Appeal of post-audit findings

Customs post-audit is a form of control that the supervisory authorities carry out after customs clearance of goods has been completed, in order to verify the correctness and accuracy of the data stated in customs declarations by examining accounting documents, accounts and business management systems.

To implement the requirements of the International Convention on the Simplification and Harmonization of Customs Procedures (the so-called Kyoto Convention), a new version of the Customs Code of Ukraine was adopted, which regulated the conduct of customs audits.

The main areas of post-clearance control are:

• the correct determination of the tax base and the timeliness, accuracy and completeness of the assessment and payment of customs payments;
• the correct determination of customs value;
• the correct classification of goods under the UKT ZED;
• the validity and lawfulness of benefits and tax exemptions obtained.

Post-audit in customs matters takes the form of documentary inspections, which in turn are divided into on-site and desk inspections.

It should be noted that during documentary on-site inspections the supervisory authorities are granted a wide range of rights to clarify matters related to the inspection, which in turn creates additional risks of abuse that may adversely affect the company’s business. Thus, during an on-site inspection, officials of the supervisory authorities have the right to:

• inspect monetary, financial and accounting documents, reports, contracts, declarations, cost calculations and other documents that may relate to the import (shipment) of goods into the customs territory of Ukraine or the territory of a free customs zone, or to the export (shipment) of goods outside the customs territory of Ukraine;
• examine the production, storage, retail and other premises of the company under inspection;
• carry out control analyses of raw materials, materials and finished products and control production runs of raw materials and materials that were or are under customs control or were used by the company under inspection to manufacture finished products from raw materials and materials placed under the relevant customs regime, or have these actions carried out by authorised experts; have authorised experts carry out control measurements of the volume of construction, installation, repair and other works;
• require an inventory of fixed assets and inventory items that were or are under customs control or were used by the company together with goods placed under the relevant customs regime, and, if the company refuses to carry out such an inventory, apply to a court for an order obliging the company under inspection to carry it out;
• if officials are not allowed to examine the territory and production, storage, retail or other premises or to carry out control analyses, apply to a court to suspend the company’s debit transactions on its accounts by freezing its funds and other assets;
• draw up reports on customs violations;
• determine the amounts of tax liabilities
• obtain information from insurance companies and banks in the manner and to the extent provided by law;
• for the time needed to clarify the matters under inspection, place customs seals on computers, safes (cabinets), archives and other places where documents needed for the inspection are kept, including in electronic form, as well as on storage, production and retail premises, if there is a risk of unauthorised removal, destruction, substitution or change in the condition or quality of the goods in those premises that could affect the decision taken following the inspection.

Given the above levers available during a customs post-audit, which can even bring a company’s business to a complete standstill, only an experienced attorney specialising in customs and tax disputes can effectively appeal post-audit findings and counter the supervisory authorities in such a case.