Terms & Conditions
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"Fah Mai Holdings t/a Whisky Bull Auctions" – Website Terms and Conditions
1. Definitions
Alcoholic Beverage means any Whisky or alcoholic liquid suitable for consumption;
Buyer a Member who uses our auction Website to bid on and purchase an Alcoholic Beverage listed for sale;
Member means a User who has signed up for a membership in accordance with clause 4 of these Terms;
Seller a Member who uses our auction Website to list their Alcoholic Beverage for sale;
Terms means these website terms and conditions, which apply to your use of this website;
Transaction Fees means any of the fees payable to us under clause 7;
User(s) means anyone who uses or visits our Website;
We or "us" or "our" or any similar terms mean Fah Mai Holdings t/a Whisky Bull Auctions , which runs and manages this website;
Website means this website, www.whiskybull.com ;
Whisky means, for the purposes of these Terms and for ease of reference, all distillates undergoing maturation, including distillate which will become whisky in due course through maturation (though within the whisky industry, "whisky" only refers to distillate after three years of maturation);
You or "your" or any similar terms mean the relevant User.
2. Information about us and about these Terms
a. We are WHISKY BULL AUCTIONS (Fah Mai Holdings t/a Whisky Bull Auctions), a company incorporated and registered in England and Wales with company number 10817925 whose registered office is at 1st Floor Fah Mai Holdings, 4 Davis Way, Fareham, PO141JF.
b. These Terms govern your use of the Website and our business relationship with you as a Member. By using this Website, you confirm that you accept these Terms and you agree to comply with them. If you do not agree to these Terms, you must not use our Website. You are also responsible for ensuring that anyone who accesses the Website through your internet connection are aware of these Terms and comply with them.
c. We reserve the right to amend these Terms from time to time. Every time you use the Website, we recommend you check these Terms to understand the terms that apply at that time.
d. If you wish to contact us in relation to these Terms, please use the following details:
Email: [email protected]
Tel: +44 1489 298086
3. Terms that apply to all Users
a. The following terms apply to all Users of our Website, regardless of whether or not they are also a Member:
i. Changes to, suspension and withdrawal of our Website
We may update and change our Website from time to time for any reason. We do not guarantee that our Website, or any content on it, will always be available or uninterrupted. We may suspend or withdraw or restrict the availability of all or any part of our Website at any time.
ii. Intellectual property in our Website
We are the owner or licensee of all intellectual property rights on our Website and all material published on it. You must not modify any paper or digital copies of materials you have printed off or downloaded from our Website in any way and you must always acknowledge our status as authors of the content on our Website.
iii. Reliance on information on our Website
The content of our Website is provided for general information only and is not advice on which you should rely. We make no representations, warranties or guarantees, whether express or implied, that the content on our Website is accurate, complete or up-to-date.
iv. Websites that we link to
We are not responsible for links that we provide to third party websites and such links are not an approval by us of those linked websites.
v. Viruses
We do not guarantee that our Website is secure or free from bugs or viruses. You must not knowingly introduce viruses, trojan horses, worms, logic bombs or any other material that is malicious or technologically harmful. You must not attack our Website via any technological attack or attempt to gain unauthorised access to our Website.
vi. Lawful use of our Website
You must not use our Website for any unlawful purpose.
vii. Our liability to you
We do not limit or exclude our liability to you where it would be unlawful to do so. This includes liability for death or personal injury caused by our negligence or that of our employees or agents and for fraud or fraudulent misrepresentation. Different limitations and exclusions of liability apply to liability arising as a result of the supply of auction services to you. These are set out at clause 11 of these Terms.
viii. Linking to our Website
If you link to our home page, you must do so in a way that is fair and legal and does not damage or take advantage of our reputation.
ix. Force majeure
We will not be responsible or liable for any failure or delay in the performance of our obligations under these Terms arising out of or caused by forces beyond our control, including, without limitation, strikes, work stoppages, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, and interruptions, loss or malfunctions of utilities, communications or computer (software and hardware) services
x. Governing law and jurisdiction
These Terms are governed by English law and subject to the exclusive jurisdiction of the courts of England and Wales, save that if you are resident in a different jurisdiction, you may bring proceedings in your own jurisdiction in relation to these Terms.
b. Clauses 4 to 11 of these Terms apply only to Members.
