AWRS Policy
EXCISE DUE DILIGENCE POLICY - AWRS URN XSAW000 0011 8435
July 2022
Nuttycombe Brewing Ltd is fully aware of its obligations under the
AWRS. A due diligence process is in place which considers the likelihood of
excise duty evasion as well as other commercial/criminal risks when undertaking
trading activities. Nuttycombe Brewing Ltd fully supports any action to drive
out illicit trade in alcohol and reduce the risk to businesses.
Alcohol duty fraud is a serious problem that harms not only the UK
taxpayer but also legitimate businesses, communities and the wider economy.
Without effective safeguards in place, there are considerable risks to all
businesses along alcohol supply chains of becoming implicated in illicit
trading. Any business in the supply chain which trades in alcohol is
potentially at risk of becoming implicated in the illicit alcohol trade unless
it undertakes due diligence checks as set out by HMRC in Excise Notice 2002:
Alcohol Wholesaler Registration Scheme. The AWRS is designed to reduce fraud
and under the scheme, any business which falls within the definitions in the
Notice as being required to register, must do so. From March 2017, it will be
an offence to purchase alcohol from an unregistered wholesaler.
Nuttycombe Brewing Ltd may ask for your Unique Reference Number
(URN) or AWRS application reference number in addition to any other questions
that may be pertinent in order to document and satisfy the requirements of due
diligence as set out by HMRC. Nuttycombe Brewing Ltd will not deal with any
customers or suppliers where it is felt that there is a possibility that such
trade will involve fraud. If Nuttycombe Brewing Ltd suspect fraud, HMRC will be
notified.
Nuttycombe Brewing Ltd maintains its obligation to:
· Objectively
assess the risk of alcohol duty fraud within the supply chain
· Establish
reasonable and proportionate checks in day-to-day trading in order to ensure
that transactions do not lead to fraud and do not involve duty-evaded goods
· Establish processes
and procedures to take timely and effective action where the risk of fraud has
been identified
· Put in place
audit and governance procedures to ensure that due diligence processes are, and
continue to be, carried out
For the purposes of AWRS, suppliers or customers may need to
document their own due diligence regarding Nuttycombe Brewing Limited.
The Unique Reference Number (URN) for Nuttycombe Brewing Ltd will
be placed on all invoices for reference.
Nuttycombe Brewing Ltd is committed to trading in full compliance
with all relevant national, EU and International laws, although we only source
products from reputable businesses within the UK. We do not import
alcohol-based products from the EU and non-EU countries. All products we supply
will have had its appropriate duty paid.
1. FOR A RETAILER TO OPEN AN ACCOUNT:
In order for a business to register for trade, Nuttycombe Brewing
Ltd will require
the following documents:
A completed account application form which is available online at https://nuttycombebrewery.co.uk/34-2/application-for-credit-account/
or which can be posted on request.
- Copy
of Incorporation Certificate (if Applicable)
- Copy
of VAT Certificate (If applicable)
- Company
Bank Details
- Owner
Photo ID Details such as Passport & Driving License
- Copy
of Business Utility Bill (Less than 3 months old)
- Copy
of Lease agreement or proof of Freehold of the business premises (Proof of
contract if using third party distribution hub)
Once Nuttycombe Brewing Ltd has collated this information, the
necessary checks will be conducted before opening the account. Payment methods
are cash, card, bank transfer or direct debit only. Nuttycombe Brewing Ltd does
not accept cheques. Note that photo ID may be requested for card payment at the
time of payment. Third party card payments will not be accepted.
2. FOR A WHOLESALER TO OPEN AN ACCOUNT:
In order for a business to register as a wholesaler, Nuttycombe
Brewing Ltd will require the following documents:
A Completed account application form which is available online at https://nuttycombebrewery.co.uk/34-2/application-for-credit-account
or which can be posted on request.
