Registration and approval of excise goods held in duty suspension (Excise Notice 196)

1. Introduction

1.1 Information in this notice

This notice explains the UK’s requirements for the warehousing of excise goods held in duty-suspension within the UK.

You should read this notice if you:

• would like to be authorised as an excise warehousekeeper, read section 3
• require premises to be approved as an excise warehouse, read section 4
• are an owner of excise goods and would like to be approved and registered to hold them in an excise warehouse, read section 5
• would like to be approved and registered as a duty representative, acting on behalf of an owner based outside the UK who wants to hold goods in a UK excise warehouse, read section 5
• would like to be approved and registered as a registered consignor, read section 6
• perform operations on excise goods in an excise warehouse, read section 7

Excise Notice 197 is about the receipt into and removal from warehouse of excise goods in duty-suspension and should be read along with this notice.

As an authorised warehousekeeper, registered owner, duty representative or registered consignor you have obligations under the law. Failure to fulfil these obligations or observe any condition of your authorisation and approval could result in one or all of the following:

• restriction of your authorisation and approval
• withdrawal of authorisation and approval of some or all the sites for which you’re an authorised warehousekeeper
• withdrawal of your registered owner, duty representative or registered consignor approval
• non-renewal of your authorisation or approval for some or all the sites for which you’re an authorised warehousekeeper
• non-renewal of your registered owner, duty representative or registered consignor approval
• the imposition of a financial penalty

In addition, where there has been a breach of our regulations, any goods concerned may be liable to forfeiture, or you may be liable for the excise duty on missing goods.

2. Approvals, authorisations and registrations

You must be authorised to deal in duty-suspended goods. To be authorised as an excise warehousekeeper, approved as a registered owner, duty representative or registered consignor you need to contact HMRC.

We regularly review the compliance of existing authorised excise warehousekeepers and excise registered businesses and robustly challenge all new applications.

The law allows us to decide if we should:

• allow an existing authorisation or approval to continue
• approve and register new excise warehousekeepers
• approve new and additional excise warehouse premises
• approve and register new owners or duty representatives of excise goods
• approve and register registered consignors

Only persons who can demonstrate that they are fit and proper to carry out an excise business will be authorised or registered.

Failure to apply for authorisation or approval at the correct time can attract a financial penalty. You can avoid financial penalties by applying for excise warehousekeeper, excise warehouse premises, registered consignor, registered owner or duty representative approval at the correct time.

For more information on changes in ownership, read paragraph 2.1.

We will visit the authorised excise warehousekeeper and the approved premises of excise goods in duty-suspension to carry out checks on the:

• production
• operations
• warehousing

Our controls consist of both audit based and physical checks. While our officers are on your premises you must make sure their safety in line with the relevant Health and Safety Act 1974 and regulations. If you do not provide safe access to your premises and warehoused goods, we will restrict or withdraw your authorisation.

This notice contains our general requirements for the approval of premises, authorisation of warehousekeepers, approval of registered owners, duty representatives and registered consignors.

For certain trade facility warehouses more information is contained in:

• Spirits production in the UK (Excise Notice 39)
• Motor and heating fuels general information and accounting for excise duty and VAT (Excise Notice 179)

• Aviation turbine fuel (Excise Notice 179a)

• Excise Notice 197a: excise goods — holding and movement
• Excise Notice 197b: excise goods — aircraft store floors

If you’re a warehousekeeper you must prominently display, the warning poster Excise Notice 50: duty-free warehouse warning at each entrance and exit to the warehouse site.

Notice 50 explains that excise goods in the warehouse may be duty-suspended. It warns that, by improperly removing these goods, anyone can incur severe penalties or imprisonment.

From 1 November 2014 registered excise businesses must make sure that they are carrying out appropriate due diligence checks on their suppliers, customers and supply chains.

For information on due diligence, read section 10.

We will normally arrange appointments to visit your premises, but may also make unannounced visits, particularly when undertaking physical checks. You must permit our officers access to any area of the excise warehouse during warehouse operating hours or at any time when activity is taking place at the excise warehouse.

All our officers carry identification which they will produce upon arrival or on request.

If your application is rejected, or your authorisation or approval is revoked, you may be able to apply for a temporary approval whilst you seek a review or appeal of that decision.

2.1 Changes in ownership

Excise approval will not transfer to the new owner of a business where both of the following apply. The:

• existing excise approved business is to be sold or transferred as a going concern (including all assets, liabilities, and obligations)
• sale is from one legal entity, to be carried on as a business in the name of another legal entity

For example, a sole proprietor might sell to another sole proprietor, a partnership, or a limited company.

The new owner must:

• make sure that any necessary approval, authorisation, or registration, is in place before the sale or transfer takes place
• where required, apply for approval and be able to demonstrate that they meet the ‘fit and proper’ test described in paragraph 3.2

They should apply by:

• using the forms in this notice
• providing detail of the original owner’s approvals.

HMRC reserves the right to ask for a different application arrangement to the one described in this notice. This may occur where HMRC is satisfied that the new owner has already been found to be fit and proper to hold the excise approval in question. An example could be the transfer of an existing warehouse (or whole business) between two different authorised warehouse keepers. In such cases HMRC will discuss any revised arrangements directly with the new owner.

At the point that new authorisations, approvals, or registrations apply, we will cancel those granted to the original owner before the transfer. We’ll co-ordinate with the new and original owners make sure this happens at the point that ownership changes.

New owner obligations

As a new owner, you must be approved, authorised, or registered to carry out any of the controlled activities set out in this notice. If you are not: 

• any excise goods in your possession relating to that controlled activity could be liable to forfeiture

• we will assess you for any excise duty due on goods liable to duty which you held whilst not approved, authorised, or registered

• we may also issue you with a financial penalty for breaching approval, authorisation, or registration requirements

Changes in an approved limited company’s ownership  

A limited company’s existing approvals will remain in force if the actual approved legal entity remains the same after a change of ownership.For example, this could occur following a complete transfer of company shares.

If we have concerns that the new owner is not fit and proper we will consider:

• cancelling the existing approval of the limited company

• adding conditions and restrictions to the approval to limit any new risk identified

If you are unsure whether you need to make a new application, contact Excise and gambling duties enquiries in advance of any sale or transfer

Changes to persons with significant control and other key persons in a limited company  

In this notice, a person with significant control (PSC) is someone who holds: 

• more than 25% of shares in the company

• more than 25% of voting rights in the company

• the right to appoint or remove persons from the board of directors

If we have concern following any such, change, we will consider:

• cancelling the existing approval of the limited company
• adding conditions and restrictions to the approval to limit any new risk identified. 

Financial security required by HMRC

The new legal entity must make sure that any financial securities required are in place when they take over the business.

3. Authorisation of excise warehousekeepers

3.1 Applying for authorisation

Before applying for authorised excise warehousekeeper status you should make sure that you’re aware of the obligations and conditions which we impose upon excise warehousekeepers.

Do not assume that we will automatically authorise you as an excise warehousekeeper.

Where an existing business is to be sold or transferred the new owner must apply for authorisation, where necessary, before the change in ownership. This is described in paragraph 2.1.

To apply, you must complete the form Excise warehousing: application to be an excise warehousekeeper (EX61).

If you’re a partnership you must also complete form EXCISE 102.

The application form must be completed and signed by a responsible person within the business. This will either be:

• the sole proprietor of the business
• one of the partners if the business is a partnership
• a director or the company secretary or an authorised signatory if the business is a corporate body

Completed forms should be returned to the National Registration Unit (Excise Processing Teams) using the contact details shown on Excise and gambling duties enquiries.

You must apply at least 45 working days before the date on which you want your authorisation to begin. This is to allow us time to carry out the necessary verification and pre-approval checks, which will normally include a visit to your place of business.

Your application will be vetted and is subject to background checks. Should these checks provide insufficient assurance that the business is suitable for authorisation, more information may be requested. Until this information is received, your application will be put on hold.

3.2 The next steps

It’s important that all applicants receive a pre-approval visit so that we may get information to assist in the processing of the application.

During the visit we will examine all the business’s activities and may enquire about your suppliers, customers, business plans, accounting systems, premises, financial viability, and other relevant matters.

Only applicants who can demonstrate that they are fit and proper to carry on an excise business will be granted approval. This means we must be satisfied that the business is a genuine enterprise which is commercially viable, with a genuine need for approval, and that all persons with an important role or interest in it are law abiding, responsible, and do not pose any significant threat in terms of potential revenue non-compliance or fraud.

We will assess all applicants (not just the legal entity of the business, but all partners, directors and other key persons) against a number of ‘fit and proper’ criteria to establish:

• there is no evidence of applicants being involved in significant revenue non-compliance or fraud, either within excise or any other regime, including:
  • penalties for wrongdoing or other civil penalties which suggest a business does not have a responsible outlook on its tax obligations
  • previous occasions where approvals have been revoked or refused for this or other regimes
  • previous confiscation orders and recovery proceedings under the Proceeds of Crime Act
  • evidence that key persons have been disqualified as a director under company law
• there are no connections between the business (or key persons involved in the business) and other known non-compliant or fraudulent businesses
• there are no relevant criminal convictions of key persons involved in the business (for example, offences involving dishonesty or links to organised criminal activity) — we will:
  • disregard convictions spent under the terms of the Rehabilitation of Offenders Act 1974
  • assess the convicted person on the remaining ‘fit and proper’ criteria
• the application is accurate and complete and there has been no attempt to deceive
• there have not been persistent or negligent failures to comply with any of our record-keeping requirements (for example, poor record keeping in spite of previous warnings or absence of key business records)
• the applicant, or key persons in the business, have not previously attempted to avoid being approved and traded unapproved
• the business has provided sufficient evidence of its commercial viability or credibility — we will not approve applicants if they cannot prove there’s a genuine plan to legitimately trade from the proposed date of approval
• there are no outstanding, unmanaged debts or a history of poor payment to us
• the business has in place satisfactory due diligence procedures covering its dealings with prospective customers and suppliers to protect it from trading in illicit supply chains (for more information on due diligence read section 10)

Key persons are those who play a key role in the operation of the business to the extent that they can be seen as one of its ‘guiding minds’. For example, they have authority and responsibility for directing and controlling the activities of the business or day to day management. It also includes significant beneficiaries of the business who are not directors, partners or similar.

