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HMRC internal manual

Excise Due Diligence Condition guidance

Compliance visit: objective of visit

During your visit to the registered person’s business, you should consider the due diligence checks they carry out and the actions they take in response to any of their findings. The registered person’s checks should be part of a documented process, which should be linked to that person’s governance arrangements to test the transactions and supply chains they are involved with. Know your supplier/customer checks should form part of these governance risk management arrangements. When considering the due diligence/risk assessment carried out by the registered person, you should determine and document:

  • the registered person’s due diligence policy and procedure
  • what due diligence/risk assessment checks were actually performed and whether they have genuinely done everything they can to check the integrity of the supply chains they are dealing in and, where appropriate, whether the checks were in accordance with the registered person’s established policy and procedures
  • what the results of the checks indicated
  • what purpose the registered trader believed the checks served
  • to what extent they were appropriate, adequate and timely in relation to addressing the risks identified, and
  • whether the registered person took appropriate action in response to the results of those checks

You should also consider:

  • what actions or precautions the registered person took in response to any indicators of risk their checks identified
  • whether the checks are reasonable and sufficient to test a transaction’s immediate supply chain
  • how the checks test aspects of the wider supply chain that the transaction is a part of, for example, when specific branded goods are sent to a country with little appetite or demand for that brand, or where supplies received are from an unusual source, for example, UK produced goods received from France
  • testing the credibility of the excise due diligence and risk assessment undertaken by the registered person together with the circumstances surrounding the transactions (This content has been withheld because of exemptions in the Freedom of Information Act 2000)  

When you identify concerns or risks, you should normally notify the business of these, working with the business to improve compliance. Once notified, the business’ compliance should be further monitored to establish whether or not a real change in behaviour has occurred as a result of your action. Where it has not, consideration should be given to further action referred to in EDDC04000.