- Copy
of Incorporation Certificate
- Copy
of VAT Certificate
- Company
Bank Details
- Owner
Photo ID Details such as Passport & Driving License
- Copy
of Business Utility Bill (Less than 3 months old)
- Copy
of Lease agreement or proof of Freehold of the business premises (Proof of
contract if using third party distribution hub)
- Signed
account forms
- Picture
of business address, if applicable
Once the information has been gathered, the appointed officer Simon
Brown (Operations Manager) or Ross Nuttycombe (Managing Director) or another
qualified member of staff will complete a risk assessment. Any customers
identified as high risk will undergo further questioning. High risk customers
that are accepted will be evaluated every three months; all other customers
will be reviewed on an annual basis.
All customers who do not pass the internal check will be notified
that their account will not be opened and customers with suspicious behaviour
will be reported to HMRC within 5 working days.
3. FOR A SUPPLIER TO OPEN AN ACCOUNT:
As a part of the Alcohol Wholesaler Registration Scheme (AWRS), Nuttycombe
Brewing Ltd is required to conduct due diligence checks on partners involved in
the supply chain for alcoholic drinks. Nuttycombe Brewing Ltd will require the
following documents for a supplier to open an account to start trading:
- Company
Introduction stating nature of business and products available
- Completion
of ‘FITTED’ questionnaire
- Copy
of Incorporation Certificate
- Copy
of VAT Certificate
- Owner/Director’s/
Proprietor’s ID Details
- Company
Bank Details
- AWRS number
if this has been issued and UK based supplier
- Headed
paper or business card
- If
you are a UK duty paid supplier, please provide us with copies of form
W-5 (or similar document) showing evidence of duty payment.
The FITTED questionnaire includes all information that is required
for our checks as well as points to upload evidence. This will be sent directly
to a new supplier prior to an initial order being placed.
Once the supplier has sent the above information, Simon Brown or
Ross Nuttycombe or another member of the team will review it. The overall risk
of the supplier will be established. If the business is identified as a high-risk
supplier, further questions will be asked, and site visits will be conducted as
appropriate. Any suspicious retail pricing at uneconomic levels or improper
trading patterns will be reported to HMRC within 5 working days.
All high-risk suppliers will be reviewed every three months; all
other suppliers will be reviewed on an annual basis.
4. DUE DILIGENCE CODE OF CONDUCT (DDCOC):
Our Due Diligence Code of Conduct (DDCOC) sets out the basic rules
we will follow and the values that will guide our decisions. It also points us
to more detailed processes and procedures relating to the purchase and supply
of alcoholic products.
The DDCOC is built on the premise of ‘knowing your customer or
supplier‘ and the commercial transactions that will be involved. Supply chains
are only as strong as the weakest link and the purpose of the Nuttycombe
Brewing Ltd DDCOC is to prevent entering into commercial transactions with any
illicit customer or supplier. The policy will aid in ensuring all customers and
suppliers are regularly reviewed so any changes of activities are identified,
and the appropriate action taken.
Specific guidelines have been developed for customers and
suppliers. All customers and suppliers must provide the required list of
documents and completed questions for Nuttycombe Brewing Ltd to undertake a
risk assessment before any account is open. Nuttycombe Brewing Ltd will only
trade with a customer or supplier if they have passed the necessary risk
assessment checks.
Simon Brown or Ross Nuttycombe or another authorised member of the
team will review the submitted information on a case-by-case basis and will
conduct the final sign off. Any customer or supplier who fails to pass the risk
assessment will immediately have all transactions ceased pending review. If the
review is unsatisfactory, the account will be closed indefinitely.
Regular reviews of customer and supplier information will be
conducted by Simon Brown or Ross Nuttycombe or another authorised member of the
team and the final sign off will be conducted by Simon Brown or Ross Nuttycombe.
All initial checks and further reviews will be documented in the
customer or supplier file and maintained on an ongoing basis.
The DDCOC will be implemented and maintained by Simon Brown who
has experience working with Nuttycombe Brewing Ltd customers, suppliers and
methods of business.
