By Alan Henderson, excise specialist, The Customs People

Illicit, untaxed alcohol within the UK’s retail supply chains is costing HM Revenue & Customs (HMRC) a great deal of money in lost income. In fact, HMRC estimated this cost to be an annual loss of approximately £1.2 billion, with 180 million litres of the 450 million litres of beer exported to Europe each year thought to be smuggled back into Britain. In an attempt to curb these ongoing losses, the government announced a new scheme during its Autumn Statement in 2013, with the first stage commencing on 1st October 2015. Any business which trades in or retails alcohol will be affected by the changes and potentially liable for fines and sanctions, so it is essential the owners of such firms are aware of their obligations.

The Alcohol Wholesaler Registration Scheme (AWRS) requires existing and new businesses trading wholesale in alcohol to submit an application for registration with HMRC. In this application, the business must demonstrate that it meets ‘fit and proper’ criteria, as well as showing compliance with record-keeping obligations and operating due diligence. It is important to note that ‘trading wholesale’ applies to those trading in any quantity of alcohol and may well include businesses that do not currently class themselves as traditional wholesalers. The registration period for AWRS is 1st October 2015 - 31st December 2015, so those affected must make their application now in order to meet this tight three-month window.

After the registration period closes, HMRC will review every single application and decide which businesses are fit and proper to be included on their approved register. This will conclude by 31st March 2017, meaning that from 1st April 2017, any business trading in or retailing alcohol has to do so with a business on HMRC’s approved register. Anybody found to have purchased alcohol from a non-registered wholesaler will face new criminal and civil sanctions after this date, while penalties for wholesalers will start sooner; on 1st January 2016, when the AWRS window closes.

With this in mind, it is advisable for any business involved in alcohol in any way to understand the next steps as soon as possible. Alcohol wholesalers, brokers, auctioneers and retailers should all explore their obligations immediately in order to remain compliant. It is a problem that HMRC has been attempting to address for some time now, having introduced a due diligence requirement on 1st November 2014, which required businesses in the alcohol sector to check their supply chain in a bid to reduce the risk of trading in excise goods where duty had not been paid. These latest measures demonstrate the scale of the problem facing HMRC and its commitment to collect the duty owed in this sector, and should be taken just as seriously by businesses operating within the industry.

AWRS registration forms can be completed and submitted by business owners themselves, but those requiring assistance and complete peace of mind would be wise to seek help from a VAT or customs expert in this field.