4. Membership
a. You are required to become a Member in order to sell or purchase Alcoholic Beverages via our online auction Website. A Member is able to act as a Buyer and/or Seller of Alcoholic Beverages.
b. You can become a Member by registering for an account online and paying a one-off non-refundable membership fee.
c. You can terminate your membership at any time by following the steps on our Website to close your account. Please note you will not be due any refund of your membership fee if you do so. Prior to closing your account you will need to have settled any fees, withdrawn any money we are holding for you and arranged for the collection or courier of any Alcoholic Beverage which you have purchased or which you had intended to sell and which is held in storage by us.
d. You are responsible for keeping your account details secure and you must keep these confidential. If you think anyone knows your account details, you must inform us immediately. We accept no responsibility for unauthorised access to your account.
e. In order to open an account and become a Member, you must be over 18 years old and above the legal drinking age in your country of residence. We reserve the right to withdraw membership if an account is identified as being operated or owned by anyone under the age of 18 years old.
f. When you register as a member, you must provide all requested documentation to verify your identity within two weeks and thereafter on reasonable request from us.
g. You must also provide us with any and all information we request to comply with any applicable laws or regulations including but not limited to anti-money laundering regulations.
h. Where we ask you to do so, you must also promptly provide us with clear evidence of the ownership and identity of the bank account from which your money originates and to which money will be remitted if required. This evidence must detail:
i. your bank's country and name;
ii. your branch name and address;
iii. your bank account name and number;
iv. your name and address;
v. your bank's Bank Identifier Code and your IBAN (for accounts outside the UK and the USA)
i. Where documents are required, you must provide these in English or any other language that we confirm as being acceptable to us.
Your consumer rights
If you are a consumer and you have purchased a Membership via our website, you may be entitled to a statutory 14-day cancellation period (the Cooling-off Period), during which time you can change your mind and receive a full refund. However, please note that the length of the Cooling-off Period and whether or not it applies differs depending on what you have purchased. Your statutory cancellation rights are described in more detail below.
Please note that nothing in these terms restricts your rights under general consumer law, for example if we have broken the contract, or if we have misdescribed our goods or services.
j. We will only activate your Membership during the Cooling-off Period if you ask us to provide the Membership services right away by ticking the request box during the online checkout process[DP1] .
k. If you have asked us to activate your Membership right away, we will grant you immediate access to the full Members' benefits on the Website as soon as payment has been taken and you have completed the account registration process.
l. Please note, however, that once we have provided the Membership services in full by granting you unrestricted access to the Members' benefits, you will lose the right to cancel your Membership during the Cooling-off Period and your Membership fee will not be refunded.
m. By accepting our terms and conditions you self certify that you are an individual purchasing for personal use and not for wholesale or retail. You confirm that the bottles you purchase will not be placed in any shop or any activity that requires an Alcohol Wholesaler Registration Scheme (AWRS) license and will be kept for personal investment or consumption.
n. If we suspect that you are purchasing for resale or bulk buying we will investigate further. You confirm that you understand that it is an offence for the buyer and the seller if this is happening without an AWRS in place. You agree to provide any evidence requested by Whisky Bull Auctions in any other the fore mentioned scenarios.
5. Terms Relevant to Sellers
a. The terms set out in this clause 5 (the Seller Terms) apply to all Users who wish to use the Website to sell their Alcoholic Beverage via our online auction. By signing up to and purchasing membership you agree to comply with these Seller Terms.
How the Auction Website Works for Sellers
b. Once you have registered as a Member you are able to contact us in respect of selling your Alcoholic Beverage via our online auctions.
