VPDS050500 - Vaping Products Duty and Vaping Duty Stamps: Approvals - general: Granting or refusing the approval

Once you have completed the pre-approval visit, you must make a decision on whether to grant the approval or refuse it.

Granting the approval

It is important that you base your decision on evidence gathered from the initial risk assessment and during the pre-approval visit. You must not base your decision on anything such as general statements or hearsay. If you find that you need more information, you should request this in writing from the business, giving them a strict time limit by which they should respond. You need to make it clear that if the information isn’t supplied, then the application may be refused. You should also make it clear that the application cannot be progressed whilst the information is outstanding.

Remember that you are the decision maker, and you must be able to support your decision with evidence-based facts. (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
You should only grant the approval if you are completely satisfied that the trader is fit and proper to be approved. You should not feel pressured into granting the approval. The default position should be never to approve if you have genuine doubts; the approvals process is set up so that businesses which are not fit and proper are kept out of the VPD and VDS regimes.

You should confirm that all verified information supports the trader as being fit and proper to be approved.

Additional conditions

Regulation 4(6) of VPPDSC 26 allows for additional conditions to be applied to an approval.

If the evidence you have gathered raises concerns about compliance but is not strong enough to justify refusal, you should look for ways to reduce the compliance risk. One option is to add conditions to the trader’s approval that specifically addresses the risks identified. Conditions can also be added to existing approvals where revenue risks have arisen but there are insufficient grounds to revoke the approval.

Conditions must be relevant to the identified risk, and appropriate to the business’s circumstances. Do not use conditions as a solution where there is usable evidence of evasion or fraud; in such cases, refusal is normally the correct response. Conditions are most suitable where risks arise from regulatory breaches, not deliberate attempts to evade duty. It is also important that conditions do not simply state what is already required either in legislation or the external guidance – it must address a specific identified risk.

Examples of conditions that could be added include (but are not limited to):

  • additional record keeping requirements
  • notifying any changes of suppliers/customers
  • imposing a time limit on the approval, for example where a business is in the process of winding down its manufacturing, or if the manufacturing is only going to occur for a limited period
  • recording additional delivery details from specific suppliers

Refusing the approval

The legislation states that: 

  • regulation 4(2) and 4(3) VPPDSC 26 states that the Commissioners of HMRC may approve a person for VPD manufacture and storage
  • s.122(2) FA 26 states that the Commissioners of HMRC may approve a person for VDS
  • s.123(1) FA26 states that the Commissioners of HMRC may approve a person to act as a duty stamps representative

Providing that they are satisfied they are fit and proper – approval is therefore a privilege, not a right in law. This means that if the fit and proper tests are not met, then their application may be refused.

Your decision to refuse must be based on solid evidence that can reasonably be defended at a Tribunal hearing. Evidence should demonstrate, on the balance of probability, that any of the following apply:

  • the trader is not a fit and proper person to hold the approval
  • there is, or would be, a significant risk to revenue
  • (This content has been withheld because of exemptions in the Freedom of Information Act 2000)

If you decide to refuse an approval, and the trader appeals your decision to the tribunal, they may be able to apply for a temporary approval as an interim measure under sections 16A-16C of the Finance Act 1994. (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
You should assess the suitability of the business, it’s key officers/persons and any guiding minds. Central to your decision should be the overall credibility of the business.

As the decision maker, you are responsible for the final decision. You must draft clear reasons for refusing the application, stating all the grounds for doing so, so that the trader understands why you have arrived at this conclusion. Remember that the trader can appeal against your decision, and you should ensure your grounds for refusal are robust when challenged.

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)
You should aim to issue the approval decision within 45 working days of their application being received into HMRC, however it may take longer if there are delays in obtaining additional information from the trader, for example. If the case is particularly complex or contentious, then advice may need to be sought from the Excise Technical Team as above.