Applicants for authorised excise warehousekeeper status will also need to demonstrate the following before approval can be granted:

• they are able to provide adequate financial security for their warehouse premises as required by us, read paragraph 4.5
• they have an accounting system that satisfies our requirements
• they have adequate IT infrastructure in place which is sufficient to support the business an HMRC systems such as the Excise Movement and Control System (EMCS), read paragraph 3.3.1

These are not full lists. If we are not satisfied with the information provided to us, we may refuse to authorise you. In addition, if you fail to provide us with the information requested, we will place your application on hold until the information is received. We will notify you of the reason or reasons for the refusal.

3.3 Excise warehouse records

3.3.1 General

As part of the procedure for authorising you as a warehousekeeper you must demonstrate that you have the ability to keep the commercial records as laid down in Excise Notice 206: revenue traders’ records, making sure that all information is permanent and legible.

Your records must show details of all excise goods received, stored in and removed from the excise warehouse.

The warehousekeeper must normally also register for access to the EMCS within the online services offered by HMRC. Access to EMCS will be required for dispatching and receiving goods using this system.

If you have a problem with the EMCS registration and enrolment process, you should contact the EMCS online services helpdesk.

Full details of the procedures for receiving and dispatching excise goods in duty-suspension under EMCS are contained in Excise Notice 197.

You’ll not necessarily need any special IT systems, however, you’ll need access to the internet to be able to access EMCS.

You can access EMCS either:

• through HMRC online services
• by purchasing an IT system, from a suitable software supplier, which is capable of directly interfacing with EMCS

Whichever system you choose, you need to register for access to our online services. (If you’re already registered for online services for another reason, you do not need to re-register). You then need to add EMCS onto the list of services you want to have access to.

This request may take up to 7 days to process, as your activation code will be sent to you through the post.

When you register for our online services you’ll be sent an activation code that is valid for 28 days — if you do not use it within this time you’ll need to re-register with online services.

3.3.2 Manual records

We allow the use of manual records, however, if you use loose-leaf stock records you must serially number the pages.

As a minimum, your stock accounts must show:

• a full description of the goods (including age and date of first warehousing for spirits)
• the current location of goods in the warehouse
• the duty status of the goods, and evidence of any duties paid
• the name, address and, if appropriate, the VAT registration number of the owner, and, if applicable, the duty representative
• if the goods have been subject to a supply in warehouse
• a means of identifying all goods to their stock number or the other way round

Additional record-keeping requirements for certain trade facility warehouses may be required. For details of the additional notices relating to other types of trade facility warehouse read section 2.

3.3.3 Electronic records

If you want to use computers for stock control or accounting purposes, you should include this request in your application for approval, providing full details of the system you intend to adopt. The standard of records stored on your computer must be equivalent to that required if you were to use manual records.

We do not endorse a specific software package and advises that the software packages which are used in one warehouse may not be appropriate for use elsewhere.

Should your authorisation application request permission to use computer versions of official forms, include copies of these forms with your application so that we can make sure they meet our requirements.

When considering granting approval to use your specified software package we require:

• the right of access to your computer systems and to the data and documentation (including financial and management systems) that relate to your business
• the facility to download data for any checks and audit work which we may carry out off-site
• you to provide any necessary assistance to our officers whilst carrying out audits of your systems
• you to include the software package in your annual audit and make sure the auditor’s report is available to us
• you to have in place adequate back up, fallback and disaster recovery systems in place
• you to give us advance notice of any proposed changes to the software package, as you cannot introduce any changes that may affect the system’s ability to account for the excise goods without our approval

You must make sure that safeguards exist to protect your system from inadvertent corruption.

If necessary, we ask that you:

• provide a terminal for official use, which is capable only of printing, reading files and displaying information on the visual display unit (VDU)
• allocate a unique password to our officers which will allow us to access the files on a ‘read only’ basis
• keep a record of changes to programmes
• prevent unauthorised access to data

3.3.4 Stock marking and control

You must mark all excise goods, so that you can identify them in your stock accounts. Excise goods must have clear and tamper-proof markings at all times whilst in your excise warehouse, from arrival to removal from the duty-suspension system. You may use any system which meets this requirement (for example, bar coding), providing that you can establish an audit trail.

A stock account must show the following details:

• a commercial description of the product (for example, Old St Andrews Golf Ball Miniatures)
• the quantity received (in litres for all goods other than spirits which should be in litres of alcohol)
• the alcoholic strength of the product
• the quantity received in cases, casks or polydrums
• a unique identifying reference number
• the date received
• the owner of the goods

You must make sure that:

• your stock records accurately record any change of ownership
• all owners of relevant goods are registered with us and the date that you examined their certificate or, if appropriate, the duty representative’s certificate
• full details of owners and duty representatives are available to us

You should keep all excise goods in clearly identified locations so that you can readily trace them to the stock account. You must note the appropriate stock account whenever you move excise goods to a new location in the excise warehouse.

You must check the accuracy of your stock by undertaking a satisfactory inventory-checking system as agreed with us and by complete stocktaking at reasonable intervals.

You must take stock of all excise goods in the excise warehouse:

• monthly in the case of bulk goods in vats or in storage tanks
• annually in the case of all other excise goods

We may ask you to produce all stocktaking records and working papers. If you do not carry out stock control measures, we may restrict or even cancel your excise warehouse approval.

We may ask you to carry out a stocktake if there is reasonable cause to do so. In such circumstances we will give you written instructions.

As an authorised warehousekeeper, you’re responsible for the care and control of the goods in your approved sites. You must take all necessary steps to control and safeguard your stocks and investigate and examine critically all losses and deficiencies.

You must:

• record losses and the results of your investigations into them, including any management decisions taken
• take prompt remedial action
• report losses or deficiencies in line with arrangements agreed with us
• note the loss in the stock account

Failure to report notifiable losses immediately is a serious breach of your conditions of approval and could lead to its revocation.

We will charge duty on losses and deficiencies of excise goods in your warehouse unless you can show us that they are due to natural causes or accident. Normally, we will issue an assessment to the warehousekeeper for any duty due.

Only if you can demonstrate that stock losses and stock surpluses are related (for example, the product is similar, but stock rotations differ), can you request off-setting. Your records and accounts must contain a clear audit trail to justify any adjustments of stock records following the discovery of any errors. You must be able to justify each offset. We do not allow you to accumulate losses and surpluses from various sources and then offset gross totals against each other.

If at any time you discover a discrepancy in your stock you must immediately contact the excise and customs helpline.

It’s a serious offence to conceal any deficiency, surplus or other discrepancy.

3.4 Granting or refusing an application for authorisation

If we accept your application, we will issue a certificate of authorisation.

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 Excise Processing Teams immediately using the contact details shown on Excise and gambling duties enquiries.

All the excise warehouses which you’re authorised to operate will be listed on the reverse of your certificate, plus details of any conditions that we have placed on your authorisation.

If we refuse your application, we will inform you in writing and give our reasons. We will offer you a review of our decision or you can appeal direct to the independent tribunal, read section 11.

You must tell the Excise Processing Teams within 7 days if any information contained on your certificate of authorisation changes. You can do this using the contact details shown on Excise and gambling duties enquiries. When you receive a replacement certificate, you must destroy the previous certificate, or we may impose a financial penalty.

If the status of your business changes (for example, a sole proprietor becomes a partnership or all the approved excise warehouses are transferred to a company which is not an authorised excise warehousekeeper), the new legal entity must apply to become an authorised excise warehousekeeper in its own right.

In addition, if there is any change to the key persons involved in the business, we retain the right to review the authorisation after considering the fit and proper criteria set out in paragraph 3.2. Following this review your authorisation may be withdrawn or have conditions added.

3.5 Cancelling the authorisation

You must write to the Excise Processing Teams using the contact details shown on Excise and gambling duties enquiries at least 30 days before the date you want to cancel your authorisation. On the date of cancellation, you must destroy your certificate of registration or we may impose a financial penalty.

Unless the duty-suspended stock is transferred to another approved excise warehouse before the cancellation date, excise duty becomes due.

If you plan to sell or transfer your business, the new owner must apply for authorisation, where necessary, at least 45 days before the date they need authorisation. This will normally be the date that the business changes ownership. Do not cancel your authorisation whilst HMRC reviews any new application. For more information read paragraph 2.1.

3.6 HMRC imposed cancellation or changes to your authorisation

We can withdraw or vary your authorisation immediately, at any time, for reasonable cause. If we decide to withdraw your authorisation, as a concession, we may give you a period of notice.

If we withdraw your authorisation we will inform you in writing giving our reasons for our action. We will offer you a review of our decision or you can appeal direct to the independent tribunal, read section 11.

You must destroy your certificate of registration on the day your authorisation ceases.

Unless another authorised excise warehousekeeper agrees to operate the premises with immediate effect, you’ll be liable for the duty on all the stock in your excise warehouse. Any changes of authorised warehousekeeper must be notified to the Excise Processing Teams using the contact details shown on Excise and gambling duties enquiries within adequate time for the change to be made.

Even if you lodge an appeal against the withdrawal of your authorisation, you’ll cease to be an authorised excise warehousekeeper from the date of the withdrawal.

4. Approval of premises as an excise warehouse

We will consider 3 types of premises approval:

• general storage and distribution warehouses
• trade facility warehouses
• motor and heating fuels warehouses

4.1 General storage and distribution warehouses

In order for us to consider approving your premises as a general storage and distribution warehouse you must:

• demonstrate there is a real economic need to store goods under excise duty suspension arrangements at these premises, including that you will have enough clients or business to run the excise warehouse as a viable going concern — to demonstrate a real economic need you should:
• provide detail of expected volumes of business, including the potential excise duty liability of stock likely to be in the warehouse at any given time
• show that you will have customers lined up to use the warehouse facility should your application be successful
• demonstrate a genuine need for further excise warehouse storage facilities if the warehouse premises are situated in a location where other approved premises are nearby
• provide a premises guarantee (if needed)
• make sure that the premises are secure
• make sure that the premises allow HMRC safe access to all approved areas and duty-suspended stock
• make sure that your systems allow us to carry out an audit and any other checks
• meet all the conditions set out in the law and this notice
• meet any other conditions which we may impose on your approval

From 1 June 2022 you will no longer need to the meet minimum throughput levels if you can show a real economic need to store goods at your premises.