You can contact us on [email protected].
c. If your Alcoholic Beverage is accepted as being suitable for online auction you will need to arrange for the courier or delivery of the Alcoholic Beverage to our warehouse. It remains the Seller's responsibility to arrange insurance covering any damage or loss during transportation. We accept no liability for any loss of, or damage to, Alcoholic Beverages during transportation, whether from the seller to us or from us to the buyer.
d. On receipt and inspection of the Alcoholic Beverage, if we are satisfied that the Alcoholic Beverage is suitable for online auction, we will post a listing for the Alcoholic Beverage on our Website for the relevant auction. We reserve the right to withdraw or amend the listing on our Website at any time. For the avoidance of doubt if the Alcoholic Beverage on inspection is not suitable it remains the Seller's duty to arrange its return by courier or collection, at the Seller's cost.
e. If you send us several Alcoholic Beverages for sale via our Website auction, we reserve the right to break up these Alcoholic Beverages into separate or smaller lots.
f. We do not guarantee that your Alcoholic Beverage will be sold and any Alcoholic Beverage listed for auction will be listed in accordance with any reserve price you have specified.
g. In circumstances where your Alcoholic Beverage is not sold at auction, or where the Buyer fails to pay, you will remain liable for the listing fee but no commission will be payable as outlined at clause 7.
h. Seller has the option to re-list any Alcoholic Beverage which fails to sell via our online auction subject to paying our storage fee until the next auction. Alternatively, Seller can arrange for the return of the Alcoholic Beverage by collection or courier subject to all outstanding balances being paid.
Seller's Alcoholic Beverages held in our warehouse[DP2]
i. While Sellers must have appropriate insurance in place to cover courier/transport of the Alcoholic Beverage to and from our warehouse, once delivered and inspected for any damage WHISKY BULL AUCTION'S will insure the Alcoholic Beverage while located at our warehouse.
j. Clause 11 applies in respect of any Seller's Alcoholic Beverage stored at our warehouse.
Accuracy of Information and Prohibited Bidding
k. You shall ensure that any information provided to us in respect of the Alcoholic Beverage you intend to list for auction is accurate, complete and truthful. We reserve the right to post additional or different information in the listing itself.
l. You shall not bid on your own Alcoholic Beverage listed for auction via our Website for any reason including via another Member's account.
m. Any Seller who is:
i. deemed to have provided inaccurate, incomplete, misleading or untruthful information; and/or
ii. caught or suspected of bidding on their own Alcoholic Beverage including via another Member's account;
may have their membership suspended or terminated for failure to comply with these Terms.
6. Terms Relevant to Buyers
a. The terms set out in this clause 6 (the Buyer Terms) apply to all Users who wish to use the Website to purchase Alcoholic Beverages via our online auction. By signing up to and purchasing membership you agree to comply with these Buyer Terms.
How the Auction Website works for Buyers
b. Once you have registered as a Member you are able to bid via our auction Website on any Alcoholic Beverage listed by a Seller.
c. We will notify you by email and pop up if your bid was successful after the auction has ended and inform you of the purchase price and fees due in accordance with clause 7.
Authenticity of the Alcoholic Beverage
d. Please note that we do not inspect the condition of any Alcoholic Beverage listed for sale by Sellers. Although we carry out basic checks to ensure that the Alcoholic Beverage is suitable for auction, we do not provide any warranties or guarantees in respect of the quality, suitability or authenticity of the Alcoholic Beverage or the accuracy of the Seller's description.
e. We do not accept any liability in respect of the quality, suitability or authenticity of the Alcoholic Beverage and each item is sold as per the Seller's description.
Payment, Delivery and Storage
f. We will invoice you for the purchase price at the end of the relevant auction. You must make payment of the purchase price and associated fees within 3 working days from the date of receiving the invoice.
g. Any late payment of the purchase price or associated fees after 7 working days from receiving the invoice shall incur a late payment fee of 3% above the Bank of England's base rate. You will incur this charge on the full value of your invoice.
h. Delivery or collection may be arranged by either you, us (subject to payment of costs) or the Seller, depending on the product purchased. You should check our Website for details. It remains the Buyer's responsibility to have appropriate insurance in place to cover any loss or damage incurred during transportation. We accept no liability for any loss of, or damage to, Alcoholic Beverages during transportation, whether from the Seller to us or from us to the Buyer.
