Customs Import Duty Audit - Their powers.....`

I have no experience of an import duty audit, but I would think that the place to start is to find out under what section of the legislation the audit is being conducted and then, read it up and discover the statutory powers given to HMRC.

I think the HMRC officer is acting under this section of the law -Information Powers

77A(1) states 'every person who is concerned (in whatever capacity) in the importation or exportation of goods for which for that purpose an entry is required by regulation 5 of the Customs Controls on Import of Goods Regulations 1991 or an entry or specification is required by or under this Act shall:

(a) furnish to the Commissioners, within such time and in such form as they may reasonably require, such information relating to the goods or to the importation or exportation as the Commissioners may reasonably specify and

(b) if so required by an officer produce or cause to be produced for inspection by the officer

(i) at the PPOB

(ii) at such time as the officer may reasonably require.

Unfortunately there are penalties for failure to comply.

Malcolm McFarlin

www.mandrtaxadvisers.com

Your quote of s.77A CEMA 1979 omits the final line of (1)(b) which is necessary to make any sense of it:

(b)if so required by an officer, produce or cause to be produced for inspection by the officer—
(i)at the principal place of business of the person upon whom the demand is made or at such other place as the officer may reasonably require, and
(ii)at such time as the officer may reasonably require,
any documents relating to the goods or to the importation or exportation.

Could the client use this to suggest to the officer that she comes and looks for herself?

As to (1)(a), is it reasonable to require the client, rather than the agent who applied the codes, to produce the information for the last 3 years?

I'm sure there have been many articles/judgements written about HMRC and the First Tier Tax Tribunals interpretation of what is reasonable. Personally I would not want HMRC officers crawling all over a client's premises and business records.

I think it is a matter for the client to produce business records for HMRC to inspect.

Malcolm McFarlin

www.mandrtaxadvisers.com

I think the clients MP could understand about one bit of the HMRC demanding documents that another bit are holding at present.   The letter to the MP, will most lickly get passed from the MP to someone in the HMRC with a brain.

... whilst I note that "it's not about the money", it should be.  Are you sure that this woman's assertions are correct.  Before you go getting your MP involved, how about taking specialist advice, from someone who might just blow her argument completely out the water.

They might even find that your clien't paid too much duty, you never know.  Then you can bet he will get the records he needs back form HMRC and will find the resources to make a claim.

At the moment, with the greatest respect to all the posters, everybody's just watering the breeze.

I am an accountant (in industry) but I believe that accountants trying to deal with import, or export, compliance is not a good starting point. Yes the questions are from HMRC but it is worth remembering that this is a combination of Inland Revenue and Customs and whilst I'd generally be happy to engage an accountant on Inland Revenue queries I wouldn't expect them to have the correct expertise to deal with Customs queries, which this is. So in short get the appropriate professional assistance on board.

Whilst I have empathy with those on the wrong end of an unpleasant enquiry it is still no excuse to use the 'reputable customs clearance agent' line. They are just agents and act on instructions, which need to be given by the importer.

As regards commodity codes they are difficult but HMRC runs a telephone service at 01702 366077 (Tariff Classification Service) which will give a commodity code ruling based on information provided to them by the importer. There is no charge for this and upto three items can be enquired on in any call. The BusinessLink website is another good source of information and help.

Also it is worth remembering that commodity codes are only one area that will be checked by an HMRC audit. I expect them to pay as much attention to the CPC code used in the import enry as well. CPC is the Customs Procedure Code and together with the Commodity Code determines the amount of import duty payable.

All import entries are transactions in the HMRC computer system and each have a unique transaction number often referred to as the "Entry Number". All of this information is summarised on a standard form known as a C88 and any sensible importer, or exporter, would DEMAND a copy be supplied by the clearing agent for the specific purpose of checking the entry has been completed correctly. This is the proper way of ensuring Customs compliance. Not a pleasure, but infinitely better than being on the wrong end of an audit.

Training is available from a number of sources including HMRC and local Chambers of Commerce, in addition to specialist companies involved in the import/export area.

Just to clarify I'm not selling anthing, I work for a business that imports and exports and works hard at being compliant.

Hi there,

We have been through this and can simply say the following:

1. Ask the office to provide the entries from their Customs computer system for the years in question.

2. They should be able to provide the details which I understand is quite extensive and would have all your import entries.

3. Set up a time limit to get this enquiry over and done with, obviously, explaining that you have limited sources and ask for the say 3 months to get it done.

4. On the information provided by them, you will be able to see what's paid, etc and what comm code was used, and use it as a starting point doing it year by year.

5. Once done, double check your comm codes as suggested by another commentor.

6. Check and submit the figures year by year in separate files.

7. Write to them with all your findings, which hopefully is that there's nothing to pay!?

I agree that Customs can provide details of all items over a period of years, they have a system for this and it's called MSS. In effect it is an audit trail of all transactions entered by a given business for the period requested and is ususally requested in Excel format. However this is a chargeable service, you can't demand the data from HMRC, bear in mind you should already have the details.

On re-reading one of the original posters responses I notice the problem with records also being used for a CT enquiry. It might be worth checking what records are at the other office as the import C88 I referred to earlier is often sent by the clearing agent attached to their invoice and I cannot see any conection with this document and a CT enquiry. If the client is interested in understanding the potential liability then they need either all the C88's or an MSS report as these contain the data that Customs will audit.

Mike

I worked for HMRC -the old Customs & Excise as a Customs investigator for over 20 years. Some of the issues often raised by HMRC in respect of  commodity coding classifications can be quite complex which are outside my field of expertise.  I can, however, give you the name of a Customs specialist in this area who may be able to assist you if you want to send me a private e-mail at malcolm@mandrtaxadvisers.com

Malcolm McFarlin

www.mandrtaxadvisers.com

Mike,

As per Malcom McFarlins message. Having been at the sharp end of HMRC audits and understanding the compliance issues I would also recommend the use of a specialist - it paid huge benefits.. I know a number of people in the field and have practical experience of assisting companies with reviewing their imports over the 3 year period HMRC require. Additionally, a specialist will act on behalf of the client with HMRC which will take all the pressure off the clients admin systems.

If I can be of any assistance please contact me at apmk55@gmail.com

Alan Keefe