ISSUE 4 2010


NEWS


The United Kingdom Warehousing Association (UKWA) has warned that the movement of excise goods could grind to a halt if problems with the new Excise Movement and Control System (EMCS) are not sorted out soon. The EMCS computer system


is intended to link over 150,000 traders in excise goods such as alcohol and tobacco in duty suspension in 27 EU member states and would replace the paper Administrative Accompanying Document (AAD) and paper W8 for intra UK duty suspended movements. EMCS is intended to capture and process AAD information online, validate data and allow real time notification of dispatch and receipt of duty suspended excise goods. Authorised warehouse


keepers, registered consignors, registered consignees and temporary registered consignees will exchange messages online containing consignment and movement information with their counterparts throughout the EU. It will be used mainly for goods


across borders within the EU or in or out of the EU; domestic movements are generally handled under different simplified arrangements, so there is little risk of the pubs running dry if EMCS crashes. However, while 20 other EU


countries appear to be at an advanced stage of developing the new system, in the UK testing is not even scheduled to begin until 20 December which leaves barely two weeks, the Christmas holiday period included, until ECMS is due to go live on 1 January. UKWA’s chief executive officer,


Roger Williams, said: “We strongly feel that a longer testing period is needed to ensure that any problems with the system are addressed before the go- live date. While we are assured by HMRC that the project is on course, it doesn’t require great foresight to envisage a situation where the movement of excise goods around the EU or parts of the EU would be rendered virtually impossible if the system does not function properly.


seeking assurances that all was progressing well. “However, if it’s not, I’m not sure what they’re going to do about it.” Another UKWA spokesman said that the urgency with which the meeting was being convened suggested that the Commission was “very concerned” about the issue. He said the the Commission


had to take a view on whether to delay the launch or enter into some sort of transitional arrangement. l Roger Williams added that


Roger Williams “We would urge HMRC to


consider delaying the launch of EMCS to such time as it is clear that any glitches in the system have been addressed.” Williams told FBJ: “If it all


crashes, it would effectively become illegal to trade excise goods with the rest of the EU.” He added that the European


Commission had however convened a meeting at the end of November to review progress where it would be


EMCS was not the industry’s only concern. The Excise Department has new gained new powers under EU legislation that could make warehouse operators and freight forwarders more likely to be prosecuted and fined in the event of serious fraud. Where so-called diversion


or ‘carousel’ fraud takes place whereby goods that are supposed to be held duty or VAT-free are in fact illegally sold, anyone involved in the supply chain deemed to have ‘means of knowledge’ could be held liable – whether they


actually knew of the fraud or not, said Mr Williams. “You wouldn’t even have to know that a fraud was going on – you could still be prosecuted,” he said. “People that are visible like warehousekeepers and forwarders could become easy targets.” Since April 2010 HMRC has had


the authority to assess anyone for duty on goods illegally diverted from bonded movements who was ‘aware or should reasonably have been aware’ of the diversion at any point in the supply chain. The wording of this new power springs directly from precedent in VAT fraud case law and has widespread implications because HMRC has promised to apply the lessons learned in VAT to excise duty fraud. UKWA’s honorary advisor on


excise duty matters, Alan Powell of Alan Powell Associates, said: “Warehouse keepers and third party owners of goods, hauliers and couriers handling the goods as well as wholesalers and retailers can now be held liable for the duty if it can shown by


5 Warehousemen warn of excise computer chaos


HMRC that they knew or should have known that duty was not, or would not be, paid.” He added that as things stand,


there may not be much that businesses can do to avoid falling foul of HMRC. “Beyond carrying out the usual due diligence when entering in to a contract, there is not much that a company can do to protect themselves. And due diligence may be no protection if HMRC alleges knowing participation in a market tainted with fraud.” If a person knowingly or even


unknowingly handles such goods, there is now an absolute liability to a penalty of up to 100% of the duty as “potential lost revenue” on the goods, but in addition, says says Alan Powell, “if you are holding goods suspected of being duty unpaid, HMRC can detain and seize the goods and refuse to restore them.” He warned: “HMRC’s action


plan and its enforcement is not theoretical. It is happening now and businesses are facing financial ruin.”


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