4.2 Trade facility warehouses

A trade facility warehouse is a warehouse approved for a specific purpose that is required to be completed within an approved warehouse to maintain the duty-suspension chain. Any application for a trade facility warehouse must fully detail the purpose for the application and why this purpose can only be completed within duty-suspension. Such purposes may include:

• the maturation of spirits produced at an associated distillery
• goods which will not bear UK excise duty, for example, goods for export, goods used in pharmaceuticals, goods used in foodstuff, goods to be removed for use as ship or aircraft stores
• performing any allowable operation on the goods

This is not a full list and we have given examples only.

We will in the first instance examine why the operation detailed in your request can only be completed in duty-suspension. If there is no valid reason for the request, or the operation could be performed after the goods are released for consumption, the application will be rejected.

If trade facility warehouse approval is granted, we will restrict this approval to only allow specific requested operations or activities. For example, we will limit your approval to a bottling operation if that is the activity you are applying for approval for.

Once approved, goods may only be entered to the warehouse for an approved trade need purpose which is detailed on your approval document. In some cases, we may also restrict the length of time that duty suspended goods may be held in the trade facility warehouse before the commencement of the operation they were entered for.

From 1 June 2022, goods can remain in a trade facility warehouse following completion of the operation they were originally entered for, as follows:

• where the goods are owned by the warehousekeeper, the warehousekeeper may store their own goods indefinitely
• where the goods are owned by a third party, they may be stored in the warehouse for a period of 90 days following the completion of the operation they were entered for

A trade facility warehousekeeper cannot receive, hold or move duty-suspended excise goods outside the terms of their warehouse approval.

4.3 Motor and heating fuel warehouses

A motor and heating fuels warehouse is premises where mineral (hydrocarbon) oil, biofuels and special energy products may be stored in duty-suspension.

These warehouses are approved for a specific purpose and specified products and are normally required to provide a minimum of 1 million litres bulk storage capacity. Read information about the conditions and requirements that apply in Motor and heating fuels general information and accounting for excise duty and VAT (Excise Notice 179).

4.4 Applying for excise warehouse approval

If you want to apply for approval as an excise warehouse you should complete:

• form EX68 for general storage and distribution
• form EX69 for trade facility
• form EX70 for motor and heating fuels
• form EX71 for vessels, plant and equipment

For details on who should complete and sign the application forms read paragraph 3.1.

Completed forms should be sent to the address given on the form as soon as possible. We aim to process applications within 45 working days of receipt by the Excise Processing Teams.

In order to operate an excise warehouse, you must be approved as an authorised warehousekeeper, read section 3.

When you apply you must include:

• 3 copies of drawings or plans showing details of the proposed approved area
• a copy (or, if this is impractical, an executive summary) of your premises’ Health and Safety Risk assessment
• any other information that we request (for example, business plans)

Prior to approving the premises an HMRC officer will visit you, at which point you must satisfy us of all of the following:

• the premises are physically secure and suitable for the intended purpose
• potential risks to the revenue are appropriately managed
• our officers can work in a healthy and safe environment

For trade facility warehouse approvals, you must provide full details of the trade facility that you’re applying for and be able to demonstrate why such an operation must be completed in duty-suspension.

Existing premises approval will not normally transfer to the new owner of a business upon the sale or transfer, where both of the following apply:

• the existing excise approved business is to be sold or transferred as a going concern

• the sale or transfer is from one legal entity, to be carried on as a business in the name of another legal entity

New owners should normally apply for premises approval and warehouse-keeper authorisation before the change in ownership. For more information, read paragraph 2.1. You must also be able to fulfil any further conditions we may reasonably apply.

4.5 Premises guarantees

From 1 January 2021 we no longer routinely require a premises guarantee for excise warehouses, but may still require one where there’s a risk to the revenue.

The following arrangements apply where we require a premises guarantee.

For the purposes of this notice, a premises guarantee is a guarantee given by an approved guarantor (for example, a financial institution) who undertakes to pay money to us in the event of a chargeable loss being detected with regards to warehoused goods, where the person with the prime (or joint and several) liability fails to pay that duty.

If you’re an authorised excise warehousekeeper and need information about applying for a premises guarantee, you should write to:

Guarantees are the only form of security acceptable to us. We will issue the draft guarantee form to you when we have agreed your level of security. If you disagree with the level of the guarantee you have the right to an independent review of our decision.

You must ask your guarantor to complete the guarantee form and return it to the Financial Securities Centre. If satisfied, we will accept the guarantee and return a signed copy to the guarantor.

Only companies approved by us may act as guarantors. Most banks and insurance companies have this approval, but if you want to check a particular company ask the Financial Securities Centre.

A guarantee is valid only when the named principal has a permanent place of business or residence in the UK.

The cost of maintaining the guarantee is a commercial arrangement between you and the guarantor.

Your completed guarantee will form a part of your application for approval of your premises.

You should be aware that your liability is not restricted to the size of the guarantee. We can assess the person with prime liability, or notify a joint and several liability, for all outstanding duty arising from any chargeable loss in the warehouse. These liabilities may be significantly greater than the size of the guarantee.

The authorised warehousekeeper (or an associated or parent company) must provide the premises security.

For general storage and distribution warehouses and motor and heating fuel warehouses, we will base the level of security on the potential duty due on your average end of month stock calculated over a 12-month period, allowing for any seasonal variations. For trade facility warehouses we base our calculations on the proposed or current throughput levels.

Potential duty on month-end stock holding	Level of security
Less than £100,000	Nil
More than £100,000 but less than £400,000	£100,000
More than £400,000 but less than £1 million	25% of potential duty
More than £1 million but less than £25 million	£250,000
More than £25 million but less than £100 million	1% of potential duty
More than £100 million	£1 million

The minimum level of security for new general storage and distribution warehouses is £250,000.

We offer a reduction of the guarantee levels for established traders in certain circumstances. We only allow this if we have made no claim against the security and no significant irregularities have been identified in the operation of the excise warehouse during a specified period.

We may allow reductions for premises security.

The level of security may be reduced by 50% if both the following apply:

• the principle has provided security for the 2 previous consecutive years
• we have made no claim against the security and no significant irregularities have been identified

No guarantee is required if both the following apply:

• the principle has provided security for the previous 4 consecutive years
• we have made no claim against the security and no significant irregularities have been identified

Where the principal qualifies for a reduction in the level of security and the new security required would be less than £100,000, no security is required.

Should you be entitled to a reduction, write to the Financial Securities Centre stating the grounds for your request.

Where we are obliged to make a claim against a reduced level of security, we will issue a ‘notice of withdrawal’ to the guarantor and principal. The level of cover provided by the replacement guarantee will revert to at least 100% of the amount for premises security.

Unless you (as the authorised excise warehousekeeper) have applied and been granted a reduction in the level of premises security, the level of premises guarantee must be reviewed at least every 6 months. You must keep a record of this review.

As an authorised warehousekeeper you must write to the Financial Securities Centre if your trading pattern changes as it could result in an increased level of guarantee.

We may carry out similar checks to make sure that your level of security is satisfactory and could therefore ask for additional security as a condition of your approval if we identify a weakness in your system or consider your trading pattern has altered.

A change in trading pattern could also mean a reduction in the level of security required. If you consider that you qualify for a reduction you should write to the Financial Securities Centre stating the grounds for your request.

If you’re a principal, you can apply for a single guarantee covering more than one set of premises or to cover both premises and duty-suspended movements. In such circumstances, the month-end stockholding of all your excise warehouses and the amount of movement guarantee must be totalled to calculate the size of the security.

Multi-site security of premises or companies, in conjunction with a movement guarantee, gives commercial benefits in terms of the overall level of security required. However, it carries additional risks in that one significant irregularity on the part of any of the company’s activities would result in the loss to the entire group of any reductions granted or result in the cancellation of your entire guarantee.

4.6 The approval process and refusal of an application

Once we are satisfied that the premises meet all our requirements and that you or someone else have been accepted as the authorised excise warehousekeeper, you’ll receive an approval letter which sets out the conditions of your approval.

We may not grant an excise warehouse premises approval if:

• the prospective authorised warehousekeeper for those premises fails to meet any of the fit and proper criteria set out in paragraph 3.2
• there are significant health and safety or security risks identified within the premises
• the business cannot demonstrate a genuine need for an excise warehouse
• there is insufficient evidence demonstrating a real economic need for the approval
• there will be insufficient business to be able run the warehouse as a viable going concern
• the business cannot demonstrate a genuine need for a further excise warehouse in an area which is occupied by other approved excise warehouse premises
• the premises do not fulfil a particular trade need or are not suitable for the intended operations or it has not been demonstrated that the trade facilitation must be completed within the duty-suspension regime (trade facility warehouse only)
• the applicant cannot provide a minimum 1 million litres bulk storage capacity or the warehouse is for the exclusive use of the applicant or an associated company (motor and heating fuels warehouses only)

This is not a full list.

If we cannot approve your application, we will inform you in writing and give our reasons. We will offer you a review of our decision or you can appeal direct to the independent tribunal, read section 11.

4.7 Post approval action

We will grant new premises approvals for an initial maximum period of 12 months, during which time we will carry out checks to make sure that your business meets an economic or trade facility need and that you’re complying with all the conditions of your approval.

During the first 12 months, you must observe all the conditions specified in the warehouse approval letter. If you do not comply with all the conditions of your approval we may add to or vary those conditions, withdraw your approval and consider imposing financial penalties.

Only if we are satisfied that you’re operating your excise warehouse in an acceptable manner will your premises approval be extended. If we have any doubts over the validity of the business or you have not fully complied with the terms and conditions set out on your premises approval or excise warehousekeeper registration, we may immediately cancel the approval or renew your approval for a further limited period, at which point we will carry out a review of your activities.

You should be aware that any premises approval only covers the premises named in the approval. If you want to open another excise warehouse to hold duty-suspended goods, you must write to the Excise Processing Teams using the contact details shown on Excise and gambling duties enquiries quoting your excise warehousekeeper authorisation number.

