Notice

Temporary Registered Consignees — (Excise Notice 204a)

Updated 7 May 2024

1. Overview

1.1 What this notice is about

This notice sets out the UK’s requirements for the commercial movement of excise goods by a Temporary Registered Consignee (TRC).

It contains:

• general conditions and requirements
• approval procedures
• receipt procedures
• duty payment procedures

It also sets out your rights and obligations as a TRC.

The systems and procedures in this notice no longer apply to movements between Great Britain (England, Wales and Scotland) and the EU. If you are importing or exporting excise goods to or from the EU after 1 January 2021 you should read Receive goods into and remove goods from an excise warehouse (Excise Notice 197).

This notice does not cover duty-paid movements or goods imported from outside the EU.

1.2 Who should read this notice

You must read this notice if you’re bringing, or want to bring, excise goods into Northern Ireland from EU member states in duty suspension, on a one off, or infrequent basis, in the course of your business.

You will find details about the procedures to follow throughout this notice.

If you wish to import goods commercially that are already duty paid in the member state of dispatch, then you should read Commercial importers, certified traders and tax representatives — EU trade in duty paid excise goods (Excise Notice 204b).

1.3 Other notices you will need

You will need to read:

• Excise Notice 206: revenue traders’ records
• Excise Notice 476: Tobacco Products Duty
• Excise Notice DS5: UK Duty Stamps Scheme

1.4 If you want a copy of any forms or notices

If you wish to obtain any of the forms and notices mentioned in this notice follow the relevant links.

1.5 Who to contact if you have a query

Unless you’re told otherwise, either in this notice or in writing, your first point of contact is Excise and gambling duties enquiries.

Details of other teams that you may need to contact are in section 13.

1.6 How long it takes to respond to your enquiry

HMRC will respond in line with its Charter Standards.

2. Legal background

2.1 The law covering this notice

You will find the primary legal provisions applicable to the contents of this notice in:

• The Customs and Excise Management Act 1979 (CEMA)

• The Rehabilitation of Offenders Act 1974 (ROA)

• Finance Act 1994 (FA)

You will find detailed requirements in:

• The Revenue Traders (Accounts and Records) Regulations 1992 (SI 1992 No. 3150) (RTAR)

• The Duty Stamps Regulations 2006 (SI 2006/202) (DSR)

• The Excise Goods (Holding, Movement and Duty Point) Regulations 2010 (SI 2010/593) (HMDP)

This UK law enacts the requirements placed by EU Council Directive 2008/118/EC OJ L9 14.01.09 (as amended).

2.2 How the law is referred to in this notice

When this notice refers directly to the law, the standard abbreviations as shown in paragraph 2.1 will be used.

2.3 If you fail to meet your legal obligations

If you do not meet your legal obligations HMRC may impose financial penalties for breaches of the regulations or the conditions set out in this notice.

For more serious offences, we may:

• refuse further requests for movement authorisations

• revoke your approval

• prosecute you

For information on how to appeal against any decision we make, read section 12.

3. Overview of the scheme

3.1 What TRCs are

TRCs are excise traders that are registered and approved to import duty-suspended excise goods into Northern Ireland from EU member states on a consignment by consignment basis. They may not hold or dispatch excise goods in duty suspension.

3.2 The excise goods covered

The scheme applies to:

• energy products, such as mineral oils (also known as hydrocarbon oils)

• alcohol and alcoholic drinks

• manufactured tobacco (cigarettes, cigars, hand-rolling tobacco and other smoking tobacco)

3.3 How the TRC Scheme works

To take advantage of the TRC Scheme you must follow certain basic procedures. You must first be approved as a TRC (read section 4). In addition, before undertaking each TRC movement of excise goods you must:

• provide HMRC with advance information about the consignment

• complete and return form TRC2 TRC movement request, including the duty stamps declaration if applicable (read section 10), and secure payment of the UK duty due on the goods to us

• provide the consignor with the unique authorisation number (known as a Temporary Consignment Authorisation (TCA) number) which we will give you for the movement (read section 5)

• notify any changes regarding the details of the consignment, for example, change to quantities or type of goods, to the TRC team immediately by telephone (read contact details in section 13)

• on receipt of the goods, complete a report or certificate of receipt for your supplier, provide us with a final accounting declaration and make sure that any duty and VAT due is paid in full (read sections 8 and 9)

3.4 Legal right to be approved

Approval and registration is at HMRC’s discretion. We may reject applications, impose additional conditions and revoke approvals where we have good reason to do so. We explain this in more detail in section 4.

3.5 Effect on TRCs who receive excise duty-suspended goods from Northern Ireland suppliers

The TRC Scheme is for traders to obtain commercial consignments of excise goods from EU countries.

3.6 Effect on TRCs who receive goods from suppliers in non-EU countries

The TRC Scheme is for traders to receive commercial consignments of excise goods from EU countries.

3.7 Effect on TRCs who receive goods which have been duty-paid in an EU member state

If you wish to import goods that have been duty-paid in an EU member state into Northern Ireland, you will need to use one of the duty-paid movement schemes. Further information can be found in Commercial importers, certified traders and tax representatives — EU trade in duty paid excise goods (Excise Notice 204b).

3.8 Using the UK TRC Scheme if you’re based in an EU member state

As long as you meet all the Northern Ireland TRC requirements, including having a place of business in the UK, follow all the procedures set out in this notice and also comply with any conditions in force in your own member state. This is provided the movements that you wish to account for duty are being delivered to a Northern Ireland address.

3.9 Time limits

Once approved, there’s no limit on the number of times you can use the TRC Scheme, but you can ordinarily only have a single valid TCA at any one time. This means that HMRC will only supply you with a TCA for another consignment once you have:

• notified us that the previous consignment has been received

• submitted the report of receipt for the consignment on Excise Movement and Control System (EMCS) or, where EMCS will not allow this, submitted a fully completed manual closure request form to the TRC team (read paragraph 8.3)

• paid any outstanding duties or taxes

If you wish to receive more frequent consignments, you may apply for multiple TCA authorisation (read paragraph 5.13) or you should consider applying to become a Registered Consignee. For further information, please read Excise Notice 203a: Registered Consignees.

3.10 Bringing excise goods in from an EU member state without using the TRC Scheme

You may choose to:

• apply for approval as a Registered Consignee and comply with the procedures described in Excise Notice 203a: Registered Consignees (you will be required to be VAT registered, have adequate duty deferment arrangements in place, keep an up to date duty account, and submit monthly returns)

• appoint a Registered Consignee to import goods on your behalf

• use the services of an authorised warehousekeeper who receives goods on your behalf into an ‘excise warehouse’ (you must be registered under the Warehousekeepers and Owners of Warehoused Goods Regulations 1999 to hold goods in duty suspension in an excise warehouse) — for more details read Excise Notice 196: excise goods — registration and approval of warehousekeepers, warehouse premises, owners of goods and registered consignors

• import goods that have been duty paid in an EU member state through one of the duty-paid schemes, as described in Commercial importers, certified traders and tax representatives — EU trade in duty paid excise goods (Excise Notice 204b)

You must use one of these recognised schemes if you wish to import excise goods commercially into the UK. Failure to do so will result in the goods being liable to forfeiture and you may be prosecuted.

3.11 Marking requirements for excise goods

Subject to certain exceptions, alcohol in bottle sizes of 35cl or more with an alcoholic strength of 30% alcohol by volume (ABV) or more which are intended for retail sale in the UK must bear a duty stamp.

