© Crown copyright 2019
This publication is licensed under the terms of the Open Government Licence v3.0 except where otherwise stated. To view this licence, visit nationalarchives.gov.uk/doc/open-government-licence/version/3 or write to the Information Policy Team, The National Archives, Kew, London TW9 4DU, or email: firstname.lastname@example.org.
Where we have identified any third party copyright information you will need to obtain permission from the copyright holders concerned.
This publication is available at https://www.gov.uk/government/publications/excise-notice-204b-commercial-importers-and-tax-representatives-eu-trade-in-duty-paid-excise-goods/excise-notice-204b-commercial-importers-and-tax-representatives-eu-trade-in-duty-paid-excise-goods
1.1 What is this notice about?
This notice sets out the UK’s requirements for the commercial importation of excise goods already released for consumption in another EU member state. Such goods are referred to throughout this notice as duty-paid goods, and are normally available for purchase from cash and carries, supermarkets and wholesalers in the member state of dispatch.
It describes the standard scheme for importing such goods as an Unregistered Commercial Importer, as well as the Registered Commercial Importer and Tax Representative schemes.
- general conditions and requirements
- application procedures
- duty payment procedures
It also sets out your rights and obligations as an importer of duty-paid goods.
Unless otherwise stated, the information provided in this notice relates to the standard scheme.
1.2 Who should read this notice?
You must read this notice if you want to commercially bring into the UK excise goods from other EU member states, which have already been duty-paid in the member state of dispatch. This includes traders in other EU countries who are selling such goods remotely to private individuals in the UK (for example using the internet or mail order), and anyone wishing to act as a Tax Representative on behalf of such traders.
The fact that duty has been paid on the goods in another member state does not affect the requirement to secure the UK duty on commercial supplies of those goods, before they’re dispatched to the UK.
1.3 What other notices will I need?
|Deferring duty, VAT and other charges||101|
|Revenue Traders’ Records||206|
|Tobacco Products Duty||476|
|The Single Market||725|
|UK Duty Stamps Scheme||DS5|
|Alcohol Wholesaler Registration Scheme||2002|
1.4 What if I want a copy of any forms or notices?
If you wish to obtain any of the forms and notices mentioned in this notice, follow the relevant links or go to GOV.UK.
1.5 Who must I contact if I have a query?
Unless you are told otherwise, either in this notice or in writing, your first point of contact is the Excise: enquiries helpline. Details of other teams that you may need to contact are in section 16 of this notice.
1.6 How long will it take for you to respond to my enquiry?
HMRC will respond in line with its Charter Standards.
2. Legal background
2.1 Where will I find details of the law?
You’ll find the primary legal provisions applicable to the contents of this notice in:
|The Customs and Excise Management Act 1979||CEMA|
|The Rehabilitation of Offenders Act 1974||ROA|
|Finance Act 1994||FA94|
You’ll find detailed requirements in:
|The Revenue Traders (Accounts and Records) Regulations 1992 (SI 1992 No. 3150)||RTAR|
|The Excise Duties (Deferred Payment) Regulations 1992 (SI 1992 No. 3152)||EDDPR|
|The Duty Stamps Regulations 2006 (SI 2006/202)||DSR|
|The Excise Goods (Holding, Movement and Duty Point) Regulations 2010||HMDP|
This UK law enacts the requirements placed by:
EU Council Directive 2008/118/EC OJ L9 14.01.09
2.2 How is the law referred to in this notice?
When this notice refers directly to the law, the standard abbreviations as shown in paragraph 2.1 will be used.
2.3 What happens if I fail to meet my legal obligations?
If you do not meet your legal obligations HMRC may impose civil penalties for breaches of the regulations and the conditions set out in this notice. For more serious offences we may revoke any approval we may have granted you, or even prosecute you.
If you import or arrange for the importation of excise goods, without the appropriate and correctly completed accompanying documentation, and without prior payment of duty, the goods and vehicle will be liable to forfeiture, and you may be liable to a civil penalty or prosecution.
For information on how to appeal against any decision we make, see section 15.
3. Overview of the schemes
3.1 Which excise goods are covered?
The schemes apply to:
- energy products, for example mineral oils (also known as hydrocarbon oils)
- alcohol and alcoholic drinks
- manufactured tobacco (cigarettes, cigars, hand-rolling tobacco, other smoking tobacco and tobacco for heating)
These goods are released for consumption in the member state of dispatch (duty-paid).
3.2 Do all duty-paid movements follow the same process?
No. Unless otherwise stated, the information provided in this notice relates to the standard scheme (also known as the Unregistered Commercial Importer (UCI) scheme).
The Registered Commercial Importer (RCI) scheme is almost identical to the standard one, but with a different accounting procedure. For further information about specific Registered Commercial Importer requirements, see section 8.
Additionally, if you wish to sell duty-paid goods from another EU member state to private individuals in the UK (known as distance selling), for example, using the internet, you must appoint a UK Tax Representative to account for the UK duty. For further information on distance selling and Tax Representatives, see sections 11 and 12.
3.3 How does the standard duty-paid scheme work?
To take advantage of the standard duty-paid scheme you must follow a few basic procedures:
- before undertaking any duty-paid movements of excise goods, you must provide the Duty Paid Movements team (see section 16 for contact details) with advance information about the consignment by completing and returning form Request to import excise goods bought duty-paid in another EU member state (HM4) and secure payment of the UK duty due on the goods
- provide your supplier with evidence that the UK duty has been secured (the endorsed form HM4)
- notify any changes to the Duty Paid Movements team immediately
- advise the Duty Paid Movements team immediately of the arrival of the goods at the delivery address
- on completion of the movement, make sure that the duty and VAT due is paid in full
- if required, provide a certificate of receipt to your supplier
You can find a link to a simplified flowchart of the standard duty-paid scheme in Section 17.
3.4 Do I need to be registered to receive goods which have been duty-paid in another EU member state?
You can receive goods through the standard duty-paid system without the need to be registered. HMRC will authorise each movement on a consignment by consignment basis on the receipt of a completed form Request to import excise goods bought duty-paid in another EU member state (HM4) and payment of the UK duty on the goods.
However, if you wish to pay the duty using deferment arrangements, you’ll need to apply to be authorised as a Registered Commercial Importer. See section 8 for further information.
In addition, if you wish to account for the duty on EU goods that are dispatched to a private individual in the UK (known as distance selling) then you must be authorised as a Tax Representative. See section 12 for further information.
3.5 May I use these schemes to receive excise goods from suppliers based in non-EU countries?
No. This scheme can only be used to receive goods from other EU member states.
3.6 I intend to combine my purchasing trip with a holiday – can I do this?
Yes. You must use one of the schemes for importing commercial duty-paid goods into the UK, as detailed in this notice. You must complete and return form HM4 and secure the UK duty before you leave the UK.
3.7 I am based in another member state – can I use the UK duty-paid scheme?
Yes, provided you follow all the procedures set out in this notice and also comply with any conditions in force in your own member state. However, if the goods being imported are being delivered to a private individual in the UK, you must appoint a UK Tax Representative to account for the UK duty on your behalf (see sections 11 and 12).
3.8 What if I want to receive goods that I’ve purchased from an EU supplier for my personal use?
This form of transaction is known as ‘distance selling’ and the arrangements set out at section 11 must be followed.
If you wish to receive excise goods in this manner, the person who sells you the goods is responsible for ensuring that the UK duty is paid before the goods are dispatched to you.
3.9 Can I bring excise goods in from another EU country without going through these procedures?
If you wish to import duty-paid goods, then you must follow one of the schemes set out in this notice.
If you wish to import excise goods in duty-suspension, you may choose to:
- apply for approval as a Registered Consignee and comply with the procedures described in Excise Notice 203a: Registered Consignees
- use the services of a Registered Consignee acting on your behalf
- apply for approval as a Temporary Registered Consignee and comply with the procedures described in Excise Notice 204A: Temporary Registered Consignees, or
- use the services of an authorised warehousekeeper who receives goods on your behalf into an ‘excise warehouse’ (if you are the owner of goods held in duty-suspension, in an excise warehouse, you must be registered under the Warehousekeepers and Owners of Warehoused Goods Regulations 1999). For more details see Excise Notice 196: excise goods - registration and approval of warehousekeepers, warehouse premises, owners of goods and registered consignors
3.10 Are there any marking requirements for excise goods that I need to be aware of?
Yes. Subject to certain exceptions, alcohol in bottle sizes of 35cl or more with an alcoholic strength of 30% or more which are intended for retail sale in the UK must bear a duty stamp.
