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HMRC internal manual

Alcohol Wholesaler Registration Scheme

HM Revenue & Customs
, see all updates

Calculating the penalty: determining the quality of disclosure - examples

Example 1

Steve is a large retailer but lets it be known to local trade that he will bulk buy alcohol on their behalf and supply at a competitive price. He should have applied for approval before he started supplying.  You receive information from one of Steve’s customers that they asked Steve for his Unique Reference Number (URN) and he could not provide one. You challenge Steve and he originally denies he makes these sales.  When he does admit it, there is some delay in providing the relevant documentation for you to check the nature of his sales; who his suppliers and customers are and whether the supplies involved duty paid alcohol.

The quality of the disclosure is decided as:

Telling/Helping/Giving access   15%/25%/20%

Total   60%   (of the full 100% that you can allow for reduction)

So the quality of disclosure reduction is 60%.


Example 2

Bob runs a business arranging the supply of French cheeses to UK restaurants. His French suppliers suggest he also finds them UK customers for their wines and negotiate prices on their behalf.

Bob does this but is so busy establishing this side of the business that he forgets to apply for approval until someone asks him for his URN. He immediately contacts us with his application and gives a full explanation why he had not applied previously. He gives access to all sales documentation as soon as he is asked to do so.

The quality of disclosure is decided as:

Telling/Helping/Giving access   30%/40%/30%

Total   100% (of the full 100%)

So the quality of disclosure reduction is 100%. Bob is given the full reduction for each element.


Example 3

Lucy has a company based in Spain supplying Spanish beers to large UK retailers. She has not applied for approval as she does not consider she is UK established.

We have obtained details of a UK address that Lucy appears to be using but she ignores any letters sent to this address. We send notification that she is liable to a penalty and at this point Lucy eventually contacts HMRC. She is adamant she does not belong in the UK and does not need to be approved. We think the UK premises qualify as a fixed establishment. The requirement to be approved is finally decided in our favour by the tribunal.  Lucy then gives full access to her records.

We discuss the penalty and agree the following views on quality of disclosure:

Telling - We should not penalise the person for maintaining a tenable position and not admitting the failure. However, Lucy does ignore our letters at the outset.

Helping - Here Lucy was somewhat unhelpful particularly before she received notification of a penalty and we have a less positive view about the helping reductions.

Giving Access – Lucy’s unwillingness to co-operate comes in to play but she gave full access to her records once the tribunal found in HMRC’s favour.

The quality of disclosure is decided as:

Telling/Helping/Giving access  20%/20%/10%

Total   50% (of the full 100%)

So the quality of disclosure reduction is 50%.