Why me?
Businesses are normally selected for audit randomly, although the following factors may increase the chance of selection:
- the business has a higher risk score because of historic compliance records; or
- specific industry, company or peer group intelligence is identified.
Customs audits can cover documentation only and are sometimes done over the phone. However, customs representatives often come to inspect business premises and occasionally customs audits/visits are unannounced.
What to Expect
When the audit starts, the auditors explain what they need. They may want to:
- inspect goods and documents relating to customs and international trade;
- view information about goods or services in the international supply chain;
- check compliance of any customs related approval, authorisation, registration, or licence held or applied for;
- carry out visits for another government department, where the licence relates to the import or export of goods.
The information auditors may ask for includes company’s charter, powers of attorney, accounts, returns, bank records, import and export paperwork, contracts, goods specifications, import and export licenses and certificates and other business documents.
Best Practice
It is best practice to be able to demonstrate sound customs processes and procedures, including those for customs special procedures, accurate customs records (invoices, import and export declarations, transport documentation, bills of discharge, etc.), clear instructions for intermediaries, evidence of customs controls and checks, customs knowledge and technical understanding.
The Risks
Customs non-compliance does not only bear economic risks to businesses but may also result in penalties if customs law has been broken. This includes, but is not limited to, infringements of customs regulations, failure to comply with any customs-related approval, authorisation, registration or licence, mis-declarations, failure to comply with a customs procedure, failure to produce information, failure to keep records, inaccurate returns or documents and unauthorised removal of goods from customs supervision.
Ultimate Responsibility
The Senior Accounting Officer will bear ultimate responsibility for companies with a turnover of over £200 million. Read more on Senior Accounting Officer responsibilities.
4 Top Tips for Audits
- Representation
You have the right to be represented and the right to take reasonable care to get things right. You can authorise anyone to act on your behalf, and if you have an adviser, you must still take reasonable care to make sure that any returns, documents, or details they send to HMRC on your behalf are correct. Barbourne Brook can carry out a pre-emptive audit to spot any issues whilst supporting you in taking corrective action.
- Preparation
- in advance of the Audit, ask for a remit or the information needed;
- ask for a list of the transactions for review. Analyse this list and determine if there are any risks with these transactions, for example, if you are claiming a relief, are the conditions met?
- request your MSS data – this will help initial analysis, so you know what figures and sums HMRC have sight of;
- prepare the information requested and brief staff who will be involved;
- review charter and information notices.
- The visit
During the visit:
- remain calm and courteous and expect the same;
- answer questions truthfully and honestly;
- take copies of any documentation taken away and get receipts;
- do not guess answers – if you do not know, say you will need to find out;
- go straight to the point: poorly answered or undocumented answers may lead to undesirable outcomes.
- Post Visit
- follow up with any information requests promptly and on time;
- review their letter and, if appropriate, act on recommendations – it is important not to repeat any errors;
- check any demands or penalties – agree or request a review or appeal;
- review lessons any learned and other potential improvements that can be made going forward.
If you would like further information on HMRC audits or would like support in preparation for a forthcoming audit, contact Adam Wood at Barbourne Brook on 0121 403 3901.
If any of this resonates with you, contact Adam Wood from Barbourne Brook for a no-obligation chat, completely free of charge.
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