Alcohol Wholesale Registration Scheme – what you need to know
HMRC has introduced an Alcohol Wholesale Registration Scheme (AWRS) from to tackle alcohol fraud.
The AWRS requires businesses who wholesale alcohol at or after the point at which Excise Duty is payable to be approved by HMRC. Businesses will be required to apply to HMRC for approval and need to pass a ‘fit and proper’ test in order to be approved to trade.
From 1 January, 2016, businesses with a UK establishment who wholesale alcohol to other businesses at or after the duty point must apply to HMRC for AWRS approval. From 1 January, 2016 to 31 March, 2016 all existing alcohol wholesalers must apply for approval. New wholesalers who plan to start trading from 1 April, 2016 onwards need to apply at least 45 calendar days before they intend to start trading.
Who is affected?
The registration scheme applies to businesses established in the UK who carry out a "controlled activity". This means:
- Selling 'controlled liquor' wholesale.
- Offering or exposing controlled liquor for wholesale sale.
- Arranging in the course of a trade or business for controlled liquor to be sold wholesale.
"Controlled liquor" is alcohol on which duty has been charged and the duty point is at or before the time of sale. This means that sales where the recipient will continue to hold in duty suspension, duty free and denatured alcohol will not be affected as the alcohol has not passed the duty point.
Registration is online using a Government gateway ID and HMRC has indicated it will update its guidance to explain how to access the service.
Traders have been advised to prepare for registration by making sure business records are in order, reviewing processes and supply chains to ensure they are sourcing legitimate alcohol, and introducing policies and procedures to prevent involvement in the illicit market.
HMRC will check applications to make sure they have been completed correctly and will return them if any details are missing or unclear. HMRC will also look at whether the business is 'fit and proper' to trade wholesale. Once an application has been approved the trader will receive a Unique Reference Number from HMRC.
If a business fails the "fit and proper" test, then HMRC can remove its right to trade in wholesale alcohol. New criminal and civil penalties will be introduced for both wholesalers and traders who buy alcohol from non-registered wholesalers. Penalties for failure to register for the scheme will apply from 1 April, 2016.
Exclusions from the scheme
There are exclusions from the scheme for:
- Incidental trade sales.
- Wholesale sales of alcohol between members of the same corporate group.
Traders who are mainly retailers but who unknowingly or unintentionally make occasional trade sales will be covered by the incidental trade sales exemption.
HMRC’s guidance includes a useful flow chart for traders to use to decide whether they need to register and (for retailers) to help them decide whether they are covered by the incidental trade sales exemption.
Wholesale sales of alcohol between members of the same corporate group are excluded from the scheme. However, if any members of the group make wholesale sales outside the group they will need to register. If more than one company makes such sales there is an option for those companies to apply for group registration
Impact of the changes
These changes will have a significant impact in businesses involved in wholesale alcohol sales and their advisers. Find out more in the HMRC guidance.