i. If you wish, you can continue to store the Alcoholic Beverage at our warehouse subject to payment of the relevant storage fees as notified to you.
j. Ownership of the Alcoholic Beverage will pass to you from the Seller once we have received payment in full, including all applicable delivery charges, value added taxes, import duties, administration charges and taxes which are payable by us.
k. Some of the bottles represented on our platform are held by our partners in various locations for ease of sending and security. Due to location some bottles may take slightly longer to arrive than others.
l. We cannot ship to Thailand unless you are willing to pay the taxes involved with shipping and delivery.
7. Our Auction & Storage Fees
a. The Buyer must pay to us the purchase price of the Alcoholic Beverage, together with the transaction fee notified to the Buyer, within 3 working days of receiving our invoice following the end of the relevant auction. Our commission is 7% of the purchase price paid for the Alcoholic Beverage and we will take this commission from the purchase price before transferring the remainder of the purchase price to the Seller.
b. There are no charges to the Seller for listing an item in Auction. If the Seller wishes to set a reserve, we will charge a reserve fee of £5 per lot per Auction.
c. The cost of storage payable by both the Buyer or Seller will vary per Alcoholic Beverage and we will confirm these fees (calculated on a weekly basis) when you contact us with regard to storage of the Alcoholic Beverage.
d. VAT is applicable on all commission and surcharges. Please note VAT is not applicable to the price of the Alcoholic Beverage.
e. Subject to receiving payment for the Alcoholic Beverage from the Buyer, we will transfer the monies to the Seller's account within 30 days of receipt of payment, minus our commission, listing fee and any reserve fee.
f. Membership fee is £5 per member. This is a lifetime membership.
g. Storage is £1 per bottle per year and any bottle left longer than 60 days will incur the annual fee. This will include insurance of your item.
8. Cancellation and Charges
a. A Seller cannot cancel or make any changes to a listing once the Website auction has started and/or been concluded. The Buyer is also not entitled to make any changes to or to cancel a winning bid. All bids are considered binding and if a Buyer bids on an Alcoholic Beverage and that bid is the winning bid, the Buyer is contractually obliged to pay the price in the bid.
9. Termination
a. We reserve the right to terminate a contract to sell and/or purchase goods to the extent there is any material breach of these terms. Where we terminate a contract we reserve the right to terminate your membership.
10. Care of your money
a. Where we hold money on your behalf (for example, when the funds are received from a Buyer and we are to transfer the money to your account as a Seller), we will select the bank(s) to hold such money. We will take reasonable steps to select a bank(s) of adequate standing to do so.
b. You acknowledge and accept that no interest is payable to you for any money we hold on your behalf.
c. We accept no responsibility in the event that a bank holding your money suffers a failure to remain in business.
11. Exclusions and limitations of liability
a. All warranties, conditions and other terms implied by statute or common law (save for the conditions implied by section 12 of the Sale of Goods Act 1979) are, to the fullest extent permitted by law, excluded.
b. Nothing in these Terms limits or excludes our liability to you:
i. for death or personal injury caused by our negligence;
ii. for fraud or fraudulent misrepresentation; or
iii. for any matter in relation to which it would be illegal for us to exclude or attempt to exclude our liability.
c. Our liability for any loss of or damage to Alcoholic Beverages whilst they are stored at our warehouse shall be limited to the lower of :i) the amount we are able to recover under our insurance in respect of the relevant Alcoholic Beverage; or ii) the pre-auction value of the relevant Alcoholic Beverage.
d. Subject to paragraphs a, b and c above:
i. Our total liability in contract, tort (including negligence or breach of statutory duty, misrepresentation, restitution or otherwise, arising in connection with the performance or contemplated performance of these Terms shall be limited to the value of your Transaction Fees.
12. Understanding WOWGR
See below for details on understanding a WOWGR
Modernization and Simplification of Alcohol Excise Programme
Registration of owners of goods in excise warehouse – spirits and spirits in cask
Summary
In the Modernization programme, HMRC lists possible revocation of duty representatives and casks/bulk goods from WOWGR but as a longer term objective.
