HMRC Prepares to Scale Up Compliance Audits Efforts
There is a hint of a warning that UK businesses should think about possible customs compliance audits sooner rather than later, as the government strongly suggests that it’s time to ramp up audits to collect outstanding debt.
The recruitment of 5000 Customs compliance staff was announced in the Autumn Budget 2024, with a further 500 announced in the March Spring Budget. This clearly indicates a trend towards customs audits being likely very soon, and customs officers arriving to audit give little prior warning.
After leaving the EU, many UK businesses that traded with EU Member States only struggled with unfamiliar customs import processes, particularly in relation to the management of import VAT. Goods classification, valuation, and origin were unfamiliar terms, with many UK importing businesses leaving the declaration of all three to their forwarder, agent, or fast parcel operator.
EU Exit is five years past; any slack cut for UK importers has been slowly tightened. There is no excuse for an importing business not understanding the regulations governing UK cross-border trade in working practice. Compliance records for imports from any 3rd country, not just the EU, must support international trade.
Customs will focus on import records, as duties and taxes are levied at import. The strategy is aimed to close a £40bn tax gap enhance the efficiency of the UK's tax system.
What can trigger a Customs Audit?
Regular mistakes and inconsistent information on customs entries
Variations on Customs Valuations
Delayed in paying HRMC
Failures when applying for customs special procedures or Audits
Not having been audited in a long time
Record Keeping: Part of succeeding when going through a customs audits relies on an accurate and complete records of all your import and export operations ensuring regulatory compliance and audit trail readiness. This can include invoices, evidence of origin, shipping documents and more. It is also imperative that you keep documents for the legally required time which could be between 5 to 7 yrs and should be easily accessible during an audit. Ensure you have up to date Standard Operations Procedures (SOP) which easily demonstrate the documented methodology for tariff classification, valuation and origin.
Robust Digital Systems: Ensure your IT Systems are robust and secure to enable populate information easily and fast. From Finance to Shipping and Productions, ensure your systems can provide the information as required.
Help!
If you systems are not looking good, or you would like to endure you woudl pass a HMRC compliance audit, get in touch with our International Trade Department to discover how we can help.
