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HMRC internal manual

Excise Due Diligence Condition guidance

General: what is due diligence?

In general terms, due diligence is the appropriate reasonable care a business exercises when entering into business relationships or contracts with other businesses. It is a series of checks to identify and manage any risk that a business may have within a transaction or supply chain. These risks could be anything from not being paid to handling illegally sourced goods. The approach will differ from business to business, with different tests applied, depending on where the business is within a supply chain and the nature of the transactions under consideration.

Due diligence is not static but an ongoing, dynamic process that develops as the relationship between the trading parties evolves. Reasonable care is using sound judgement or acting in a sensible manner. The actual due diligence carried out by a business should be proportionate to the level of risk it identifies.