George Osborne today gave alcohol wholesalers an ultimatum – demonstrate that you are trading legally or you will go out of business.

imagesThe Budget confirmed the inclusion of the Alcohol Wholesaler Registration Scheme (AWRS) in the Finance Bill 2015. The scheme is intended to stamp out duty evasion on beers, wines and spirits, which costs the Treasury £1.3bn a year in lost revenue. Originally proposed to government by the Federation of Wholesale Distributors (FWD), it will require any business trading alcohol in wholesale volumes to undergo stringent tests to ensure they are trading within the law. Wholesalers must be able to prove they meet ‘fit and proper’ criteria, and carry out due diligence checks on their suppliers and customers. They just apply for registration between October and December 2015.

Licensed retailers will also be required to demonstrate that their alcohol products are sourced from registered wholesalers.

Announcing a series of measures to clamp down on tax and duty evasion and avoidance, Mr Osborne said: “This country’s tolerance for those who will not pay their fair share of taxes has come to an end.”

FWD chief executive James Bielby said: “This is a major step towards identifying rogue operators and removing them from the market. We have worked hard to bring this issue to the Government’s attention, and we’re delighted to see it included in the Finance Bill. This will make sure alcohol is distributed by law-abiding suppliers, wholesalers and retailers.”

HMRC will undertake a programme of pre-approval visits from January 2016, lasting approximately 15 months. During that time HMRC will remove the right to trade in alcohol from any trader failing the AWRS ‘Fit and Proper’ criteria.

From April 2017, wholesalers will be required to display a Unique Reference Number on all invoices involving alcohol, and to provide it upon request to anyone purchasing from them. Retailers will be expected to make regular checks to ensure a wholesaler’s fit and proper status has not changed, via an online registry.

Mr Bielby added: “The clock is ticking for alcohol duty cheats. We expect HMRC to conduct a thorough investigation of all businesses that apply for registration, and those who cannot prove they are trading within the law will face severe penalties if they continue to sell alcohol.

FWD also welcomed duty cuts on beer and spirits and a freeze in the rate on wine. “Annual increases in duty are a gift to the illicit trade so these announcements alongside the registration requirement are a double blow to duty evaders,” Bielby said.

FWD has issued guidance to its members on complying with the registration criteria.

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