HMRC Due Diligence Checklist (Customers & Suppliers)

1. Business Identity

• Full legal name of business
• Company registration number (check Companies House)
• VAT registration number (check HMRC’s VAT checker)
• Registered address and trading address (verify physically if possibly)
• Website/online presence (does it look genuine?)
• Professional contact details (landline, business email, not just mobile/free email)

2. Commercial Legitimacy

• Does the business normally trade in the type of goods/services offered?
• Are the prices realistic compared to market value?
• Are payment terms normal (no unusual upfront payments or cash)?
• Are payments requested to a UK bank account in the business’s name?
• Are contracts, invoices and delivery notes consistent and professional?
• Any unexplained third parties involved (middlemen, agents, unusual subcontractors)?

3. Tax & Compliance

• VAT number valid and matches business details
• Invoices compliant (correct VAT rate, company info, sequential numbering)
• Evidence supplier/customer pays staff properly (if relevant – e.g. in labour provision)
• No history of HMRC penalties, liquidation, or phoenix activity
• Not on HMRC’s published list of deliberate tax defaulters

4. Supply Chain Awareness

• Know where the goods/services originated
• Delivery details consistent with scale of business
• No unusual transport/logistics arrangements (e.g. unnecessary overseas routing)Check for links to high-risk sectors (alcohol, tobacco, labour, construction, electronics)

5. Record-Keeping

• Keep copies of all checks (Companies House searches, ~VAT checks, ID, contracts)
• Maintain a central file for each customer/supplier
• Review checks periodically (e.g. annually or when business activity changes)

6. Red Flags

• Prices far below market value
• Pressure to act quickly/secrecy about supply chain
• Payments routed through unrelated third parties
• Inconsistencies between paperwork and reality
• Customer/supplier unwilling to provide basic information