You can find more information about duty stamps in section 10 and in Excise Notice DS5: UK Duty Stamps Scheme.

Also, there are fiscal marking and health warning requirements that you must be aware of and follow if you intend to import cigarettes or hand-rolling tobacco.

You can find more information about these requirements in Excise Notice 476: Tobacco Products Duty.

4. Registration process

4.1 How to apply to become a TRC

To apply to become a TRC, you must complete a TRC1 application form. Once completed, this should be sent to the excise processing teams (EPT), whose address is provided on the form.

4.2 Requirements you must meet before you can apply to become a TRC

To become a TRC you must:

• have a place of business based anywhere in the UK — this however, is on the condition that movements you wish to account for duty are of goods being delivered to a Northern Ireland address — this is where you must receive the goods

• if you are based in Great Britain and wish to become a temporary registered consignee to move goods in excise duty-suspension to Northern Ireland from the EU, HMRC will allocate you with an XI excise ID as a part of your approval

• demonstrate a business need to become a TRC — for example, you should be able to provide HMRC officers with a viable business plan for your proposed business, including details of who you intend buying goods from and details of your customer base

• demonstrate suitability to be a TRC — for example, that you or any key personnel of the business do not have any unspent convictions or a recent compounded settlement for any HMRC offence

4.3 Information you must provide in support of your application

You must provide all the information requested in the TRC application form. You must provide us with details of:

• your business (including whether you’re VAT registered)

• the type or types of goods that you wish to be approved to receive

• any current or previous excise authorisations or approvals (including any applications that were refused)

• any unspent convictions under the Rehabilitation of Offenders Act (ROA) (other than for minor motoring offences), or any compounded settlements accepted during the preceding 3 years

4.4 If you provide false or misleading information

If you provide false or misleading information on your application form, HMRC may:

• revoke any registration or approval which we have granted

• impose penalties

• prosecute you

4.5 When you should apply to become a TRC

You must submit the completed application form to HMRC no less than 45 working days prior to the date from which you wish to be approved.

4.6 Refused applications

HMRC may refuse to approve you. In particular, we reserve the right not to approve or register anyone who, at the time of applying, has an ‘unspent’ conviction under ROA (other than for minor motoring offences) or has accepted a compounded settlement during the preceding 3 years. In the case of partnerships and limited companies, this also applies to all the partners or key officials of the company.

You should not assume that we will agree to approve you. In particular, you should not place orders or enter into any binding financial agreements on the assumption that we will grant approval.

4.7 When your application has been accepted

If your application is accepted HMRC will issue you with a certificate of registration. You should check the accuracy of the details on the certificate which should be kept in a safe place and made available to our officers on request. Any inaccuracies should be reported to the EPT immediately.

If we do not accept your application, we will inform you in writing and give our reasons for the rejection. If you disagree with our decision, you have the right to appeal.

For further information on what you should do if you wish to appeal against our decision, read section 12.

4.8 How long your TRC registration lasts

As long as you continue to demonstrate that you are fit and proper to hold an excise approval, still have a business need for being a TRC trader, and you do not ask HMRC to cancel your approval, your registration as a TRC will last indefinitely. The temporary aspect of your TRC approval is in relation to the movement authorisations, which are only valid for a single movement within a very specific period of time.

We will review your approval from time to time as part of our assurance process. Where there’s no longer a business need for you to be approved, we reserve the right to revoke it. If we do this, we will inform you of our decision in writing, and you have the right to appeal if you disagree. For further information on what you should do if you wish to appeal against our decision, read section 12.

4.9 Register as a TRC and then separately apply for authorisation to receive goods

The initial approval as a TRC means that you will not have to provide HMRC with the same basic information every time you wish to receive a consignment, as we will already hold this as part of your TRC registration. It should also reduce the time it takes to obtain authorisation for each consignment, as detailed checks will have already been carried out at your initial approval.

In addition, it means that you will only have to register once for access to EMCS to submit reports of receipt for your movements, using your TRC registration number, rather than re-registering for each consignment (read paragraph 6.2).

4.10 Tell HMRC about any changes to your business

You must notify HMRC of any changes to the core detail on your certificate of registration, for example, a change of address. If the legal status of your business or company changes, for example, a sole proprietor becomes a partnership, the new legal entity must apply to become a TRC in its own right. We will not automatically approve the new applicant.

You should also tell us when there are significant changes to your corporate structure affecting the day to day running of the business, for example, a change of directors.

You must advise the EPT in writing within 7 days of the change taking effect. You will either receive a new certificate or an amendment to your current one, depending on the change.

You must destroy the previous certificate as soon as you receive the replacement certificate.

Failure to advise us of any changes may result in the revocation of your approval.

4.11 Categories of excise goods

On the TRC application form you will need to indicate what categories of excise goods you wish to receive. You must demonstrate a business need for each category you select. Your registration certificate will show which categories you are approved to receive as a TRC.

4.12 Starting to receive consignments from other member states when you’re approved as a TRC

Once you’re approved as a TRC, you will still need to obtain a TCA number for each consignment you wish to import. This is done by completing form TRC2 TRC Movement Request for each consignment and returning it to the TRC team (read section 5).

4.13 Other approvals or registrations needed to operate as a TRC

You will need to be able to confirm the receipt of your goods electronically. Regardless of which method you use to do this, you will need to register and enrol for EMCS through HMRC Online Services. Further information on this can be found in section 6.

4.14 Conditions for approval

There are standard conditions that must be complied with to remain approved as a TRC. You must:

• continue to meet the UK TRC requirements (read paragraph 4.2)

• follow all the procedures set out in this notice, including the application of appropriate due diligence checks (read section 16)

4.15 Additional conditions to your approval

HMRC may apply specific conditions to your approval, which we will list on your certificate of registration.

For information on what you should do if you disagree with any conditions we impose, read section 12.

4.16 Revoke or vary the terms of your TRC approval

HMRC can revoke or vary the terms of your approval immediately at any time for reasonable cause. For example, where appropriate due diligence checks are not being carried out (read section 16).

If HMRC revokes your approval we will inform you in writing giving the reasons for our action.

You must destroy your certificate of registration the day either your approval ceases or you receive your replacement certificate.

For information on what you should do if you disagree with any decision we make, read section 12.

4.17 Cancel your approval

If you wish to cancel your approval you must write to the EPT at least 30 days before the date on which you wish to cancel it (read section 13 for contact details). Your approval will not be cancelled until any remaining consignment has been received and any outstanding duty paid.

HMRC will inform you in writing that your approval has been cancelled. On the date of cancellation you must destroy your certificate of registration.

You will remain liable for any duty unpaid on goods imported by you whilst you were approved.

5. Before you can receive excise goods

5.1 Forms you need to complete or provide

Once approved as a TRC, you will need to apply for authorisation to receive excise goods on a consignment by consignment basis. You must do this by completing form TRC2 TRC Movement Request for each consignment and sending this to the TRC team (as per the address on the form) together with payment to cover the total duty liability of that consignment (read section 9). You will then be provided with your TCA number for that movement. Form TRC2 is only available from the TRC team.

5.2 The TCA number

A TCA is the authorisation number for a particular TRC movement. It’s the TCA number that your supplier should use on the electronic administrative document (eAD), not your TRC registration number. It’s specific to a single consignment, and can only be used by the supplier, and for the type and quantity of goods, stated on the original TRC2 form. The period of time that a TCA is valid is also limited, based on the dates of dispatch and arrival that you provide on your TRC2 form.

