Notification of cash transactions: introduction and background
This guidance is intended for officers engaged in assuring warehouses and alcohol production sites; it is also intended for Risk and Intelligence Service (RIS) teams involved in the selection of assurance events. It provides information on the notification of cash transactions requirement, introduced as part of the UK Alcohol Strategy on 1st January 2006, for excise goods under duty suspension arrangements. It is foundation for good practice in relation to the cash notifications requirement.
Why do traders notify HMRC of cash transactions?
Payment in cash for excise goods and related services is known to be a feature of high risk transactions and fraud. Cash payments can introduce difficulties for officers wishing to establish who owns excise goods at a particular time and also in establishing whether supplies of excise goods are genuine transactions. Dealing in cash may make it easier to suppress sales from business records, which in turn can help traders hide diversion fraud.
Notifying cash transactions helps to better identify risk within the duty suspension system allowing HMRC to focus efforts to reduce spirits fraud.
Why do traders have to notify cash transactions when legislation also exists within the Money Laundering Regulations (MLR) 2007?
All affected traders (see HMAG140200) are required to notify HMRC of all cash transactions specifically involving the sale of duty-suspended alcohol or the provision of duty-suspended alcohol related services, where the full amount of cash received or (for part payments) expected for the sale or service exceeds £9,000 (see HMAG140200 also for instalment payments). The requirement is targeted at identifying high risk transactions in relation to duty-suspended alcohol rather than money laundering.
HMRC has adopted the key definitions and financial limits within this measure from the MLR to ensure consistency. However, the two schemes have separate objectives and are covered by separate legislation.
The requirement for traders to notify HMRC of all cash transactions for sales or services provided in relation to alcohol has been introduced under section 118B(1) of the Customs and Excise Management Act (CEMA) 1979.
Although the two schemes are different, information obtained from cash transactions will also help HMRC to assure compliance within Money Service Business (MSB) obligations.