Investment in cask sales extremely important for distillery start-ups and generation of commercial revenue.
Imperative that WOWGR be clarified/corrected shorter term – by formal or “constructive” ESC or a simple legislative change by a short SI amending WOWGR.
Most recent spirits tax gap figures confirm negligible illicit consumption of spirits.
There is no risk whatsoever of cask sales of spirits in excise warehouse (cask sales growing as investment) yet excessive checks are required for applicant owners of such products. (WOWGR does not apply to hydrocarbon oils or wine/made-wine).
Law and interpretation of revenue traders and ownership of excise goods unclear and at times contradictory;
Overview
Industry has submitted that the WOWGR registered owner scheme lists only beer, spirits (and cider) as alcohol relevant goods. There is minimal spirits duty fraud since the cessation of the HMCE entrapment fraud in 1998 (which was almost exclusively in spirits), confirmed (a) by the statements by HMRC and counsel that spirits is not the focus of fraud and (b) the tax gap estimates that show barely any illicit activity.
The latest tax gap (“illicit trade”) figures of £10 million duty per year are consistent with the “samizdat” knowledge of level of fraud estimated by HMCE after 1998 (and during the period leading to the (unnecessary) spirits duty stamps implementation).
WOWGR registration of owners was initially inadvertently conceived by HMCE to combat the spirits fraud of 1994-1998, though HMCE must have known by 1998 why the fraud had occurred and that it practically ceased by 1999. For years HMCE/HMRC treated the WOWGR scheme with a “light touch” because there was no need to enforce a scheme against a non-existent threat.
The WOWGR powers have been used subsequently by HMRC against the inward beer duty fraud. That fraud (beer) shows signs of significant reduction by tax gap figures and, as also reported by the FWD. Amongst other things HMRC’s FIS has illustrated the co-operative methods employed by the large brewers and HMRC to prevent duty-suspended beer being supplied for re-positioning outside the UK for inward diversion. The AWRS may also have an effect and that anecdotally fraud has transferred from alcohol (beer) to the soft drinks sector.
WOWGR was a statutory scheme that was never required and now appears to be a bureaucratic relic. Moreover, the application process for WOWGR is excessively onerous and intrusive and often requires answers to questions that are simply not proper to prospective owners of goods in warehouse.
The problem is severe in relation to sales and ownership of spirits in cask/bulk. Since there is no real alcohol duty fraud in spirits, there seems no reason whatsoever for cask sales within the warehousing system – which is heavily regulated – to be subject to the WOWGR scheme as “relevant goods”. It seems a waste of resources for industry and HMRC.
Trade in casks
There are now a number of brokers of casks of whisky who help investors buy casks of spirits. These spirits are usually intended for long term maturation and will remain in warehouse for many years.
Such sales are crucial for start-ups and in generating finance as the spirits will not be ready for sale for several years (minimum 3 years in the case of whisky).
The matured spirits may be bottled from cask and then released duty paid by the investors or re-sold in warehouse for subsequent bottling or use in blending. There is no alcohol duty fraud risk whatsoever in such activity. WOWGR registration is an unnecessary obstruction to this trade which impacts upon legitimate new businesses (and obstructs a source of foreign revenue to the UK).
The problems in this area relate to what a “revenue trader” is and what “ownership” comprises. For example, joint ownership by private investors, or a pension fund or where legal ownership may be that of an infant (cask(s) bought by parents and title transferred).
None of these matters would have been considered when WOWGR was under construction. WOWGR was an attempt by HMCE Policy to curtail fraud in popular spirits brands which had ceased by 1998 when the Investigation Division closed the fraud activity. What remains on the statute book is an unnecessary, painful, grumbling appendix.
Timing of change
The HMRC programme for change includes under “Longer term projects”:
8. Review on whether Duty Representatives are still required.
9. Can we include bulk (including casks) from WOWGR registration requirements
10. Can we exclude bulk (including casks) from WOWGR registration requirements)
Item 8 presumably refers to Duty Representatives per WOWGR.
