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The Alcohol Wholesale Registration Scheme (AWRS) is being introduced on the 1st October 2015 by Her Majesty Revenue & Customs to tackle alcohol fraud, which has become a growing problem over the past 5 years.

Since the Government took more serious action to tackle the illicit trade in none duty paid and counterfeit alcohol in 2010, the cost to the government has reduced, but is still unacceptably high at £1.3 Billion per annum.

The effect on Wholesalers of alcohol

From 1st January 2016 all existing and new wholesalers of alcohol must have registered with the AWRS. On-line guidance from HMRC is available here

This applies to over 20,000 wholesalers across England and Wales, regardless of whether they already hold other Excise registrations.  For existing operators, applications must be submitted between 1st October and 31st December 2015 to assure of trading post 31st December.  New wholesalers applying after 31st December 2015 should have their application determined within 45 days, according to HMRC.  There is no facility to trade pending registration.  Whilst HMRC have set a period of 45 days to deal with applications, if their handling of these applications is similar to other HMRC registration schemes you can expect that the process will take longer.  New operators to the market would be advised to apply well in advance of any planned trading date or make sure to be registered before the 31st December 2015.  Applications for registration will be on-line and available shortly.

Since this registration scheme has been brought in to tackle fraud it follows that operators will be placed under some scrutiny.  From 1st January 2016 HMRC will begin “assurance work” in order to determine whether applicants applying between 1st October and 31st December 2015 are fit and proper to be accepted on to the register.  This process will involve an assessment of the businesses application and possibly a pre-registration visit.

What this means to alcohol retailers/trade buyers

There are already obligations on alcohol retailers to make sure that their products are traceable and failure to do so, where alcohol is found to be unfit for human consumption for example, can result in prosecutions under various Food Safety legislation.  The new registration scheme is asking alcohol retailers to review their supply chain.  The purpose of this is to make sure that they only source genuine tax paid alcohol.  Larger wholesale operations will be well aware of these provisions coming in to place, but smaller wholesalers may be less aware.  So alcohol retailers should make sure that they are registered.  HMRC will provide an on-line ‘look up’ data base of approved traders which buyers can use.  Clearly this will form part of the retailers due diligence process.

Criminal and Civil Sanctions

Wholesalers and trade buyers will be subject to penalties if they do not comply with the new registration scheme.  Penalties for wholesalers will start from 1st January 2016 and for trade buyers on 1st April 2017 (??).  Any alcohol found in the premises of unregistered businesses, regardless of whether duty has been paid, may be seized.

Clearly these changes together with changes being brought about in the draft Immigration Bill are seeking to reduce the proliferation of counterfeit and non-duty paid alcohol, and the sanctions available to HMRC, the Police, Local Authorities and both the Courts and before Licensing Committees (when dealing with a review of a Premises License under the 2003 Licensing Act) are becoming less forgiving.

If you are a trader or wholesaler requiring advice on this subject please contact Matt Foster in the Licensing and Gaming Department at Mincoffs Solicitors on 0191 212 7702 or email mfoster@mincoffs.co.uk.

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