If you want to occupy premises which are currently approved under another approval, you must apply for approval in your own right at least 45 days prior to the date you intend to trade. You will be required to supply the same level of information presented for any new premises application.

You will need to check your level of premises security and if necessary arrange for a higher level of security.

4.8 Variations to existing approvals

If you need us to vary the terms of your warehouse approval either temporarily or permanently, you must tell the Excise Processing Teams (EPT) in writing as soon as possible, by sending either:

• an email to: nruwhseapprovals@hmrc.gov.uk
• a letter to the Excise Processing Teams, using the contact details shown on Excise and gambling duties enquiries

The email or letter must be signed by a responsible officer of the business, such as a company director or company secretary.

You must state what you require and why. For example:

• to include or exclude types of excise goods
• to increase or decrease the approved area

If you currently provide premises security, you must check the level of your guarantee and if necessary, arrange for a higher level of security. We will not grant any new approval until you can demonstrate that you’re able to provide adequate security.

We will advise you of our decision in writing within our published Charter Standards.

Any structural additions or alterations to approved areas, other than routine repairs, would be treated in the same manner as a ‘variation’ to your existing approval.

It’s in your own interests to receive our written consent before you start any work as a failure to tell us of any alterations or additions to the structure of the warehouse may result in your approval being withdrawn.

If you can provide evidence that you have a need for additional storage space (for example, due to seasonal demand), then we will consider permitting you to use additional premises under the terms of your main excise warehouse approval. We call such additional premises an ‘annexe warehouse’.

We do not specify the distance between the main excise warehouse and any additional premises, but you must comply with all the conditions of the main excise warehouse approval. If you cannot do this, you must seek separate approval for the additional excise premises.

All the conditions contained within your main excise warehouse approval will apply to any annexe excise warehouse we permit you to use.

4.9 Co-storage

Under certain conditions, we will allow you to store different classes of excise goods on a single approved site. This is known as ‘co-storage’. You must write to the Excise Processing Teams, using the contact details shown on Excise and gambling duties enquiries and ask us to vary your excise warehouse approval.

You may store goods:

• that are liable only to excise duty which is suspended
• on which excise duty and any other duties have been paid (in other words UK duty-paid goods)
• that are not liable to any duty (known as ‘innocent goods’)

You must satisfy us that your accounting system is capable of:

• identifying and recording the location and duty status of all the excise goods at all times
• running the various accounting routines for all classes of excise goods
• showing clearly when duty becomes due

Your system must make sure that duty-paid goods cannot revert to duty-suspended status and that duty-suspended goods cannot be shown as duty-paid without prior payment of duty.

4.10 Movement between the main warehouse and annexe warehouses

All excise goods must be received at the main excise warehouse and removed from the main excise warehouse. In addition, you must account for all receipts and complete any removal documentation at the main excise warehouse.

We do not specify the distance between the main warehouse and any additional premises but you must comply with all the conditions of the main warehouse approval. If you cannot do this, you must seek separate approval for the additional premises. Any additional premises are approved under the terms of your main warehouse approval and are not excise warehouses in their own right.

You must apply for a separate warehouse approval for your additional premises if you want to receive goods into or send goods out from the additional premises.

If you currently provide premises security, you need to check the amount of your guarantee. If necessary, you must arrange for a higher level of security.

You must also:

• control all movements of excise goods in and out of the additional premises
• incorporate stock records relating to goods in the additional premises into your existing stock system
• make sure you keep a record of all transfers to and from the additional premises

In the case of mineral (hydrocarbon) oils, these requirements only apply to floating storage that has been approved in conjunction with a motor and heating fuels (bunkers only) export warehouse, read Motor and heating fuels general information and accounting for excise duty and VAT (Excise Notice 179).

4.11 Transferring a premises approval to another authorised warehousekeeper

Any existing premises approval will not transfer to the new owner upon the sale or transfer where both of the following apply:

• the existing excise approved business is to be sold or transferred as a going concern
• the sale or transfer is from one legal entity, to be carried on as a business in the name of another legal entity

The new warehousekeeper should normally apply for premises approval before the change in ownership. For more information, read paragraph 2.1.

4.12 Renewal of approval

If you require your excise warehouse approval to continue beyond its specified date, you must apply to the Excise Processing Teams for renewal at least 2 months before your approval expires. You can do this using the contact details shown on Excise and gambling duties enquiries.

We may not renew your approval when:

• you cannot demonstrate a genuine business or economic need for your approval
• you have failed to comply with any of the conditions of your approval

If we cannot renew your approval, we will inform you in writing and give our reasons. We will offer you a review of our decision or you can appeal direct to the independent tribunal.

Even if we have granted approval with an expiry date, we will still advise you in writing of the cancellation of the approval, giving at least 3 months’ notice and the reason or reasons for our decision.

4.13 Cancellation of approval

Section 92 of Customs and Excise Management Act 1979 allows HMRC to cancel warehouse premises approval at any time if there is reasonable cause.

In particular, we will cancel an approval if a premises guarantor has advised us that they are withdrawing from their guarantee arrangements and you’re unable to provide a replacement premises guarantor.

If you fail to comply with any piece of legislation concerning the holding and movement of excise goods or any condition attached to your approval, we may cancel or vary your approval. In such circumstances we will also cancel your authorisation as an excise warehousekeeper.

Under Regulation 20(2) of the Warehousekeepers and Owners of Warehoused Goods Regulations 1999, excise duty becomes due on all excise warehoused goods unless another authorised warehousekeeper takes over the responsibility for the premises with immediate effect.

We will give you 3 months’ notice of revocation of an excise warehouse approval. In exceptional circumstances this notice period can be reduced if we decide it’s necessary.

Before the date from which your approval is cancelled you must remove all duty-suspended goods from your excise warehouse by either paying the duty, moving the goods to another approved excise warehouse or removing the goods for a purpose which does not attract duty.

You must comply with any conditions we impose, pending a review or appeal of the cancellation.

Any duty-suspended goods remaining in the excise warehouse after the date of closure will be liable to forfeiture.

5. Registration of owners of excise goods in warehouse (including duty representatives)

5.1 General

As an excise warehousekeeper, before you accept goods into your warehouse you must make sure that:

• the owner of the goods is an excise registered owner
• if the depositor is an overseas owner, they have appointed a duty representative
• the owner does not require registration

All owners of duty-suspended excise goods must get approval and registration, unless:

• the goods belong to the authorised excise warehousekeeper of that excise warehouse
• the owner of the excise goods is not a revenue trader
• the excise goods are UK duty-paid tobacco products or mineral oils for warehousing for export under the Excise Goods (Drawback) Regulations 1995 (EGDR) — read section 6 of Excise Notice 197
• the excise goods are wine or other fermented products (previously known as made-wine)
• the excise goods are hydrocarbon oils, bioethanol or special energy products
• you’re a non-UK based owner and have appointed a duty representative to act on your behalf

Registered excise owners and duty representatives must produce their registration certificates to you as the authorised excise warehousekeeper. If we issue an amended or varied certificate to an owner or duty representative, a copy of the new certificate must be provided to every excise warehousekeeper in which the owner’s excise goods are stored. The certificates will contain details of any conditions imposed by us.

We will confirm the validity of any registration if an excise warehousekeeper supplies the Excise Processing Teams with the name and registration number on the certificate.

We will not give out any information regarding conditions or restrictions, however, these details will be on the registration certificate provided to you as the registered owner. We will keep a record of your request.

5.2 Registration process for an owner

To apply for approval to own excise goods in an excise warehouse you must have a UK business address and apply on form EX60.

A UK business address is defined as either:

• the place in the UK where essential management decisions are made and the business’s central administration is carried out
• a location in the UK where the business has a permanent physical presence with the human and technical resources to make or receive taxable supplies

An owner is considered to be a sole proprietor, a partnership or a limited company. If you’re a partnership you must also complete form EXCISE 102.

If a registered owner is to sell or transfer their business to be carried on as a business in the name of another legal entity, the registration will not transfer to the new owner upon the sale or transfer.

Do not cancel any existing registration whilst HMRC reviews any new application. For more information, read paragraph 2.1.

Read paragraph 3.1 for information about who should complete and sign the application form.

You must send an up-to-date business plan with your application. You may be requested to send further additional business papers to substantiate your application. When all the requested information is held by us we intend to process your application within 45 working days.

If you’re unable to provide a business plan or other requested information you should contact the Excise Processing Teams, using the contact details shown Excise and gambling duties enquiries. Failure to do this will result in your application not being processed until this information is received.

If you do not have a business address in the UK, you’ll be unable to keep the goods in an excise warehouse for more than the initial period, which is 72 hours (excluding Saturdays, Sundays and other specified days), after which duty is due on the excise goods.

If, as an overseas owner, you want to hold excise goods in duty suspension beyond this time you should appoint a duty representative, read paragraph 5.3.

In considering your application, we will apply a fit and proper test set out in paragraph 3.2. If any applicant provides false or misleading information on the application form, we may:

• cancel any approval which we have granted
• impose financial penalties
• prosecute the applicant

If you have previously been registered as an owner or a duty representative you must tell us, supplying your previous registration number, name and address.

As a part of our registration procedure, we will ask for further information about you and your business. If you fail to supply this information, we will place your application on hold until this information is received.

If we accept your application, we will issue you with a certificate of registration. The certificate will contain the following information:

• your unique registration reference number
• your name and (if different) your trading name
• your address
• any conditions or restrictions which apply to your registration

You should quote the unique registration reference number on all correspondence with HMRC in connection with your registration. You should also have it available when contacting us.

If we do not accept your application, we will inform you in writing and give our reasons. We will offer you a review of our decision or you can appeal direct to the independent tribunal.

5.3 Duty representatives

Duty representatives must have a business or other fixed establishment in the UK and may only represent non-UK based owners. We refer to such owners as your ‘principals’.

Find out how to apply to be a duty representative.

If you’re a partnership you must also complete form EXCISE 102.

Read paragraph 3.1 for information about who should complete and sign the application form.

If you plan to sell or transfer the business the new owner must apply for approval, where necessary, before the change in ownership. They should apply for approval at least 45 days before acting as a duty representative. The existing duty representative should not cancel their approval while any new application is being considered. For more information, read paragraph 2.1.

