Alcohol duty fraud, particularly in beer and wine, is a significant
problem for the Exchequer and legitimate business. HMRC’s measures to
counter the fraud thus far have had limited success (and this includes
the supposed “ideal” anti-fraud measure – the electronic excise movement
and control system for EU duty-suspended movements – EMCS).
Of
the various anti-fraud measures under consideration in 2012, the only
one being taken up is a scheme to register and control wholesalers of
duty paid alcohol under the Alcohol Wholesaler Registration Scheme
(AWRS). The new law will start to kick in very soon and will have a
“two stage” effect.
Firstly, almost all business-to-business
vendors of duty-paid alcohol will have to be approved by HMRC as
wholesalers of alcohol in order to trade. Trading “wholesale” in this
context means the trading in any quantity of alcohol. Furthermore, many
businesses will be affected by the new scheme who would not even
consider their business to be “wholesale”. HMRC will start to register
existing wholesalers in a window from 1 October – 31 December 2015.
Businesses trading in alcohol should therefore review all their
activities to check whether they need to be approved as wholesalers and
make application on time if an approval is necessary.
Secondly,
“trade buyers” (mainly retailers) will have to check that their
suppliers are approved by HMRC. It will be an offence for retailers not
to carry out such checks when the scheme takes full effect from 1 April
2017. Retailers should also prepare for the new scheme and their
obligations under it.
Failure to comply with the new laws will lead to severe sanctions, as HMRC gets tougher in the fight against alcohol duty fraud.
A tough and comprehensive regime
The
new provisions to control wholesalers are much more pervasive than the
old wholesale licensing requirement operated by HMRC until 1981 and will
affect traders who might not even think they are “wholesalers” of
alcohol. HMRC has sewn a fine mesh to prevent fraudsters using gaps in
the net for illicit activity and estimates that 21,000 businesses will
need to be registered or else will break the law when trading in
duty-paid alcohol. Furthermore, businesses will not legally be able to
buy any alcohol for commercial purposes from any non-registered trader.
The penalties for breaches will be severe. In order for checks to be
made by retailers on their suppliers, there will be an on-line “look up”
facility for suppliers’ Unique Reference Numbers (URNs).
During
initial consultations with HMRC, industry had expressed concerned that
such a scheme will require a huge amount of resources or it will fail
and lack all credibility, which HMRC has acknowledged. It is reported
by HMRC that the Treasury has provided sufficient funding and that 200
new staff have been recruited specifically for this exercise.
by Alan Powell, UKWA’s excise duty expert
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