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:

• Your UK 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 UK businesses for resale.

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:

• 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.
• UK wholesales and marketing: Your UK business plans to sell, offer for sale, or arrange wholesales of alcohol to other UK businesses. 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 duty point: Your UK 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 customers: The customers of your UK business are other UK-established businesses who purchase the alcohol for resale. Note that exporting alcohol to non-UK businesses (e.g., EU or international clients), where the buyer has no UK establishment and will not resell the alcohol in the UK market, does not require AWRS approval.

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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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 alcohol to unrelated UK 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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