Why Me?

If you are involved in international trade and import & export operations, HMRC are very likely to carry out a Customs Audit or Inspection to check the customs compliance of your business typically every 5 years. It will, at some point, happen:

  • by random selection intended to keep everyone honest;
  • when you have a higher risk score because of historic compliance record;
  • due to specific industry or peer group intelligence or specific company intelligence when some issues are identified that need to be checked.

Customs audits can cover documentation only and sometimes are done over the phone.  However, customs representatives may come to inspect your premises. You are normally informed of such an audit by letter, but occasionally customs audits are unannounced, and customs authorities come to your premises without prior notification.

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.

What to Expect

When the audit starts, the auditors inform you what they need from you and may want to:

  • inspect goods and documents relating to customs and international trade;
  • ask for information about goods or services in the international supply chain that you provide or will provide;
  • check you are complying with any customs related approval, authorisation, registration, or licence you hold or have applied for;
  • sometimes 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, 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 (either hard copies or electronic copies as appropriate, of 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 for your business but may also result in penalties if you are found to have broken customs law. 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, unauthorised removal of goods from customs supervision.

Our Top Tips

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 in order to spot any issues whilst supporting you in taking corrective action.

IT IS WORTH NOTING THAT, UNLIKE BARBOURNE BROOK, HMRC DO NOT LOOK FOR SAVINGS AND RECLAIMS

How to Prepare

  • in advance of the Audit, ask for a remit or the information needed;
  • 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.

During the visit

  • remain calm and courteous and expect the same;
  • answer questions truthfully and honestly;
  • take copies of any documentation they want to take away and get receipts;
  • do not guess answers – if you do not know then say you will need to find out;
  • go straight to the point: poorly answered or undocumented answers may lead to undesirable outcomes.

After the Visit

  • follow up with any information requests promptly and on time;
  • review their letter and, if appropriate, act on recommendations – it is important that you do not repeat any errors;
  • check any demands or penalties – agree or, if not, you may ask for review or appeal;
  • review lessons any learned and other potential improvements you can make going forward.