Beta This part of GOV.UK is being rebuilt – find out what this means

HMRC internal manual

Holding and Movements Assurance Guidance

From
HM Revenue & Customs
Updated
, see all updates

Excise Duty Drawback: part 1 approval of alternative evidence (AEA) of UK duty payment

General information

For a drawback claim to be made, the claimant must normally provide the evidence of UK excise duty payment detailed in paragraph 4.7 of Notice 207 (HMRC website). Businesses who are not the original duty payer, who are unable to obtain actual evidence of duty payment from the original duty payer, are permitted to apply for an alternative evidence agreement. Approval is not automatic. This application must be made and agreed by HMRC before the claim process starts, which is when the claimant submits their notice of intention to claim drawback to the Drawback Processing Centre (DPC). In addition, the agreement is only valid for a specific supply chain. Where a business requires an agreement for another supply chain then they would need to apply separately for this.

Deciding whether or not to approve the request

The decision whether to approve such a request is made by the Drawback Centre Assurance Team (DCAT) to ensure consistency in agreements. Agreements should only be reached when it is clear that the intending claimant cannot obtain the normal evidence of duty payment specified in Section 4 of Notice 207 and that the alternative evidence provides HMRC with sufficient, reasonable, assurance that the UK duty on goods likely to be presented for drawback will be paid.

An AEA is a ‘condition’ of drawback, any decision to approve or refuse requests must be fact based, be proportionate and reasonable to those facts. Any decision imposing a condition of drawback is appealable under the Customs and Excise review and appeals provisions of the Finance Act 1994.

Where you have evidence to show that a drawback claimant is submitting false evidence to gain an agreement then this should be refused. Where that business holds other agreements you should consider whether in light of the potential risk to the revenue these other agreements should be allowed to remain extant.

Risks

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

  • (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
  • (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
  • (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
  • (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
  • (This content has been withheld because of exemptions in the Freedom of Information Act 2000)

Submitting a request for alternative evidence

For an AEA to be considered, the claimant must write to DCAT providing them with the information required by paragraph 4.9 of Notice 207 (and in accordance with the requirements placed by that paragraph). This includes:

Original duty payer evidence

Original duty payer evidence conditions are:

  1. That the claimant/intermediary has attempted to obtain the UK duty payment document.
  2. A written declaration from the original duty payer stating that:
* they will not or cannot provide evidence of duty payment to the intending claimant,
* that the goods provided are UK duty paid, and
* detail of the type and brand of the goods supplied.

The written declaration should be on letter headed paper and signed by an authorised signatory from the original duty payer.

Intermediaries

If an intermediary/supplier is used, then the prospective claimant will still need to supply the same detail from the original duty payer. He should obtain this through the supply chain with the intermediary/supplier contacting the original duty payer to obtain the written declaration. In addition to this declaration, the intermediary/supplier should provide the intending claimant with a signed letter listing the products and brands that he will supply to the claimant.

Although the original duty payer may be aware that a claim is being made they will not know who is making it.

Claimant

The claimant should also submit in writing a covering letter advising of the brands and products that will be supplied by the intermediary/supplier to their business. This should accompany the information from the original claimant and the intermediary/claimant.

AEA for longer supply chains

Where there is more than one intermediary/supplier in the supply chain then the intending claimant will need to show clearly all the links within the supply chain and provide good evidence for each transaction sufficient to track the actual goods back to the duty payment. The longer the supply chain the more difficult this will be to provide. Owing to the difficulties in obtaining sufficient reasonable alternative evidence of duty payment for longer supply chains, the majority of drawback supply chains should be short. Ideally, to provide the best assurance of duty payment these should normally be limited to one intermediary/supplier. For example, if there are 3 intermediaries ideally we would require the following:

  • A brewery delivery note from the UK duty payer to supplier A
  • An invoice from supplier A to supplier B
  • A delivery note from supplier A to B
  • An invoice to supplier C (the claimant) from supplier B
  • A delivery note to supplier C (the claimant) from supplier B
  • An AEA Schedule showing details of the UK duty payer and when supplier A, B and C took ownership/title
  • A list of SSCC / Batch Codes / Pallet codes from the UK duty payer, which links to each of the previously listed core documents

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

Review of existing agreements

A number of claimants may each have many extant AEA’s in place. These should be reviewed on a regular basis by DCAT, who should consider whether:

  • a component of the agreement no longer applies, invalidating it
  • the agreement is still required, older agreements should be monitored and where it is clear that they are no longer being used the claimant should be contacted with a view to withdrawing it.

Cancelling existing agreements

Any decision to cancel an AEA must be reasonable and proportionate to the facts/risks identified. For example, where there has been a material change in the supply chain which is not reflected in the original agreement. Where a decision to cancel is reached, you should provide written notification to the business concerned. This should include full reasons for your decision and provide detail on how the business can appeal if they disagree.

Considering AEA claims

When considering claims with agreements you should carefully consider the documentation submitted with the claim and decide whether it is inline with the agreement. Where it is not, then the claim should be rejected.

Consideration should also be given to periodically:

  • verifying that the duty payer has actually paid the duty via the normal verification route
  • establishing whether the letter provided by the duty payer is genuine, and where it is,
  • that the letter is still extant (This content has been withheld because of exemptions in the Freedom of Information Act 2000) .