My objective is to find out how the procedures work with regard to clearing customs in the UK when you travel into Heathrow and are connecting to a UK Domestic flight with Hand Baggage only.

If you as you are entitled to go landside between flights through customs at Heathrow and have no Hold Luggage is this the point you clear customs?

To my mind the biggest deterrent to stop people exceeding their Duty Free Limits is to have a physical presence at customs as they do in most other Countries. They then randomly stop people. I have seen this in Ireland, Jersey and most European Countries I have visited. Ironically Barcelona which is where I have just come back from was the exception to the rule on entry - no one in sight.