A business or other fixed establishment in the UK is defined as either:

• the place in the UK where essential management decisions are made and the business’s central administration is carried out
• a location in the UK where the business has a permanent physical presence with the human and technical resources to make or receive taxable supplies

Applications for duty representative approval will be considered against the fit and proper criteria set out in paragraph 3.2.

Duty representatives must, prior to acting for an owner, carry out checks to make sure that any owner that they represent does not have a business establishment or fixed address in the UK. A duty representative will be expected to retain evidence that they have carried out such checks on each principal before they act for them.

Failure to complete these checks and hold the required evidence will result in the duty representative’s registration being revoked and may also affect any other excise registrations or approvals they hold.

5.4 Conditions that may be applied to a registration

All owners and duty representatives must comply with the conditions and restrictions detailed in this notice. In addition, we may apply specific conditions (for example, restrictions of the type of goods that can be warehoused) which we will list on your certificate of registration.

5.5 Guarantees

Guarantees are the only form of financial security acceptable to us. We will issue the draft guarantee form to you when we have agreed your level of security. If you disagree about the level of guarantee you have the right to a review of our decision or you can appeal direct to the independent tribunal.

You must ask your guarantor to complete the guarantee form and return it to the Financial Securities Centre. If satisfied, we will accept the guarantee and return a signed copy to the guarantor.

Only companies approved by us may act as guarantors. Most banks and insurance companies have this approval, but if you want to check a particular company ask the Financial Securities Centre. A guarantee is valid only when the named principal has a permanent place of business or residence in the UK.

The cost of maintaining the guarantee is a commercial arrangement between you and the guarantor.

You should be aware that your liability as principal is not restricted to the size of the guarantee. We can assess you for all outstanding duty arising from any irregularities in the warehouse. These liabilities may be significantly greater than the size of your guarantee.

5.6 Cancellation of registration

We may cancel your registration at any time. If we do so, then we will inform you in writing and give our reasons for the cancellation. We will offer you a review of our decision or you can appeal direct to the independent tribunal.

When your registration is cancelled, you must immediately destroy your certificate of registration and inform every excise warehousekeeper in whose excise warehouse your goods are deposited. You cease to be a registered owner the instant we cancel your registration.

If you’re a revenue trader and your registration is cancelled you (the owner) will be jointly and severally liable with the excise warehousekeeper and the person or persons who owned the excise goods immediately before and after the excise duty point (and any duty representative of either of the owners), for the excise duty due.

However, if you’re not a revenue trader and your registration is cancelled your goods can remain in duty suspension in the excise warehouse.

If you want to cancel your registration you must write to the Excise Processing Teams, using the contact details shown on Excise and gambling duties enquiries, at least 30 days before the date on which you require us to cancel your registration.

If we agree to cancel your registration, we will inform you in writing.

On the date of cancellation, you must destroy your certificate of registration.

5.7 Amendment of registration details

If the legal status of your business changes (for example, a sole proprietor becomes a partnership), the new legal entity must apply to become a registered owner prior to taking ownership of the excise goods. We will not automatically approve the new applicant.

If there is any change to the key persons involved in the business, we retain the right to review the registration, after considering the fit and proper criteria set out in paragraph 3.2. After this review, we may withdraw your registration or add conditions to it.

If you plan to sell or transfer the business the new owner must apply for approval, where necessary, before the change in ownership. They should apply for approval at least 45 days before the change in ownership. The existing owner should not cancel their registration while any new application is being considered. For more information, read paragraph 2.1.

For any changes to the details contained on your certificate of registration (for example, change of address) you must advise the Excise Processing Teams in writing, using the contact details shown on Excise and gambling duties enquiries, within 7 days of the change taking effect. We will provide you with a new certificate.

Within 7 days of receipt of the replacement certificate, you must provide a copy of it to every excise warehousekeeper in whose excise warehouse your excise goods are deposited.

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

5.8 Changes of ownership in warehouse

The owner or duty representative of excise goods stored in an excise warehouse must inform the excise warehousekeeper in advance when any duty-suspended goods are sold in warehouse.

The new owner must produce their registration certificate to the warehousekeeper, which will contain details of any conditions attached to the registration.

If the new owner is a revenue trader but not registered with us, the duty becomes immediately due to HMRC. The warehousekeeper, the buyer and the seller will be jointly and severally liable for the duty. In your own interests, if this happens, you should immediately contact HMRC using the contact details shown on Excise and gambling duties enquiries.

An overseas owner of duty-suspended goods must give you 72 hours’ notice of a change of their duty representative. They must also give 72 hours’ notice of the change to their duty representative.

You can get confirmation of the validity of the registration from the Excise Processing Teams.

5.9 Obligations of owners and duty representatives when receiving cash payments for duty-suspended sales of alcoholicalcohol products in warehouse

Owners and duty representatives who have been paid or expect to be paid by customers in cash for the sale or supply of duty-suspended alcoholicalcohol products (that is, spirits and spirits-based beverages, beer, wine, other fermented products and cider) exceeding £9,000 (or equivalent in other currencies) must complete form W7 and send it immediately (without undue delay) by email to the address shown on the W7.

You must complete the form in full by following the ‘Explanatory Notes’ contained in the form.

Where duty-suspended alcoholicalcohol products are transferred to approved excise warehouses in the UK, form W7 must be submitted prior to the removal of the goods from the dispatching warehouse.

It may be commercial practice for customers to pay cash in 2 or more instalments which individually are below the £9,000 notification threshold but the total sale will exceed this amount. In such circumstances owners and duty representatives must notify us on form W7 when the first cash payment is received.

Failure to notify qualifying transactions to us may result in the issue of a financial penalty with persistent failure resulting in the withdrawal of the registered owner’s or duty representative’s approval.

5.9.1 Additional information for owners and duty representatives in Northern Ireland

Form W7 must also be submitted before the dispatch of duty-suspended alcoholicalcohol products from a warehouse in Northern Ireland to approved excise warehouses in EU member states.

5.10 The Warehousekeepers and Owners of Warehoused Goods Regulations (WOWGR) — summary of main duty points

If a warehousekeeper accepts goods contrary to any conditions shown on their certificate of registration or approval letter, the duty point is at the time of deposit. The warehousekeeper has sole liability.

If goods remain in a warehouse after the authorisation ceases, the duty point is the time when authorisation ceases. The warehousekeeper has sole liability.

A warehousekeeper accepts goods but does not see the required certificate of registration. During the initial period they remove the goods to a purpose other than home use. The duty point is the time of deposit and the warehousekeeper has sole liability.

If a warehousekeeper accepts goods but does not see the certificate of registration within the initial period, the duty point is at the time of deposit. The warehousekeeper has sole liability and may immediately abandon the goods to the Commissioners, read Excise Notice 197.

If goods are in a warehouse and owned by a revenue trader (other than the warehousekeeper) but there is no longer a registered owner or duty representative in respect of those goods, the duty point is at the time when registration of owner or duty representative ceases. The warehousekeeper has joint liability with the owner or duty representative. The warehousekeeper may immediately abandon the goods to the Commissioners, read Excise Notice 197.

An owner (this includes an authorised warehousekeeper) sells goods in warehouse. The new owner is a revenue trader but not registered with us. The duty point is at the time of sale. The warehousekeeper has joint and several liability with the seller and the buyer. The warehousekeeper may immediately abandon the goods to the Commissioners and will no longer have joint and several duty liability, read Excise Notice 197.

6. Approval as a registered consignor

6.1 General

A registered consignor is a natural or legal person approved by us who, in the course of their business and under the conditions set by us, dispatches imported excise goods under excise duty suspension arrangements on their release to free circulation (meaning that all customs duties have been paid or accounted for) to allowable destinations.

All registered consignors approved by us are able to dispatch goods in duty suspension to:

• a tax warehouse in the UK
• a place where the goods will be exported from the UK

We may also approve someone as a registered consignor, based on specific criteria and at our discretion. In addition to the allowable destinations, we may allow this person to dispatch goods in duty suspension from a place where the goods are released to free circulation in Northern Ireland, to allowable destinations in an EU member state. Find more information in paragraph 7.2 of Excise Notice 197.

When non-UK or non-EU (countries which are not members of the EU) goods are imported into the EU through a UK port or airport they may only be moved in excise duty suspension to allowable destinations when a registered consignor has started the movement through EMCS following release of the goods to free circulation.

6.2 Approval process for a registered consignor

We will generally only consider approving the following as registered consignors:

• import agents
• authorised warehousekeepers who receive the goods from the place of release to free circulation (for example a UK port, airport or inland clearance depot)
• authorised persons who dispatch goods from Great Britain which will leave the UK customs territory from Northern Ireland

We have defined these persons as follows:

• an import agent is the person who, acting on behalf of the importer, makes the import declaration, declaring the goods to free circulation (using one of the customs procedure codes listed in the 07 or 68 series of the Tariff)
• the authorised warehousekeeper for the approved tax warehouse in the UK to which the goods are destined
• an authorised person who dispatches excise goods in duty suspension in Great Britain that will be consigned, on release to free circulation in Northern Ireland, to a destination outside the UK customs territory

We will also consider approving businesses that can demonstrate a business need to consign their own goods under excise duty suspension arrangements, following their release from customs control to free circulation.

A business acting as a registered consignor, in respect of their own goods and moving those goods to a third-party excise warehouse, will also need a WOWGR owners’ approval if the goods to be warehoused are relevant goods as defined by the WOWGR regulations.

6.3 Application process

Any of the persons in paragraph 6.2 wanting to apply for approval should complete form EX72 (and form EXCISE 102 in the case of a partnership) and forward the completed form to the Excise Processing Teams.

Read paragraph 3.1 for information about who should complete and sign the application form.

If an approved business is to be sold or transferred in its entirety  from one legal entity to be carried on as a business in the name of another legal entity, in most cases the approval will not transfer to the new owner upon the sale or transfer. The new owner should apply for approval at least 45 days before they intend to trade. Do not cancel or deregister any existing approval whilst any new application is being considered. For more information, read paragraph 2.1.

