Excise Reforms

In early 2015, HMRC published detailed proposals regarding the Alcohol Wholesalers Registration Scheme, including the legislation now introduced in the Finance Bill 2015 to amend the Alcoholic Liquor Duties Act 1979. By way of background upon this developing process, back in 2013, HMRC had published a document entitled “Alcohol Fraud: Next Steps”, an ‘informal consultation document’ which explored the conclusions reached in HMRC’s ongoing consultation on the proposed implementation of measures to counter alcohol excise duty fraud in the UK. The Alcohol Wholesalers Registration Scheme was subsequently announced within the Autumn Statement 2013 following the public consultation. The scheme involves the introduction of a central register within a new wholesaler registration scheme. It is proposed that the scheme registers all alcohol wholesalers which deal in duty paid alcohol in order to address allegedly high levels of illicit alcohol trading particularly within the cash and carry and retail sectors, which HMRC perceive to be a particularly vulnerable market. The intention of the scheme is to prevent registered wholesalers being exposed to the illicit alcohol market and to restrict the involvement of fraudsters willing to risk trading in illicit alcohol. All businesses buying and selling duty paid alcoholic drinks for wholesale will be affected, whether new or existing businesses in this trade sector.

Implementation of the measures, originally intended to take effect from 1st October 2015, has been delayed by HMRC until 1st January 2016 from when alcohol wholesalers will have a three month window to apply for registration, thereby being required to demonstrate that:-

  • they fulfill certain ‘fit and proper’ criteria;
  • they comply with new record keeping obligations;
  • they operate appropriate due diligence to avoid inadvertent involvement in the illicit alcohol market and fraudulent supply chains;
  • they will only purchase alcohol from other registered wholesalers through checks conducted upon HMRC’s online register of approved alcohol wholesalers.

HMRC estimate that some 21,000 businesses will apply for registration for this scheme. According to their proposals document, HMRC expect that “not all of these will be successful”. Given HMRC’s current highly stringent approach to all applications for approvals within excise regimes, we may assume that this is an understatement of some magnitude.

HMRC intend to undertake a fifteen month programme of assurance activity from 1st April 2016 to assess the suitability of applicant businesses for registration. Wholesalers who are found either to be trading without having applied for registration before 1st April 2016 or to be trading beyond the conditions of their approval, will be liable to a penalty. Penalties for contravention of the scheme will vary from £3,000 to £10,000 per transaction, depending upon whether the contravention is deliberate and concealed, deliberate but not concealed or non-deliberate. It should be noted that where a penalty is due from a company in relation to a contravention which is attributable to a company officer then HMRC may make a Director, Manager or Secretary personally liable for the penalty.

In addition, from 1st April 2017, new offences will also apply to those who purchase from an unregistered wholesaler.

Please contact us if you consider that we can be of assistance to you in respect of any issue arising with HMRC.