You can find more information about duty stamps in section 13 of this notice and in Excise Notice DS5: UK Duty Stamps Scheme.
Also, there are fiscal marking and health warning requirements that you must be aware of and follow if you intend to import tobacco products such as cigarettes or hand-rolling tobacco.
You can find more information about fiscal marking in Excise Notice 476: Tobacco Products Duty.
4. Before you can receive goods
4.1 How far in advance should I notify HMRC of a consignment?
You should set aside sufficient time to:
- allow HMRC to receive and process your completed form HM4 (including postal delays)
- allow your payment to clear, particularly if you choose to secure the duty using an unguaranteed cheque
- inform your supplier that the duty has been secured
Provided we receive accurate and complete details from you, we aim to process your form HM4 within 15 working days.
4.2 What information must I provide in support of my application?
Before HMRC returns your form HM4, endorsed with your unique reference number for that consignment, we will check that you’ve provided all the required information regarding trading details and information about the consignment.
This will include:
- your name, address and business phone number
- details of your supplier and customers
- the UK delivery address (see paragraph 4.11)
- details of the consignment you wish to import (for example, brand and quantities)
- details of the transporter you’ll use (including vehicle registration details), and
- details of any excise goods on which duty stamps should be affixed (see section 13)
If you cannot provide these details we may not be able to process your form.
However, we accept that you may not know the details of the transporter or the vehicle registration number at the time of completion. You should let the Duty Paid Movements team know these details as soon as possible and certainly before arrival in the UK.
4.3 How do I complete form HM4?
There are notes for completion, which accompany the form. These provide full details of how to complete it.
If you are still in doubt after reading the notes, you should contact the Duty Paid Movements team for assistance (see section 16 for contact details).
Once completed, this form should be returned to the Duty Paid Movements team at the address given on the form.
4.4 Do I have to notify HMRC of any changes?
Yes. You need to immediately notify the Duty Paid Movements team of any changes to the information you’ve supplied to HMRC (see section 16 for contact details).
We would expect you to notify us of these changes as soon as they become known, and certainly before arrival in the UK.
Failure to notify these changes may render the goods liable to forfeiture and you liable to a civil penalty.
4.5 How do I work out the duty?
We have provided examples of how to calculate the duty for excise goods in Section 18 below. Please refer to these and to section 7 Calculation of the duty.
4.6 When do I pay the duty payable on the consignment?
Under the standard scheme, you must secure the total duty due on each consignment at the time of submitting your completed form HM4 to the Duty Paid Movements team for authorisation.
This amount becomes an actual duty payment once you’ve notified us of the receipt of the goods. Should the amount of duty payable subsequently change, for example, due to excesses or shortages, either a further payment may be required or, if you can show that you’ve overpaid excise duty, you’ll be entitled to a refund of that overpayment.
If you wish to use a deferment account to secure the duty, you must apply to be authorised as a Registered Commercial Importer. For further information please see section 9.
4.7 What method of payment will you accept?
HMRC will accept a Bacs payment, banker’s draft, postal order or cheque.
You should be aware that if you present a non-guaranteed cheque it can take up to 10 working days to clear. We are unable to fully process your form until your cheque has cleared.
If you pay by cheque and also need duty stamps to affix to bottles of spirits (see section 13), we will not provide them until the cheque clears.
4.8 How do I show that I have secured the UK duty?
Once you’ve secured the UK duty, form HM4 will be returned to you, endorsed with a unique reference number for that consignment. If required, this reference number can be used to verify that you’ve secured the UK duty on those goods.
Goods should not be dispatched until you’ve notified your supplier of the unique reference number, which should then accompany the goods.
4.9 How should I account for VAT?
If you are registered for VAT, you should account for acquisition VAT on your VAT return for the period covering the date of acquisition of the goods. You’ll find more details about this in VAT Notice 725: the single market.
If you are not registered for VAT, you must make arrangements to pay the VAT at the current rate on the total value of the goods, including the Excise Duty. You may use form HM4 to pay VAT, but you’ll not be able to calculate the actual VAT payable until you’ve obtained the goods.
4.10 What must I do if I wish to take delivery of more than one consignment?
You’ll need to apply for a separate form HM4 for each consignment.
If you are using the standard scheme you can only have a single valid HM4 at any one time.
This means that HMRC will only authorise another HM4 for a second consignment once you’ve notified us that the previous consignment has been received and you’ve paid any outstanding duties or taxes.
4.11 What must I do if goods are to be delivered to more than one delivery address?
If you are using the standard scheme, the goods must be delivered to your business premises, as stated on form HM4.
If you are authorised as a Registered Commercial Importer, you may arrange for the goods to be delivered to another business address, which must be stated on form HM4 for that movement. You’ll need to complete a separate form HM4 for each delivery address.
4.12 My intended supplier does not have the goods I require – can I get the goods from somewhere else?
As long as you notify HMRC before the goods are dispatched, you can change your intended supplier.
4.13 Can I change my mind over the quantity and/or type of goods that I want to import?
As long as you notify HMRC before the goods are dispatched, you can change your mind over the quantity or type of goods you wish to import. Any additional duty must be secured with us before the movement can take place, which may affect the dispatch date.
4.14 What if I lose the reference number?
If you lose your reference number for a particular consignment, you should contact the Duty Paid Movements team by phone as soon as possible and ask them to provide you with a reminder (see section 16 for contact details).
It is very important that you know the reference number for a particular consignment, as you’ll need to quote it when contacting HMRC about any aspect of the movement, including informing us of the receipt of the goods. This number should also accompany the goods during the movement to avoid undue delay if stopped by the Border Force on arrival in the UK. For this purpose, we recommend that you arrange for form HM4, which we have endorsed with the reference number, to accompany the goods.
4.15 What must I do if I subsequently find I do not need the reference number?
If you find that your circumstances have changed and you no longer need the reference number, you should notify the Duty Paid Movements team immediately (see section 16 for contact details). They’ll advise you of what to do next.
4.16 Must the completed form accompany the movement?
There is no legal requirement for the original form to accompany the movement. However, HMRC recommends that the goods are at least accompanied by the reference number provided by the Duty Paid Movements team for that consignment, to avoid any undue delay should it be stopped on arrival in the UK. As we endorse your form HM4 with this reference number, you may wish to have a copy of this form to accompany the goods. Alternatively, your supplier may choose to add the reference number to the commercial documentation which must accompany the goods.
If the person transporting the goods is unable to provide a valid reference number for a movement, the goods may be delayed whilst checks are carried out to verify that the movement has been notified to us and the UK duty has been secured.
You should keep a copy of the form for your records. You should also quote your reference number when contacting us about your duty-paid consignment.
4.17 Are there any documents that must travel with the goods?
Yes. Unless they’re consigned under distance selling arrangements (see section 11), duty-paid movements of excise goods must be accompanied by a Simplified Administrative Accompanying Document (SAAD) (copies 2 and 3) that complies with EU requirements. The goods must also be consigned to the person shown on the SAAD as the recipient.
It is normally up to your supplier to produce the SAAD, however you may produce one on behalf of your supplier. HMRC does not provide supplies of this document. Details of what information an SAAD must include are contained in EU Commission Regulation 3649/92/EEC.
A commercial document can be used instead of an SAAD provided that it contains the same information. The layout of data on commercial documents can differ, however each item of information must have the same box number as on the SAAD. You must make sure that such commercial documents are marked, ‘Simplified accompanying document (excise goods) for fiscal control purposes.’
If you import, or arrange for the importation of, excise goods without the appropriate and correctly completed accompanying documentation, and without prior payment of duty, the goods and vehicle will be liable to forfeiture, and you may be liable to civil penalty and may even face prosecution.
5. After the goods have been received
5.1 What must I do when I receive the goods?
As soon as you receive the goods, you must:
- inform the Duty Paid Movements team (see section 16 for contact details), by phone, of their arrival
- complete the certificate of receipt on the accompanying SAAD
- calculate, and account for, the UK VAT payable on the consignment
- return form HM4 to the Duty Paid Movements team along with a copy of the receipted SAAD and payment for any outstanding duty or VAT
- make sure that any goods which are required to bear a duty stamp have one affixed within 14 days of the importation of the goods (see section 13)
You’ll find further accounting information in section 7.