5.3 When you should apply for TCA

You should set aside sufficient time to:

• allow for receipt of the form (including postal delays)

• allow your payment to clear

• inform your supplier that duty has been secured

Provided HMRC receives accurate and complete details from you, we aim to process your TRC2 form within 10 working days.

If you choose to secure the duty by unguaranteed cheque, the process may take slightly longer than 10 working days.

5.4 Information you’ll need to provide for each consignment

You must provide evidence to show that the TRC consignment is being made in the course of your business.

Before HMRC will issue you with a TCA, you will need to complete form TRC2. This will ask you for trading details and information about the consignment, including:

• your TRC number, business name and address

• details of your supplier and customer

• intended dates of dispatch and arrival

• details of the consignment you wish to import (for example, brand and quantities)

• details of the transporter you will use (including vehicle registration details, if you have them)

• details of any excise goods on which duty stamps should be affixed (alcoholic spirits)

On this form you must also calculate the total duty payable on the consignment.

If you’re not UK VAT registered you should account for the VAT due by declaring the value for VAT on the TRC2 form. You should add this information after receipt of the goods as you can only accurately calculate the value for VAT at this point.

We are unable to provide a TCA unless you have provided all the necessary information on your TRC2 form.

5.5 How to complete the movement request form

Details of how to complete form TRC2 are included on the form.

5.6 How to secure the duty

When you send the completed form TRC2 to the TRC team, you should also make sure that you provide security for the total amount of UK duty payable. If you do not do so through a Bacs transfer, your form should be accompanied by a banker’s draft, cheque, or postal order for the total amount. HMRC must receive payment before a movement is authorised.

If you present a non-guaranteed cheque it may take up to 10 working days to clear and we will not be able to process your form until that time.

5.7 If we refuse to authorise a particular movement

HMRC reserves the right to refuse authorisation for a particular movement. However, we will normally agree to authorise your consignment where you have a valid TRC approval, are approved to receive that category of goods and have pre-paid the duty.

5.8 When you can ask for goods to be dispatched to you

Once the TRC team has processed your TRC2 form, they will return it to you, endorsed with the TCA number for that consignment.

You must not proceed with the importation until HMRC returns the form, endorsed with your TCA number, to you. You must then provide your supplier with details of this TCA for them to dispatch the goods to you.

5.9 How to use your TCA to receive a consignment

You should provide your TCA number to your supplier, who should then use this as your excise ID number to raise an eAD for the movement. Because a TCA is specific to a consignment, it’s important that you provide your supplier with the correct number. If you supply an incorrect TCA, your supplier will not be able to raise an eAD for that consignment, resulting in delay to the dispatch of the goods.

5.10 If you do not need the TCA

If you decide that you no longer wish to receive a particular consignment, you should notify the TRC team. Provided that the TCA has not already been used, they will cancel the TCA and normally refund any money used to secure the duty for that movement. HMRC reserves the right to request further evidence demonstrating that the movement was cancelled before repaying any duty secured.

5.11 When to notify HMRC of any changes

You must notify the TRC team of any changes to the details provided in the original form TRC2 as soon as you’re aware of them, and at least 48 hours before the intended date of dispatch. This is because the new information needs to be sent to the supplier’s EU member state before your supplier can raise an eAD for the movement.

Failure to notify HMRC of these changes may mean the goods are liable to forfeiture and you are liable to a financial penalty.

5.12 What to do if you wish to take delivery of more than one consignment

You will need to complete a separate form TRC2 for each consignment. Unless you have obtained multiple TCA approval (read paragraph 5.13), you may only receive one consignment at a time. This means that you must take receipt of one consignment before HMRC will provide you with another TCA for a subsequent one.

5.13 Obtaining multiple TCA approval

You must submit a request for multiple TCA approval to the EPT. This request must include a business case explaining why you require the ability to receive multiple consignments at the same time.

5.14 Refuse multiple TCA approval

HMRC will only grant you multiple TCA approval if you can demonstrate a genuine business need for it. If you cannot provide a suitable business case to support your application, approval will be refused.

If we do not accept your application, we will inform you in writing and give our reasons for the rejection. If you disagree with our decision, you have the right to appeal.

For further information on what you should do if you wish to appeal against our decision, read section 12.

5.15 Cancelling a multiple TCA approval

If it becomes apparent that you no longer require the ability to receive multiple consignments, then the approval may be withdrawn. In addition, if it becomes apparent that receiving multiple consignments is affecting your ability to keep accurate records of each consignment, or you fail to properly account for the duty, your approval may be withdrawn.

5.16 Receive goods from more than one supplier

A TCA is only valid for one consignment and is specific to one supplier. If you wish to import goods obtained from more than one supplier, you will need a TCA for each supplier.

Unless you have obtained multiple TCA approval (read paragraph 5.13), you can only receive one consignment at a time, and you must take receipt of one movement before HMRC will provide you with another TCA for a subsequent consignment.

5.17 If your goods are delivered to different delivery addresses

All consignments must be delivered to the same delivery address. If you wish to have your goods delivered directly to different addresses, you should consider applying to become a Registered Consignee. For further information, read Excise Notice 203a: Registered Consignees.

5.18 Goods delivered to your registered premises

All consignments must be delivered to the same delivery address. This must normally be your place of business, as declared on your TRC1 application form. However, where you can show that you’re unable to receive goods at this address HMRC may exceptionally agree an alternative delivery address with you.

5.19 TCA covering each brand or type of product that you wish to import

Provided that the goods are from a single supplier and are dispatched together in one consignment, one TCA can cover different brands and product types. Each specific brand and product type must be correctly declared on your original TRC2 form so that your TCA will be valid.

5.20 Schedule movements

As a TRC you’re authorised on a consignment by consignment basis, therefore you must notify HMRC of, and secure the relevant duty on, each individual consignment before we will provide you with the necessary TCA number.

5.21 How to work out the duty

There are examples of how to calculate the duty for excise goods in section 15. Please refer to these and to section 9, which tells you more about how to account for the duty.

6. EMCS

6.1 What EMCS is and how it affects you as a TRC

EMCS is an electronic system for recording and validating all movements of duty-suspended excise goods within the EU. For each movement an electronic record, known as eAD, must be raised on EMCS and the Administrative Reference Code (ARC) that is generated as a result of this must accompany the goods.

You must make sure that you can access EMCS before you order your first consignment as a TRC (read paragraph 6.2).

6.2 IT systems you’ll need to receive goods as a Registered Consignee

You will need to use an EMCS third party software supplier to be able to access the internet and to use EMCS to access eAD notifications sent to you and send a message back to your supplier confirming receipt of the goods (known as a report of receipt). EMCS can be accessed through HMRC’s Online Services, by developing an in-house IT system that interfaces with EMCS or by purchasing a bespoke IT system designed by a suitable software supplier to interface directly with EMCS.

Whichever option you choose, you will first need to register for access to HMRC Online Services (if you’re already registered for Online Services for another reason, you do not need to re-register). You will then need to add EMCS on to the list of services you wish to have access to. Your activation code will be sent to you through the post, which may take up to 7 days to process.

As access to EMCS requires an excise registration number, you will only be able to enrol once you have been approved as a Northern Ireland TRC. Your TRC number should then be used as your user ID for all future access.

You must make sure that you can access EMCS before you order your first consignment.

6.3 Consignor must use EMCS to move TRC goods

The consignor must always use EMCS to move TRC goods. But, where EMCS is not available to the consignor at the time of dispatch, the goods may be dispatched under fallback procedures (read paragraph 8.5).

