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HMRC internal manual

Excise Due Diligence Condition guidance

General: why and when should businesses be carrying out due diligence?

Businesses must carry out due diligence to minimise their exposure to risks of goods they trade with or handle being linked to alcohol fraud. They must carry out timely, reasonable and proportionate checks on intended transactions (and supply chains) before entering into new agreements. They should also carry out regular checks on existing arrangements they have. Where businesses properly carry out due diligence this will help ensure that:

  • they have a good understanding of risks and overall market for the goods traded
  • they have a good knowledge and understanding about their customer
  • their customers will pay for goods on time
  • goods held out for sale physically exist and will arrive if ordered
  • sellers have legal ownership of goods and are able to sell them on
  • goods are as described and not counterfeit
  • goods are of merchantable quality
  • taxes and duties are correctly accounted for
  • businesses holding excise approvals do not become unwittingly liable for duty or penalties
  • risk of fraud or evasion is minimised

 

Each business should have appropriate management controls for these checks. Where a third party carries out due diligence checks, the registered person remains responsible for ensuring that adequate due diligence and risk assessment procedures are in place.