5.2 What certificate of receipt must I provide to my supplier?
After unloading and checking the goods are complete, you must endorse copy 2 and 3 of the SAAD to acknowledge receipt. Show the following details:
- the date and place of receipt of the goods
- a description of the goods received
- if the goods agree with the accompanying document’s description, the words ‘consignment checked’ (if the goods do not agree with the consignor’s description, please follow the procedures set out in section 6 as appropriate)
- your reference number
- an authorised signature
You must keep in your records copy 2 of the accompanying document together with the receipted copy 3 (either the original, or a photocopy of this, where your supplier requires the original).
5.3 What documents should I provide to HMRC?
You must deliver form HM4 to our Duty Paid Movements team within 4 business days of receipt of the goods. You should also supply a copy of the SAAD for that movement. Please keep a copy of the form for your records. If you are not VAT registered, you should also enclose a banker’s draft, guaranteed cheque, or postal order for the total amount of UK VAT payable on the consignment.
We may not issue further HM4s where there are consignments still outstanding. It is in your interest, therefore, to return the correctly completed documentation to us within the required timescales.
6.1 What if the goods arrive without the accompanying document (SAAD)?
You must inform our Duty Paid Movements team immediately by telephone.
Excise goods found to be travelling in the UK without the appropriate accompanying document are liable to forfeiture, therefore you should take steps to make sure that a SAAD travels with the goods at all times.
6.2 What if the goods are not what I ordered?
If the goods are not what you ordered (for example, a different brand or product) you should still take full account of the goods when they arrive and advise the Duty Paid Movements team immediately by telephone.
If you subsequently decide to return the goods to the sender, then you may be able to reclaim the UK duty you’ve paid on them through the excise duty drawback scheme. For further information on the conditions and requirements for claiming drawback, see Excise Notice 207: Excise Duty drawback.
6.3 What if I discover shortages on receipt?
You should bring any shortages toHMRC’s attention when submitting the completed form HM4.
Make sure you enter the actual goods received in your records.
The Duty Paid Movements team will advise you what steps to take to account for the duty on any chargeable losses in the consignment. If you can demonstrate that the loss is the result of the actual nature of the goods or an accident, we may not require payment of the duty. You should provide full details to the Duty Paid Movements team in order for us to consider on a case by case basis.
If you’ve over-paid any duty, you must submit a written request for repayment to us. Please enclose all relevant supporting documentation (for example, dispatch note, invoice, and copy of SAAD).
6.4 What if I discover excesses on receipt?
You must account for the UK duty on all excesses. Notify the Duty Paid Movements team immediately and they’ll give you advice on how to proceed.
If you subsequently decide to return the goods to the sender, then you may be able to reclaim the UK duty you’ve paid on them through the excise duty drawback scheme. For further information on the conditions and requirements for claiming drawback, see Excise Notice 207: Excise Duty drawback.
If you do not pay duty on any excess goods you receive they’ll be liable to forfeiture.
6.5 What if the goods do not arrive on the intended date?
As soon as you become aware that the goods will not arrive on the intended date of arrival indicated on form HM4, or have not arrived on the expected date, you should notify the Duty Paid Movements team.
Any changes of more than 24 hours to the expected date of arrival must be notified to the Duty Paid Movements team immediately. They’ll advise you what steps to take.
7. Calculation of the duty
7.1 How should I work out the duty payable on the goods?
You are responsible for working out the correct UK duty due on each consignment, even if someone else works out the duty value on your behalf.
- determine the correct 3 digit tax type code for each product
- use the correct code for each class of goods received
You should then calculate the duty due on the consignment. Section 16 provides examples to help you with your duty calculation.
7.2 What rate of duty do I use?
You must use the rate in force for the type of goods you intend to receive at the time when the goods are received.
7.3 Where can I find out more information about tax types and duty rates?
Current duty rates and tax types are published in Volume 1 of the Integrated Tariff of the UK. You can find the current duty rates in the Rates and allowances section on GOV.UK.
7.4 What duty account must I keep?
You must keep a duty account in accordance with our guidance in Excise Notice 206: revenue traders’ records summarising:
- all your transactions
- the duty which you are liable to pay
The duty account and its supporting documents must show:
- the duty due in each accounting period
- the Excise Duty point for each consignment
- the date and method of payment of any duty due
- any adjustments made to the amount of duty due in current or earlier accounting periods (for further information see section 13)
You should make sure that your duty account is kept fully up to date and a separate duty account must be kept for each scheme you use.
The account must have an audit trail. This means that each entry in the account must be traceable back to the relevant source document. Similarly it must be possible to trace any source document to the relevant entry in the duty account.
8. Registered Commercial Importers
8.1 What is a Registered Commercial Importer?
A Registered Commercial Importer is someone who is able to import goods into the UK that are already duty-paid in another member state, and defer payment of the duty using their own or someone else’s duty deferment account. Under this arrangement the duty is guaranteed by the duty deferment guarantee.
Apart from the difference in payment method and the ability to have the goods delivered to other business addresses, the same procedures apply to Registered Commercial Importers as to those traders using the standard duty-paid scheme (see sections 4 to 7).
8.2 How do I apply to become a Registered Commercial Importer?
In order to apply to become a Registered Commercial Importer you must complete form Application to register as a Registered Commercial Importer (HM3) and return it to the address on the form. Further information on the registration and approval process can be found in section 9.
8.3 Are there any requirements that I must meet before I can apply to become a Registered Commercial Importer?
In order to become a Registered Commercial Importer you must:
- have a place of business in the UK
- have a duty deferment account, or have written permission to use someone else’s deferment account (see section 10)
- be able to demonstrate a business need to become a Registered Commercial Importer. For example, you should be able to provide HMRC with a viable business plan for your proposed business, including details of who you intend buying goods from and details of your customer base
- be able to demonstrate suitability to be a Registered Commercial Importer. For example, that you or any key personnel of the business do not have any unspent convictions or a recent compounded settlement
8.4 How far in advance should I apply to become a Registered Commercial Importer?
You must submit the completed application form to HMRC no less than 45 working days prior to the date from which you wish to be registered.
8.5 Must I notify you of every consignment that I receive as a Registered Commercial Importer?
Yes. It is a legal requirement for you to notify HMRC before each consignment is dispatched. You should do this by submitting a completed form HM4 to the Duty Paid Movements team for each consignment.
9. Registration and approval process
9.1 Who needs to apply for approval?
If you wish to receive goods as a Registered Commercial Importer (see section 8) or a Tax Representative (see section 12), then you must apply for approval. If you wish to receive goods as an Unregistered Commercial Importer using the standard duty-paid scheme, then there is no approval required, although you must still follow the rules as laid down in this notice.
9.2 What information must I provide in support of my application?
You must provide all the information requested in the application form. You must provide HMRC with details of:
- your business (including whether you are VAT registered)
- the type or types of goods that you wish to be registered to receive
- any current or previous excise authorisations or approvals (including any applications that were refused)
- any unspent convictions under the Rehabilitation of Offenders Act (ROA) (other than for minor motoring offences), or any compounded settlements accepted during the preceding 3 years
- any deferment arrangements that you have in place
9.3 What happens if I provide false or misleading information?
If you provide false or misleading information on your application form, HMRC may:
- revoke any registration or approval which we have granted
- impose penalties
- prosecute you
9.4 Does HMRC ever turn down applications?
Yes. HMRC may refuse to approve you. In particular, we reserve the right not to approve and register anyone who (at the time of applying) has an ‘unspent’ conviction under ROA (other than for minor motoring offences) or has accepted a compounded settlement during the preceding 3 years. In the case of partnerships and limited companies, this also applies to all the partners or key officials of the company.
You should not assume that we will agree to approve you. In particular, you should not place orders or enter into any binding financial agreements on the assumption that we will grant approval.
9.5 How will I know whether my application has been accepted?
If HMRC accepts your application we will issue you with a certificate of registration. You should check the accuracy of the details on the certificate which should be kept in a safe place and made available to our officers on request. Any inaccuracies should be reported to the Excise Processing Teams (EPT) immediately (see section 16 for contact details).
If we do not accept your application, we will inform you in writing and give our reasons for the rejection. If you disagree with our decision, you have the right to appeal.
