Who the scheme applies to
AWRS will apply to all wholesalers of alcohol trading at or after the excise point, and all trade buyers of alcohol (retail or wholesale). These traders must ensure sure that any UK wholesale supplier is registered with HMRC. Businesses affected include:•alcohol wholesalers
•brokers
•auctioneers
•alcohol retailers
The provisions set out in Part 6A of the Finance Act 2015 sets out when the scheme comes into force, and makes clear that all alcohol wholesalers must apply online to HMRC to register for AWRS i.e. from 1 October 2015.From 1 January 2016 HMRC will apply a ‘fit and proper person’ test before acceptance onto the Register of authorised trading businesses. A business cannot trade in alcohol unless it passes the ‘fit and proper’ test.
Any business intending to trade in alcohol must ensure sure that, from 1 April 2017, any of its UK wholesalers from whom they purchase goods are registered with HMRC. HMRC will provide an online database for use by traders in order to ensure that the wholesalers from whom they buy are properly registered with HMRC. Reference to this on-line database will form part of a businesses’ “due diligence”, similar to the current VAT Registration checks.
What your business should do
All current or intending alcohol wholesalers, including those who already hold other excise registrations or authorisations, must submit their AWRS application between 1 October and 31 December 2015. New wholesalers who commence trading after 31 December 2015 must apply for registration at least 45 days before they wish to start trading. Any trade conducted without HMRC assurance of their “fit and proper” status, will lead to penalties being imposed on offending traders.
To establish the ‘fit and proper’ status of a business, HMRC will review a business’s application and may carry out a pre-registration visit to ensure the bona fides of the application, the applicant directors, and its employees. Regard will be given to the previous conduct of the business and its directors in relation to any alcohol trade conducted in the past and, in particular, whether appropriate and effective ”due diligence” measures in place to ensure the bona fides of other members of its supply chain. HMRC may refuse approval to if they have concerns that the applicant is a serious risk to the revenue.
In the absence of any history of wrongdoing, bad debt or dishonesty, wholesalers will be the subject of a favourable review of their application, but they must demonstrate good standards of record keeping and robust safeguards to avoid becoming involved in the purchase of illicit goods.
From 1 April 2017, wholesalers and alcohol trade buyers (for example brokers, auctioneers, and alcohol retailers) can only source alcohol from businesses that have been properly registered under the scheme unless the purchase is made directly from outside the UK.
What alcohol trade buyers need to do
Alcohol buyers must ensure that the supply chain in which they are currently involved is genuine and legitimate and that they are only dealing with genuine tax paid alcohol. Such buyers should approach their own wholesalers and ensure that they are aware of the scheme so as to prepare for the new regime.
Penalties
Any wholesalers involved in the purchase of alcohol from an un-registered will be subject to criminal or civil penalties from 1 January 2016, penalties for trade buyers will start from 1 April 2017. In addition any alcohol found in the premises of unregistered businesses may be seized, whether or not the duty has been paid.
A refusal by HMRC to register a business will be subject to Independent Departmental Review and an appeal to the Tax Tribunal. In such circumstances the Tribunal will consider whether HMRC have been reasonable in reaching their decision.
How can we help?
iTax UK has many years’ experience in the alcohol trade and can assist you by:
- Reviewing your existing business processes
- Identifying and implementing process enhancements required
- Reviewing your Due Diligence and enhancing as appropriate
- Reviewing your business record keeping processes and enhancing where required
- Assisting in the application to HMRC
- Assisting in the management of any negotiations with HMRC for acceptance onto the scheme
- Challenging a refusal by HMRC to register a business.