Part of the DDCOC is to ensure day-to-day checks are in place to
identify transactions that may lead to fraud or involve goods on which duty may
have been evaded. Checks in purchase order processing and customer orders are
two areas where daily checks are performed.
5. PURCHASE ORDER PROCESS FOR NOMINATED SUPPLIERS:
The purchase order process we currently use will help assist in
ensuring fraud does not take place. All orders are raised through official
purchase orders for approved suppliers on Breww. The orders are emailed across
directly to the supplier with the full details of product and price. Once the
goods are received into our warehouse or bonded warehouse, the goods are booked
into the Breww system. This process highlights any errors in quantity and
costings.
If any order has not been received in the expected delivery
window, we will raise a query with the supplier, haulier if we have instructed
them and destination warehouse. If anything fraudulent has been identified we
take the necessary actions.
The same principle applies to the delivery address requested
on the customer’s purchase order. Nuttycombe Brewing Ltd ensures copies of
delivery notes for each order are received to help prove delivery to the
requested delivery address.
Any changes to the form of ordering or delivery address have to be
made in writing by the customer on company letterhead or company email.
Existing suppliers who are already supplying Nuttycombe Brewing
Ltd at the date of this policy will need to provide Nuttycombe Brewing Ltd with
the relevant documents (as above) to continue as a supplier. As with new
suppliers, each supplier's risk will be established. Regular visits to the
supplier’s premises may also be made by Nuttycombe Brewing Ltd representatives
to verify business records.
Existing Customers who are already purchasing from Nuttycombe
Brewing Ltd at the date of this policy will need to provide Nuttycombe Brewing
Ltd with the relevant documents (as above) to continue as a customer. As with
new customers, each customer’s risk will be established. Regular visits to the
supplier’s premises may also be made by Nuttycombe Brewing Ltd representatives
to verify business records.
HMRC due diligence requirements are known by the name
FITTED. They are also referred to as “the due diligence condition”. HMRC Excise
Industry FITTED was introduced to the duty suspended Excise industry in Nov
2014 as part of WOWGR compliance and was applied to the AWRS scheme in 2017. It
is set out in HMRC’s Excise Notice 196 and Notice 2002.
HMRC Excise Industry FITTED
- F
=Financial Health
- I
=Identity
- T=Terms
of contract
- T=Transport
- E=Existence
of goods
- D=Deal
FITTED applies to duty paid traders as part of AWRS (Alcohol
Wholesalers Registration Scheme). Enhanced Due diligence checks are here to
stay and are Tax Tribunal approved.
Many companies in the Alcohol wholesale industry are now
very familiar with HMRC’s FITTED Due diligence condition. It stands as part of
the Alcohol Wholesalers Registration Scheme (AWRS). For those that are
unfamiliar, read HMRC Public Notice 2002 to bring yourself up to speed. We have
seen the quality of due diligence checks improve significantly since the
introduction of FITTED.
The Due Diligence condition is split into 3 parts.
- The
identity of the trading entity;
- The Risk
Assessment;
- The Continuous
Monitoring of this entity and the trading relationship.
The following should be high priority considerations
- There
is no defined list of checks that must be carried out. However the checks
must reflect the risks posed by the trading relationship. Many of the
larger companies within the Excise and Drinks industry, now have either
departments or individuals tasked to deal with these queries.
- If a
company has a Bond account or has a direct supplier account with a
producer doesn’t mean FITTED can be ignored. Each company sets its own due
diligence and risk assessments to a level of risk that it is willing to
take. This is a commercial decision, made by that company. The directors
will be held accountable to HMRC. This would be in the case of the company
is found to not be ‘assisting in the administration, collection and
protection of the revenue’.
- For
companies trading in the Duty paid sector. If HMRC deny or revoke an AWRS
number, this means the company if it trades solely in wholesaler alcoholic
drinks, will be forced to cease operating. If this puts the company out of
business, then in the context of reducing the overall burden of excise
duty fraud on the UK taxpayer. This has been deemed as acceptable by the
Tribunal system.