For further information on what you should do if you wish to appeal against our decision, see section 15.
9.6 Must I tell HMRC about any changes to my business?
Yes. You must notify us of any changes to the core detail on your certificate of registration, for example, a change of address. If the legal status of your business or company changes, for example, a sole proprietor becomes a partnership, the new legal entity must apply in its own right. We will not automatically approve the new applicant. Where registration is no longer required you must advise us in order that we may cancel your approval (see paragraph 9.10).
You should also tell us when there are significant changes to your corporate structure affecting the day to day running of the business, for example a change of directors.
You must advise the EPT in writing within 7 days of the change taking effect. They’ll either provide you with a new certificate or an amendment to your current one, depending on the change.
You must destroy the previous certificate as soon as you receive the replacement certificate.
Failure to advise us of any changes may result in the revocation of your approval.
9.7 Will I automatically be able to receive all categories of excise goods?
On the application form you’ll need to indicate what categories of excise goods you wish to receive. You must demonstrate a business need for each category of goods you wish to import. Your registration certificate will show which categories you are authorised to receive.
9.8 Are there conditions to my approval?
Yes. There are standard conditions that must be complied with in order to remain approved as a Registered Commercial Importer or Tax Representative. You must:
- continue to meet the UK Registered Commercial Importer or Tax Representative requirements
- follow all the procedures set out in this Notice, including the application of appropriate due diligence checks (see section 19)
Yes. All Registered Commercial Importers and Tax Representatives must comply with the conditions and restrictions detailed in this notice. In addition, HMRC may apply specific conditions to your approval, which we will list on your certificate of registration.
For information on what you should do if you disagree with any conditions we impose, see section 15.
9.9 Can HMRC apply additional conditions to my approval?
Yes. We may apply specific conditions to your approval, which we will list on your certificate of registration.
For information on what you should do if you wish to appeal against this decision, see section 15.
9.10 Can HMRC revoke or vary the terms of my approval?
Yes. We can revoke or vary the terms of your approval immediately at any time for reasonable cause. For example, where appropriate due diligence checks are not being carried out.
If we revoke your approval we will inform you in writing giving the reasons for our action.
You must destroy your certificate of registration the day either your approval ceases or you receive your replacement certificate.
For information on what you should do if you wish to appeal against this decision, see section 15.
9.11 How do I cancel my approval?
If you wish to cancel your approval you must write to the EPT at least 30 days before the date on which you wish to cancel it. HMRC will not normally cancel an approval until any outstanding duty has been paid and all HM4 forms issued to you accounted for.
We will inform you in writing that your approval has been cancelled. On the date of cancellation you must destroy your certificate of registration.
You’ll remain liable for any unpaid duty on goods imported by you whilst you were approved.
10. Accounting for duty using deferment arrangements
10.1 Who can use deferment arrangements to account for duty?
Anyone approved as either a Registered Commercial Importer or a Tax Representative in the UK can use deferment arrangements to account for the UK duty on duty-paid goods they receive. Anyone using the standard duty-paid scheme may not defer the duty, but must secure it before the goods are dispatched, as described in paragraph 4.6.
Any deferment account used to account for Registered Commercial Importer or Tax Representative transactions must have a guarantee in place which covers 100 % of the total duty liability.
10.2 How do I apply for a duty deferment account?
You’ll find more information about this in Notice 101: deferring duty, VAT and other charges.
10.3 How do I gain authorisation to use another person’s deferment account?
If you are a Registered Commercial Importer, you must obtain written authority, on form HM8, from the person whose duty deferment account you wish to use. You must send the completed form to the Duty Paid Movements team. Once they’ve received this form, they’ll notify you of the date from which you may use the third party deferment account. You should obtain confirmation from the duty deferment account holder, that the duty deferment guarantee level is sufficient to cover the duty for the period of use. A separate form must be completed and sent to us for each third party deferment account you wish to use.
If you are a Tax Representative, you may not use another person’s deferment account so must have your own deferment account in place.
10.4 What if my duty deferment account number changes?
You must tell HMRC if your duty deferment account number changes.
10.5 How do I account for the duty on consignments I receive?
At the end of each calendar month accounting period you must calculate the duty due for each tax type and complete the relevant return form with this information. For Registered Commercial Importers this is form HM2 and for Tax Representatives it is form HM10. If you are a Registered Commercial Importer using other people’s deferment accounts, a separate return must be used for each deferment account you intend duty to be paid through. Each return must include all goods on which the duty is being paid using that deferment account. If you are authorised as both a Registered Commercial Importer and a Tax Representative you must use separate returns for each scheme.
Your return (or returns) must be completed and delivered to the Duty Paid Movements team within 4 consecutive working days (3 if a non-business day intervenes) after the end of the accounting period.
HMRC may allow you to submit plain paper returns as long as they contain the same information as the official return. If you wish to submit plain paper returns you should send an example of your proposed document to the Duty Paid Movements team so they can consider your proposal.
10.6 Is there a limit to how much duty I can declare in each period?
You must declare all duty due within each accounting period, so there is no limit to how much you can declare on each return. However, due to Bacs payment scheme restrictions HMRC can no longer collect direct debits in excess of £20 million. If you have a payment to make which exceeds £20 million, you should make arrangements to pay us, on the due date, by an alternative payment method such as CHAPS.
10.7 What rate of duty do I use?
For Registered Commercial Importers, duty is due on the goods at the rates in force at the time when the goods are received at the Registered Commercial Importer’s registered address.
For Tax Representatives, duty is due on the goods at the rates in force at the time that the goods are imported. However, if you do not know the time of importation, you may use the rates in force at the time of dispatch.
You can find the current duty rates in the Rates and allowances section on GOV.UK.
10.8 What should I do if the duty rate changes during an accounting period?
When you are completing your returns you should check that you are using the correct rate of duty in force at the duty point.
10.9 What is my accounting period?
You must use calendar monthly accounting periods.
10.10 What happens if I fail to submit my returns in time?
If you fail to submit your returns in time, HMRC may:
- impose civil penalties
- revoke your approval
If you disagree with our actions, you have the right to appeal. For further information on what you should do if you wish to appeal, see section 15.
10.11 Must I submit ‘nil’ returns?
Yes. You must submit a return for accounting periods in which your duty liability is ‘nil’.
10.12 What if I discover errors in any accounting period?
For all errors on returns submitted, you must make the necessary adjustments clearly in your records by tax type for the current accounting period in a way which makes it easy for us to check. You must draw attention to the adjustment by ticking the relevant box on your next return.
For errors amounting to a total net duty of £2,000 or more, you must also inform the Duty Paid Movements team in writing as soon as the errors are found.
These procedures do not apply where HMRC has begun to examine your accounts for the periods in which the errors were made. Nor do they cover any case where you are aware that an irregularity has occurred which involves a breach of the law.
10.13 What happens if I have overpaid duty?
If you’ve overpaid duty to us, those sums must usually be offset against the same tax type code on subsequent declarations made using the same deferment account.
However, if you can justify a request for direct repayment you should complete form Claim for repayment of Excise Duty (HM6) and submit it to the Duty Paid Movements team. HMRC will accept such requests only if we are satisfied that you cannot make the adjustment through your normal systems, for example, if you have an unusually high duty liability for a particular tax type in one particular accounting period. We will only repay the holder of the deferment account which was originally debited.
10.14 What happens if HMRC discover errors?
If we discover errors we will tell you what you must do. We will also tell you if we decide to impose sanctions.
10.15 How do I pay the duty?
HMRC will check your return and debit the appropriate sums from the relevant deferment account on the next ‘payment day’.
The payment day for both Registered Commercial Importer and Tax Representative Transactions is the 15th of each month following each accounting period (except for beer which is the 25th of each month).
If the payment date falls on a non-banking day (when banks are closed) the payment date is:
- the last banking day before the 25th of the month for beer
- the first banking day after the 15th of the month for all other goods
10.16 When will HMRC send me a statement?
Seven days before the payment day we will send each deferment account holder a statement showing the amount being debited.
10.17 What if I have enquiries about my deferment holder’s statement?
If you identify a discrepancy in the statement you should check your records thoroughly and establish it relates to Registered Commercial Importer or Tax Representative Transactions. If it does, you should contact the Duty Paid Movements team who will advise on the appropriate action to be taken (see section 16 for contact details). For other discrepancies, you should follow the guidance set out in Notice 101: deferring duty, VAT and other charges.
