Penalties and sanctions: trading without approval (TWA) overview
The AWRS is designed to reduce illicit trading in the wholesale sector by introducing a requirement for anyone trading wholesale to be approved. There are businesses who will try and avoid approval either knowingly or because they are careless about their responsibilities. From 1 January 2016, anyone who has been refused approval but continues to trade will be liable for a TWA penalty/criminal offence where appropriate. From 1 April 2016, any existing business who has failed to apply in the registration window or any new business that starts trading in the registration “window” and fails to apply for approval may be considered to be trading without approval. Any business that intends to start trading after 1 April 2016 must apply to HMRC for approval at least 45 days before the date they intend to commence trading.
After 1 April 2016, a new business cannot start trading without an approval. There are no provisions for a belated notification in AWRS. If a person (P) commences trading without an approval, they are liable to a penalty.
We will not charge a penalty if we are satisfied that P
- has a reasonable excuse for a non-deliberate failure, and
- if the excuse has ended, P has remedied the failure without unreasonable delay.
The amount of the penalty is based on a maximum penalty currently set at £10,000 but the actual amount will be determined by the behaviour that caused the contravention - higher penalties are payable if the contravention was deliberate.
Reductions in the percentage penalty are given for disclosure and depend upon
- whether the disclosure is unprompted or prompted, and
- the quality of the disclosure.
We must assess the penalty assessment. The person is entitled to a review of, and can appeal against, our decision
- that a penalty is payable, and/or
- the amount of the penalty.
Where necessary the appeal will be heard by the tribunal.
We may agree to a special reduction of the penalty if there are special circumstances. You can find more details in AWRS110500.
Suspension of penalties is not applicable to AWRS behavioural penalties.