Tag Archives: alcohol

Excise Duty: Your Christmas drink of choice, or perhaps not

By   17 December 2018
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Advocate General (AG) Manuel Sanchez-Bordona has released his opinion in the Bene Factum case (The link is to Lithuanian, so you ‘may” need to translate…).

A curious matter and one which brings into focus the drinking habits of people across the EU. Now, as those who know me will be aware, I am not adverse to a good single malt, nor a decent claret, but I do wonder sometimes where people draw the line.

Background

It transpires that in Lithuania people who choose not to drink, or cannot afford, even the cheapest alcoholic items have turned to drinking perfume and mouthwash which contain isopropyl alcohol. This has a similar effect on the human body to what most people would regard as being from more usual beer, wine or spirits etc. Sounds delicious eh?

Issue

The issue was whether these products where subject to Excise Duty, or, as the appellant contended, they were duty free as cosmetic products.

Decision

The AG found that isopropyl alcohol is almost unpalatable to most people. The fact that Bene Factum held out, advertised and marketed to people to drink the products did not affect the fact that the main purpose of the goods was for their use as cosmetics and mouthwash. What must be considered is Excise Duty depends on an objective classification to determine whether it is intended for human consumption. This classification is not affected by the fact that Bene Factum actively encouraged people to drink these products rather than use them for cosmetic purposes.

Consequently, the goods where not subject to Excise Duty. Good news for Lithuanian alcohol connoisseurs! It remains to see if the court follows this opinion, in most cases they do, but one never knows.

Commentary 

If there is anybody out there who is getting ready for their Christmas party, looks at some cosmetic products and considers taking a swig, I make the following comments:

  • Probably best to stick supermarket own brand booze if money is an issue
  • I expect that these things taste absolutely terrible (although I have not sampled them)
  • I tend to stick to things that are to be applied externally doing just that with them without ingestion
  • If you can’t decide whether to gargle with something or drink it, I counsel spitting it out
  • If these goods come to the UK, at least they will be even cheaper being duty free. I am not sure that is a good thing.

The Alcohol Wholesaler Registration Scheme (AWRS) – A Warning

By   25 February 2016
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The Alcohol Wholesaler Registration Scheme (AWRS)

HMRC has introduced AWRS in order to tackle what it perceives to be significant alcohol fraud.  If a business sells alcohol to another business it may need to apply to register for the scheme. HMRC will also, at the time of application, make a decision on whether the relevant person is “fit and proper” to trade wholesale.  If it is not, it will be not be permitted to trade at all.

If a business is an existing alcohol wholesaler, or a person starts a new business before 1 April 2016, it is required to apply online for registration between 1 January 2016 and 31 March 2016.  This is very important since new criminal and civil sanctions will be introduced for both 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 buy alcohol from unregistered wholesalers will start from 1 April 2017. Any alcohol found in the premises of unregistered businesses may be seized whether or not the duty has been paid.

If a new business is started after 31 March 2016, it must apply for registration at least 45 days before it intends to start trading.  It must wait until it gets approval from HMRC before it starts trading.

From 1 April 2017, if a business buys alcohol to sell from a UK wholesaler, it will need to check that whoever it buys from has registered with HMRC and has an AWRS Unique Reference Number (URN). HMRC will provide an online look up service so that trade buyers can ensure the wholesalers they buy from are registered

Who needs to apply to register for AWRS?

A business must apply for approval if it is established in the UK and supplies alcohol to other businesses at, or after, the point at which Excise Duty becomes due by either:

  • selling – this includes to other businesses as well as to the general public
  • arranging the sale
  • offering or exposing for sale

Reminder: If a business is affected by AWRS it will have to apply for it or face penalties for trading without approval.

This flowchart should be of assistance in determining whether a business is required to register for AWRS.

Exclusions to the scheme

  • If a business only sells alcohol to the general public and not to other businesses it will not need to apply
  • Also, the scheme doesn’t apply to individuals purchasing alcohol from retailers for their own use.
  • Businesses which are mainly retailers, but unknowingly or unintentionally make occasional trade sales of alcohol are excluded from AWRS.  This can happen if the purchaser is unknown to a business and the only indication you might have that the purchase is being made for commercial purposes is if a tax invoice is requested.  These sales are known as ‘incidental sales’.
  • Wholesale sales of alcohol between members of the same corporate group are excluded from the scheme and there is no need to register for AWRS to cover these sales (however, if wholesale sales are made outside of the corporate group the companies involved in those sales will need to register).

This incidental sales exemption decision making flowchart will be of assistance.

How to apply for registration

You should apply online using the AWRS service.  You’ll need to have a Government Gateway ID to apply.

Pre-registration

 We advise that a business prepares for registration by:

  • ensuring its business records are in order and accessible
  • reviewing its processes and supply chains to ensure that it is sourcing only legitimate alcohol
  • introducing a corporate due diligence policy and procedures to prevent involvement in the illicit market

We can assist with any aspect of this preparation.

Processing

HMRC has announced that because of the large number of applications which are expected, it might be several months before you’re given a decision.  So a business has a tight deadline, but HMRC has excused itself from dealing with applications in a timely manner.

Post-application

When HMRC receive an application they will check it has been completed correctly. If it’s incomplete or unclear HMRC won’t process it until the missing details have been provided.  HMRC will then look at whether the business is ‘fit and proper’ to trade wholesale.

If a business fails the ‘fit and proper’ test, HMRC will remove the right to trade in wholesale alcohol.

If approved by HMRC, a business will receive an AWRS unique reference number (URN).  The format for the URN will be made up of 4 alpha characters and 11 numeric characters, such as: XXAW00000123456.  From 1 April 2017 registered wholesalers will need to include this on wholesale sales invoices.

Another burden for businesses I am afraid, but it is understandable considering the likely amount of tax lost in alcohol fraud.  Please contact us should you have any queries on this matter.