The only exception to this is where a consignment of wine is being dispatched by a small wine producer based in an EU member state that exempts such traders from the requirements of EMCS. In these cases the movement should instead be accompanied by a document drawn up by the small wine producer in accordance with EU Commission Regulation 436/2009. There are no receipt provisions under this regulation, therefore you will need to discuss with your supplier what evidence of receipt they require.

6.4 Who can raise the eAD

The consignor is the only one who can raise the eAD at the start of a movement.

6.5 The date of the dispatch must be the same as the date declared on your TRC2 form

If the date of dispatch changes you must notify the TRC team as soon as you are aware of this. Failure to do so may result in your TCA for the movement becoming invalid.

6.6 How the supplier knows that your approved as a TRC

As an approved excise trader, your TRC and TCA numbers are recorded on the System for the Exchange of Excise Data (SEED). Your TCA information is shared between member states (your TRC details are not shared between member states but are instead used in the UK for administration purposes). Your supplier will therefore be able to verify your TCA information according to the rules in their member state.

The TCA information held on SEED is also shared with EMCS. When your supplier attempts to create an eAD for your consignment, and enters your TCA number, the system will automatically validate it.

6.7 If the TCA number is not recognised when your supplier tries to raise the eAD

There are a number of reasons why your TCA number may not be recognised:

• your supplier may be entering the wrong number — you should make sure that you have provided your supplier with the correct TCA for that movement

• the TCA could have already been used — if the TCA has already been used to raise an eAD, then it will not be valid for any further movements

• the TCA may not be available — if you attempt to use a TCA before the date of dispatch or after the date of arrival stated on your TRC2 form, then the number will not be recognised

You may need to apply for a new TCA number for your consignment.

6.8 If you want to import a different quantity of goods to the one you originally notified

You must notify the TRC team of the change to the quantity, and pay any additional duty, before the goods are dispatched.

If you import more goods than you originally notified on your TRC2 form and you fail to secure the UK duty on the extra goods with the TRC team before dispatch, they’re liable to forfeiture on arrival in the UK. Such action may also result in a financial penalty or revocation of your TRC approval.

If the amount to be consigned is less than you originally notified, failure to notify HMRC of the change before the goods are dispatched may result in delays to any claim for a refund of overpaid duty.

If we issue a new TCA, the original TCA will be cancelled and cannot be used. Any changes can take up to 48 hours to take effect.

6.9 If you change your mind over the brand or type of goods that you want to import

Provided you notify the TRC team before the goods are dispatched, you can change your mind over the brand or type of goods you wish to import. If less than 48 hours notice is given, there may be a delay to the dispatch of the goods, as HMRC must communicate the changes to the authorities in your supplier’s member state. Any additional duty must be secured before the movement can take place, which may also affect the dispatch date.

6.10 Get goods from somewhere else if your intended supplier does not have the goods you require

Provided you notify HMRC before the goods are dispatched, you can change your intended supplier. If less than 48 hours notice is given, there may be a delay to the dispatch of the goods, as we must communicate the changes to the authorities in your supplier’s member state. Failure to notify us of a change in supplier will invalidate your TCA therefore a movement cannot take place until you notify us of the change.

7. The movement of the goods

7.1 What must travel with the goods

For consignments sent using EMCS, your supplier must make sure that the ARC for that consignment accompanies the goods. If stopped, this will allow HMRC to verify all the relevant information relating to that movement.

Goods moving under fallback arrangements must travel with an appropriate fallback accompanying document.

7.2 If the goods do not arrive on the intended date

As soon as you become aware that the goods will not arrive on the intended date of arrival declared on your TRC2 form, or have not arrived on the expected date, you should notify the TRC team.

You must immediately notify the TRC team of any changes of more than 24 hours to the expected date of arrival.

HMRC will advise you on what steps to take.

7.3 If something happens to the goods during transit

Where there’s a serious incident affecting the movement, for example an accident or theft, you should notify the TRC team immediately. HMRC will then raise an event report on EMCS, based on the information you provide. This message will be visible to both you and your supplier.

Where an event report is raised by the authorities in the dispatching EU member state there may be documents attached, which you will not be able to view on EMCS. In such cases the message you receive will tell you an attachment has been removed. You can obtain a copy of the attachment by contacting the EMCS helpdesk.

7.4 When your supplier raises an eAD for your consignment

Once your supplier raises an eAD using your TCA, you will receive a message through EMCS to tell you that this has been done. It’s therefore in your interests to regularly access EMCS to check for messages.

On arrival of the goods, you should also expect the ARC to be noted on accompanying commercial documentation. The ARC is generated when your supplier raises the eAD. HMRC recommends that you remind your supplier to do this when placing your order, as goods moving without an ARC are liable to forfeiture.

7.5 If you receive a message for a consignment that you’re not expecting or is incorrect

On EMCS you will be able to see the details of all movements that are consigned to you. As soon as you become aware of an unwanted consignment, for example, one that you believe has been incorrectly consigned to you, or which is for a different brand or quantity than you asked for, you should contact your supplier to alert them to the problem.

EMCS provides the ability to do this electronically. You have the option to send either an alert message in relation to a specific consignment to inform the consignor of an error on the eAD, or to send a rejection message to reject the consignment entirely.

The consignor can then cancel the movement or change the intended destination. In the event of an unwanted consignment physically arriving at your premises, you should immediately notify the TRC team (read paragraph 8.7).

Such movements may invalidate the TCA used, in which case you will need to apply for another TCA if you wish to receive a replacement consignment.

8. After the goods arrive

8.1 When you receive the goods

As soon as you receive the goods, you must unload and check your consignment, immediately enter full details in your duty account (read paragraph 9.4) and complete the electronic report of receipt on EMCS for the movement. If EMCS is not available for you to provide a report of receipt, you should wait for EMCS to become available and then provide your report of receipt in the normal way. If EMCS is available but will not allow you to complete a report of receipt, you should follow the procedure detailed at paragraph 8.3.

In all cases, within 4 business days of receipt of the goods, you should make sure that you return your completed TRC2 form to the TRC team, endorsed with the relevant ARC for that consignment. In addition, if you’re not VAT registered your TRC2 form should be accompanied by your VAT payment for the consignment. Until this is done, HMRC will be unable to provide you with another TCA for any further movements. Please keep a copy of the TRC2 form for your records.

You will find further accounting information in section 9.

It’s your responsibility to make sure that any goods which are required to bear a duty stamp have one affixed within 14 days of the importation of the goods (read section 10).

8.2 The certificate of receipt you must provide

For all movements made using EMCS, you must submit an electronic report of receipt. To do this, you need to access EMCS, find the correct eAD for that movement using the ARC, and follow the online instructions. You must submit the report of receipt without delay, and certainly within 5 business days of the goods being received.

If EMCS is not available for you to provide a report of receipt, you should wait for EMCS to become available and then provide your report of receipt in the normal way. If EMCS is available but will not allow you to complete a report of receipt, you should follow the procedure detailed at paragraph 8.3.

8.3 If EMCS will not allow you to submit the report of receipt

If EMCS will not allow you to complete a report of receipt, you should notify the TRC team as soon as possible.

Where the problem is with the system and cannot be resolved, you will be issued with a manual closure request form. This must be completed and returned to the TRC team without delay, as the movement will remain open on EMCS until the required information is received. Movements remaining open on EMCS may result in the TRC team being unable to provide you with further TCAs. In addition, you may experience problems with your suppliers, as they may be required to pay the duty in their country by their member state’s authorities.