To Assist Those who are Still Working on their Due
Diligence.
Due diligence documents should be scrutinised. They should
be checked by the business requesting them. It is not sufficient to merely ask
for documents, and then store them away at the business. Failure to carry out
sufficient checks on a business, could leave you at risk of assessments and
wrongdoing penalties being raised. It can also result in having stock seized.
Always remember that the test of your due diligence is one
of hindsight. Based on the paperwork, and the operations of a trading partner.
Ask yourself, should you, or ought you to have known that there was a problem
or a concern?
1:Have a Process
Go through the same steps every time you want to work with a
new supplier, or customer as this helps with consistency. You know what you do
as part of your checks. Other companies now need to confirmation you are
meeting FITTED standards. HMRC will also ask you details of the process you go
through as part of your Alcohol Wholesalers Registration Scheme (AWRS)
interview. It is easier to write this down in the form of a policy, as this
will give you a standard question form and checklist. This will also reduce the
opportunity for mistakes. If staff assist with completing these checklists, a
written policy will assist with training and consistency.
2:Check the Paperwork
It sounds basic but, you cannot rely upon the paperwork
given to you. You must confirm its contents. If you are given a Certificate of
Incorporation, go onto Companies House or the appropriate state registry
(gov.uk contains a list of key states) and confirm the company exists. Check
the VAT number matches and is valid online (VIES or gov.uk). Confirm the
directors. Confirm the registered address are as per your conversations; Carry
out website checks. Check passports and utility bills you have received (there
are various websites which permit you to confirm the validity of documents such
as passport or ID cards and addresses).
3:Do a Site Visit, do an Identity Check and a Credit
Check
You should meet an individual face to face. If this simply
isn’t possible use Zoom, FaceTime, WhatsApp, or one of the other online
platforms. If you haven’t met the individual in person or seen them, how can
you be sure that the person on the paperwork is who they say they are? You want
a visual facial match to the documentation in front of you. Online credit
checks are easily available and can be sourced on a one-off basis for around
£10 for UK registered entities, or £30 for non-UK companies. This will provide
you with another independent check and a recommended credit rating. Many
agencies also provide monitoring services for a monthly fee. You can then
create a portfolio of companies, based upon their risk ratings.
4:Duty Status and Supply Chain
For commercial confidentiality reasons you cannot force
another company to provide you with details of their supplier. However, you can
ask about where their goods are sourced from. Do they buy from manufacturers,
other wholesalers? Is it within the UK or from mainland EU? Are those
goods duty paid, or duty suspended? These answers can help form a defence if
the goods are found to be non-duty paid. Remember that a refusal to provide
this information is itself an indicator of a potential risk.
5: Confirm who Actually Controls and Owns the Company
There is a difference between beneficial and controlling
ownership. If another company owns the company you want to do trade with, you
need to review that company’s ownership as well. Anyone who owns more than 25%
of a company needs to be identified, and ID obtained. Additionally you need to
understand who controls the company. If they know what they are doing, e.g. a
director who has a history in the industry or has had some exposure in a
previous but similar type of company. You are looking to ensure that you are
confident the company is run by the person or people you have met. You are
checking that there isn’t someone in the shadows controlling the business.
6: Do you know who is Moving the Goods and, why?
Understand who will be moving your goods. Whether they have
what is required to do this correctly. This could assist if any issues
are raised at a later stage. This area is often disputed. But HMRC cannot
require FITTED level due diligence to be undertaken on Hauliers by wholesalers.
This is unless they are directly instructed. They however are companies
involved in the supply chain of Alcohol, some due diligence on Hauliers must be
undertaken.
7:The Deal – Is it too Good to be True
How much are the goods? Does it make commercial sense? These
are questions that only those in the industry who know the market pricing can
answer. Markets go up and down. This is depending on demand and product
quality. Law firms, accountants, tax advisors are not commercially trading in
your market. They cannot comment accurately on the commerciality of a deal.