Customs Compliance Audit

Customs compliance audits tend to be a task that most businesses and private individuals dislike as they can be monotonous and time-consuming. That said, custom compliance audits are absolutely essential in order for your business to stay on the right side of law.

So let’s take a look at what custom compliance audits are, what the responsibilities of a custom compliance audit looks like for international trade companies, and how to prepare or simplify the process.

What is a customs compliance audit?

A custom compliance audit is a process a business follows to prove their authenticity, which involves providing specific data for HMRC.

All UK businesses must comply and follow the processes outlined by HMRC. So to ensure that you have the correct data ready for your audit, it’s important that procedures are implemented so that you have all the information regarding your importing and exporting declarations when you need it, and also that the information in question is correct.

Why HMRC carries out customs compliance audits

The main purpose of carrying out a customs compliance audit is to prove that your business is abiding by the law and following rules and regulations.

HMRC checks over customs compliance audits, not only to discourage tax evasion, but to make sure that all businesses are complying by paying the right amount of tax and taking advantage of the right benefits and reliefs. They’re entitled to carry out regular checks both off-site and on-site, which means HMRC can request information about your business activities via email, as well as visit your premises in person to carry out audits.

What are the benefits of a customs compliance audit?

Custom compliance audits are beneficial because they can protect businesses and their assets. They ensure that you’re paying the correct amount of tax, and receiving the correct allowances and tax reliefs too. Although it may seem like it’s just a routine check to make sure you’re making the right payments at the right time, customs compliance checks also keep everything operating fairly, so you’re not continually over-paying on tax or missing out on benefits your business is entitled to.

Your customs compliance responsibilities

To help yourself with upcoming customs compliance audits, record-keeping systems are a must. Record-keeping systems will help you to keep track of all business records and data and hold it in one accessible place.

Make sure that you have the following:

  • Your most current records of everything in the past year
  • Records of at least the past 4 years for customs duty
  • Records of at least the past 6 years – required for import VAT

Customs must be given access to necessary records so that they are satisfied that your business has met all schemes.

Preparing for a customs compliance audit

In preparation for your customs compliance audit, we’ve put together a HMRC compliance checklist for you to follow:

  • Get your company’s up-to-date manual ready – your auditor will want to look at this first
  • Check over the compliance process for your company to make sure that all relevant systems and controls are in their rightful place
  • Make sure all departments of the business have process and system links to keep all data streamlined
  • Revisit financial links and make sure all financial statements and agreements are easy to access
  • Make sure there is documentation supporting the methodology (where there are tariff classifications) – whether that’s from previous rulings, third party opinions, samples or specification sheets
  • Choose a few transactions at random and ensure that all information is accurate and that supporting documentation can be found to verify these records
  • Put the last customs audit recommended changes into action. This may include binding rulings, protests, petitions, duty relief claims and voluntary disclosures
  • Sort after a third-party auditor who can identify whether or not your business is compliant – this is a great way to find out if you’ve missed anything before the official auditor does

Unable to satisfy customs with your compliance audit?

An unsatisfactory audit can lead to customs civil penalties, supply chain delays (due to inspections), withdrawn benefits and a request for additional customs duty payments.

If an error is made on purpose with the intention to defraud HMRC, criminal investigations will be pursued.

What to do if you disagree with your customs compliance audit

If you’re not happy with your customs compliance audit results, you can make a tax appeal but this must be brought to HMRC first. If HMRC agrees that you can appeal against the outcome of your customs compliance audit, you will receive an email or letter that includes how to proceed.

Once you’ve been given the OK to proceed with your appeal, you have 30 days to either:

  • Send over more information to the auditor and ask them to consider this new data
  • Get your audit reviewed by a different person who hasn’t any prior knowledge of your case
  • Have an independent tribunal look over your appeal and have them come to a decision on this case

How can KlearNow simplify customs compliance?

Brexit director and trade adviser, Richard Bartlett said, ‘Complying with HMRC and customs can be tricky, especially since the procedures can be complex and ever-changing. However, businesses need to be meticulous with their data to remain compliant.

“Throughout my 25 years in this business sector, I have found that the majority of businesses are failing to be proactive when it comes to filing and storing the correct data. This is an expensive oversight, one that can lead to missed benefits too!’’

“Being savvy about lost profits such as duty, tax, VAT and interest can help businesses to save money. Although customs compliance audits may seem like a chore, it pays to put an effective management system into place, such as KlearNow.’’

KlearNow is the first customs clearance and document management platform that assists importers, freight forwarders, customs brokers, and carriers with their critical data. Helping businesses to save money, save time, enjoy full transparency of all shipments, find documents anywhere and anytime, as well as eliminate avoidable fees and mistakes.

So, if you want to relieve the headache that comes with customs compliance audits, take action and get in touch with KlearNow to get started with our AI-driven, shared-economy platform that will revolutionise the way you operate.

To speak to one of our professionals, send an enquiry today or email us at: – we’d love to help!