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HMRC internal manual

Excise Due Diligence Condition guidance

From
HM Revenue & Customs
Updated
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The due diligence condition: a high level view of the condition

The due diligence condition is a direct condition of registration for those businesses captured by it (EDDC01010 provides detail of those businesses captured by the condition). It is brought into effect by its inclusion in the following notices:

Beer Duty Notice 226 

Registered Consignees Notice 203A 

Temporary Registered Consignees Notice 204A 

Commercial Importers and Tax Representatives Notice 204B and

Authorisation of warehousekeepers and approval of premises Notice 196.

As such, it has tertiary law status and only applies to those businesses whose approvals are covered by these notices.

The condition requires that the registered person carries out reasonable and proportionate checks on their transactions and related supply chains. The word “reasonable” should be treated as objective when a business is considering whether or not tests are sufficient and reasonable. In other words, they are considered reasonable if they could be perceived by a reasonable neutral observer as being reasonable. The registered person must document these and include appropriate due diligence checks in their governance arrangements. The registered person must consider the risks associated with each transaction and/or market before entering into that trade arrangement. This can mean anything from undertaking research on the product/market, the supplier(s) and customer(s) to entering into written contracts etc and establishing terms and conditions. The registered person will need to take into consideration the way in which the supply is about to occur, for example, the status of the goods, whether they are supplied directly by a producer or supplied via a broker, which country the goods will be travelling from etc.