11. Distance selling
11.1 What is distance selling?
Distance selling is the sale of excise goods by a vendor in one EU member state to a private individual in another member state. For example, this could be sales over the internet.
It does not apply to sales to the UK from outside the EU. For information on the rules regarding non-EU sales, see Notice 143: a guide for international post users.
11.2 Are the requirements for distance sales different than for other duty-paid movements?
Yes. In order to account for the UK duty on goods sold through a distance sales transaction, you must be authorised as a Tax Representative in the UK (see section 12).
11.3 If I purchase goods from another member state, for example, over the internet, am I also responsible for paying the UK duty?
No. The vendor in the member state of dispatch is responsible for ensuring that the UK duty is paid before they send the goods. However, the vendor is likely to pass on this cost in the purchase price. If the vendor does not make sure that the UK duty is paid, the goods are liable to forfeiture on arrival in the UK.
11.4 I am the vendor in another EU member state - how do I account for the UK duty?
You must appoint a Tax Representative in the UK to account for the duty on your behalf (see section 12). The UK duty must be secured before the goods are dispatched; otherwise the goods are liable to forfeiture on arrival in the UK.
11.5 I am the purchaser - how can I tell that UK duty has been paid?
You should expect the price you pay to reflect the payment of UK duty - if the price is very low, it is likely that the vendor does not intend to pay the UK duty. In addition, some websites openly advertise that they’ll misdeclare goods, to try to avoid paying the UK duty. In both of these circumstances, the goods would be liable to forfeiture on arrival in the UK, so you should be very careful about where you purchase your goods from.
11.6 What happens if the UK duty has not been paid before the goods are dispatched - can I pay it when they arrive?
There is no facility to pay the UK duty due on goods sent from another EU member state when they arrive in the UK. If the duty has not been paid before the goods are dispatched, the goods are liable to forfeiture on arrival in the UK.
12. Tax Representatives
12.1 What is a Tax Representative?
A Tax Representative is approved and authorised in their member state to account for Excise Duty on distance sales on behalf of vendors in other EU member states.
12.2 How can I become a UK Tax Representative?
You must apply to become a UK Tax Representative by completing Application to register as a tax representative (HM9). You must provide all the information requested on the form. Further information on the registration and approval process can be found in section 9.
12.3 How do I account for UK duty as a Tax Representative?
As a Tax Representative, you should account for the duty using deferment arrangements; therefore you should make sure that you have a deferment account in place before you apply for authorisation as a Tax Representative. You may not use someone else’s deferment account to account for the duty on distance sales. For more information on accounting for duty using deferment arrangements, see section 10.
12.4 I am based in another member state – can I become a UK Tax Representative?
No. In order to become a UK Tax Representative, you must have a place of business in the UK. If you are based in another EU member state, you should appoint a UK Tax Representative to account for the duty on your behalf.
12.5 Must I keep a separate duty account and records for any consignments for which I act as a Tax Representative?
Yes. Your duty account should easily identify each distance sale that you accounted for as a Tax Representative from any other UK excise transactions you may have been responsible for. For further information on the type of information that you should record in your duty account, see paragraph 7.4.
13. UK duty stamps
13.1 What goods are required to bear a stamp?
All bottles and other retail containers of spirits, and wine or made-wine, with a strength of 30% alcohol by volume or more, with a capacity of 35cl or more, are required to bear a duty stamp when removed to home use in the UK.
13.2 Are there different types of duty stamps?
Yes. The duty stamp comes in 2 formats:
- a product specific stamp (known as a type A or free-standing stamp) which must be attached directly to the bottle
- a label stamp (referred to in the law as a type B stamp), which is incorporated into bottle labels and printed by the industry’s own label printers
If you wish to obtain label stamps you must be authorised as a Registered Commercial Importer or a Tax Representative.
13.3 When must the stamps be affixed?
If you are receiving unstamped products from the EU through either the standard or Registered Commercial Importer schemes, you must affix stamps within 14 days of the arrival of your goods in the UK. Alternatively, you can receive goods which already bear either a free-standing or label stamp which has been affixed by a person in another member state.
If you are a Tax Representative, any product you receive must be stamped before the goods arrive in the UK.
If you are required to and fail to affix stamps within the correct time period the goods are liable to forfeiture. You may also be liable, on summary conviction, to a fine of up to £5,000, or a civil penalty.
13.4 How do I acquire duty stamps?
Unless you are approved as a Registered Commercial Importer or a Tax Representative, you should request duty stamps from our Commercial Importer team by completing the duty stamps declaration part of form HM4. HMRC will then provide you with free-standing duty stamps for your consignment at the same time as they return your completed form HM4, endorsed with your reference number. We will only supply sufficient stamps for the consignment you are importing.
If you’ve been approved by HMRC as a Registered Commercial Importer or a Tax Representative, you must apply to become registered to obtain duty stamps. Once registered, you may acquire free-standing stamps or the design specification for the label stamp.
If you are a Tax Representative importing distance sales the stamps must be affixed before the goods are dispatched to the UK.
You’ll find more details on the requirements for registration and how to then obtain stamps in Excise Notice DS5: UK Duty Stamps Scheme.
13.5 What information will I need to provide on my duty stamp declaration?
You’ll need to provide the following information:
- your name and address
- the delivery address for the stamps (this must be the address where you intend affixing the stamps)
- the type of product you are importing, that is, whisky, gin, vodka, rum, brandy, or other product and its alcoholic strength
- the number of bottles you are importing and their size
You must also sign a declaration confirming that the goods will not already bear duty stamps when they’re imported.
13.6 What happens if I receive goods which already bear a stamp?
If the goods you receive already bear duty stamps, and you’ve received free-standing stamps from the Duty Paid Movements team for that consignment, you must return them to HMRC. Failure to do so may render you liable to a civil penalty for each stamp that you fail to return.
13.7 What if I do not have enough free-standing stamps?
If you receive more goods than you ordered, you are required to notify the Duty Paid Movements team. When they’ve received payment of the additional duty due, they’ll provide sufficient additional stamps.
You should note that, where this happens, stamps must still be affixed to the goods within 14 days of their arrival in the UK. It is therefore in your interests to make sure that HMRC receives payment of any additional duty as soon as possible.
13.8 What should I do if my stamps are lost, stolen or damaged?
In these circumstances you should inform the Duty Paid Movements team (see section 16 for contact details) by the end of the business day following the day on which the loss or the discovery of the loss occurred. Depending on the circumstances, they’ll then provide you with replacement stamps.
13.9 What happens if I do not have the correct stamps for the goods I receive?
In these circumstances you should contact the Duty Paid Movements team (see section 16 for contact details). They’ll then advise you of the correct action to take.
Normally HMRC will require you to return the incorrect stamps and reissue you with appropriate replacements. However, you must also confirm that the Alcohol By Volume (ABV) and volume of the product are identical to the detail originally notified to us. If they’re not, then you must also arrange for any outstanding duties to be paid before we will provide replacement stamps.
13.10 Where can I find out more about duty stamps?
You can find more information in Excise Notice DS5: UK Duty Stamps Scheme.
14. General information
14.1 Are there times when HMRC will visit my business and premises?
|We may visit …||In order to …|
|your business, from time to time||check your business records, systems and premises
check the details of your application, and
give you guidance.
|the delivery address shown on form HM4||check the consignment|
|your transporter||verify the movement details shown on the endorsed HM4.|
When we visit you must do all of the following:
- admit us to your premises
- produce records for us to check
- allow us to inspect any stock
Alternatively, there may be occasions when we ask you to come to one of our offices to discuss your imports.
14.2 Will HMRC make an appointment?
We will normally make an appointment. Occasionally, visits are made without an appointment, but the attending officer will give the reason for the unannounced visit.
We aim to carry out our visits as quickly and efficiently as possible. You can help by providing the relevant records and helping us understand them, especially if there is anything special or unusual about your particular business.
14.3 Am I responsible for the safety of HMRC personnel?
Yes. While our officers are on your premises you must make sure their safety at all times.
