clearing instruction. The Instruction is not only the correct legal process when working with an agent generally, but a fundamental requirement for customs compliance.
If you are working with export clearing agents who do not provide blank clearing instructions, then either stop working with them or issue a Customs’ compliant instruction to the agent on your stationery.
There are guides provided by SARS on what should be shown on a commercial invoice, and what should be captured on the export clearing instruction.
Source: Freight Training
