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HMRC internal manual

Holding and Movements Assurance Guidance

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HM Revenue & Customs
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Excise duty points: forfeiture and penalties

Forfeiture

If, in relation to excise goods that are liable to duty that has not been paid, there is a contravention of any provision of the HMDP Regulations, or a contravention of any condition or restriction imposed by or under the HMDP Regulations, those goods are liable to forfeiture under regulation 88. (This content has been withheld because of exemptions in the Freedom of Information Act 2000)  Enforcement Handbook 

Action after condemnation has taken place

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Civil Penalties

Regulation 89 of the HMDP Regulations also allows you to issue a civil penalty in certain circumstances. Where there is any contravention of or any failure to comply with any relevant regulation or EU requirement, section 100J of CEMA 1979 (contravention of registered excise dealers and shippers regulations) is made to apply for the purpose of attracting a civil penalty under section 9 of the Finance Act 1994.

In practice you should consider raising a civil penalty for any contravention or failure to comply with any of the relevant regulations shown in Schedule 1. This includes, for example, a failure by a registered commercial importer to comply with any of the requirements of regulation 68 (imports of goods after release for consumption), which attracts a civil penalty under regulation 89.

Schedule 1-Relevant Regulations:

41(2) (completion of draft electronic administrative document for exports of excise goods under duty-suspension arrangements);

42(2) and (5) (electronic administrative document for exports of excise goods under duty-suspension arrangements-supplementary provisions);

43 (exemption certificates);

44(3) (export of energy products by sea-notification of consignee);

45(4) (splitting a movement of energy products);

50(2) and (4) (procedure for exports of excise goods under duty-suspension arrangements when computerised system unavailable);

51 (procedure for exports of excise goods under duty-suspension arrangements when computerised system unavailable-supplementary provisions);

53 (electronic administrative documents for imports of excise goods under duty-suspension arrangements);

54(1) (report of receipt of goods imported under duty-suspension arrangements);

55(1) and (3) (report of receipt of excise goods imported under duty-suspension arrangements when computerised system unavailable);

57(2) (completion of draft electronic administrative document for movements of excise goods under duty-suspension arrangements wholly within the United Kingdom);

58(2) and (5) (electronic administrative document for movements of excise goods under duty-suspension arrangements wholly within the United Kingdom-supplementary provisions);

59(1) (report of receipt of excise goods moved under duty-suspension arrangements wholly within the United Kingdom);

60(2) and (4) (procedure for movement of excise goods under duty-suspension arrangements wholly within the United Kingdom when computerised system unavailable);

61 (report of receipt of excise goods moved under duty-suspension arrangements wholly within the United Kingdom when computerised system unavailable);

62(3) (conditions applying to simplified procedures for certain movements of alcoholic liquors);

63(3) (conditions applying to simplified procedure for certain movements of tobacco products);

65 (accompanying document for exports of excise goods after release for consumption);

66 (additional requirements relating to exports of excise goods after release for consumption);

68 (imports of excise goods after release for consumption);

69 (requirements relating to imports of excise goods after release for consumption);

77(2) (tax representatives-procedure);

87 (obligations of owners and transporters).

In some cases, the failure to comply with certain conditions under the HMDP Regulations will also create a duty point under regulation 19(6). This is covered in more detail in HMAG150900. For example, where a registered commercial importer fails to provide security for a movement of duty-paid goods under regulation 69(1)(a)(ii), a duty point arises under regulation 19(6), for a contravention of regulation 19(5).

However, in other cases where the failure to comply with a condition under the HMDP Regulations attracts a civil penalty, there is no excise duty point created by regulation 19(6). For example, where a registered commercial importer fails to ensure the correct documentation travels with the goods (regulation 68(2)).

Where the contravention does not automatically create a duty point under regulation 19(6) you may need to consider whether something more serious has occurred. For example, the absence of accompanying documents could mean that the registered commercial importer did not secure the duty before the goods were dispatched. As such, there may well have been a contravention of regulation 69(1)(a), with a duty point arising under regulation 19(6), by virtue of regulation 19(5).

