New businesses, particularly those launched by ex-military personnel, can fall foul of trade laws, a Amesbury export advisor has warned as the UK celebrates Export Week.
Around 35,000 small businesses in Wiltshire and the South West are forecast to start exporting their goods and services overseas in the next 12 months.
But according to export adviser David Wookey, many risk falling foul of the law, potentially facing fines and the threat of imprisonment.
David, whose firm DJAW Limited, provides specialist advice for companies exporting both general and defence-related products around the world, has first-hand experience of businesses in the region that have inadvertently broken international trading laws and sanctions.
While HM Revenue & Customs officials in the UK are prepared to deal reasonable with businesses that come forward to admit breaches of the law retrospectively, many other countries are less tolerant.
According to David, the biggest mistakes local firms make in relation to export law are:
- Believing that sending products overseas to be displayed at exhibitions does not count as exporting. It does.
- Failing to apply for the proper export licences for products that have a military use.
- Not realising that some items have what is called ‘dual use’ – a non-military item that could be used for military purposes or manufacture of military equipment. For example, a piece of medical equipment that could be used for state-sponsored torture.
- Not realising that e-mails and documents sent overseas electronically are subject to the same controls as hard copies or hardware.
“Many businesses in Wiltshire and the South West are blissfully unaware of export controls or paying little more than lip service to the relevant legislation,” said David.
“Breaching international trade controls can lead to huge fines with directors finding themselves extradited to stand trial. Sentences can be up to 10 years. In the last few years I’ve been involved in the case of one British businessman who’s now serving jail time in the US for breaching export controls.”
Because of the large scale presence of the military in Wiltshire, many ex-servicemen and servicewomen set up small businesses making or distributing products for use by the military.
Areas such as Corsham, Colerne, Bradford on Avon and Chippenham are home to many of these types of businesses, which must manage particularly rigorous export controls for their products.
Approximately 10 percent of the UK’s small-to-medium sized enterprises are based in the South West. According to a study by Clydesdale Bank this summer, 350,000 SMEs nationally will begin to export by summer 2016.
This means around 35,000 South West businesses are on the verge of exporting for the first time.
David, who worked for the Ministry of Defence, launched DJAW Limited in 2012 and has advised numerous businesses across Wiltshire, the South West and the wider UK. He has also appeared as an expert witness in court cases.
“It’s great that so many Wiltshire businesses are on the verge of joining the export market, but there is a real need to tread cautiously. Firms must comply with export legislation,” he added.
- November 9 to 13 is Export Week in the UK, an initiative backed by UK Trade & Investment to encourage businesses to export.