On receipt of a fully completed form, HMRC will forward it on to the authorities in the member state of dispatch for them to close the movement on EMCS. You and the consignor should receive a message through EMCS confirming that the movement has been manually closed.

8.4 If the goods arrive without an ARC

If goods arrive with a Fallback Accompanying Document instead of an ARC read paragraph 8.5.

If goods arrive without either an ARC or a Fallback Accompanying Document, you must inform the TRC team immediately by phone (read section 13 for contact details).

Duty-suspended excise goods found to be travelling in the UK without either an ARC or a Fallback Accompanying Document are liable to forfeiture.

You should therefore take any steps you reasonably can to make sure that your supplier follows the correct procedure for moving duty-suspended excise goods.

If you require further assistance, the TRC team will inform you of the procedures to follow.

8.5 If you receive goods with a Fallback Accompanying Document instead of an ARC

If EMCS is unavailable at the time the goods are dispatched they will travel under ‘fallback’ arrangements, which require the goods to be accompanied by a fallback accompanying document. You will be able to identify this document because it will include the statement ‘fallback accompanying document for movements of excise goods under duty-suspension of excise duty’. If a consignment of goods is received under cover of a fallback accompanying document you should wait for your consignment to be shown on EMCS and then provide your report of receipt on EMCS in the normal way.

The fallback accompanying document will not include an ARC, as the movement was not recorded on EMCS at the time of dispatch. A Local Reference Number (LRN) provided by the consignor will uniquely identify the movement instead. As soon as the system becomes available again in the EU member state the consignor will record the movement on to EMCS. You can use the LRN provided by the consignor, in place of the ARC, to identify your movement on EMCS.

8.6 If EMCS is not available to submit the report of receipt

If EMCS is not available for you to provide a report of receipt, you should wait for EMCS to become available and then provide your report of receipt in the normal way.

8.7 Refuse to accept a consignment

TRCs are not permitted to use the refusal functionality on EMCS to refuse a consignment. This is because the refusal (either full or partial) is made by submitting a report of receipt. This creates a duty point, requiring immediate payment of the UK duty.

But, EMCS provides TRCs with the option to reject a consignment before or during transit. If you receive an eAD on EMCS which is incorrect or which you are not expecting, then you can use this facility to either alert the consignor to the discrepancy or reject the consignment outright, provided that the goods have not physically arrived at their destination.

In most cases, you may not reject goods consigned to you once they arrive at your premises. You must take full account immediately, submit the report of receipt accepting the movement and enter the details to your duty account records (read section 9). If there is any outstanding duty, the TRC team will provide the necessary guidance on how to pay this.

But, in certain circumstances, for example, for health and safety reasons, HMRC may allow you to reject the consignment, even though the goods have arrived. This is only possible where a problem has been discovered on arrival, for example during a tailgate check. If goods have been offloaded and the transporting vehicle has departed, then this option is no longer available. If you wish to reject a consignment that has arrived, you should immediately contact the TRC team to obtain authorisation to do so (read section 13 for contact details). Once you have received this, you must inform your supplier of your decision and reject the consignment on EMCS. Your supplier will then amend the destination on the eAD to allow the goods to be delivered to an alternative address.

If you have accepted a consignment, you cannot subsequently reject it.

In all cases, the TCA for the movement will no longer be valid, so you will need to apply for another TCA to cover any replacement delivery.

8.8 If you discover shortages on receipt

You must record the actual quantities received on the report of receipt (read paragraph 8.2).

You must also:

• make sure you enter the actual goods received in your records

• notify the TRC team (read section 13), who will advise you what steps to take to claim a repayment of any monies due to you

HMRC will normally only allow a refund for allowable losses or where it can be shown that the goods were never dispatched. Allowable losses are losses due either to a genuine accident or to the nature of the goods.

In some circumstances you may also wish to consider submitting an explanation on reasons for shortages or excesses message. Unlike the information that can and should be entered on the report of receipt when reporting a shortage, this message can only be read by you, the UK authorities and the authorities in the member state of dispatch. This message can be useful where you may wish to provide information regarding discrepancies that may be sensitive and which you do not wish to share with your supplier.

8.9 If you discover excesses on receipt

Excesses should not normally happen, as you’re required to inform HMRC of any changes before the movement starts, and the correct amount must also be shown on the eAD, which must match your original declaration.

We may exceptionally allow you to make a voluntary declaration if you can show that the excess was completely accidental, for example, a packing error that could only be discovered after receipt. In these cases, you should record the actual quantities received on the report of receipt that you send back to your supplier, and contact the TRC team immediately (read section 13 for contact details). They will then provide advice on how to pay any outstanding duty.

If you do not pay duty on any excess goods they will be liable to forfeiture.

In some circumstance you may also wish to consider submitting an explanation on reasons for shortages or excesses message (read paragraph 8.8).

8.10 What to do if there’s a shortage on receipt to cover the outstanding amount

A TCA can only be used for one consignment. You will need to apply for another TCA from the TRC team.

8.11 How you should account for VAT on your transactions

If you’re registered for VAT, you should account for acquisition VAT on your VAT Return for the period covering the date of acquisition of the goods. You will find more details about this in VAT on movements of goods between Northern Ireland and the EU.

If you’re not registered for VAT in the UK, you must pay the VAT at the current rate on the total value of the goods, including the excise duty. You may use your TRC2 form to pay VAT, but you will not be able to calculate the actual VAT payable until you have obtained the goods.

9. Accounting for duty

9.1 How to work out the duty due on the goods

You’re responsible for working out the correct UK duty due on each consignment, even if someone else works out the duty value on your behalf.

You must:

• determine the correct 3-digit tax type code for each product

• use the correct code for each class of goods received

You should then calculate the duty due on the consignment. Section 14 provides examples to help you with your duty calculation.

9.2 The rate of duty you should use

You must use the rate in force for the type of goods you intend to receive at the time when the goods are received at your premises.

9.3 Where you can find out more information about tax types and duty rates

Current duty rates and tax types are published in Volume 1 of the Integrated Tariff of the United Kingdom. You can find the current duty rates in the Rates and allowances guidance.

9.4 Keeping a duty account and records for your TRC consignments

You must maintain a permanent record, in summary form, listing the TCA reference, the goods received and the excise duty payable.

For each imported consignment, the excise duty account must show, per TCA:

• detail of the relevant ARC

• the total duty due to HMRC

• the total duty due from HMRC

• the net duty due from, or to, HMRC

• any adjustments made

• payment details or a payment reference (as detailed on your TRC2 form)

You should make sure that your duty account is kept fully up to date.

The account must have an audit trail. This means that each entry in the account must be traceable back to the relevant source document. Similarly it must be possible to trace any source document to the relevant entry in the duty account.

You will find more information about record keeping in Excise Notice 206: revenue traders’ records.

9.5 When you pay the duty due on the consignment

You must secure the total duty due on each consignment at the time of submitting your completed TRC2 form to the TRC team.

The secured amount becomes an actual duty payment once you notify HMRC of the receipt of the goods. Should the amount of duty payable subsequently change, for example, due to excesses or shortages, either a further payment may be required or, if you can show that you have overpaid excise duty on allowable losses (read paragraph 8.8), you will be entitled to a refund of that overpayment. Once we receive full payment, we will discharge the TCA.

