The Government estimates that Alcohol duty fraud costs UK taxpayers an estimated £1 billion each year. They believe that the majority of illicit alcohol typically works its way into legitimate supply chains at the point of wholesale. To tackle alcohol duty fraud the Government has implemented a dedicated scheme called the Alcohol Wholesaler Registrations Scheme (AWRS) and it came into force from 1st January 2016. Is my business affected?
If you sell, offer, expose for sale or arrange to sell alcohol to another business duty paid alcohol you must be registered for AWRS. AWRS applies to existing and new alcohol wholesalers who trade in or retail alcohol to any entity with a UK VAT number that may retail alcohol. If your business employs third party sales agents you must ensure that they are either AWRS registered or have applied for AWRS. The scheme includes ‘offering to sell’ to sell as an offence. HMRC Excise Notice 2002 sets out the full guidance for impacted businesses and records that must be kept. Businesses must make sure they have clear evidenced processes as part of their Enhanced Due Diligence, that show checks against HMRC’s AWRS were made for any UK wholesaler they purchase from. FITTED due diligence will need to be applied to wholesalers both up and down the supply chain. It will NOT apply to private individuals purchasing alcohol from retailers.
From Jan 1st 2016 all existing Alcohol wholesalers must have applied to HMRC for AWRS registration before 31st March 2016. Any new business that starts trading after this date must apply and be approved by HMRC before trading commences. HMRC have made a commitment that all new applications will be approved within 45 days. Once an application is made, HMRC have the power to investigative whether applicants are ‘fit and proper’ and can be accepted onto the register and by definition trade in the alcohol sector. For a business to be considered ‘fit and proper’ HMRC will assess its application and then carry out a preregistration visit.
From 1st April 2017, all business who trade or retail Alcohol must make sure any UK wholesalers they purchase or sell to are registered with HMRC.
HMRC Fit and Proper Test What are HMRC looking for as part of their ‘fit and proper’ criteria?
HMRC have advised they are looking to ensure:
HMRC has not issued an exhaustive list and may refuse approval to a wholesaler for reasons that are not given above if HMRC have concerns that the applicant is a serious risk to revenue. These are detailed meetings and can take several hours with documents being provided in evidence. What will HMRC do if I do not register or meet the criteria?
New criminal and civil sanctions are in place for wholesalers and trade buyers caught purchasing alcohol from non-registered wholesalers. HMRC may also remove a business’s right to wholesale alcohol at any time during the introduction of the scheme. Penalties for wholesalers started from 1 January 2016, while penalties for buyers will started in April 2017. In addition, any alcohol found in the premises of unregistered businesses may be seized, whether or not the duty has been paid. Businesses will have a similar right to review and appeal as for other HMRC regimes in regard to civil penalties raised or decisions related to appeals.
Yes. Altion Law can review existing business processes and assist with the application process. We would also urge businesses that have been refused registration or have failed the ‘fit and proper’ test to contact us at the earliest point as you only have a limited period to challenge a decision. Altion Law also offers an AWRS dry run service where we will work through the likely AWRS questions with your business in advance to insure you are aware and correctly prepared. Altion Law can also assist with appealing any fines or penalties applied under the scheme but again businesses only have limited time to lodge an appeal. The cost of an Appeal or an Injunction or a Judicial Review can be substantial so it is very important that you seek legal advice at the earliest opportunity.