Excise wrongdoing penalties

Under paragraph 4 of Schedule 41 to the Finance Act 2008, anyone who is found handling excise goods (on which the excise duty has not been paid) after the excise duty point is liable to a wrongdoing penalty. This can include anyone who acquires possession of the goods or who is involved with the carrying, removing, depositing, keeping or otherwise dealing with those goods. In some cases, you may end up issuing several wrongdoing penalties because there will have been a number of person/s handling those excise goods after the duty point. You should not issue a wrongdoing penalty to anyone who has handled the goods before the duty point.

This penalty is particularly useful when the duty point is taken back to an earlier time in the supply chain because you have been able to identify an earlier holding of those goods.

You should consider the action of every person liable to a wrongdoing penalty in isolation because each case will rest on the behaviour and action taken by that person. The behaviour can be categorised in three ways - ‘deliberate and concealed’, ‘deliberate but not concealed’ and ‘none deliberate’. The penalty amount can then be reduced further in line with the law and policy. There is also a ‘reasonable excuse’ provision under this legislation. For further details, you should refer to the Compliance Handbook.

This covers wrongdoing penalties:

  • where there has been an irregularity during a duty-suspended movement
  • where goods are held outside of a duty-suspension arrangement
  • where there has been an irregularity during a movement of goods that have already been ‘released for consumption’ in another Member State
  • where there is a failure to comply with distance-selling provisions, and
  • where goods already ‘released for consumption’ in another Member State are held for a commercial purpose in the UK.

Wrongdoing penalty: Irregularity during a duty-suspended movement

In practice where an irregularity occurs, or is detected in the UK, during a duty-suspended movement the person/s liable to a wrongdoing penalty will usually include those you have identified as participating in the irregularity. In addition, anyone else who is found to be handling those goods (on which the excise duty has not been paid) after the excise duty point is also liable to a wrongdoing penalty.

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

Wrongdoing penalty: Goods held outside of a duty-suspension arrangement

In practice, where an assessment is made against a person liable for duty under regulation 10 (holding goods outside a duty-suspension arrangement), their action will usually attract a wrongdoing penalty. However, you may also find that others have been handling the excise goods (on which the excise duty has not been paid) after the excise duty point. As such, they are also liable to a wrongdoing penalty. (This content has been withheld because of exemptions in the Freedom of Information Act 2000)

This penalty is particularly useful where you identify an earlier time in the supply chain when a person was holding those goods outside of a duty-suspension arrangement.

Wrongdoing penalty: Irregularity during a movement of EU duty-paid goods

In practice where an irregularity occurs, or is detected in the UK, during a duty-paid movement you may find that the person/s who participated in the irregularity is liable to a wrongdoing penalty. This may also include the person who secured the UK duty on the goods before they were despatched. In addition, anyone who is also found to have been handling those goods (on which the excise duty has not been paid) after the excise duty point is also liable to a wrongdoing penalty.

Wrongdoing penalty: Failure to comply with the distance-selling provisions

Where an assessment is made against the consignee of a package or parcel because a tax representative has not been appointed in the UK, a wrongdoing penalty will also normally be due against the consignee/recipient of the goods. (This content has been withheld because of exemptions in the Freedom of Information Act 2000) HMAG150700(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

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Wrongdoing penalty: Goods already ‘released for consumption’ in another Member State and held for a commercial purpose in the UK

When you make an assessment against a person under regulation 13 (when goods already ‘released for consumption’ in another Member State are held for a commercial purpose in the UK) a wrongdoing penalty will also normally be due. In addition, anyone else who is found handling those goods (on which the excise duty has not been paid) after the excise duty point is also liable to a wrongdoing penalty.

Wrongdoing penalty: Cases involving private individuals

Where a person is liable to pay the duty under regulation 13 for bringing goods back to the UK for a commercial purpose, a wrongdoing penalty will normally be due

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