When is AWRS Approval Required?

When is AWRS Approval Required?

Interested in B2B (business-to-business) alcohol wholesales in the UK? You’ll likely need AWRS approval.

HMRC launched the Alcohol Wholesaler Registration Scheme (AWRS) in April 2017 to combat Excise Duty fraud. You must register if all of the following are true:

• Your UK-established business plans to sell, offer for sale, or arrange wholesales of alcohol.
• You sell alcohol at or after the point when excise duty is due.
• You sell alcohol to other businesses for onwards supply.

Not registering, or buying from unregistered suppliers, can result in serious fines or even criminal penalties.

We'll break down the key concepts above in the next section of the article.

Key AWRS Concepts

Let's break down the key concepts. You must register if all of the following are true:

• UK establishment: Your business has a UK establishment - a fixed, physical presence in the UK through which the business’s activities are carried out (e.g., an office, warehouse, or distribution centre). This must be under the control of your business. Simply storing alcohol in a third-party logistics provider’s warehouse does not qualify as having a UK establishment. Note that a UK business establishment falls under AWRS regardless of its structure, which may be a UK limited company, a sole trader or paid employee(s) of an overseas company trading in the UK. Whether a business is considered UK-established by HMRC is a matter of fact and degree.
• UK duty point: Your UK-established business conducts, offers or arranges wholesales of alcohol at or after the duty point - the moment when UK alcohol excise duty becomes due. The duty point occurs when the alcohol either leaves a duty-suspension arrangement (such as a bonded warehouse) or is imported into the UK and released for free circulation - triggering payment of excise duty at the border
• UK wholesales and marketing: Your UK-established business plans to sell, offer for sale, or arrange wholesales of duty-paid alcohol to other businesses for onwards supply. The AWRS is not restricted to actual sales, but also covers arranging alcohol wholesales (e.g., as a broker or agent) and offering alcohol for wholesale (e.g., through trade shows, catalogues, or online listings).
• UK customers: The customers of your UK-established business are other businesses who purchase the duty-paid alcohol for onwards supply. The businesses to which you sell may be UK-established or foreign.

We'll outline the exemptions for AWRS registration in the next section of the article.

AWRS Exemptions

There are various exemptions to the AWRS:

The Intra-group Sales Exemption: Sales made between members of the same corporate group are excluded from AWRS requirements. According to Section 106 of the Finance (No. 2) Act 2023, a corporate group consists of two or more bodies corporate that:

• Have a fixed establishment in the UK.
• Are connected through control, meaning either one company controls all others, a single person (individual or corporate) controls all companies, or two or more individuals or bodies corporate operate a business in partnership.

To give a simple example, if you are the sole director of several limited companies - each running an individual retail store - you can transfer ownership of alcohol between those companies without AWRS approval.

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Sales Made Before the Duty Point: A UK company without AWRS approval may make duty-suspended sales of alcohol provided that:

• The alcohol remains in duty-suspended storage.
• The alcohol is not immediately released for onward sale and supply.

If a sale of duty-suspended alcohol is made to a third party who immediately removes that alcohol from bonded storage, HMRC could interpret this as indirectly facilitating a transaction at or after the duty point. Penalties could then be imposed under the AWRS.

Working under this exemption may be appropriate for an activity such as whiskey investing - where the alcohol never leaves the bonded warehouse - but it generally isn't appropriate for any kind of onward UK market sales. We recommend seeking AWRS approval rather than relying on this exemption in borderline cases.

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Small Cidermakers: Nil-rate Cider and AWRS

There is no longer any volume-based exemption from producer approval for small commercial cidermakers. The Cider and Perry (Exemption from Registration) Order 1976 originally exempted makers whose production did not exceed 1,500 gallons in any 12 consecutive months, although that threshold was replaced in 1979 by 70 hectolitres—7,000 litres. The Order was revoked with effect from 1 February 2025 by regulation 5 and Schedule 1 to the Finance (No. 2) Act 2023, Part 2 (Alcohol Duty) (Appointed Day, Consequential Amendments and Modifications, Revocations, Savings and Transitional Arrangements) Regulations 2025 (SI 2025/96). The associated claim form CP33 was withdrawn on 3 February 2025. Subject to the statutory exceptions for domestic, research and experimental production, every UK producer making alcoholic cider commercially must therefore hold an Alcoholic Products Producer Approval (APPA), whatever the volume produced.