14.4 What can I expect from HMRC?
You can expect that we will:
- identify ourselves by name on arrival, and produce an identity card
- explain the main purpose of the visit
- be polite and considerate and deal with your tax affairs confidentially
- keep claims on your and your staff’s time to a minimum
- where possible, try to resolve matters during the visit
14.5 How can I help HMRC?
You can help by:
- advising us as soon as possible about the reasons for any significant changes in the tax or duties you’ve declared or the systems used to calculate the declarations. You should do this by contacting our Duty Paid Movements team
- keeping your records, declarations and payments up to date
- providing us with the information and explanations we request
- asking us if you are unsure of any matter connected with the duty or tax. We may not look at all aspects of your records and business, so you cannot assume that you are accounting for everything correctly just because no errors are found. So it is in your own interest to ask if you are unsure
- helping us to understand your business and records
- replying to enquiries within the specified time
- quoting your reference number when you contact us
14.6 What if I disagree with a decision made by your visiting officer?
If you disagree with a decision, discuss it first with the visiting officer.
If you still disagree, then you should read section 15 Review and appeals process.
15. Review and appeals process
15.1 What if I disagree with any decision HMRC makes about my affairs?
When we make a decision that you can appeal against we will tell you and offer you a review. We will explain the decision and tell you what you need to do if you disagree.
For example with:
- the amount of an assessment
- the issue of a civil penalty
- a decision specifically connected to duty-paid movements
You’ll usually have 3 options. Within 30 days you can:
- send new information or arguments to the officer you’ve been dealing with
- have your case reviewed by a different officer
- have your case heard by an independent tribunal
A review will be handled by a different officer from the one who made the decision. If you prefer to have an independent tribunal hear your case, you must write directly to the Tribunals Service.
15.2 Is there a time limit to ask for a review?
Yes. If you want HMRC to review a decision, you must write to the person who issued the decision letter, within 30 days of the date of that letter.
We will complete our review within 45 days, unless we agree another time with you.
You cannot ask the tribunal to hear your case until the 45 days (or the time we agreed with you) has expired, or we have told you the outcome of the review.
If you are not satisfied with the review’s conclusion, you have 30 days within which to ask the tribunal to hear your case.
If we cannot complete our review within 45 days, or any time we agreed with you, we will ask you whether you are willing to agree to an extension so that we can complete the review. If you do not agree to an extension, the review is treated as concluding that the decision being reviewed is upheld.
We will write to tell you this and, you then have 30 days from the date of that letter to ask the tribunal to hear your case.
15.3 What must I include in my request for a review?
Your request should set out clearly the full details of your case, the reasons why you disagree with HMRC and provide any supporting documentation. You should also state what result you expect from our review.
15.4 What if I do not want a review?
If you do not want a review you may appeal to the independent tribunal. You need to send your appeal to the Tribunals Service within 30 days of the date on the decision letter.
15.5 Where can I get more information?
Get more information about reviews and appeals in:
- factsheet HMRC1 - copies available from the HMRC Orderline on
Telephone: 0300 200 3610
- what to do if you disagree with an HMRC decision
There’s also information about how to appeal to the Tribunals Service on GOV.UK.
16. How to contact HMRC
Application and registration queries
Contact the Excise Processing Teams about an application you’ve submitted or if you need to tell us about any changes.
Contact Excise: enquiries if you have a general query.
Contact the Duty Paid Movements team to notify us of any:
- consignments of excise goods
- changes to information already given about a consignment
HMRC Duty Paid Movements Team
St Mungo’s Road
Telephone: 03000 583099
17. Duty-paid scheme - flowchart
18. Examples of duty calculation
Unless HMRC has approved the use of an alternative method of calculating the duty that does not disadvantage the revenue, you must work out each constituent stage of the calculation process to a minimum of 4 decimal places.
The amount of duty due should be rounded down to 2 decimal places (for example, £2,957.3532 should be expressed as £2,957.35).
The following examples may assist you in calculating Excise Duty. The rates used are only examples and are not the current duty rates.
Current rates of Excise Duty for all excise goods can be found in the Rates and allowances section of GOV.UK, or in Part 12, Volume 1 of the Tariff.
Wines and cider
Excise Duty on wine and cider is charged on the total hectolitres of product. It is charged in bandings, according to the strength of the product (its abv) and whether it is still or sparkling. It is calculated by converting the bulk litres of product into hectolitres and then applying the current rate of Excise Duty.
To find the Excise Duty on a case of still wine containing 12 bottles of 75cl at 7% abv:
- convert the total volume to bulk hectolitres (hl). This is done by multiplying the number of bottles by their volume in litres and then multiplying that figure by the number of cases. This gives you the bulk volume in litres, therefore you need to divide this figure by 100 to convert it into hectolitres. In this case you get: 12 x 0.75 / 100 = 0.09 hl
- the duty rate for the product is then applied to the bulk volume calculated
- multiply the bulk hectolitres by the current rate of duty for the relevant product and duty banding. For the purposes of this calculation we will use a rate of £214.02 per hl
- therefore the duty on the case in this example is: 0.09hl x £214.02 = £19.26
Beer Duty is charged on the hectolitre % of alcohol in the beer. It is calculated by converting the bulk litres of beer into hectolitres and multiplying by the alcohol by volume (abv) figure declared. The current Excise Duty rate is then applied to this figure. There are 3 main types of Beer Duty:
1. General Beer Duty (GBD). The standard rate of GBD applies to all beer with an abv exceeding 2.8% but not exceeding 7.5%.
To find the Excise Duty on 327 cases of beer each containing 24 bottles of 33cl at 5% abv:
- convert the total volume to bulk hectolitres. This is done by multiplying the number of bottles by their volume in litres and then multiplying that figure by the number of cases. This gives you the bulk volume in litres, therefore you need to divide this figure by 100 to convert it into hectolitres. In this case you get: 24 x 0.33 x 327 / 100 = 25.8984 hl
- the bulk hectolitre figure is then multiplied by the declared abv amount: 25.8984 x 5 = 129.492 hl %
- multiply the hl % amount by the GBD rate. For the purposes of this calculation we will use a rate of £18.57
- therefore the duty on 327 cases in this example is: £18.57 x 129.49 = £2,404.62
2. High Strength Beer Duty (HSBD) is payable on beer exceeding 7.5% abv. It is payable in addition to GBD. For the purposes of the calculation below we have used a GBD rate of £18.57 (as in the previous example) and a HSBD rate of £4.64 (25% of the General Beer Duty rate).
To find the total Excise Duty on 450 cases of beer each containing 24 bottles of 27.5cl at 8% abv:
First work out the hl % of alcohol in the consignment (as shown in the previous example):
24 x 0.275 = 6.6 litres per case
6.6 x 450 = 2,970 litres in total
2,970 / 100 = 29.7 hl in total
29.7 x 8 = 237.6 hl % Then multiply this amount by both the GBD and HSBD rates:
237.6 x GBD rate of £18.57 = £4,412.232, truncated to £4,412.23237.6 x HSBD rate of £4.64 = £1,102.464, truncated to £1,102.46
Total duty payable
GBD + HSBD = £4,412.23 + £1,102.46 = £5,514.69
3. There is also a reduced rate of general beer duty for lower strength beer (that is, beer exceeding 1.2% abv but not exceeding 2.8% abv). For the purposes of the calculation below we have used a GBD rate of £18.57 (as in the previous examples) and a reduced rate of £9.29 (50% of the General Beer Duty rate)
To find out the total Excise Duty on 375 cases of beer each containing 24 bottles of 27.5cl at 2.8% abv:
First work out the hl % of alcohol in the consignment (as shown in the previous examples)
24 x 0.275 = 6.6 litres
6.6 x 450 = 2,970 litres in total
2,970 / 100 = 24.75 hl in total
24.75 x 2.8 = 69.3 hl % To calculate the actual duty due, multiply the hl %amount by the duty rate
69.3 x £9.29 = £643.797, truncated to £643.79.
Beer that qualifies for small brewery relief is eligible for different reduced rates of duty. For further information on how to calculate the duty on small brewery beer please see Excise Notice 226: Beer Duty.
Duty is charged on the alcohol content of the spirit (that is, the litres of pure alcohol). This is calculated by multiplying the bulk litres by the alcoholic strength (abv). The Excise Duty is then obtained by multiplying this amount by the spirit duty rate.
To calculate the Excise Duty on 79 cases of 43% whisky each containing 12 x 70cl.
