Post-Clearance Audit: What HMRC Checks and How to Prepare

Customs clearance is not final. It is provisional. For the next three years, HMRC can audit your declarations and you can reclaim overpayments.

The HMRC Post-Clearance Audit Process

HMRC's Post-Clearance Audit (PCA) programme follows a structured process from notification to resolution.

Stage 1: Audit Notification

HMRC sends a formal letter stating the scope and period of the audit. You typically have 30 days to respond.

Stage 2: Information Request

HMRC requests specific documentation, which may include:

• CDS data and customs declarations
• Commercial invoices and packing lists
• Contracts and purchase orders
• Origin certificates (e.g. EUR1, statements on origin)
• Valuation workings and transfer pricing documentation

Stage 3: Desk Review

HMRC analysts review your data against risk indicators. They check in particular:

• Classification – correctness of commodity codes and duty rates
• Valuation – declared customs value, additions and deductions
• Origin – preferential and non-preferential origin claims
• Procedure codes – use of customs procedures and reliefs

Stage 4: Site Visit

HMRC may visit your premises to:

• Inspect records and systems
• Interview operational, finance and customs staff
• Verify how processes align with your declarations

Stage 5: Findings Letter

HMRC presents initial findings in writing. You have the opportunity to:

• Provide further evidence or clarification
• Correct factual errors
• Make representations before any formal assessment is issued

Stage 6: C18 Demand

If underpayments are confirmed, HMRC issues a C18 post-clearance demand for:

• The customs duty and import VAT shortfall
• Penalties, typically 15–30% depending on behaviour
• Statutory interest on the underpaid amounts

Stage 7: Appeal Rights

You can challenge a C18 demand by:

• Requesting an internal review by HMRC
• Appealing to the First-tier Tribunal (Tax Chamber) within the relevant time limits

The Flip Side: C285 Duty Reclaims

The same three-year window works in your favour. If you have overpaid duty, you can submit a C285 reclaim to recover the difference, for example where:

• An incorrect (higher) duty rate was used
• Preferential origin was available but not claimed
• Special procedures or reliefs were not applied at the time of import

Maintaining complete, well-organised records and regularly reviewing your declarations helps you both manage PCA risk and identify reclaim opportunities within the three-year period.