MHA | Customs compliance audit risks for UK importers and exporters

Customs compliance audit risks for UK importers and exporters

Andrew Thurston · Posted on: November 30th 2022 · read

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Post Brexit there is much increased Customs activity for many UK businesses as a result of imports and exports to the EU. Many still struggle with the complexity and increased paperwork and do not have the resources to manage the issues compliantly. 

HMRC are increasing their customs compliance audits and a visit can be daunting.

We can help your business prepare or navigate through any audit on your customs or excise activities so your employees can continue their working day.

HMRC can review imports declared up to three years prior to any audit, so businesses must ensure they have the correct documentation and processes in place.  Failure to do so could result in significant customs debts and penalties which would not have been considered as part of original costings.

Being proactive ensures there are no unexpected costs, which could affect profitability.

The Risks

Without taking the necessary preventative action, businesses are taking a risk.


  • Recovering import VAT when you are not the owner of the goods
    This is an area we are seeing increasing investigation by HMRC as the rules are clear that it is only the owner of the goods who is legally entitled to reclaim any import VAT. If you are a Tolling Operator or are receiving goods whereby you are not the owner, such as for repair/service, there is a significant risk that HMRC will reject any reclaim of import VAT.
  • Failing to correctly operate a Customs Special Procedure – poor compliance record.
    If your company has a Customs Special Procedure (e.g. Inward Processing), but it does not operate it correctly it could be putting itself at risk of having the authorisation revoked.  Any revocation results in the failure to reapply for the Procedure for 3 years. 
  • Civil penalties
    Businesses who are found to be non-compliant can be, under certain circumstances (e.g. persistent poor compliance) be subject to Customs Civil Penalties.  This not only affects Customs compliance, but also impacts how HMRC consider the business complies with ither taxes. 
  • Tariff Classification
    Importing and exporting goods requires businesses to understand the importance of knowing the Commodity Code that applies to their goods.  Failure to do so could result in exposure to additional controls and customs duties which, in turn, render any supply cost-prohibitive.
  • Valuation
    One of the most important aspects of Customs is how the value is determined for declaration to HMRC.  Failure to ensure all dutiable costs are declared will, if audited, result in HMRC issuing a customs debt for the under-declared values.
  • Origin
    The Origin of goods has always formed an important part of the Customs process.  It can, in conjunction with free trade agreements, allow for reduced tariffs to be applied on import. With Brexit, the Origin of goods has become a major factor in minmising the duty liability, but businesses must ensure they understand the rules or could expose themselves to undue risk of customs debts.
  • CDS transition
    From 1st October 2022, HMRC started the process of switching to its new Customs Declaration Service (CDS).  Importers and exporters must ensure that they subscribe to CDS, otherwise consignments cannot be declared to HMRC resulting in transport delays.
  • Transfer pricing
    Any business who is part of a multinational Group of companies will need to consider how the transfer pricing affects the value to be declared on import of goods into the UK.  Since Brexit this also includes supplies from the European Union so will be a new consideration for many UK businesses.

How we can help

If your business imports goods into the UK it will have to ensure it is compliant with UK customs legislation.

Many businesses have been exposed to Customs due to Brexit and do not have the necessary experience, or capacity, to monitor its import and/or export activities.

MHA can help and tailor your services to meet your business needs:

  • Access to our experienced Customs Duty Consultant who will be allocated specific hours for managing your business’ customs compliance.
  • Periodic check of your customs declarations and completing the necessary amendment action to ensure compliance is maintained.
  • Tariff classification review.
  • Origin review – to ensure you meet the complex requirements of the FTA and are able to claim UK origin and 0% Duty.
  • On-site attendance on a monthly basis for conducting reviews of declarations, ensuring procedures are being operated correctly, or managing the business’ Customs Special Procedure by completing the necessary post-import requirements for HMRC.
  • In-house Customs training to enable your business to manage its Customs compliance going forwards.
  • Whatever your needs, we can assist your business to ensure that it is confident that it will be ready for any HMRC Customs Audit.

Get in touch 

If you would like advice on how to prepare for a customs compliance audit, please get in touch

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