Where a business, that’s not an import agent, authorised warehouse keeper or other authorised person (authorised to dispatch goods from Northern Ireland to the EU) wants to apply for approval, they should provide the following information with their application:

• a business plan which demonstrates a genuine business need for the approval
• an explanation on how the approval will be used in practice, including the checks they will put in place to make sure imported goods consigned in excise duty suspension are in free circulation If we accept your application, we will issue you with a certificate of registration. The certificate will contain the following information:
• your unique registration reference number
• your name and (if different) your trading name
• your address
• any conditions or restrictions which apply to your registration

You should quote the unique registration reference number on all correspondence with us in connection with your approval. You should also have it available when contacting us.

If we do not accept your application, we will inform you in writing and give our reasons. We will offer you a review of our decision or you can appeal direct to an independent tribunal.

If you’re approved you must also register for access to the EMCS within the online services offered by HMRC, read paragraph 3.3.1, which will allow you to dispatch goods using this system.

6.4 Conditions that may be applied to a registration

All registered consignors must comply with the conditions and restrictions detailed in this notice. In addition, we may apply specific conditions which we will list on your certificate of registration.

6.5 Guarantees

Movements started by a registered consignor must be covered by a guarantee, from the place of release to free circulation to the place of receipt.

The guarantee can be provided by one of the following:

• registered consignor
• owner of the goods
• consignee (importer) of the goods
• transporter of the goods

If you’re one of the class of persons who may provide the movement guarantee for movements from the place of release to free circulation to the warehouse and do not currently have a guarantee read Excise Notice 197 for details on how to apply for a movement guarantee.

6.6 Cancellation of registration

We may cancel your approval at any time. If we do so, then we will inform you in writing and give our reasons for the cancellation. We will offer you a review of our decision or you can appeal direct to an independent tribunal.

When your approval is cancelled, you must immediately destroy your certificate of registration.

If you want to cancel your approval you must write to the Excise Processing Teams using the contact details shown on Excise and gambling duties enquiries, at least 30 working days before the date on which you require us to act.

If we agree to cancel your approval, we will inform you in writing.

On the date of cancellation you must destroy your certificate of registration.

6.7 Amendment of approval details

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 registered consignor. We will not automatically approve the new applicant. Refer to paragraph 2.1.

In addition, if there is any change in the key personnel of the company, HMRC retains the right to review the approval. Following this review, your approval may be withdrawn or have conditions added.

For any changes to the details contained on your certificate of registration (for example, change of address), you must tell the Excise Processing Teams in writing within 7 days of the change taking effect. You can use the contact details shown on Excise and gambling duties enquiries to tell them about the changes. We will provide you with a new certificate within 7 days of receipt.

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

7. Approval to carry out operations in warehouse

7.1 Bulk goods

Providing that we have approved you to receive and store excise goods in bulk and we have not specifically restricted your approval by imposing any conditions or restrictions, you may carry out the following operations on your goods:

• bottling
• cask rinsing, subject to the warehousing of the contaminated cleaning agent
• colouring
• denaturing (including vinegarisation)
• disgorging from case to cask, case to vat
• filling
• filtering
• fining
• mixing of goods of different sorts
• priming of beer
• racking from cask to cask
• fortifying other fermented products (previously known as made-wine)
• fortifying wine
• mixing beer or wine with other fermented products to produce other fermented products
• production of beverages or foodstuff of low alcoholic strength qualifying for duty relief
• rectifying and compounding spirits
• rendering other fermented products sparkling (that is, aerating or carbonating other fermented products)
• rendering wine sparkling (that is, aerating or carbonating wine)
• reducing spirits
• stabilising and preserving
• sweetening
• vatting or blending and racking into casks or drums

Operators of motor and heating fuel warehouses should refer to Motor and heating fuels general information and accounting for excise duty and VAT (Excise Notice 179).

In addition, you may incorporate additives providing you comply with legal obligations and the quantity used does not affect the Tariff rating of the goods.

You can find more information about Tariff classification in the Integrated Tariff of the UK.

The only allowable operations in andistillers’ excisewarehouses warehouse which is run by a spirits producer are:

• bottling of spirits produced at the associated spiritsdistillery productionof premisesmanufacture only, subject to amendment of the excisedistiller’s warehouse approval
• reducing spirits with water
• filling casks or drums with spirits
• removing spirits in bulk to tanker or by authorised pipeline
• drawing off spirits from unsound casks or pumping direct from casks to a tanker
• emptying casks of spirits into vats for subsequent removal in bulk
• transferring spirits from cask to cask

While we do not class the transfer of spirits from one vat to another as an operation, you must record the details.

7.2 Goods already bottled and packaged

For goods already bottled, providing that we have approved you to receive, and store bottled excise goods and not specifically restricted your approval by imposing conditions or restrictions, you may carry out the following operations:

• adjusting and repacking cased goods (including damaged cases), emptying bottles, dividing cased goods
• packing bottled goods from bin storage into cases
• relabelling bottles
• remarking or renumbering packages, including repacked packages

We allow repacking of retail packs of tobacco products provided no disturbance of the tobacco product itself is involved. This means individual packets, tins or pouches of cigarettes or tobacco may be repacked into sleeves or cases, but the packets, pouches or tins may not themselves be opened.

It follows that cigarettes or hand-rolling tobacco may not be repacked into packets, pouches or tins bearing the fiscal mark. Read more information about fiscal marks in Excise Notice 476: Tobacco Products Duty.

If you want to carry out an operation that is not listed or if you’re in any doubt that your action is an allowable operation, you must contact HMRC. We will provide you with a new certificate within 7 days of receipt, giving full details of the proposed operation. The performing of this operation may require an amendment to your approval.

As an authorised excise warehousekeeper, you should treat imported excise goods the same way as UK produced excise goods. Importers must make sure that they correctly declare the volume and strength of the goods.

7.3 Record keeping

When carrying out any operation in an excise warehouse on duty-suspended goods, you must keep accurate records to allow us to carry out audit checks when we wish. Operators of motor and heating fuel warehouses should also refer Motor and heating fuels general information and accounting for excise duty and VAT (Excise Notice 179).

You must take and record your accounts immediately before and after each operation, keep an accurate record of any cleaning agent used and advise HMRC about any gains and losses from any operation in warehouse.

You must also make sure that:

• you carry out and record details of the checks carried out on the fill measures and tests of strength
• you check that you have completely drained all empty casks or other containers of bulk alcoholic liquids
• you remove the empty casks promptly from the warehouse
• you measure the alcoholic strength of contaminated agent before you allocate a stock account number
• when rinsing casks, you measure the volume of cleaning agent used before and on completion of the operation

You may mix goods of different descriptions in one case if you make sure that your accounting system lets you to account accurately and satisfactorily for the goods concerned. In particular, you must use the correct tax type and duty rate for each of the products in the mixed case whenever you pay duty. You should contact HMRC using the contact details shown on Excise and gambling duties enquiries if you have any doubts about the adequacy of your proposed system.

For all operations you must:

• record details of any mechanical breakdowns where losses have occurred
• make sure that you take account of and keep secure all remnants from any operation
• keep a separate record of losses (by type) to establish loss patterns
• investigate and record the reasons for any losses or gains outside your established loss patterns
• make sure that all empty packages not intended for immediate reuse are removed from warehouse or placed in packaging materials compartments without delay
• denature or destroy used pads following filtration or other operations
• bring into warehouse only empty packages and quantities of packing materials required for immediate use — you must remove or obliterate any previous identifying marks

For each bottling operation you must:

• take account prior to bottling
• take and record bottle measurements of strength and liquid content
• carry out filling adjustments to make sure that the intended strength and quantity are achieved in practice
• allocate an identifying stock number to filled cases
• balance the operation account
• investigate any losses outside established loss patterns
• investigate all gains during the operation
• complete a declaration of outturn — if more than one size of bottle is to be filled, record the number of cases of each size
• secure any remnant
• complete your stock accounts
• keep a copy of the bottle label used
• make sure you keep a record if you use duty-free spirit for rinsing

Your production records of the strength of bottled excise goods and quantity, in each case, should agree with the strength and quantity shown on the bottle labels.

We may ask you to remove eligible remnants immediately to home use and pay the duty.

7.4 Gains and losses during operations

While we accept that there will be gains or losses from any operation carried out in warehouse, we do not set tolerances or ‘allowable losses’.

It’s a warehousekeeper’s responsibility to maintain tight controls on all operations and to accurately record any resultant gains or losses.

Any gain resulting from the operation must be immediately added into the appropriate stock account. Any loss should be recorded and investigated. You must demonstrate that any loss is within your business’s established parameters (taking into account the type of operation, product, machinery, temperature, and so on). If you fail to do this, or your explanation is not accepted by us we may ask you to account for the excise duty.

Motor and heating fuel warehouse operators should also read Motor and heating fuels general information and accounting for excise duty and VAT (Excise Notice 179).

7.5 Statements on labels

We reserve the right to object to the use of labels, wrappers, cases or printed matter contained in cases bearing incorrect or misleading statements or words, for example:

• claiming an exclusively British origin for spirits which are shown by the records to be imported spirits, or the other way round
• claiming an exclusively British or an exclusively foreign origin for spirits which are shown by the records to be a mixture of British and imported spirits
• implying, directly or indirectly, that the trader concerned is a licensed distiller when they do not hold a distiller’s licence
• indicating that the spirits are ‘Scotch whisky’ or ‘Irish whiskey’ when the legal requirements relating to these descriptions are not fulfilled

If you print labels in a foreign language, you must provide an English translation on request.

We may require you to provide written clearance from a Trading Standards Officer for the use of any label.

The Food Labelling Regulations contain other requirements for labels on alcoholic products.drinks.

Further information is available from either:

• your local Trading Standards office
• the Food Standards Agency

7.6 Determining strength and volume

In order that the strength and volume of product may be determined for duty and stock control purposes, you must have a system in place that meets the following UK legal requirements:

• section 45 Finance (No 2) Act 2023
• regulations 2 and 3, and Schedule 2 of the Alcoholic Products (Excise Duty) Regulations 2023 (APED)

You may use any recognised method to determine alcoholic strength provided that the results are accurate, and the method is used consistently. The method used to settle any dispute may depend on the type of product, but will use the method set out in Schedule 2 to the APED regulations 2023.

You must record alcoholic strength and volume during an operation as accurately as possible, making sure that you adjust for any obscuration caused by the presence of sweetening, colouring or other ingredients.

