The credit for establishing a Customs service in 1203 on a national scale goes to King John responsible directly to the Crown. At all the ports, he required six or seven 'wise and substantial men, well versed in the law' to account to him for the revenue; and he divided the control between assessment, collection and accounting to guard against bribery or collusion.
Collectors of Customs were appointed at each principal port. The limits between each port were defined to ensure the whole of the coastline was covered. The collectors’ principal task was to assess and collect the proper duties of Customs.
At various times in history, instead of appointing his own collectors, a King would sell the rights to the Customs duties for a fee, often substantial, to a merchant who would then undertake the collection with his own staff. This system of 'farming' was open to abuse, bribery and loss of revenue and was finally abandoned in 1671 when Charles II appointed his first Board of Commissioners.
Under royal authority, attempts to avoid paying duty or avoid a prohibition were made more difficult by requiring goods only to be landed or shipped at approved quays, with London growing into the premier port.
Edward I had expelled the Jewish financers and their place as ‘farmers’ of the Customs had been taken by Italian merchants such as Luke of Lucea and the Bardi and Frescobaldi families of Florence.
In 1303, Edward introduced the Carta Mercatoria which placed both trade and customs duties on a firmer footing and involved the levying of the Aliens Customs or butlerage, a tax on wine to be paid only by aliens (anyone who is not a national or citizen of the United Kingdom). Later, the tax was also paid by English merchants in lieu of providing the monarch with a certain quantity of imported wine. This act also provided for 'weighting' at the wool scale or 'King's Beam' by officials controlling the operation with officially approved weights.
The Customs service gradually expanded during the next two hundred years and Henry VII - by his mercantilist policies and trade agreements - gave trade a great impetus. The 1496 Customs Roll of the port of Bristol shows how the King arranged for Richard A'Meryke, the Customs collector at Bristol, to pay certain money to John Cabot to finance his voyages. In the same year, he signed a treaty of commerce with the Netherlands which included an article providing that ‘officers appointed for searching for contraband goods shall perform it civilly’. His treaty of commerce with Castille in 1506 was also significant to the Customs inasmuch as it provided that the rates of duty payable should be publicly affixed to the Custom Houses of the countries concerned. In the following year, the first known Book of Rates, forerunner of the present day tariff, was produced, for many articles other than wine and wool were now liable to duty.
By the time of Queen Elizabeth I, the whole of the Customs was let out in one ‘Great Farm’ and Sir Thomas Smythe became known as Mr Customer Smythe. Although the collection of duties was managed by the 'farmers', the rates were determined by the King, sometimes with, often without, the authority of Parliament and given force in the Books of Rates.
When James I wished to increase the revenue and, being unable to get Parliament to raise the rates, decided he would revise the valuation of goods in the published Books, a merchant called Bates took legal action on the grounds that no increase in taxation could be imposed without the consent of Parliament. The court held that the King acted within his prerogative: Bates lost.
At the height of the Civil War, Parliament appointed their own Commissioners and published new Books of Rates directed to achieve rigid protection against foreigners. Few goods were exempt.
In 1651, the Rump Parliament passed the first Navigation Act requiring goods brought to England to be carried in English ships, navigated by English crews and captains.
New duties came into force in December 1660 when the Commonwealth duties lapsed. By 1662, both Customs and Excise were back in farm. By 1671, both were for renewal and, although the Customs looked to be continued by the farmers, Charles II cancelled the agreement, having no certainty of the revenue collection.
A second Navigation Act of 1661 gave more work to the Customs enforcing the requirement of certificates on produce carried only on British ships.
In 1686, the Board of Customs became the Commissioners for the 4.5 per cent duty levied on West Indian produce and became responsible for the administration of Customs in the plantations there and in America, as well as in Africa and Australia
By the late 1700s, the Customs laws needed to be consolidated - and simplified. The laws contained in 27 volumes were not available to the public; many goods were liable to duty under 12 to 18 separate Acts and there were 100 different branches of duty for value, imports and accounts.
In 1787, William Pitt introduced his 'remedy for this great abuse' by substituting one single duty for each article. Nearly 3,000 different resolutions were approved by the House of Commons at one sitting! Over the next forty years, Parliament broke with tradition and ended the grants various Kings had made from the Revenue.
During the nineteenth century, duties continued to be rationalised. The subordinate Boards in Edinburgh and Dublin were wound up in 1829 and all administration since then has been controlled from London.
In 1909, the Board of Customs was amalgamated with that of Excise by Order in Council and renamed the Board of Customs and Excise.
Although the Board of Customs was also instituted by King Charles in 1671 it was already a much older organisation in other forms to control imports and exports and to levy the Customs duties.
Disclaimer: In this note, we have attempted to summarise some of the significant aspects to be kept in mind by readers to ensure compliance of tax laws and regulations. Readers should ensure to verify specific provisions as applicable to each case before taking any business decisions. It would be pertinent to note that some changes are being made to the tax laws and rules and regulations on a continuous basis by way of notifications, clarifications etc issued by the department based on their practical experience in implementing the legislation.
It may be noted that nothing contained in this note should be regarded as our opinion. Professional advice should be sought for applicability of legal provisions based on specific facts. Though reasonable efforts have been taken to avoid errors or omissions in this note we are not responsible for any liability arising to readers directly or indirectly due to any mis-statements or error contained in this note. It must be noted that the views expressed in the note are based on our understanding of the law and regulations as published by the Government authorities and we may or may not agree or subscribe to such views.
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