- calculate the volume per case by multiplying the number of bottles per case by their volume in litres: 12 x 0.70 = 8.4 litres
- the alcohol volume per case is then calculated by multiplying the total volume per case by the abv expressed as a decimal: 8.4 x 0.43 = 3.612 litres of alcohol
- the total alcohol volume for the consignment is obtained by multiplying by the number of cases: 3.612 x 79 = 285.348 litres of alcohol
- multiply the total litres of alcohol by the spirits duty rate. For the purposes of this calculation we will use a rate of £22.64 per litre of alcohol
- therefore the duty on 79 cases in this example is: 285.34 x £22.64 = £6,460.09
19. The due diligence condition
19.1 What is due diligence?
Due diligence is the appropriate reasonable care a company exercises when entering into business relations or contracts with other companies, and how it responds in a deliberate reflexive manner to trading risks identified.
19.2 Why is a due diligence condition required?
Without effective safeguards in place, there are considerable risks to all businesses along alcohol supply chains of becoming implicated in illicit trading.
This condition requires that all excise registered businesses operating in the alcohol sector consider the risk of excise duty evasion as well as any commercial and other risks when they’re trading. Doing so will help to drive illicit trading out of alcohol supply chains, and reduce the risk to businesses of financial liabilities associated with goods on which duty has been evaded.
19.3 What am I expected to do?
From 1 November 2014 it becomes a condition of your approval as a Registered Commercial Importer or Tax Representative that you must:
- objectively assess the risks of alcohol duty fraud within the supply chains in which you operate
- put in place reasonable and proportionate checks, in your day to day trading, to identify transactions that may lead to fraud or involve goods on which duty may have been evaded
- have procedures in place to take timely and effective mitigating action where a risk of fraud is identified
- document the checks you intend to carry out and have appropriate management governance in place to make sure that these are, and continue to be, carried out as intended
19.4 How do I assess the risks in my supply chains?
The fraud risks within a supply chain are unique to each business, and objective assessment of the likelihood of your trading activities contributing to fraud is an essential first step to developing effective due diligence procedures. You’ll need to consider the full range of trading relationships you’ve established and the potential for fraud in each.
The main risks within the alcohol sector include:
- involvement in the supply of goods for fraud
- receiving goods that have been smuggled or diverted into the UK
- inadvertently facilitating fraud by providing import or warehousing services
A key feature of the smuggling or diversion of alcohol to the UK market is the ability to source product either where the excise duty has been suspended or it has been refunded under drawback provisions. To assess your exposure to this risk you’ll need to objectively assess if there is potential for duty evasion resulting from your trading activity. You’ll need to know who you are selling to and where the goods are destined for and understand the market for these products. Without this, there is a risk of supplying goods directly or through a third party into illicit supply chains.
Import and warehousing procedures are often exploited to provide cover for the illicit movement of goods. Fraudsters will seek to distribute duty evaded goods as well as counterfeit alcohol into legitimate retail supply chains. To assess your exposure to this risk you’ll need to objectively consider whether the supply chain and trading activity is credible which includes knowing who you source goods from and provide a service to.
High level indicators of risk include goods being received from unusually complex or apparently uneconomic supply routes, for example, regular supplies of UK produced goods that have been shipped out to another member state and then re-imported. If you are sourcing duty paid goods you’ll also need to consider the credibility of suppliers and the level of evidence you can obtain to demonstrate the provenance and duty status of goods.
Paragraph 19.9 of this notice provides further detail on risk indicators.
19.5 What checks should I carry out?
Once you’ve established the main risks of fraud you may be exposed to, your regular checks during trading should be of a type and level sufficient to establish the integrity of the excise transactions and supply chains you are trading in. This level needs to be reasonable and proportionate to the risk.
Depending on the nature of your business and complexity of your transactions, checks will need to be individually tailored. In particular, they must be sufficiently sensitive, yet robust enough, to pick up potential fraud risks. These checks should provide protection from the threat of fraud or you becoming inadvertently involved in fraudulent activity.
As a general rule ‘FITTED’ checks should normally focus on:
- financial health of the company you intend trading with
- identity of the business you intend trading with
- terms of any contracts, payment and credit agreements
- transport details of the movement of the goods involved whether or not you are directly involved in this
- existence/Provenance of goods - where goods are said to be duty paid you should normally seek sufficient detail to satisfy yourself of the status of the goods
- the Deal, understanding the nature of the transaction itself, including:
- how the cost of the goods is built up, for example, whether it includes appropriate taxes, transport etc
- why is it being offered
- whether it is too good to be true
- how the deal compares to the market generally
Paragraph 19.10 of this notice provides more examples.
19.6 How should I respond to a fraud risk in my supply chains?
It is expected that your due diligence procedures will provide effective control over the risks of fraud within your supply chains. Where your checks indicated real concerns, we would normally expect aspects of your supply chain to be changed to address this, eg the supplier or the destination of the goods. However, a decision of whether or not to trade with another party remains a commercial decision for your business to take.
If your checks lead you to suspect duty fraud you should also inform our Customs Hotline.
19.7 Will HMRC review the due diligence checks I have in place?
Yes. As part of our enforcement and general audit programmes, we will consider whether or not the steps you’ve taken to embed anti-fraud due diligence into your trading activity are sufficient and timely to address fraud risks in your supply chains. We will aim to establish whether you have objectively assessed the risks in your supply chain, and you must be able to demonstrate that you have put in place reasonable and proportionate checks and effective procedures to respond to fraud risks when they arise.
19.8 What will HMRC do if my due diligence checks are found to be insufficient?
If your due diligence procedures are considered insufficient to address fraud risks, we will carefully consider the facts of the case before taking further action, but where appropriate we will seek to support you to strengthen your procedures.
In more serious cases such as a failure to consider the risks, undertake due diligence checks or respond to clear indications of fraud, we will apply appropriate and proportionate sanctions. For serious non compliance, such as ignoring warnings or knowingly entering into high risk transactions, we may revoke excise approvals and licences.
You are also reminded that handling goods liable to excise duty held outside a duty suspension arrangement may cause you to become liable for any excise duty due on those goods and an excise wrongdoing penalty. Any of those goods you currently hold could also be liable to forfeiture.
Paragraphs 19.9 and 19.10 of this notice provide further details on risk indicators and outline some of the checks that you may carry out to identify high risk transactions. These are not intended to be prescriptive or exhaustive.
Once you’ve established the most appropriate due diligence tests for your business, these should be used to test both new and existing transactions and supply chains linked to your business. Some checks may be more appropriate to your business than others.
19.9 Examples of due diligence risk indicators
You should be concerned about a prospective transaction where you identify one or more of the following indicators in both suppliers and customers, the presence of which may lead you to make further inquiries. This list is not exhaustive.
Financial health of the company you intend trading with
- there is no, or poor, credit ratings but it is still able to finance substantial deals
- there are high levels of debt
- they’re buying high value goods on extended credit
- they’re a new company with little or no trading history
- there are little or no fixed assets
Identity of the business
- there is a lack of detail about the business’ identity, eg no address details, or HMRC approval number
- they do not appear to be on Companies House records as originally described
- they’re dealing in high value goods from short term lease accommodation and/or residential addresses
- there is no general visibility of the company you intend trading with, for example, they do not appear to advertise or have a website
- they’ve returned only partly completed application or trading forms
- if you are a warehousekeeper, receiving duty suspension goods on behalf of a third party who is not WOWGR registered where they would otherwise be required to be registered
Terms of contract, payment and credit agreements
- an insistence on dealing in cash, especially where the deal is a high value one
- cash payments made using money couriers
- offers of credit appear to be outside normal business practice. Payment terms are normally 21, 31 or 45 days but high risk transactions may have short payment terms eg 48 hours
- you are asked to make payment to an account or person which does not appear to be linked to the seller, or other unusual payment arrangements requested by the seller. The same applies to customers
- a valid pro-forma or purchase invoice is not or will not be provided
- the circumstances of the trading arrangement seem false or contrived. For example, a supplier provides you with the details of a customer for the goods he is selling to you, or offers you a contract with no financial loss to you
The goods are to be received from an unusual source or supply route, for example, UK produced goods are sourced from another country and directly compete with those from a more direct supply route.
