For businesses regularly importing or exporting goods, an HMRC customs audit is not a matter of if but when. HMRC's Customs Compliance team conducts a range of compliance activity — from post-clearance amendment requests to formal audit visits — and the findings can have significant financial and reputational consequences if a business is not prepared. This guide explains the different types of HMRC customs compliance activity, what auditors typically focus on, and how to build the records and processes needed to withstand scrutiny. Types of HMRC Customs Compliance Activity HMRC conducts customs compliance in several forms: Post-Clearance Checks (C18s): HMRC may issue a C18 demand for additional duty after a consignment has been released. This commonly arises from classification errors, valuation disputes, incorrect preference claims or the use of wrong procedure codes. Compliance Checks (HMRC Letters): HMRC may write to a business requesting information and documentation about specific declarations or aspects of their import/export activity. These are typically risk-based and focused on specific issues. Full Audit Visits: For larger traders or those with identified risk indicators, HMRC may conduct a full audit visit. An audit visit typically involves HMRC officers spending one to several days at the business's premises reviewing records, systems and processes. AEO Audit: Businesses that hold AEO status are subject to periodic revalidation audits to confirm continued compliance with AEO criteria. What Do Customs Auditors Focus On? Customs auditors typically examine: 1. Tariff Classification: Are commodity codes being correctly applied? Can the business demonstrate that classification decisions are made on the basis of the tariff nomenclature, explanatory notes and any relevant HMRC guidance or binding tariff information? 2. Customs Valuation: Is the declared value accurate? Are all elements of the transaction value correctly included — including royalties, commissions, assists, and post-importation adjustments? Related-party transactions receive particular scrutiny. 3. Preference Claims: Where preferential tariff rates have been claimed, does the business hold the required origin documentation — EUR.1 certificates, supplier declarations, REX statements — and has it verified the validity of those documents? 4. Special Procedures: Where special procedures such as IPR, customs warehousing or temporary admission have been used, are the authorisations in place, records maintained and discharge obligations met? 5. CDS Records: Can the business link declaration data in CDS to its accounting records and purchase documentation? 6. Customs Agent Management: If using an agent, does the business understand the nature of the agency relationship? Are instructions to agents documented? Does the business review declarations made on its behalf? Common Audit Findings The most frequently identified issues in HMRC customs audits include: - Classification errors — often systematic (i.e., the same wrong code has been used across hundreds of declarations) - Underdeclared transaction values — particularly where royalties, assists or other additions have not been included - Missing or invalid preference documentation — EUR.1s obtained from suppliers that did not in fact originate in the preference country - IPR discharge failures — goods diverted to the UK market without duty payment - Inadequate customs records — insufficient documentation to reconstruct the basis of declarations How to Prepare for an Audit The best preparation for a customs audit is simply running a compliant operation — but several specific steps help: 1. Conduct a periodic self-assessment of your customs procedures, including classification review, valuation reconciliation and preference documentation audit. 2. Maintain a customs procedures manual that documents how declarations are prepared, who is responsible, and how issues are escalated. 3. Ensure your agent instruction records are up to date — particularly if you have changed agents or updated your standing instructions. 4. Review your CDS account regularly to reconcile declarations against purchase records. 5. Seek specialist advice if you have identified historic errors before HMRC does — voluntary disclosure is treated significantly more favourably than errors discovered in audit. Conclusion A well-prepared business has nothing to fear from a customs audit — in fact, AEO-standard businesses often use audit results as evidence of their compliance quality. The key is treating customs compliance as an ongoing process rather than a retrospective exercise, investing in training and documentation, and seeking professional support when technical complexity demands it.