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HMRC internal manual

Excise Due Diligence Condition guidance

HM Revenue & Customs
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General: why and when should businesses be carrying out due diligence?

Due diligence is essential to help businesses minimise their exposure to commercial risk. Proportionate tests should take place before the business enters into a trade agreement. In particular, it helps ensure that where goods are being supplied, that:

  • goods will be paid for on time
  • goods physically exist and will actually arrive if ordered
  • sellers have correct legal ownership, reducing the risk of inadvertently receiving stolen goods
  • goods are as described and are not counterfeit
  • goods are likely to be of merchantable quality
  • where appropriate, taxes and duties are correctly accounted for
  • the risk of a business holding excise goods outside a duty suspension arrangement and becoming unwittingly liable for the duty and a penalty is reduced

The company should have appropriate management controls for these checks. Where checks are carried out by a third party, it will still remain the responsibility of the registered person to ensure that he has adequate due diligence and risk assessment procedures in place.