Details of the Section
Definitions
2.This section contains various definitions of terms which are used in Part 6A such as “controlled liquor”, “wholesale”, “excluded sales” etc.
3.Subsections (2) and (3) define when a sale is a sale of “controlled liquor” and when it is sold “wholesale”. The sale of the alcohol must be to a buyer carrying on a trade or business for sale in the course of that business. Controlled liquor is not sold wholesale if it is an incidental sale, a group sale or an excluded sale.
4.Subsections (4) and (5) define an incidental sale as a wholesale sale made by an authorised retailer that is incidental to its retail sales. An authorised retail sale is one that is made in accordance with the requirements under a retailer’s alcohol licence or similar authorisation.
5.Subsection (6) defines “group sales” as sales that take place between a seller and a buyer who are both corporate bodies themselves and are members of the same group.
6.Subsection (7) allows for HMRC to prescribe by or under regulations for certain sales to be “excluded sales”.
7.Subsection (8) defines “controlled activity” as selling, offering or exposing for sale or arranging to sell alcohol wholesale.
8.Subsection (9) defines a “UK person” as someone who for the purposes of VAT is UK based, i.e. has a business establishment or some other fixed establishment in the UK.
Further provision relating to definitions
9.Subsection (1) allows for HMRC to make regulations to define further how the sales covered by the scheme are treated for the purposes of Part 6A. Subsection (2) allows for provision to further define how HMRC treat cases involving offering or exposing controlled liquor for sale, or arranging for its, sale wholesale.
Approval to carry on controlled activity
10.This section sets out the conditions for being granted approval as a registered wholesaler. A trader cannot trade in wholesale alcohol unless they have been approved by HMRC. Applicants will be required to pass a fit and proper test before they can be approved. (The test criteria will be set out in the public notice). If appropriate, conditions or restrictions may be attached to an approval. HMRC will have the power to vary the conditions of approval and if appropriate revoke an approval.
The register of approved persons
11.This section states HMRC must maintain a register of approved persons and may make certain information from it available to the public via the internet on an online look-up facility (or other appropriate method) to enable persons making duty paid alcohol purchases to check the approval status of the seller.
Regulations relating to approval, registration and controlled activities
12.This section allows HMRC to make regulations regarding the approval and registration of wholesalers. It also allows HMRC to make specific regulatory provisions in certain circumstances.
13.Subsection (1) allows for regulations covering the registration application process, how variations to approvals are handled and the obligations of registered wholesalers. It also allows for any regulations required for administration of the online register.
14.Subsection (2)(b) allows for regulations covering group approvals. Group members will be jointly and severally liable for any penalties levied on the group or its individual members.
15.Subsection (2)(c) allows for regulations requiring both wholesalers and retailers to keep and make available on request appropriate records, for example, sales invoices and details of due diligence checks to ascertain a wholesaler’s registration status.
16.Subsection (2)(d) and (e) allows for regulations to impose and recover a penalty of up to £1,000 for any contravention of the regulations or conditions of approval.
17.Subsection (2)(f) allows for regulations to provide for alcohol that has been purchased in contravention of the scheme to be forfeited.
Restriction on buying controlled liquor wholesale
18.This section states that a person may not purchase alcohol from a UK wholesaler who is required to be approved unless that person has in fact been approved under the scheme.
Offences
19.This section provides for specific offences for contravention of the scheme.
20.Subsections (1) to (3) state that anyone who knowingly sells, offers or exposes for sale or arranges to sell alcohol on a wholesale basis as defined by the scheme, without being approved by HMRC, will be committing an offence.
21.Subsection (4) states that it is an offence for someone to purchase alcohol on a wholesale basis from an unapproved wholesaler where they knew or had reasonable grounds to suspect that the seller was not approved.
22.Subsection (5) sets out the sanctions that can be imposed for offences under this section on summary conviction in England and Wales, Scotland and Northern Ireland.
23.Subsection (6) sets out the sanctions that can be imposed for offences under this section on conviction on indictment.
24.Subsection (7) sets out a transitional provision until such time as section 154(1) of the Criminal Justice Act 2003 commences.
Penalties
25.Provisions covering penalties that may be levied for contraventions of the scheme are covered in new Schedule 2B to ALDA 1979.
Regulations
26.This section provides more detail on what can be done by regulations under Part 6A
Groups
27.This section provides further definition of the meaning of group sale by setting out the control requirements for group membership.
28.Subsection (1) sets out the requirements for two or more bodies corporate to form a group.
29.Subsection (2) elaborates upon when one body corporate controls another.
30.Subsection (3) states (a) when individuals will be considered to control another body corporate and (b) when a body corporate is to be regarded as having an establishment in the UK for the purposes of being entitled to be a member of a group. The test is whether the company is established or has an establishment in the UK for VAT purposes.
