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HMRC internal manual

Excise Due Diligence Condition guidance

Risks: the deal

Businesses should fully consider transactions before trading and be satisfied that overall cost is realistic and not too good to be true. They should react positively where any of the following deal risks are identified (please note this list is not definitive):

  • supplies are offered via unsolicited emails or flyers received out of the blue
  • goods are offered at incredibly low prices which seem too good to be true
  • free gifts of similar or other excise goods (which may not be fully documented) and in themselves would place a question over the deal as a whole being too good to be true
  • other incentives such as contingency discounts which overall make the deal sound too good to be true
  • the goods are to be routed from an unusual supply route that in itself would add significant logistic costs, but are priced in direct competition to goods which can be sourced from a more direct route
  • dispatches of large volumes of UK brands to countries with little appetite for them
  • the receipt, within a short space of time, of offers to supply and to purchase consignments of the same or similar specification

 

When considering ‘the deal’ you should consider both single and groups of transactions (or contracts) between the same customer and supplier. You should also establish who in the business carries out the checks, what factors they took into account and whether they have sufficient knowledge to make a reasonable judgement. They should be able to demonstrate a knowledge of: commerciality, economic costs, benefits & profitability, credibility of logistics, demand for the product in the intended marketplace etc.

 

A business may argue that because it supplies goods UK duty paid, its overall supply is low risk. This is not always the case, as the goods may subsequently be removed from the UK and become subject to a drawback duty refund. In order for drawback to be claimed, the claimant needs to contact the duty payer for information (our Notice 207 refers). We would expect suppliers to consider the added risks of supplying to businesses who are likely to claim drawback.