During an operation to bottle duty-suspended product in warehouse, you must give prior notice of the intended strength and quantity per case which should be reflected by the strength and quantity shown on bottle labels or other documents.

The following is an example of a calculation to work out the quantity of alcohol per case:

12 × 40% × 70 centilitres (cl) = 3.36 litres (l) of alcohol

You should take and record sufficient measurements, during each operation morning and afternoon, of the liquid content and strength with:

• normally, 2 multiply 5-bottle sample measurements for each bottle size
• one strength test (spirits only)
• strength tests of wine

Make sure that, if you use measuring container bottles, the templates are calibrated at intervals of:

• 1 millilitre (ml) (or equivalent in millimetre (mm)) for bottles of less than 35 cl
• 2 ml (or equivalent in mm) for bottles of 35 cl to 1 litre, inclusive
• 3 ml (or equivalent in mm) for bottles over 1 litre

The templates should also be graduated for the temperature band in which the goods are filled (for spirits, the templates may measure the liquid quantity which, on adjustment for strength, gives the equivalent of 1 ml, 2 ml or 3 ml in litres of alcohol).

You must keep a sample of each bottle label used and any other document which specifies the quantity and strength of the goods.

Also, you must maintain and retain sufficient and indelible records of the measurements taken for 6 years, to show the trends in bottling performance and the action taken to make sure consistent accuracy in filling.

If the records kept for Trading Standards Officers are inadequate, too complex or provide only uncharted individual measurements, record our measurements on a chart. These are the minimum record requirements of HMRC.

Subject to these requirements, you may adopt any of the accepted methods of measuring and recording set out in the ‘Code of Practical Guidance for Packers and Importers — Weights and Measures Act 1979’. This Department of Trade and Industry publication, known as the ‘Packers’ Code’, is available from The Stationery Office.

The Packers’ Code sets out the number of samples you should take for measurement of volume. You should take a similar number for measurement of strength. You must calculate average strength and volume for each separate operation. You must treat each change of container size or strength fill within an operation separately for the purpose of taking samples.

When recording strength, you should disregard figures beyond the first decimal place. For example, if the average strength resulting from an operation, or separate fills within it, is between 40.01% and 40.09%, record the strength as 40.0%.

You must be able to demonstrate that when measuring strength and volume you make a continuing genuine effort to achieve the strength and volume indicated on bottles or other containers. You should make adjustments, where possible during the operation, recording the actual strength found in the course of testing.

Normally, we will accept the labelled strength and volume as the basis of duty calculations if you can show that you’re controlling operations so that:

• you’re not aiming to achieve a higher strength than that shown on the label
• if the actual strength exceeds the label strength you take corrective action immediately

We may ask you to pay any additional duty if we find that you have packaged goods at strengths or volumes exceeding those on the labels. Additionally, duty will be called for when:

• there is evidence that you have neglected your responsibilities (for example, continuing to perform operations in ways that create difficulties)
• you have failed to take remedial action after discovering problems or errors
• we find evidence that you have gained a revenue or commercial advantage

You must write to tell us if you have underpaid duty following any operation as we will then advise you as to what you must do.

7.7 Receipt of cash payments for provision of services on excise goods in warehouse

If you (the warehousekeeper) receive payment in cash for the provision of a service relating to duty-suspended alcoholicalcohol products (that is, spirits and spirits-based beverages, beer, wine, other fermented products and cider) exceeding £9,000 (or equivalent in other currencies) you must complete form W7, and send it by email to the address on the W7.

It may be commercial practice for customers to pay cash in 2 or more instalments which individually are below the £9,000 notification threshold but the total sale will exceed this amount. In such circumstances you must notify us on form W7 when the first cash payment is received.

You must complete the form in full by following the ‘Explanatory Notes’ contained in the form.

For this requirement, an alcohol-related service refers to any service that a warehousekeeper may provide to a customer in relation to duty-suspended alcoholicalcohol, products, for example:

• provision of storage facilities
• use of an excise movement guarantee
• affixing, removing or obliterating duty stamps

8. Claims against premises guarantees

Should you incur a liability covered by your premises guarantee, we will, in most cases, issue an assessment and, if appropriate, send a copy of the assessment to the principal to the guarantee.

We will only claim against the guarantee if you have failed to pay the assessment we have issued within 45 days. In general, we will make a claim against a guarantee when the principal to the guarantee has a liability to us for any irregularity resulting in the loss of duty in relation to excise goods stored in an excise approved warehouse.

If the guarantee covers both premises and movements we will still claim against the guarantee — claims will not be restricted to either premises or movements.

If we make a claim against the guarantee, we will ask the guarantor for payment. You should note that:

• the ‘evergreen’ facility of the guarantee allows automatic restitution of the original level of security where, following the submission of a claim, neither party exercises the right to withdraw
• this will affect any ‘established trader’ discount
• the level of your guarantee does not limit the liability of the debt

If, following the claim against the guarantee, the guarantor gives us 30-days’ notice of withdrawal from the guarantee, we will require you to lodge a new premises guarantee with us. Unless you’re able to provide a replacement guarantor we will cancel your authorisation and approval.

If we decide to lapse your guarantee we will give your guarantor 30-days’ notice of withdrawal. If we require you to lodge a premises guarantee with us, then, unless you’re able to provide a replacement guarantor, we will cancel your warehouse premises authorisation and approval.

9. Excise Warehouse Returns (form W1)

All excise warehousekeepers are required to submit a W1 return, normally on a monthly basis for each set of premises they operate. The only exception to this is for certain trade facility warehouses.

Currently, export shop operators, operators of aircraft store floors and operators of motor and heating fuels warehouses (except for those warehouses holding ethanol) also do not have to submit the W1 return. If this exception is removed an amendment to this notice will be made.

Returns must be received within 14 days of the end of each return period. If you fail to submit a W1 return on time this may result in the issue of a financial penalty. If you persistently fail to submit returns it could result in the withdrawal of your authorisation and approval.

You can submit the W1 return on a non-standard period basis, but you must first agree these periods with the National Warrant Processing Unit prior to 1 March each year for the following financial year.

To agree the periods, write to:

You can also email: salford.nwpu@hmrc.gov.uk.

Non-standard periods must be no longer than 5 weeks and returns must be submitted in accordance with that agreement.

The return is split into 4 sections:

• section A is the warehousekeeper’s declaration that the information you have provided is true and complete — this may be completed by either the proprietor, partner, or, if a limited company, a director or company secretary for that company or an authorised representative
• section B is the stock return which shows alcoholicalcohol product and tobacco product stock movements and stock on hand at the end of the return period
• section C is for providing information on electronic administrative documents (eADs) as well as duty-suspended dispatches that take place under simplified arrangements and should include details of:
  • all duty-suspended dispatches not discharged after 2 months
  • reports of receipt or export (for EMCS movements) or certificates of receipt or export (for simplified movements) showing shortages
• section D is for providing changes to details of registered owners storing goods in the excise warehouse

You should submit your W1 returns electronically either online or through the XML direct submission service available on the HMRC website. These electronic facilities require you to register and enrol for the Alcohol and Tobacco Warehousing Declarations (ATWD) service.

The benefits of using the online service include:

• key information which is pre-populated
• a drop-down menu is available for the main registered owners storing goods in your excise warehouse
• the system automatically calculates closing stock
• outstanding electronic administrative documents are easier to manage as they can be readily discharged
• keyed-in details are validated
• an immediate on-screen acknowledgement confirms that the return has been received
• the service is 24-hour
• previously submitted returns can be viewed online

XML allows you to send the data directly from your computer system to us, removing the need to complete a paper return or re-key the information. It will not allow us to access or interrogate your computer system.

Until a formal announcement is made, you may continue to complete and submit paper W1 returns to the National Warrant Processing Unit.

If you fail to submit a W1 return on time this may result in a financial penalty being issued. You can avoid financial penalties by making sure that your returns are accurately completed and returned to the Excise Processing Teams using the contact details shown on Excise and gambling duties enquiries, or electronically submitted to the Alcohol and Tobacco Warehousing Declaration service by the due date. If you persistently fail to submit returns it could result in the withdrawal of your authorisation and approval.

The W1 return will be updated to cover reports of undischarged electronic administrative documents under EMCS.

10. The due diligence condition

10.1 General information

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.

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.

From 1 November 2014 it became a condition of your approval as an excise warehousekeeper, registered owner, duty representative or registered consignor that you must:

• objectively assess the risks of Alcoholalcohol Dutyduty 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

10.2 Assessing risks and carrying out checks

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 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

A key feature of the smuggling or diversion of alcoholicalcohol products 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 need to objectively assess if there is potential for duty evasion resulting from your trading activity. You 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 is 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 alcoholicalcohol products into legitimate retail supply chains. To assess your exposure to this risk, you need to objectively consider if 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 exported from the UK and then re-imported. If you’re sourcing duty paid goods, you need to consider the credibility of suppliers and the level of evidence you can get to demonstrate the provenance and duty status of goods.

For information about risk indicators read paragraph 10.5.

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’re 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 the:

• 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 (if you’re directly involved in this)
• existence or 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
• deal, understanding the nature of the transaction itself, including:
  • how the cost of the goods is built up, for example, if it includes appropriate taxes, transport and the likes
  • why is it being offered
  • if it’s too good to be true
  • how the deal compares to the market generally

For more examples read paragraph 10.6.

10.3 Responses to identified risks

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, if you should trade with another party remains a commercial decision for your business to take.

If your checks lead you to suspect duty fraud you should report this to HMRC.

10.4 Review of due diligence procedures

As part of our enforcement and general audit programmes, we will consider if 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 if 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.

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 strengthen 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.

For information about risk indicators and checks that you may carry out to identify high risk transactions, read paragraphs 10.5 and 10.6. 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.

10.5 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. This list is not exhaustive:

The following are examples and are not a full list.

Financial health of the company you intend trading with

There is no, or poor, credit rating but it’s still able to finance substantial deals.

There are high levels of debt.

They are:

• buying high value goods on extended credit
• a new company with little or no trading history

There are little or no fixed assets.

Identity of the business

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 are dealing in high value goods from short term lease accommodation or residential addresses.

There is 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

An insistence on dealing in cash, especially where the deal is a high value one.

