It is important to ensure you put your best foot forward with any application for a registration with HMRC.
Submitting the initial application form for registration under Notice 2002: Alcohol Wholesaler Registration Scheme ('AWRS') is simple, however this is merely the starting point of the process and you would then be subject of a meeting with HM Revenue & Customs ('HMRC') to assess whether the business and key individuals are ‘fit and proper’ for AWRS registration. Any rejected AWRS application is then weighted against you in any subsequent applications. It is therefore vital that you put your best foot forward in and make the strongest application in the first instance.
There are a number of steps that are best taken prior to applying and in preparation for the inevitable meeting with HMRC. Consideration and preparation of the following will maximise your chances of obtaining this crucial registration:
This will be an important first step in assessing the potential issues key individuals may face in passing the ‘fit and proper’ test that is required to obtain AWRS registration. Any unmanaged debts either personally or connected to a business that a key individual has been associated with within the last 6 years will be weighted against you in your application decision. Any negative interaction with HMRC within the last 6 years pertaining to them taking action against a key individual or a business they have been involved in will also be weighted against you. This could include tax loss letters, VAT assessments, seizures of goods, excise duty assessments, penalties and anything else of a similar nature. It is therefore crucial to assess what issues you may face in this regard to assess the realistic likelihood of being granted AWRS before incurring the cost involved in the process. It may also be possible to take mitigating actions such as legally addressing previous issues with HMRC and ensuring that any debts are now managed with payment agreements with HMRC.
The registration application is assessed by HMRC on the commercial viability of the proposed business. You need to be able to demonstrate that once the registration has been granted you will be able to enter the market place and that there is a commercial need for your registration. It will be necessary to identify your competitors and illustrate how you can compete within the marketplace to be a commercially viable entity. A SWOT analysis within your business plan can assist in this regard.
You need to clearly illustrate the source of any initial investment you may make and how it is sufficient to establish the business. You need to provide documentation which demonstrates the source of the investment if the capital is to be invested from personal funds. For example if the start up capital is from the proceeds of the sale of a house it would be best practice to have documents illustrating the sale of the property in questions and an auditable trails of the funds being deposited in your bank account. If external investment is going to be made, even from family members, this should be formalised in a loan agreement clearly outlining the return on investment, what controls the investor will have in the business and what any repayment terms are. These matters can also be dealt with in heads of terms drafted by a Solicitor if the investor is unwilling to sign any contractual document prior to AWRS being granted.
This will be required to support your AWRS registration application once you are visited by HMRC and it is best practice to submit a business plan with the initial application form. Most accountants will be able to draft your business plan and you will need to ensure that this includes financial details and forecasts. Inclusion of a biography for each key individual is usually included and this should illustrate what relevant experience they have and how this has enabled them to become involved in the proposed business. It is also best practice to include a marketing budget and details of how the marketing budget will be used. This supports your business plan to illustrate how you intend to enter the market and gain general visibility in the marketplace. You will also want to include details of how business records are to be generated and what stock control systems will be in place. It is a legal obligation under the AWRS to have a stock control system in place and HMRC need to be able to easily understand how this will operate.
The final element of the 'fit and proper' test relates to being able to demonstrate to HMRC that you will be applying FITTED due diligence checks on a risk based and proportionate approach on an ongoing basis. You are also required to have a published Corporate Due Diligence policy. Preparation of proposed Corporate Due Diligence Policies and Procedures guiding the FITTED due diligence checks that will be operated once AWRS is granted is the most effective way to give HMRC the confidence to know that you understand your legal obligations and will operate the registration safely once granted. These policies and procedures should include a risk assessment of your business structure, further explanation of any specific considerations regarding evidence of duty payment for where you will be situated in the supply chain, how FITTED due diligence checks will be triggered and enacted at the appropriate time on an ongoing basis, what checks will be conducted for differing levels of risk, how all key individuals and any other relevant members of staff will be trained and any other internal systems or processes which will assist in meeting your legal obligations. You will also need to conduct some level of due diligence in to all proposed customers and suppliers which is proportionate to the risk they pose. As you may not want to incur the cost of full enhanced due diligence prior to trade you will need to clearly illustrate how checks will be elevated to the appropriate level prior to trade and how these checks will mitigate any potential risk.
The application for AWRS registration is straight forward to complete and is submitted through your Government Gateway account. It is critical that this form is completed correctly however as any errors or discrepancies in the application form can be weighted against you when HMRC are making a decision with regards to you application. It is best practice to employ the services of a compliance specialist if you feel that you are not certain how best to answer a particular section of the form or would like the confidence of knowing that it has been cross-checked.