New alcohol checks will stop retailers paying for fraud

Retailers, landlords and caterers must check that their alcohol wholesaler is registered under new rules which come into force on April 1st.

After that date, any retailer who buys from a source which has not been approved by HMRC as a ‘fit and proper’ alcohol trader could face penalties, including fines, seizure of their stock, and the loss of their licence.

The Alcohol Wholesaler Registration Scheme will protect shops which sell beers, wines and spirits from prosecution by helping them ensure they only buy from wholesalers who have paid duty on alcohol products. It will also contribute to recouping the £1.2bn duty revenue lost every year to criminals who sell duty-evaded stock to unsuspecting retailers.

James Bielby of the Federation of Wholesale Distributors said that FWD’s members had been inspected and assessed by HMRC and issued with Unique Registration Numbers (URNs). “Retailers will be responsible for checking they’re buying from a registered source. They can do this online from April 1 by going to Gov.uk and following the link to the AWRS look up service.

“They just have to enter the registration number they are given by their wholesaler, and confirm that the source is approved. It’s a simple process and a small investment of time to ensure they are operating within the law. If the wholesaler doesn’t have a registration number or the number they give doesn’t show their company details on the approved list, retailers will be breaking the law if they buy alcohol from that company.”

Under the new rules, retailers will be responsible for regularly checking that their alcohol is purchased from AWRS-registered sources.

HMRC is completing its assessments of wholesalers and will have issued URNs to all those who are approved by April 1st. Retailers can buy from wholesalers without a URN until the end of March. After that date, any alcohol wholesaler without a URN will be trading illegally and retailers will face penalties if they buy from them.

 

 

Notes

 

From Excise Notice 2002: Alcohol Wholesaler Registration Scheme (June 2016)

 

Trade buyers obligations

From 1 April 2017, it will be an offence to buy alcohol for re-sale from unapproved UK wholesalers. With the exception of purchases direct from overseas suppliers and purchases from licensed retailers who are making only incidental sales, trade buyers will need to ensure that the wholesalers they purchase from have been approved by HMRC

To ensure your purchase is legitimate, as a trade buyer you’ll need to carry out sufficient due diligence. You must demonstrate to HMRC that you requested a wholesaler’s URN and checked its authenticity before you did business with them.

You should also periodically refresh these checks to the extent that you consider it necessary to ensure that a wholesaler’s approval has remained valid.

If a trade buyer is found to have purchased from an unapproved wholesaler, they could face prosecution, be liable to a penalty, and alcohol stock may be seized. If the trade buyer also holds a retail license, HMRC may also apply to the relevant licensing authority, for them to consider sanctions to the trader’s retail licence to sell alcohol.

 

13.1

Checking a wholesaler is approved

HMRC will provide an online look up service that allows trade buyers to look up the details of their alcohol suppliers to ensure that they are approved for AWRS. This service is planned to be available from 1 April 2017, when the register of approved wholesalers will be complete.

It is intended that the user will be able to enter the AWRS URN of the wholesaler and the service will return sufficient details to allow the user to confirm that the wholesaler is approved.

This will include details of the business that is approved and contact details such as telephone number or e-mail address. If a wholesaler has been approved, but has since ceased trading, the look-up will return the dates that the wholesaler was approved.

 

13.2

Accessing the AWRS online look up system

HMRC will publish more detailed information about how it’ll operate before this service goes live.

 

13.3

What to do if you find a wholesaler you’re dealing with isn’t approved

If you find that a wholesaler you’re purchasing from isn’t approved, you should first check to ensure that the sale isn’t excluded from the scheme, see section 4.

If you’re sure that the purchase should fall within the scope of the scheme, you shouldn’t continue with the purchase and you must notify HMRC immediately.

You can notify HMRC at Customs, excise and VAT fraud reporting.

 

13.4

If your supplier says the sale is excluded from the scheme

If the supplier advises that the sale is excluded from the scheme:

  • for incidental sales - you should check the guidance at section 4 to confirm that the sale does meet the criteria to be treated as an incidental sale, HMRC recommend you keep a receipt or invoice as part of your record keeping in case they need to check it at a later date, if you consider it’s not an incidental sale you should not proceed with the purchase
  • for purchases from overseas - it’s in your interests to keep some proof of the provenance of the goods to demonstrate that they were imported directly from an overseas supplier and that duty has been paid

This evidence could be:

  • a purchase invoice
  • copies or details of the relevant HMRC document to prove duty payment (eg forms HM2, HM4, TRC2)

You’ll also be expected to have undertaken due diligence checks on the overseas supplier as part of your normal due diligence checks.

 

13.5

Records you need to keep as a trade buyer

If you’re an approved wholesaler you’re required to keep the records specified at section 11.

HMRC aren’t prescribing any additional record-keeping requirements for trade buyers who aren’t also approved wholesalers over and above what is already required of them as revenue traders or under VAT law.

However, in order to protect yourself from buying from an unapproved wholesaler and any consequential penalties or seizure of alcohol, you should ensure that dutiable alcohol in your possession has come from a legitimate source. You should, in accordance with existing legal requirements be able to provide HMRC, on request, with commercial documentation such as a purchase invoice to demonstrate this.

You may also want to keep records of any checks you perform on the online look-up services as you see fit.

 

 

 

 

 

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