June 3, 2025
As global trade intensifies and post-Brexit regulations reshape the UK’s import-export landscape, customs audits have become an increasingly common and important part of doing business. For businesses in international trade, understanding how to prepare for a customs audit is no longer optional but essential.
This guide offers a comprehensive overview of the customs audit market, outlines the audit process, and provides actionable steps to make sure your business is audit ready.
Understanding the customs audit market
The global customs audit market is steadily growing, driven by increasing international trade volumes and the complexity of customs regulations. In the UK, the post-Brexit environment has led to significant changes in customs procedures. The customs audit market refers to the broader framework in which HMRC identifies, selects, and assesses businesses for customs compliance.
Why are custom audits becoming more common?
Since the UK departed from the European Union, the volume and complexity of customs declarations have increased significantly. Businesses that once traded freely within the EU must now submit full import and export declarations, creating more opportunities for error and more scope for HMRC to scrutinise records. The customs audit market has evolved in response to this. HMRC has adopted a more targeted, risk-based approach to selecting businesses for audit.
What triggers a customs audit?
While some audits are still conducted at random, many are triggered by red flags such as;
- Inconsistencies in customs declarations
- Rapid changes in trading patterns
- Use of special customs procedures, such as Inward Processing or Customs Warehousing
- Claims for preferential duty rates under Free Trade Agreements
- Inconsistent VAT or duty payments, incomplete declarations or historical compliance issues
- Businesses with intricate supply chains or high trade volumes
Audits may also be informed by broader sector trends. If a particular industry shows a pattern of non-compliance, businesses operating within it may come under increased scrutiny, even if their own declarations appear sound.
What does this mean for your business?
Understanding your place in the customs audit market helps you assess your level of risk. If your business frequently imports or exports goods or uses complex tariff classifications, you are more likely to be audited.
This does not mean an audit is inevitable, but it does mean that proactive preparation is wise. Knowing how audits are triggered and where HMRC tends to focus its attention, you can strengthen the areas most likely to be examined and reduce the likelihood of negative outcomes. Being aware of how the customs audit market functions is the first step in managing your exposure and protecting your business from disruption, penalties, or reputational damage.
The customs audit process
Preparing for a custom audit can seem daunting, but breaking down the process into clear steps can make it far more manageable. If you’re wondering what to expect, this section walks you through how a typical HMRC customs audit unfolds from start to finish.
A customs audit usually covers a review period of the past three years and involves a comprehensive assessment of your import and export activities. HMRC will examine your documentation, evaluate your compliance with UK customs regulations, and may even carry out site visits or inspect goods physically.
Here’s how the process works:
1. You receive an audit notification
The audit begins with an official letter or email from HM Revenue & Customs. This notice will explain:
- Why your business is being audited
- The specific period and areas the audit will cover
- What documents or systems the auditor will want to review
While some audits are random, most are risk based, often triggered by discrepancies in customs declarations, unusual trading patterns, or sector specific trends within the customs audit market.
2. Gather relevant documents and assign a contact
You’ll usually have time to prepare. Use this time to:
- Nominate a point of contact within your organisation to coordinate the audit; this is often a customs manager, financial controller, or external compliance consultant
- Gather all relevant records, including:
- Import and export declarations
- Commercial invoices and shipping documentation
- Proofs of origin (such as EUR1 certificates)
- Classification and valuation evidence
- Authorisations for any special procedures
It is essential that this documentation is accurate, traceable, and retained for at least five years in line with UK customs regulations.
3. HMRC reviews your documentation
HMRC will begin by examining your submitted documentation to make sure your declarations and business practices are in line with UK customs regulations. They will assess whether:
- Correct tariff codes have been applied
- Declared values align with customs valuation rules
- Claims for preferential rates are backed by valid certificates
- Duties, VAT, and other charges have been paid correctly
- Special customs procedures are used lawfully and supported by the right authorisations
Even if your declarations have been outsourced to a customs broker or freight forwarder, your business remains fully responsible for their accuracy.
4. Site visits and staff interviews
In some cases, particularly where there are gaps in documentation or complex supply chains, HMRC may request a visit to your premises. The purpose is to gain a deeper understanding of your operational controls and to validate what’s recorded on paper.
During a site visit, HMRC may:
- Observe how goods are received, stored, and dispatched
- Review internal customs and logistics procedures in action
- Interview key staff to assess their understanding of customs compliance
A site visit isn’t always required, but if it is, consistency between written policies and real-life practices is important. Any inconsistencies could raise concerns about internal controls and compliance culture.
5. Review of internal systems and controls
Beyond paperwork, HMRC is also interested in how seriously your business takes customs compliance on a structural level.
They may ask questions such as:
- Who is responsible for managing customs declarations?
- Do you use automated customs software or rely on manual processes?
- What checks are carried out before declarations are submitted?
- Are staff trained and kept up to date on customs requirements?
Having robust internal systems and a culture of proactive compliance can significantly improve the outcome of your audit – even if minor issues are uncovered.
6. The outcome and next steps
After completing the audit, HMRC will issue a formal report summarising its findings. These outcomes usually fall into three categories:
- Compliant: Your systems and records meet expectations. No further action is needed, although you may be given some best practice recommendations.
- Minor errors: Administrative or process errors that require correction but do not indicate serious non-compliance.
- Material non-compliance: Significant breaches may result in…
- Repayment of underpaid duties
- Interest and financial penalties
- In extreme cases, referral for further investigation
If duties are found to be underpaid, HMRC may issue a C18 Post Clearance Demand Note, which will need to be settled within the specified timeframe. Failure to address these findings promptly can have long term consequences – not only financially, but also in terms of reputational damage and restrictions on accessing customs simplifications in the future.
By understanding the audit process, maintaining accurate records, training staff, and engaging with specialists, businesses can navigate audits effectively and minimise risks.
Do you need help preparing for a customs audit?
Whether you’re looking to review your internal controls, organise your documentation, or seek expert advice on complex procedures, our customs specialists can help. Get in touch with us today to safeguard your supply chain, minimise risk, and move forward with confidence.