Small Producer Relief and nil-rate duty

The favourable treatment for small commercial producers now takes the form of Small Producer Relief rather than an exemption from producer approval. Under section 54 and section 59 of the Finance (No. 2) Act 2023, Alcohol Duty on qualifying small-producer alcoholic products is charged at the applicable Schedule 7 or Schedule 8 rate less the discount calculated under Schedule 9.

From 1 February 2026, the full non-draught rate for still cider of at least 3.5% but less than 8.5% ABV is £10.39 per litre of pure alcohol. The Band 1 marginal discount is also £10.39, with no cumulative discount, so qualifying cider produced on premises whose relevant production amount does not exceed 5 hectolitres of pure alcohol is charged at a nil rate. The corresponding draught rate and Band 1 discount are both £8.95, producing the same result. See HMRC's Alcohol Duty rates.

Exemption from monthly Alcohol Duty returns

Regulation 26(4) and (5) of the Alcoholic Products (Excise Duty) Regulations 2023, inserted with effect from 1 February 2025 by regulation 2(3) of SI 2024/1186, separately exempts a person approved to produce cider, and no other alcoholic product, from monthly Alcohol Duty returns where both the previous year's actual production and the current year's estimated production do not exceed 5 hectolitres of pure alcohol. For group premises, the test is applied to the aggregate production of all premises in the production group.

Strength limits

Small Producer Relief applies only to qualifying products below 8.5% ABV. At the rates effective from 1 February 2026, a product at least 8.5% but not exceeding 22% ABV is charged at £30.62 per litre of pure alcohol without Small Producer Relief; a product exceeding 22% is charged at £33.99. Products of 1.2% ABV or less are not “alcoholic products” for these purposes and bear no Alcohol Duty.

When AWRS approval is not required

For AWRS purposes, section 98(2) of the Finance (No. 2) Act 2023 confines “controlled alcoholic products” to products on which Alcohol Duty is charged at a rate greater than nil and whose excise duty point falls at or before the sale. Cider genuinely charged at a nil rate under Small Producer Relief is therefore outside AWRS. HMRC now confirms this expressly in Excise Notice 2002: a person whose wholesale sales consist solely of such nil-rate cider does not require AWRS approval. The producer must nevertheless hold APPA, and both supplier and trade buyer should retain suitable evidence that the cider qualified for the nil rate.

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The Incidental Sales Exemption: The AWRS is not designed to include businesses that primarily operate as retailers but occasionally make unintentional trade sales. A sale is considered incidental if:

• The seller is authorised to make retail sales of alcohol (holds a premises licence, club premises certificate, or Temporary Event Notice).
• The sale in question is incidental to those retail activities.

Examples of incidental sales include:

• Sales through a supermarket checkout where the customer's business identity is unknown.
• An occasional sale where the customer makes it known they are buying for their business, for example, sales from shops to the local restaurant or village fete or to cover the odd occasion where a business asks a supermarket for their wholesaler registration number.

The concept of “occasional” is a difficult one and what may seem occasional for one business, could be a regular occurrence for another. Such sales therefore expose you to the potential risk of AWRS penalties. We recommend avoiding sales where both parties are aware that the sale is business-to-business.

Penalties for AWRS Contraventions

The penalties for non-compliance with AWRS requirements can be severe and apply to both the selling and purchasing companies:

A maximum fine: £10,000 per company involved, per contravention with each individual sale of alcohol potentially being treated as a separate contravention.

HMRC determines penalties based on:

• Behaviour type: The nature of the contravention.
  • Non-deliberate: The contravention was unintentional.
  • Deliberate but not concealed: The contravention was known.
  • Deliberate and concealed: The contravention was known and actively hidden from HMRC.
• Disclosure timing: Whether the disclosure was prompted or unprompted.
  • Unprompted disclosure: You inform HMRC of an AWRS contravention before suspecting they are about to discover it.
  • Prompted disclosure: You disclose at any other time.

Type of Behaviour	Penalty Range for Unprompted Disclosure	Penalty Range for Prompted Disclosure
Deliberate and concealed	30% to 100% of the maxium £10,000 penalty	50% to 100%
Deliberate	20% to 70%	35% to 70%
Non-deliberate	10% to 30%	20% to 30%

Final Recommendation

• You will generally require AWRS approval if your UK business will be involved in open-market, business-to-business sales of duty-paid alcohol to other, unrelated businesses.
• The application process can be very useful for new businesses looking to formalise their logistics, planning and due diligence.
• We offer comprehensive support with AWRS applications for clients of all sizes.

Need AWRS approval?

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