9.6 Payment methods accepted

HMRC will accept a:

• Bacs payment

• banker’s draft

• postal order

• cheque

You should be aware that if you present a non-guaranteed cheque it can take 10 working days to clear. We are unable to fully process your form until your cheque has cleared.

If you pay by cheque and also need duty stamps to affix to bottles of spirits (read section 10), we will not provide them until the cheque clears.

9.7 Using a deferment account to secure the UK duty

If you wish to use a deferment account to secure the UK duty you should consider applying to become a Registered Consignee instead. For further information read Excise Notice 203a: Registered Consignees.

10. UK duty stamps

10.1 The goods that are required to bear a stamp

All bottles and other retail containers of spirits, and wine or other fermented products (previously known as made-wine), with a strength of 30% alcohol by volume or more, with a capacity of 35cl or more, are required to bear a duty stamp when removed to home use in the UK.

10.2 Different types of duty stamps

The duty stamp comes in 2 formats:

• a type A stamp (known as a free-standing stamp) which must be attached directly to the bottle

• a type B stamp (known as a label stamp), which is incorporated into bottle labels and printed by the industry’s own label printers

But, as a TRC, you can only use free-standing stamps.

10.3 When stamps must be affixed

If you’re receiving unstamped product from the EU as a TRC you should obtain and affix free-standing stamps within 14 days of the arrival of your goods in the UK. If you fail to affix stamps within this period the goods are liable to forfeiture. You may also be liable, on summary conviction, to a fine of up to £5,000, or a financial penalty.

Alternatively, you can receive goods which already bear either a free-standing or label stamp affixed by a person in another member state. You should check whether this is the case when placing your order to make sure that you do not request unnecessary duty stamps from HMRC.

10.4 How to acquire free-standing stamps

You should request free-standing stamps from the TRC team by completing the duty stamps declaration part of the TRC2 form.

The TRC team will provide you with duty stamps for your consignment at the same time as they return your completed TRC2 form, endorsed with your TCA. They will only supply sufficient stamps for the consignment you are importing.

10.5 Information you need to provide on your duty stamp declaration

You will need to provide the following information:

• your name and address

• the delivery address for the stamps (this must be the address where you intend affixing the stamps)

• the type of product you are importing, that is, whisky, gin, vodka, rum, brandy, or other product and its alcoholic strength

• the number of bottles you are importing and their size

You must also sign a declaration confirming that the goods will not already bear duty stamps when they’re imported.

10.6 If you receive goods which already bear a stamp

If the goods you receive already bear duty stamps, and you have received free-standing stamps from the TRC team for that consignment, then you must return them to HMRC. Failure to do so may render you liable to a financial penalty for each stamp that you fail to return.

10.7 If you do not have enough stamps

If you receive more goods than you ordered, you’re required to notify the TRC team. When they have received payment of the additional duty due, they will provide the additional stamps.

You should note that, where this happens, stamps must still be affixed to the goods within 14 days of their arrival in the UK. It’s therefore in your interests to make sure that the TRC team receive payment of any additional duty as soon as possible.

10.8 What to do if your stamps are lost, stolen or damaged

In these circumstances you should inform the TRC team by the end of the business day following the day on which the loss or the discovery of the loss occurred. Depending on the circumstances, they will then provide you with replacement stamps.

10.9 If you do not have the correct stamps for the goods you receive

In these circumstances you should contact the TRC team. They will then advise you of the correct action to take.

Normally HMRC will require you to return the incorrect stamps and reissue you with appropriate replacements. However, you must also confirm that the abv and volume of the product are identical to the detail originally notified to us. If they’re not, then you must also arrange for any outstanding duties to be paid before we will provide replacement stamps.

10.10 Where you can find out more about duty stamps

You can find more information in Excise Notice DS5: UK Duty Stamps Scheme.

11. General information

11.1 When HMRC visits your business and premises

We may visit:

• your business, from time to time, to check your business records, systems and premises or to check the details of your application

• the delivery address shown on the TRC2 form to check the consignment

• your transporter to verify the movement details shown on the TRC2 form

When we visit you must do all of the following:

• admit us to your premises

• produce records for us to check

• allow us to inspect any stock

Alternatively, there may be occasions when we ask you to produce records at one of our offices.

Failure to comply with these requirements may result in your approval being revoked.

11.2 HMRC will make an appointment

We will normally make an appointment. Occasionally, visits are made without an appointment, but the attending officer will give the reason for the unannounced visit.

We aim to carry out our visits as quickly and efficiently as possible. You can help by providing the relevant records and helping us understand them, especially if there’s anything special or unusual about your particular business.

11.3 Responsibility for the safety of HMRC personnel

While our officers are on your premises you must make sure their safety at all times.

11.4 What you can expect from HMRC

You can expect that we will:

• identify ourselves by name on arrival, and produce an identity card

• explain the main purpose of the visit

• be polite and considerate and deal with your tax affairs confidentially

• keep claims on you and your staff’s time to a minimum

• where possible, try to resolve matters during the visit

11.5 How you can help HMRC

You can help by:

• advising us as soon as possible about the reasons for any significant changes in the tax or duties you have declared or the systems used to calculate the declarations, you should do this by contacting the TRC team

• keeping your records, declarations and payments up to date

• providing us with the information and explanations we request

• asking us if you’re unsure of any matter connected with the duty or tax — we may not look at all aspects of your records and business, so you cannot assume that you’re accounting for everything correctly just because no errors are found, so it’s in your own interest to ask if you’re unsure

• helping us to understand your business and records

• replying to enquiries within the specified time

• quoting your registration number when you contact us

11.6 If you disagree with a decision made by the visiting officer

If you disagree with a decision, discuss it first with the visiting officer.

If you still disagree, then you should read section 12.

12. Review and appeals process

12.1 If you disagree with any decision HMRC makes about your affairs

When HMRC makes a decision that you can appeal against we will tell you and offer you a review. We will explain the decision and tell you what you need to do if you disagree.

For example with:

• the amount of an assessment

• the issue of a financial penalty

• a decision specifically connected to TRCs

You will usually have 3 options. Within 30 days you can:

• send new information or arguments to the officer you have been dealing with

• have your case reviewed by a different officer

• have your case heard by an independent tribunal

A review will be handled by a different officer from the one who made the decision. If you prefer to have an independent tribunal hear your case, you must write directly to the Tribunals Service (read contact details at paragraph 12.5).

12.2 Time limits to ask for a review

If you want HMRC to review a decision, you must write to the person who issued the decision letter, within 30 days of the date of that letter.

We will complete our review within 45 days, unless we agree another time with you.

You cannot ask the tribunal to hear your case until the 45 days (or the time we agreed with you) has expired, or we have told you the outcome of the review.

If you’re not satisfied with the review’s conclusion, you have 30 days within which to ask the tribunal to hear your case.

If we cannot complete our review within 45 days, or any time we agreed with you, we will ask you whether you’re willing to agree to an extension so that we can complete the review. If you do not agree to an extension, the review is treated as concluding that the decision being reviewed is upheld.

We will write to tell you this and, you then have 30 days from the date of that letter to ask the tribunal to hear your case.

12.3 What you must include in your request for a review

Your request should set out clearly the full details of your case, the reasons why you disagree with HMRC and provide any supporting documentation. You should also state what result you expect from our review.

12.4 If you do not want a review

If you do not want a review you may appeal to the independent tribunal. You need to send your appeal to the Tribunals Service within 30 days of the date on the decision letter.