Existence or provenance of goods
- the goods are claimed to be duty paid but your supplier (or person on whose behalf you are storing the goods) cannot provide reasonable evidence of duty payment to support the status of the goods.(For further detail about what constitutes evidence of duty payment please refer to Excise Notice 207: Excise Duty drawback)
- individuals in the company have little knowledge of your trade sector
- where samples are provided or the goods have been received
- for spirits there is no duty stamp in circumstances where there should be one or the duty stamp does not fluoresce (refer to guidance)
- the goods appear counterfeit, in that, the quality of labels and or packaging is poor when compared to the genuine article
- the supporting paperwork seems false
- the goods are older than supporting evidence (such as documents demonstrating duty payment) suggest, for example, the best before dates indicate an earlier production date whereas documentation gives the impression you were buying newer stock
- the company has only been trading for a very short period of time but has managed to achieve a large income in that short period of time
- customer demand for specific brands in other countries exceeds expected levels of consumption there
- the goods are to be moved in an unusual supply route that in itself would add significant logistic costs and bring into question the economics of that trade (unless duty was to be evaded)
- supplies are offered through unsolicited emails or flyers received out of the blue
- goods are offered at incredibly low prices which seem too good to be true
- free gifts of similar or other excise goods not fully documented and in themselves would place a question over the deal as a whole
- there are other incentives such as contingency discounts which overall make the deal sound too good to be true
19.10 Examples of due diligence checks
- obtain, undertake credit checks or other background checks on the business you intend trading with
- where a poor credit rating is identified, establish how the transactions will be funded, what security can be offered that you’ll be paid?
- where credit is offered by the business, who is providing the credit facility?
- what payment terms are offered and are they commercially viable?
- check company details provided to you against other sources, eg website, letterheads, telephone directories etc
- ask whether your customer or supplier is a member of a relevant trade association
- obtain copies of certificates of incorporation, VAT registration certificates and excise registration certificates where appropriate and where a trade class is quoted on these check whether or not it relates to the type of trade you are engaging in
- verify VAT and excise registration details with HMRC (we recommend that these checks are undertaken regularly for new trading arrangements and proportionately longer for trusted ones, unless you suspect a problem)
- if you are a warehousekeeper receiving duty suspended goods into your warehouse then you should be satisfied that the owner of the goods is registered under WOWGR where required
- obtain signed letters of introduction on headed letter paper and references from other customers or suppliers
- insist on personal contact with a senior official of the prospective supplier and where necessary, make an initial visit to their premises. You should use this opportunity to confirm the identity of the person you intend doing business with and keep a record of your meeting
- establish what your customer’s or supplier’s history in the trade is. Can this be evidenced?
- obtain the prospective customer’s or supplier’s bank details. In the case of an import or export, does the supplier or recipient share the same country of residence as their bank?
- establish who you’ll be paying. Is this the same company as the one you are directly dealing with?
- if you are providing a service who will be paying for it?
Terms of any contracts, payments and credit agreements
- carefully consider the terms of any contracts and credit agreements before entering into these and challenge elements which appear unusual
- what recourse is there if the goods are not as described?
- if payment is to be made to or from a third party, is there a sound commercial reason for this?
- if payment is to be made to or from a third party, is it to or from an off shore account?
- sre there normal commercial arrangements in place for the financing of the goods?
- where payment is made from an overseas business how is it to be made?
- has your supplier referred you to a customer who is willing to buy goods of the same quantity and brand as being offered by the supplier?
- does your supplier offer deals that carry no commercial risk for you, for example, no requirement to pay for goods until the payment is received?
- are the goods adequately insured?
- are high value deals offered with no formal contractual arrangements?
- where you are buying from a broker:
- what overall value does this link in the supply chain add?
- is it possible to source more directly?
- how competitive is the broker’s pricing to those from a more direct route?
- how are the savings made in a longer supply chain to make it viable?
- where transactions are being financed by a third party, is this person a regulated financial body such as a bank?
- establish where the goods will be sourced from. Is this the country of production? If not why are the goods being routed in this way?
- who is responsible for the transport? Is the cost of the goods inclusive of transport? If so, does this mean that the potential logistical costs make the unit price unrealistic?
- details of delivery vehicles should be retained and if necessary any variations to expected transport arrangements recorded
Existence or provenance
- how has the trader contacted you?
- do the goods exist?
- can you inspect the goods before purchasing them?
- are they in good condition and not damaged?
- do the quantities on offer seem credible for the type of business you intend trading with?
- where goods are said to be duty paid, seek sufficient detail to satisfy yourself that they are, this will be easier the closer you are in the supply chain to production, this point is also important where you intend holding goods on behalf of a third party
- the nature of the transaction, including
- does it just look too good to be true?
- is the demand for the type of alcohol credible? If the demand is purportedly from abroad what is the real market (consumption) for them in that country?
- if the alcohol has come from abroad but is of UK origin, how did this occur and why?
- where incentives are offered, when these are taken into consideration does this make the overall deal seem too good to be true?
- why is it being offered?
- have normal commercial practices been adopted in negotiating prices?
- how does the price compete with that offered by competitors?
- what is the age of the goods? If the stock is old you should seek an explanation as to its provenance
- does the price seem realistic? You should be aware of unit cost when duty and VAT values are removed
- if you are already established in a trading agreement we would also recommend that you continue to monitor correspondence and business paperwork to identify changes in those arrangements and take any follow up action as necessary
|CEMA||The Customs and Excise Management Act 1979.|
|Distance selling/sales||The sale of excise goods by a vendor in one EU member state to a private individual in another member state. For example, this could be sales over the internet.|
|Duty-paid goods||For the purposes of this notice, goods released for consumption in another EU member state that is, goods on which relevant duties, including Excise Duty, has been paid in the member state of dispatch. Such goods are normally available for purchase from cash and carries, supermarkets and wholesalers in the member state of dispatch.|
|Duty Stamp||A stamp attached to alcoholic products, with an abv of 30% or above in bottle sizes of 35cl or above to indicate that UK duty has been or will be paid.|
|Excise Duty||For the purpose of this notice, an indirect tax on certain goods, for example, beer, wine, made-wine, cider, perry, spirits, mineral oil, cigarettes and other tobacco products. Both UK-produced and imported goods are subject to Excise Duty.|
|Excise goods||Goods which are liable to Excise Duty.|
|Fiscal mark||In the context of this notice, a mark carried on packets of cigarettes and hand-rolling tobacco indicating that tobacco products duty has been paid.|
|Registered Commercial Importer||A trader who is able to import goods into the UK which are already duty-paid in another member state without having to provide payment of the UK duty before the goods are dispatched. Instead they’re authorised to defer payment of the duty using their own or someone else’s duty deferment account and make the necessary payment by submitting a return at the end of each accounting period. Security is provided by the deferment guarantee.|
|Released for consumption||For the purposes of this notice, ‘released for consumption’ means goods on which relevant duties, including Excise Duty, has been paid in the EU member state of dispatch. Such goods are referred to as ‘duty- paid’ goods throughout this notice.|
|SAAD||Simplified Administrative Accompanying Document for duty-paid goods moving between EU member states.|
|Supplier||In the context of this notice a person who supplies duty- paid excise goods.|
|Tariff||The short title for the Integrated Tariff of the UK which sets out information about:
the valuation of goods for import duty purposes, including excise and VAT duties
measures affecting the import, export and transit of goods.
|Tax Representative||A trader who is approved and authorised in their member state to account for Excise Duty on distance sales on behalf of vendors in other EU member states.|
|Unregistered Commercial Importer||A trader who uses the standard scheme to import goods into the UK which are already duty-paid in another member state. They must secure the UK duty by banker’s draft, cheque or postal order prior to the goods being dispatched.|
|VAT||Value Added Tax is charged on the importation of goods at the same time as if the goods had been supplied in the UK. It is chargeable in addition to customs/excise duties and is calculated on a value which includes such charges.|
Your rights and obligations
Read Your Charter to find out what you can expect from HMRC and what we expect from you.
Help us improve this notice
If you have any feedback about this notice please email: email@example.com.
You’ll need to include the full title of this notice. Do not include any personal or financial information like your VAT number.
If you need general help with this notice or have another question contact the Excise Helpline.
Putting things right
If you’re unhappy with HMRC’s service, contact the person or office you’ve been dealing with and they’ll try to put things right.
If you’re still unhappy, find out how to complain to HMRC.
How HMRC uses your information
Find out how HMRC uses the information we hold about you.