HMRC has published a factsheet about the penalties that can be imposed where there’s been a contravention of the Alcohol Wholesaler Registration Scheme (AWRS). The factsheet comes as HMRC begins compliance checks amongst alcohol wholesalers and their customers. The maximum penalty is £10,000 for each contravention, although this can be reduced by ‘telling, helping, giving’.

What is the Alcohol Wholesaler Registration Scheme?

Alcohol wholesalers must be approved under the Alcohol Wholesaler Registration Scheme (AWRS). Applications are made to HMRC. Those whose AWRS approval is refused or revoked must get temporary AWRS approval, if they continue to trade during the review or appeal process.

What is considered a Contravention of the AWRS?

As of 1 January 2016, you have contravened the AWRS if you do not have AWRS approval (or temporary approval) from HMRC and you:

  • Sell controlled liquor wholesale
  • Offer or expose controlled liquor wholesale
  • Arrange in the course of a trade or business for controlled liquor to be sold wholesale

As of 1 April 2017, you have also contravened the AWRS if you buy controlled liquor from a wholesaler who should have AWRS approval, but does not.

Therefore, both wholesalers and their customers can be guilty of contraventions. The wholesaler must have AWRS approval from HMRC, and the customer must check their supplier is approved before doing business with them. Both types of contravention can result in penalties.

How much is the penalty for Contravening the AWRS?

The maximum penalty for each AWRS contravention is £10,000. This is HMRC’s starting point if they decide that you should be penalised. However, an HMRC officer will then consider different factors that may persuade them to reduce the penalty. This includes:

Your behaviour – behaviour is categorised as non-deliberate, deliberate but not concealed, or deliberate and concealed. The penalty for a deliberate and concealed contravention is greater than a non-deliberate contravention.

Your disclosure – disclosure is either categorised as unprompted or prompted. Unprompted disclosure is when you tell HMRC about a contravention before they started a compliance check on you, or HMRC would not have uncovered the contravention without your involvement. Prompted disclosure is when you tell HMRC about the contravention once they have already discovered the issue, or are about to. Unpromoted disclosures are rewarded with greater penalty reductions. The sooner you act, the greater the reduction will be.

Telling, Helping, Giving – HMRC also rates the quality of disclosure, which it describes as ‘telling, helping, giving’. Reductions are given if you help HMRC by doing things like:

  • Telling HMRC about a contravention, or agreeing that it has happened, and saying how/why it happened
  • Telling HMRC about the extent of the contravention as soon as you know about it
  • Answering HMRC’s questions in full
  • Helping HMRC understand your accounts
  • Replying to HMRC’s correspondence in a timely manner
  • Agreeing to attend any meetings
  • Checking your own records to identify the extent of the contravention
  • Giving HMRC access to your documents

You have the right to silence, as per Article 6 of the European Convention on Human Rights. However, a lack of co-operation may go against you. Also, if HMRC has the legal right to ask for information or documents that already exist, then you must provide them.

Other Reductions – HMRC will take into account any other reductions that are necessary.

Could I also face Criminal Prosecution?

HMRC may also carry out a criminal investigation if you provide information that you know to be inaccurate, or you commit a criminal offence under the AWRS legislation.

Can I appeal the decision?

If HMRC decides that you should be penalised, you will be told about it via letter, after which you will receive a penalty assessment notice. If you think HMRC has failed to take certain factors into consideration, then you can raise these after you get the initial correspondence.

If this does not alter the decision, then you have two further options open to you:

  1. Ask to have your case reviewed by an HMRC officer who has not previously worked on your file
  2. Pursue an appeal at an independent tribunal

What if I have an excuse for the Contravention?

HMRC will not penalise you if all of the following apply:

  1. You did not deliberately contravene the AWRS; and
  2. You have a reasonable excuse for the contravention; and
  3. You complied with the AWR requirements as soon as the reasonable excuse ended

According to the HMRC factsheet, a reasonable excuse is ‘something that stopped you from meeting a tax obligation on time which you took reasonable care to meet’. HMRC has not published a list of reasonable excuses, instead inferring that each case will be assessed on its individual merits. However, you must make sure that you comply with AWRS requirements once your excuse has come to an end. For example, imagine that you are unwell for a week, after which you recover enough to manage your business affairs. If you fail to comply with the requirements after this week is up, then it amounts to a contravention.

If you think you have a reasonable excuse, you should raise this with the HMRC officer dealing with the compliance check.

Get Expert Legal Advice

HMRC have started AWRS compliance checks across the country, so alcohol wholesalers and their customers should be ready. If there is any indication that you may have breached AWRS requirements, contact us at Altion Law. We can direct you over the coming days, weeks and months to secure a favourable outcome on your behalf. If you have a reasonable excuse, then we can bring this to HMRC’s attention. If not, we can help you understand what went wrong and why. We can then advise you on how best to co-operate with HMRC to maximise the penalty reductions available.

If you would like to have a free confidential discussion with a member of our team, please either make a Free Request For Call Back or call us directly on 01908 414990 and we will be pleased to help you.