Cash payments 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 contrive (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

The goods are to be received from an unusual source or supply route, for example, UK produced goods are sourced from another country and directly compete with those from a more direct supply route.

Existence or provenance of goods

The goods are claimed to be duty paid but your supplier (or person on whose behalf you’re storing the goods) cannot provide reasonable evidence of duty payment to support the status of the goods (find out more about what constitutes evidence of duty payment in 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 is no duty stamp in circumstances where there should be one or the duty stamp does not fluoresce
• 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

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.

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

10.6 Examples of due diligence checks

Financial health

To conduct a financial health check, you must:

• get and undertake credit checks or other background checks on the business you intend on trading with
• where a poor credit rating is identified, establish how the transactions will be funded and what security is offered that you’ll be paid
• where credit is offered by the business and who is providing the credit facility
• what payment terms are offered and if they are commercially viable

Identity

Check company details provided to you against other sources (for example, website, letterheads and telephone directories).

Ask if your customer or supplier is a member of a relevant trade association.

Get copies of certificates of incorporation, VAT registration certificates and excise registration certificates (where appropriate) and where a trade class is quoted on these, check if it relates to the type of trade you’re engaging in.

Verify VAT and excise registration details with us (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 then you should be satisfied that the owner of the goods is registered under WOWGR where required.

Get 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.

Get the prospective customer’s or supplier’s bank details — in the case of an import or export, check if the supplier or recipient share the same country of residence as their bank.

Establish who you’ll be paying and if this is the same company as the one you’re directly dealing with.

Check if you’re providing a service and if so, who will pay for it.

Terms of any contracts, payments and credit agreements

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

Check what recourse there is if the goods are not as described.

If payment is to be made to or from a third party check if:

• there’s a sound commercial reason for this
• it’s to or from an offshore account

Check if there are normal commercial arrangements in place for the financing of the goods.

Where payment is made from an overseas business, check how it should be made.

Check if your supplier:

• referred you to a customer who’s willing to buy goods of the same quantity and brand as being offered by the supplier
• offers deals that carry no commercial risk for you, for example, no requirement to pay for goods until the payment is received

Confirm the goods are adequately insured.

Check if there are high value deals offered with no formal contractual arrangements.

Confirm where you’re buying from a broker and:

• what value this link in the supply chain adds
• if it’s possible to source more directly
• how competitive the broker’s pricing is to those from a more direct route
• how the savings are made in a longer supply chain to make it viable
• check where transactions are being financed by a third party and if this person is a regulated financial body, such as a bank

Transport

Establish where the goods will be sourced from, including:

• the country of production
• why the goods are being routed in this way

Check who is responsible for the transport including:

• if the cost of the goods are inclusive of transport
• if the potential logistical costs make the unit price unrealistic
• retaining details of delivery vehicles and any expected variations to recorded transport arrangements

Existence or provenance

Check:

• how the trader contacted you
• if the goods exist
• if you can inspect the goods before purchasing them
• if the goods are in good condition and not damaged
• if the quantities on offer seem credible for the type of business you intend to trade with
• where goods are said to be duty paid and seek sufficient detail to satisfy yourself that they are — this will be easier the closer you’re in the supply chain to production and is especially important where you intend on holding goods on behalf of a third party

The deal

Check the nature of the transaction, including:

• the credibility of it
• the demand for the type of alcoholicalcohol products — if the demand is mainly from abroad, check the real market (consumption) for it in that country
• if, how and why the alcoholicalcohol product has come from abroad but is of UK origin
• if incentives are offered, when are these taken into consideration and if this makes the overall deal seem too good to be true
• the reason for the offer
• if normal commercial practices have been adopted in negotiating prices
• how the price competes with that offered by competitors
• the age of the goods — if the stock is old, you should seek an explanation as to its provenance
• if the price seems 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’d recommend you continue to monitor correspondence and business paperwork, to identify changes in those arrangements and take any follow up action as necessary.

11. The review and appeal procedures

When we make 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 civil penalty
• a decision specifically connected to the relevant duty

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.

Time limits to ask for a review

You must write to the person who sent you 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.

If you have asked for a review, you cannot ask the Tribunal Service to hear your case until the 45 days (or the time we agreed with you) has expired, or until we have told you the outcome.

If you’re not satisfied with the outcome, you have 30 days from the date on the new decision letter to ask the tribunal to hear your case.

If we cannot complete our review within 45 days, (or the time we agreed with you), we will ask if you’re willing to agree to an extension. If you do not agree to an extension, the review is treated as one where the decision being reviewed is upheld.

What to include in a request for review

Your request should clearly set out:

• the full details of your case
• the reasons why you disagree with us
• any supporting documentation
• what result you expect from our 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.

More information about reviews and appeals

Read about what to do if you disagree with a HMRC tax decision or penalty.

You can also find more information about how to appeal on the Tribunals Service homepage.

12. The Law

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

• The Finance (No. 2) Act 2023
• Customs and Excise Management Act 1979 (CEMA)
• Hydrocarbon Oil Duties Act 1979 (HODA)
• Rehabilitation of Offenders Act 1974 (OA)
• Tobacco Products Duty Act 1979 (TPDA)
• Value Added Tax Act 1994 (VATA)

Find detailed requirements in the:

• Beer Regulations 1993 (SI 1993/1228) (The Beer Regs)
• Channel Tunnel (Alcoholic Liquor and Tobacco Products) Order 2003 (SI 2003/2758) (CTO)
• Cider and Perry Regulations 1989 (SI 1989/1355) (C and P)
• Denatured Alcohol Regulations 2005 (SI 2005/1524)
• Excise Duties (Deferred Payment) Regulations 1992 (SI 1992/3152) (EDDPR)
• Excise Duties (Goods Imported for Testing) Relief Order 1991 (SI 1991/2089) (Testing Relief Order)
• Excise Goods (Drawback) Regulations 1995 (SI 1995/1046) (EGDR)
• Excise Goods (Holding, Movement and Duty Point) Regulations 2010 (SI 2010/593) (HMDP)
• Excise Warehousing (Etc.) Regulations 1988 (SI 1988/809) (EWER)
• Hydrocarbon Oil Regulations 1973 (SI 1973/1311)
• Revenue Traders (Accounts and Records) Regulations 1992 (SI 1992/3150) (RTR)
• Spirits (Rectifying, Compounding and Drawback) Regulations 1988 (SI 1988/1760) (SRCD)
• Spirits Regulations 1991 (SI 1991/2564) (The Spirits Regs)
• The Alcoholic Products (Excise Duty) Regulations 2023
• Value Added Tax Regulations 1995 (SI 1995/2518) (VATR)
• Warehousekeepers and Owners of Warehoused Goods Regulations 1999 (SI 1999/1278) (WOWGR)
• Wine and Made-Wine Regulations 1989 (SI 1989/1356) (W and WM)

13. Glossary

Term	Description
Authorised warehousekeeper	An authorised and registered occupier of an excise warehouse, in accordance with Regulation 3 of the Warehousekeepers and Owners of Warehoused Goods Regulations 1999.
Commissioners	The Commissioners for HMRC.
Customs warehouse	A place approved by HMRC for the holding of goods on which Customs Duty and import VAT is suspended.
Distillers warehouse	A place approved by HMRC for the holding of spirits immediately following production in the associated distillery.
Duty representative	A person authorised and registered by HMRC to act as an agent for non-UK owners of excise goods who want to deposit goods in a UK excise warehouse.
Excise duty	For the purposes of this notice, an indirect tax on certain goods; for example, beer, wine, other fermented products, cider, spirits, mineral oil, cigarettes and other tobacco products. Both UK and EU-produced and imported goods are subject to excise duty.
Excise warehouse	A place approved by HMRC for the holding of goods on which excise duty and VAT is suspended.
Free circulation	Once import procedures have been completed and any customs duties or similar charges have been paid in the UK, goods from outside the UK are said to be in ‘free circulation’ within the UK. Goods entering Northern Ireland from Great Britain (England, Scotland and Wales) are also said to be in free circulation (in respect of the EU) once import procedures have been completed and any customs duties or similar charges have been paid.
Guarantee	In the context of this notice, an undertaking given by the guarantor to pay us a sum of money up to the level of the guarantee when we request such a payment. The wording of the guarantee has been agreed by financial institutions and us and includes an automatic restitution facility.
Guarantor	In the context of this notice, the person who undertakes to pay to us a sum of money up to the level of a guarantee, for example, a bank or a building society.
Importer	In the context of this notice, any owner or other person possessing or having a beneficial interest in the goods between the time of importation and when they are released to free circulation.
Initial period	In the context of this notice, a period of 72 hours, commencing from the time when goods are first deposited in an excise warehouse (excluding Saturday, Sunday, Christmas Day, Boxing Day, New Year’s Day, Good Friday and Easter Monday).
Obscuration	The extent to which a hydrometer reading of the strength of spirits is reduced by the presence of sweetening, colouring or other matter.
Package	Any bundle, case, carton, cask or other container.
Principal	In the context of this notice, the person who arranges for a guarantee and uses it to provide financial security.
Registered consignor	A person approved and registered by the UK authorities to dispatch excise goods in excise duty suspension following their release to free circulation.
Registered owner	A person who has been authorised and registered by HMRC to deposit their duty-suspended goods in an excise warehouse.
Revenue trader	In the context of this notice, anyone carrying on a trade or business concerned with the buying, selling, importation, exportation, dealing in, or handling of excise goods, and the financing or facilitation of any such transactions or activities. Find a full definition in CEMA section 1.
Tariff	Integrated Tariff of the United Kingdom.
Tax warehouse	A UK and EU term for premises approved under the legislation of the UK or EU member state in which the premises are located for the: production processing holding receipt dispatch of excise goods under duty suspension arrangements. All excise warehouses are tax warehouses.
Throughput level	The quantity of goods passing through a warehouse.
Tobacco products	These products include: cigarettes cigars hand-rolling tobacco other smoking tobacco chewing tobacco tobacco for heating
Transporter	The person carrying out the first transportation of excise goods in a duty-suspended movement.
Unit of account	The type or size of packing in which the goods are sold; for example, packets of 20 cigarettes.

14. Contact us

If you cannot find the information you need in this, or other excise notices, contact the Excise and gambling duties enquiries helpline.

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