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HMRC internal manual

Excise Due Diligence Condition guidance

Risks: existence and provenance of goods

Businesses should carry out tests on the existence and provenance of goods to protect themselves from the risk of buying non-existent, counterfeit, stolen or duty unpaid goods. The person within a business responsible for carrying out these tests should be able to evidence adequate knowledge of the products being considered to recognise concerns. The level of tests carried out should be proportionate to the risk. For example, a higher level of due diligence would be needed for a consignment of popular branded spirit purchased from a series of brokers than for a tanker of beer concentrate purchased directly from a producer.

 

We would expect the business to react positively to the following risk indicators (please note this list is not definitive):

 

  • long or complex supply chains, for example, goods traded through brokers
  • UK produced brands bought or sold overseas
  • imports of large volumes of UK produced stock
  • where there is no reasonable detail to support the claim that duty on goods, said to be duty paid, has actually been paid (further detail on what constitutes evidence of duty payment is available from Notice 207: Excise Duty drawback)
  • individuals in the business to be traded with have little knowledge of their trade sector
  • the business to be traded with has only been trading for a very short period of time but has managed to achieve an unusually large turnover in that short period without a reasonable explanation

 

The business should also consider the actual goods and associated paperwork received, risk indicators for these include:

 

  • for alcoholic spirits, there is no duty stamp or the duty stamp does not fluoresce
  • the goods have the general appearance of being counterfeit, in that the quality of labels or packaging is poor when compared to the genuine article
  • the supporting paperwork seems false
  • the goods are significantly older than the evidence of duty payment suggests

 

To help spot concerns, you should have a good working knowledge of the product specification, normal delivery state, excise and other legislative requirements of goods being traded. Where possible, you should inspect samples of goods being traded.