Guidance

Excise Payment Security System (EPSS): authorisation criteria

Updated 2 March 2021

1. Criteria

1.1 Length of time VAT registered

You must have been VAT registered for 3 years or more.

If you’ve re-registered as the result of a company restructure and do not therefore qualify under the 3 year rule, you may be required to provide additional information to assess eligibility.

If you rely on a previous VAT registration to satisfy the 3 year requirement, HMRC will also assess the compliance of the previous company to ensure the authorisation criteria are met.

If you’ve previously operated in an EU member state and are extending/moving to the UK, you’ll be required to provide evidence of your VAT compliance in that EU member state.

If you’ve been registered for more than 3 years, you must have been continually operating during that period.

1.2 Debt history

If you’re in debt to HMRC at the time of your application you will not qualify.

You will also not be eligible if:

• there’s a current time to pay (TTP) agreement
• you’ve failed to adhere to the conditions of the TTP agreement (fails to make payments on time etc)
• there’s a debt not currently under appeal
• there’s a bailiff visit within the last 2 years
• there have been 2 or more debt management and banking actions within the last 3 years
• the business is a continuing trader and has a write-off amount outstanding

1.3 Offence history

If you have serious offences (proven or charged) on record with HMRC you will not be authorised.

You may re-apply 3 years after the offence action was finalised or 5 years if a custodial term was imposed.

1.4 Deferment account history

Your duty deferment payment history record will be reviewed. If you’ve defaulted on deferment payments more than once in the previous 12 months you will not be authorised.

Once authorised you must maintain an adequate guarantee and, if relevant, ensure that the Deferment Account Limit (DAL) is operated within approval limits. You must also ensure that new schedules are submitted to raise levels if necessary. Failure to do so may result in the withdrawal of your authorisation and a request to provide a 100% guarantee to cover the excise duty.

In lieu of deferment account history checks, UK beer, wine, made-wine, cider and perry producers will be assessed against the following criteria:

• any outstanding excise returns and payments
• the timeliness of rendering excise returns and payments

If you have not operated a deferment account, you’re required to submit your last 2 years audited annual accounts with your application form. From these disclosures HMRC will take into account the business, profitability, level of fixed tangible assets, debts, loans, creditors and debtors etc. You must have sufficient fixed tangible assets to cover all the debts due to HMRC.

You may re-apply for approval in 12 months, providing no further deficiency in compliance occurs.

1.5 VAT compliance history

You must have a good VAT compliance history. You’ll be assessed against the following criteria:

• the number of errors made on VAT returns
• the timeliness of rendering VAT returns
• the number of assessments raised on missing VAT returns

1.6 Under-declarations of VAT in the last 3 years

If you’ve made large or frequent under-declarations of VAT in the last 3 years you’ll be excluded from EPSS.

You may re-apply three years from the date of your last under-declaration.

1.7 Default surcharges (previous 3 years)

You must not have incurred any default surcharges in the previous 12 months.

You may re-apply once the last recorded surcharge is spent and you are compliant in all other dealings with HMRC.

1.8 Transfer of a going concern

A transfer of a going concern must have occurred more than 3 years prior to the date of application for EPSS.

HMRC will consider those transfers that are less than 3 years and are the result of a change of legal entity, for example partnership to a limited company.

1.9 Financial viability

You will not be eligible for EPSS if your business is in any of the following:

• administration
• liquidation
• insolvency
• bankruptcy
• receivership
• financial difficulties (time to pay arrangements etc)

You may re-apply when you are out of financial difficulties, no longer owe money to HMRC and remain compliant for 3 years.

1.10 Liquidity Risk Assessment

If you have not previously operated a deferment account, you’ll be subject to additional checks to determine whether your business will be able to meet future deferment payments. Non-deferment account holders must have sufficient fixed tangible assets to cover all debts due to HMRC.

You’ll be required to submit your last 2 years audited accounts. From these disclosures HMRC will take into account the business, profitability, level of fixed tangible assets, debts, loans, creditors and debtors. Where applicable, checks will also be made on your previous 12 months International Trade operating history and/or the previous 12 months excise return and payment history.

1.11 Additional checks

You may also be subject to external credit checking where there is a perceived revenue risk.

2. Special criteria for small business

If you’re trading beneath the VAT registration threshold you’ll be assessed against the following eligibility and authorisation criteria.

2.1 Length of time approved or registered

You must have been approved/authorised or registered in an excise payment regime for 3 years or more.

2.2 Excise compliance history

You must have a good excise compliance history, based on excise return and payment history. HMRC will take into consideration:

• any outstanding excise returns
• timeliness of rendering excise returns and payments over the previous 12 months

You may re-apply 12 months after defaults have been resolved.

2.3 Excise debt history

If your business is, or has been, in debt to HMRC in the last 12 months for excise purposes you will not be authorised.

You may re-apply 12 months after any outstanding debt has been cleared.

2.4 Offence history

If you have serious offences (proven or charged) on record with HMRC you will not be authorised.

You may re-apply 3 years after the offence action was finalised or after five years if a custodial term was imposed.