From Transition to Enforcement: HMRC to ramp up Customs Audits efforts

Last year at the Autumn Budget and this year at the recent March Spring Budget, it was announced that over 5,500 Customs Compliance Officers will be recruited as part of HMRC's efforts to strengthen tax enforcement and modernize customs audits across the UK. The strategy is aimed to close a £40bn tax gap enhance the efficiency of the UK's tax system.

This strategy suggests HMRC is preparing to ramp up on 'Customs Audits' with compliance officers being trained to conduct through compliance checks and ensure traders are adhering to tax obligations, particularly focusing on SMEs, which is where most of the revenue gap is with.

Post-Brexit, businesses and specially SMEs were given plenty of transition time to enable to understand and adapt to the new customs processes and systems. However, fiver years since we left the EU, there is no more room for leniencies and UK importers can expect tighten controls. Companies could expect visit with very little warning to prepare and thus, the time is now to take action and ensure your business has a robust compliance structure to support your international operations.

What can trigger a Customs Audit?

• Delays in clearing your goods on regular basis

• 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 been audited in a long time

So, how can businesses prepare for a potential HMRC Customs Audit?

1. Knowledgeable and Skilled Staff: Ensure your teams (from operations to sales and finance) have the right knowledge and skills to prepare and undergo a customs audit with HMRC. From tariff classification and rules of origin to import tax regimes and more, they need to be aware of what to expect so they can prepare and make sure they are keeping the right documents and records to support any audit trail. Training is essential and also keeping up with latest regulations via webinar, or events.

   
   

2. 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.

   
   

3. 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.

   
   

   Unsure whether your processes and record keeping are enough to pass an Audit?

   Our team of International Trade & Customs Advisers and network of experts can help you with bespoke training and/or a Prep Customs Audit. Our team has experience helping both exporters and importers ensuring their record keeping and systems can withstand a Customs Audit, providing a report full of key recommendations and actionable plan for your business.

   
   

   Book a complimentary 20 min chat with a member of our team to understand how we can help - emailing us at international@gmchamber.co.uk