Following Brexit, all customs duties collected are now a valuable UK Treasury resouce.

We have been contacted by several companies undergoing an HMRC Audit, which has been unheard of historically.

HMRC are seen to be proactive in this approach as, since Brexit, revenues collected now go directly to the UK Treasury.  We lodged a freedom of information request from HMRC that confirmed our thoughts.  There is an upward trend in customs duty audits by HMRC, and the number of audits resulting in penalties has already risen by 28%.  It is more important than ever that your business is Audit ready.

Some of our clients see this as an opportunity to fully review their customs landscape. With so much change to legislation since Brexit, we recommend this approach as a sensible solution.

Customs is an audit-based control and HMRC have 3 years to go back on your records. Small issues now can snowball into large exposures in the future.

Risks Associated With Not Being Audit Ready Are Very Real

  • Assessment of any underpaid customs duties, eroding margins and working capital;
  • Penalties up to the value of underpaid duty;
  • Removal of customs duty relief regimes;
  • Supply-chain delays;
  • Reputational damage to risk score; and
  • Failure to meet Senior Accounting Officer (SAO) provisions.

Case study

This example is a famous historical case for a major supplier to a high street retailer where a business went into administration after a customs audit.

HMRC had concerns that the clothing being manufactured did not meet the proof of origin rule and, therefore, should not be imported under the GSP agreement at a NIL rate. HMRC investigated and decided to send a team to the factories manufacturing the clothing for the businesses being audited. The rule of origin showed that the clothing must be manufactured from yarn to qualify for the GSP treatment. In this instance the rule of origin was not met and, subsequently, the directors of the business were interviewed under caution, and HMRC demanded the underpaid duty plus penalties going back three years. This ultimately meant the company could no longer trade as the duty demand went into the millions and they went into administration.

The Barbourne Brook Approach

Customs Landscape

We expect this trend to continue but there are steps businesses can take to mitigate risks.   We work with clients on our Customs Landscape projects that have the added benefit of ensuring you are audit ready.  A Customs Landscape project will highlight compliance issues and process inefficiencies, mitigate compliance risk, build a sound foundation for ongoing compliance and manage future regulatory customs audits with minimum fuss.  Learn more about our Customs Landscape Projects.

Customs Support, the ongoing support service tailored to your needs

Customs Support lets you leverage our understanding of your business with access to experienced consultants.  This service provides flexibility while supporting your changing business needs.  Learn more about Customs Support.

CAT360, our Unique Customs Software Solution

CAT360 enables you to make real-time amendments to your customs data, streamlining compliance checks and drives smart decision-making. Learn more about CAT360.

Learn what CAT360 could do for you

Request Your CAT360 Brochure

A wider project taking a holistic view

Barbourne Brook offer advice ranging from one off project work through full Customs Landscape reviews and ongoing Customs Support. Using tried and tested methodology, we know exactly which questions to ask and where your pain points may lie. If you are serious about customs compliance then working with a consultant is a sensible place to start.

Further Reading …

The Implications of non-compliance for Senior Accounting Officers are explored in our ‘Customs Planning, a CFO’s Achilles Heel’ blog post.

About Barbourne Brook

Barbourne Brook are a proactive team of customs duty planning experts with a wealth of knowledge and insight in the customs sphere, offering scalable solutions backed by industry-leading technology.

Get in Touch

The Hop Merchant
21 Sansome Street

+44 (0)1905 914031


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