12.5 Where you can get more information

Find out more information about:

• how to get a review of an HMRC decision

• what to do if you disagree with an HMRC decision

There’s also information about how to appeal to the Tribunals Service on GOV.UK.

13. How to contact HMRC

Application or registration queries

Contact the excise processing teams about an application you’ve submitted or if you need to tell us about any changes.

General enquiries

Contact Excise and gambling duties enquiries if you have a general query.

EMCS queries

If you’re having problems with EMCS, check EMCS service availability and issues to find out if the answer is there.

If you still need help contact Excise Movement and Control System: general enquiries.

Movement queries

Contact the TRC team if you’re registered as a TRC and want to:

• ask for authorisation to receive a consignment of excise goods
• tell us about a consignment that we’ve already authorised

Movement Queries
HMRC payments REDS and NOIC
HM Revenue and Customs
BX9 1XT

Telephone: 03000 529510

14. Examples of duty calculation

The way in which excise duty is calculated on alcoholic products has changed. This means you now calculate duty based on litres of pure alcohol for all alcoholic products. You can find examples of duty calculation when you work out how much Alcohol Duty you need to pay.

15. The due diligence condition

15.1 What due diligence is

Due diligence is the appropriate reasonable care a company exercises when entering into business relations or contracts with other companies, and how it responds in a deliberate reflexive manner to trading risks identified.

15.2 Why a due diligence condition is required

Without effective safeguards in place, there are considerable risks to all businesses along alcohol supply chains of becoming implicated in illicit trading.

This condition requires that all excise registered businesses operating in the alcohol sector consider the risk of excise duty evasion as well as any commercial and other risks when they are trading. Doing so will help to drive illicit trading out of alcohol supply chains, and reduce the risk to businesses of financial liabilities associated with goods on which duty has been evaded.

15.3 What you’re expected to do

From 1 November 2014 it becomes a condition of your approval as a Temporary Registered Consignee that you must:

• objectively assess the risks of Alcohol Duty fraud within the supply chains in which you operate

• put in place reasonable and proportionate checks, in your day to day trading, to identify transactions that may lead to fraud or involve goods on which duty may have been evaded

• have procedures in place to take timely and effective mitigating action where a risk of fraud is identified

• document the checks you intend to carry out and have appropriate management governance in place to make sure that these are, and continue to be, carried out as intended

15.4 How to assess the risks in your supply chains

The fraud risks within a supply chain are unique to each business, and objective assessment of the likelihood of your trading activities contributing to fraud is an essential first step to developing effective due diligence procedures. You will need to consider the full range of trading relationships you have established and the potential for fraud in each.

The main risks within the alcohol sector include:

• involvement in the supply of goods for fraud

• receiving goods that have been smuggled or diverted into the UK

• inadvertently facilitating fraud by providing import or warehousing services

An important feature of the smuggling or diversion of alcohol to the UK market is the ability to source product either where the excise duty has been suspended or it has been refunded under drawback provisions. To assess your exposure to this risk you will need to objectively assess if there is potential for duty evasion resulting from your trading activity. You will need to know who you’re selling to and where the goods are destined for and understand the market for these products. Without this, there’s a risk of supplying goods directly or through a third party into illicit supply chains.

Import and warehousing procedures are often exploited to provide cover for the illicit movement of goods. Fraudsters will seek to distribute duty evaded goods as well as counterfeit alcohol into legitimate retail supply chains. To assess your exposure to this risk you will need to objectively consider whether the supply chain and trading activity is credible which includes knowing who you source goods from and provide a service to.

High level indicators of risk include goods being received from unusually complex or apparently uneconomic supply routes, for example, regular supplies of UK produced goods that have been shipped out to another member state and then re-imported. If you’re sourcing duty paid goods you will also need to consider the credibility of suppliers and the level of evidence you can obtain to demonstrate the provenance and duty status of goods.

Paragraph 15.9 provides further detail on risk indicators.

15.5 The checks you should carry out

Once you have established the main risks of fraud you may be exposed to, your regular checks during trading should be of a type and level sufficient to establish the integrity of the excise transactions and supply chains you are trading in. This level needs to be reasonable and proportionate to the risk.

Depending on the nature of your business and complexity of your transactions, checks will need to be individually tailored. In particular, they must be sufficiently sensitive, yet robust enough, to pick up potential fraud risks. These checks should provide protection from the threat of fraud or you becoming inadvertently involved in fraudulent activity.

As a general rule ‘fitted’ checks should normally focus on:

• financial health of the company you intend trading with

• identity of the business you intend trading with

• terms of any contracts, payment and credit agreements

• transport details of the movement of the goods involved whether or not you are directly involved in this

• existence/provenance of goods — where goods are said to be duty paid you should normally seek sufficient detail to satisfy yourself of the status of the goods

• the deal, understanding the nature of the transaction itself, including:

  • how the cost of the goods is built up, for example, whether it includes appropriate taxes, transport, and so on

  • why is it being offered

  • whether it’s too good to be true

  • how the deal compares to the market generally

Paragraph 15.10 provides more examples.

15.6 How you should respond to a fraud risk in your supply chains

It’s expected that your due diligence procedures will provide effective control over the risks of fraud within your supply chains. Where your checks indicated real concerns, we would normally expect aspects of your supply chain to be changed to address this, for example, the supplier or the destination of the goods. However, a decision of whether or not to trade with another party remains a commercial decision for your business to take.

If your checks lead you to suspect duty fraud you should also inform our Customs hotline.

15.7 HMRC will review the due diligence checks you have in place

As part of our enforcement and general audit programmes, we will consider whether or not the steps you have taken to embed anti-fraud due diligence into your trading activity are sufficient and timely to address fraud risks in your supply chains. We will aim to establish whether you have objectively assessed the risks in your supply chain, and you must be able to demonstrate that you have put in place reasonable and proportionate checks and effective procedures to respond to fraud risks when they arise.

15.8 What HMRC will do if your due diligence checks are found to be insufficient

If your due diligence procedures are considered insufficient to address fraud risks, we will carefully consider the facts of the case before taking further action, but where appropriate we will seek to support you to improve your procedures.

In more serious cases such as a failure to consider the risks, undertake due diligence checks or respond to clear indications of fraud, we will apply appropriate and proportionate sanctions. For serious non-compliance, such as ignoring warnings or knowingly entering into high risk transactions, we may revoke excise approvals and licences.

You’re also reminded that handling goods liable to excise duty held outside a duty suspension arrangement may cause you to become liable for any excise duty due on those goods and an excise wrongdoing penalty. Any of those goods you currently hold could also be liable to forfeiture.

Paragraphs 15.9 and 15.10 provide further details on risk indicators and outline some of the checks that you may carry out to identify high risk transactions. These are not intended to be prescriptive or exhaustive. Once you have established the most appropriate due diligence tests for your business, these should be used to test both new and existing transactions and supply chains linked to your business. Some checks may be more appropriate to your business than others.

15.9 Examples of due diligence risk indicators

You should be concerned about a prospective transaction where you identify one or more of the following indicators in both suppliers and customers, the presence of which may lead you to make further inquiries.

Note — this list is not exhaustive.

