The Alcohol Wholesaler Registration Scheme will reduce the risk of illicit alcohol, on which no duty has been paid, being sold to unsuspecting consumers. To be approved under the scheme, traders wanting to wholesale alcohol will have to pass rigorous checks and in 2017, the scheme will also provide a facility for retailers to check whether their suppliers are approved.

Who Will Be Affected?

AWRS will apply to existing and new wholesalers of alcohol, trading at or after the point at which excise duty has become payable. From April 2017 all businesses who trade in or retail alcohol will need to make sure that any UK wholesalers that they buy from are registered with HMRC. The types of business that will will be affected include:

• alcohol wholesalers, including micro-brewers and small producers
• brokers
• auctioneers
• alcohol retailers

The scheme won’t apply to private individuals buying alcohol from retailers.

So What Are The New Rules?

• From 1 January 2016 all alcohol wholesalers must apply online to HMRC to register for AWRS
• From 1 January 2016 HMRC will start to review all AWRS applications to decide whether businesses are ‘fit and proper’ to be accepted onto the register. Where a business fails the ‘fit and proper’ test, HMRC will remove its right to trade in wholesale alcohol.
• From 1 April 2017 all businesses who trade in, or retail, alcohol will need to make sure that any UK wholesalers they buy from are registered with HMRC. HMRC will provide an online look up service so that trade buyers can make sure wholesalers they buy from are registered with HMRC

How Will HMRC Implement This?

From 1 January 2016 HMRC will begin assurance work to decide whether applicants are ‘fit and proper’ to be accepted onto the register and therefore able to continue to legitimately trade in the alcohol sector. HMRC will scrutinise all applications and carry out any site visits between 1 January 2016 and 31 March 2017. Therefore wholesalers will hear the outcome of their applications at different times, but all will hear by 1 April 2017. Critically where a business fails the scheme’s ‘fit and proper’ test, HMRC may remove a business’s right to wholesale alcohol at any time during the introduction of the scheme.

Wholesalers should now review their processes and supply chains to make sure they are sourcing only legitimate alcohol. When HMRC review the applications for registration they’ll look for evidence that applicants have good standards of record keeping and robust safeguards to avoid exposure to the illicit trade. This includes effective due diligence on their suppliers and, where appropriate, their customers.

From 1 April 2017 wholesalers and alcohol trade buyers (for example brokers, auctioneers, alcohol retailers) must also source alcohol only from HMRC approved businesses (unless they are buying direct from abroad or from another retailer whose wholesale sales are purely incidental to their retail business). Businesses who trade in, or retail, alcohol will need to make sure that any UK wholesalers that they buy from are registered with HMRC. HMRC will provide an online look-up database of approved traders for buyers to use. Using the database to check the validity of wholesalers will form part of the buyers ‘due diligence’ processes.

As part of wider changes taking place to tackle alcohol fraud the new scheme will introduce the requirement for all wholesalers to display their HMRC AWRS URN on all sales invoices, with effect from 1 April 2017.

Penalties

New criminal and civil sanctions will be introduced for wholesalers and trade buyers caught purchasing alcohol from non-registered wholesalers. Penalties for wholesalers trading without having submitted their application to HMRC will start from 1 April 2016. Penalties for trade buyers who purchase alcohol from unregistered wholesalers 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.

If you think you may be affected by this or would like extra information please call us on 01782 479699 so that we can assist you.