Financial health of the company you intend trading with

You should be concerned if:

• there’s no, or poor, credit ratings but it’s still able to finance substantial deals

• there are high levels of debt

• they’re buying high value goods on extended credit

• they’re a new company with little or no trading history

• there are little or no fixed assets

Identity of the business

You should be concerned if:

• there is a lack of detail about the business’ identity, for example, no address details, or HMRC approval number

• they do not appear to be on Companies House records as originally described

• they’re dealing in high value goods from short term lease accommodation or residential addresses

• there’s no general visibility of the company you intend trading with, for example, they do not appear to advertise or have a website

• they have returned only partly completed application or trading forms

• if you’re a warehousekeeper, receiving duty suspension goods on behalf of a third party who is not WOWGR registered where they would otherwise be required to be registered

Terms of contract, payment and credit agreements

You should be concerned if:

• there is an insistence on dealing in cash, especially where the deal is a high value one

• cash payments are made using money couriers

• offers of credit appear to be outside normal business practice — payment terms are normally 21, 31 or 45 days but high risk transactions may have short payment terms, for example, 48 hours

• you’re asked to make payment to an account or person which does not appear to be linked to the seller, or other unusual payment arrangements requested by the seller — the same applies to customers

• a valid pro-forma or purchase invoice is not or will not be provided

• the circumstances of the trading arrangement seem false or contrived — for example, a supplier provides you with the details of a customer for the goods they are selling to you, or offers you a contract with no financial loss to you

Transport

You should be concerned if the goods are to be received from an unusual source or supply route, for example, Northern Ireland produced goods are sourced from another country and directly compete with those from a more direct supply route.

Existence or provenance of goods

You should be concerned if:

• the goods are claimed to be duty paid but your supplier (or person on whose behalf you are storing the goods) cannot provide reasonable evidence of duty payment to support the status of the goods (for further detail about what constitutes evidence of duty payment please refer to Excise Notice 207: Excise Duty drawback)

• individuals in the company have little knowledge of your trade sector

• where samples are provided or the goods have been received:

  • for spirits there’s no duty stamp in circumstances where there should be one or the duty stamp does not fluoresce (refer to guidance)

  • the goods appear counterfeit, in that, the quality of labels and or packaging is poor when compared to the genuine article

  • the supporting paperwork seems false

  • the goods are older than supporting evidence (such as documents demonstrating duty payment) suggest, for example, the best before dates indicate an earlier production date whereas documentation gives the impression you were buying newer stock

• the company has only been trading for a very short period of time but has managed to achieve a large income in that short period of time

The deal

You should be concerned if:

• customer demand for specific brands in other countries exceeds expected levels of consumption there

• the goods are to be moved in an unusual supply route that in itself would add significant logistic costs and bring into question the economics of that trade (unless duty was to be evaded)

• supplies are offered through unsolicited emails or flyers received out of the blue

• goods are offered at incredibly low prices which seem too good to be true

• free gifts of similar or other excise goods not fully documented and in themselves would place a question over the deal as a whole

• where are other incentives such as contingency discounts which overall make the deal sound too good to be true

15.10 Examples of due diligence checks

Financial health

You should:

• obtain, undertake credit checks or other background checks on the business you intend trading with

• where a poor credit rating is identified, establish how the transactions will be funded, what security can be offered that you will be paid

• where credit is offered by the business, know who’s providing the credit facility

• know what payment terms are offered and if are they commercially viable

Identity

You should:

• check company details provided to you against other sources, for example, website, letterheads, telephone directories, and so on

• ask whether your customer or supplier is a member of a relevant trade association

• obtain copies of certificates of incorporation, VAT registration certificates and excise registration certificates where appropriate and where a trade class is quoted on these check whether or not it relates to the type of trade you’re engaging in

• verify VAT and excise registration details with HMRC (we recommend that these checks are undertaken regularly for new trading arrangements and proportionately longer for trusted ones, unless you suspect a problem)

• if you’re a warehousekeeper receiving duty suspended goods into your warehouse, be satisfied that the owner of the goods is registered under WOWGR where required

• obtain signed letters of introduction on headed letter paper and references from other customers or suppliers

• insist on personal contact with a senior official of the prospective supplier and where necessary, make an initial visit to their premises — you should use this opportunity to confirm the identity of the person you intend doing business with and keep a record of your meeting

• establish what your customer’s or supplier’s history in the trade is — can this be evidenced

• obtain the prospective customer’s or supplier’s bank details — in the case of an import or export, does the supplier or recipient share the same country of residence as their bank

• establish who you will be paying — is this the same company as the one you’re directly dealing with

• if you’re providing a service know who will be paying for it

Terms of any contracts, payments and credit agreements

You should:

• carefully consider the terms of any contracts and credit agreements before entering into these and challenge elements which appear unusual

• know what recourse is there if the goods are not as described

• if payment is to be made to or from a third party, know if there is a sound commercial reason for this

• if payment is to be made to or from a third party, know if it it is to or from an off shore account

• know if there are normal commercial arrangements in place for the financing of the goods

• where payment is made from an overseas business know how is it to be made

• know if your supplier has referred you to a customer who’s willing to buy goods of the same quantity and brand as being offered by the supplier

• know if your supplier offer deals that carry no commercial risk for you, for example, no requirement to pay for goods until the payment is received

• know if the goods are adequately insured

• know if high value deals are offered with no formal contractual arrangements

• where you’re buying from a broker:

  • know what overall value does this link in the supply chain add

  • know if it is possible to source more directly

  • know how competitive the broker’s pricing is to those from a more direct route

  • know how the savings are made in a longer supply chain to make it viable

• where transactions are being financed by a third party, know if this person is a regulated financial body such as a bank

Transport

You should:

• establish where the goods will be sourced from — is this the country of production — if not why are the goods being routed in this way

• know who’s responsible for the transport — is the cost of the goods inclusive of transport — if so, does this mean that the potential logistical costs make the unit price unrealistic

• know the details of delivery vehicles should be retained and if necessary any variations to expected transport arrangements recorded

Existence or provenance

You should ask yourself:

• how has the trader contacted you

• do the goods exist

• can you inspect the goods before purchasing them

• are they in good condition and not damaged

• do the quantities on offer seem credible for the type of business you intend trading with

• where goods are said to be duty paid, seek sufficient detail to satisfy yourself that they are — this will be easier the closer you’re in the supply chain to production — this point is also important where you intend holding goods on behalf of a third party

The deal

You should ask yourself about the nature of the transaction, including:

• does it just look too good to be true

• is the demand for the type of alcohol credible — if the demand is purportedly from abroad what is the real market (consumption) for them in that country

• if the alcohol has come from abroad but is of UK origin, how did this occur and why

• where incentives are offered, when these are taken into consideration does this make the overall deal seem too good to be true

• why is it being offered

• have normal commercial practices been adopted in negotiating prices

• how does the price compete with that offered by competitors

• what is the age of the goods — if the stock is old you should seek an explanation as to its provenance

• does the price seem realistic — you should be aware of unit cost when duty and VAT values are removed

• if you’re already established in a trading agreement we would also recommend that you continue to monitor correspondence and business paperwork to identify changes in those arrangements and take any follow up action as necessary.

Your rights and obligations

Read the HMRC Charter to find out what you can expect from us and what we expect from you.

Help us improve this notice

If you have any feedback about this notice, write to:

HM Revenue and Customs
Excise Holding and Movements
4th Floor East
Trinity Bridge House
2 Dearmans Place
Salford
M3 5BS

This address is not for general enquiries.

You’ll need to include the full title of this notice. Do not include any personal or financial information like your VAT number.

If you need general help with this notice or have another question contact Excise and gambling duties enquiries.

Putting things right

If you’re unhappy with HMRC’s service, contact the person or office you’ve been dealing with and they’ll try to put things right.

If you’re still unhappy, find out how to complain to HMRC.

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