Items 9 and 10 seem confused – bulk (casks) of spirits are already subject to the WOWGR provisions. Presumably only items 8 and 10 are relevant.
If HMRC were to agree the risk of alcohol duty fraud in cask spirits is practically nil, a “quick win” would be to treat ownership of such casks outside the scope of “relevant goods” in the WOWGR interpretation.
This could be either by an equivalent extra-statutory concession to the wine ESC or a de facto ESC by interpretation by HMRC that cask investment does not constitute an activity that renders the owner a “revenue trader”. This latter course would simply be an extension of HMRC current excise manual (as evaluated below). The other option could be a simple amending SI to regulation 2 of the WOWG regulations to exclude cask/bulk containers of spirits from the category of “relevant goods”.
Background
There is no such category as a “registered owner” of excise goods in warehouse within the provisions of EU law (ie Directive 2008/118/EC). That Directive, concerning the production, holding and movement of excise goods under a harmonized structure, requires that excise goods be produced, held, operated on and moved within (or between) tax warehouses operated by authorized warehousekeepers, or subject to the control and obligations of registered consignors and consignees. The responsibility for the control of excise goods (and payment of duty on goods released for consumption) falls to these classes of trader only.
The activities involving duty suspension relate only to tax warehousekeepers, Registered Consignees and Registered Consignors. The question of the legal status (and legality) of the UK scheme for owners of goods in warehouse and, particularly, duty representatives was the subject of the Court of Appeal case “Seabrook Warehousing Ltd ” 2019 EWCA Civ 1357 (“Seabrook”), also considering the EU principles of equal treatment and non-discrimination.
The Court found that the WOWGR scheme was intra vires EU law, as well as consonant with EU legal principles, including the tests for proportionality (although the judge said [125] that “The evidence adduced by HMRC may be criticised as rather thin, but it is sufficient to satisfy me that the duty representative system cannot sensibly be broken down into component parts but must be viewed and assessed as a whole”
It is evident from reading the decision (and transcript notes of the hearing itself), that the court had no doubt that the level of alcohol excise fraud claimed by HMRC, and the evidence of duty fraud experienced prior to the WOWGR scheme being implemented, was extremely influential. There is grave doubt, however, that the evidence exhibited at the court by HMRC was full or even genuine.
In the Seabrook Appeal Court case, the justification for the WOWGR registered owner scheme (1999) is taken by the judges to be the same as for inward diversion fraud, which is stated by HMRC to be £1.3 billion but can vary up to £2 billion. Yet even at its height, the frauds between 1994-98 were a maximum of £600 million duty evaded per year which had ceased entirely by 1998.
It is also misleading of HMRC’s case to conflate the (then) fraud with the recent inward diversion fraud. During the hearing, this exchange took place: “Mr KINNEAR (QC for HMRC): The reason this is in, your Lordship (documents about WOWGR implementation), is to give the court an insight into what the Commissioners were doing and thinking back in 2000, i.e. at a time very close to when the (WOWGR) Regulations came in on 1 October. LORD JUSTICE VOS: But it has gone on for 20 years and we are still accepting it at a level of 12 per cent? MR KINNEAR: Well, I think they do their best, my Lord….” This verbatim exchange is not true reflection of the facts or the fraud that existed in 2000 (practically nil regarding spirits fraud and the purported reasons for WOWGR).
The spirits tax gap at this time seems to be minuscule – including VAT, just £20 million per year.
That said, the WOWGR registered owner scheme has to be complied with by revenue traders. HMRC’s exhibited evidence may also have relevance to how the Commissioners interpret the definition of “revenue trader” as is considered further below.
The key point is that the authorized warehousekeepers have all the obligations to hold and move excise goods under duty suspension and account for and arrange payment for excise duty.
Notice 196 expressly sets out in Section 3 the obligations of warehousekeepers – and only warehousekeepers – for controlling goods under duty suspension by use of necessary accounts and records. That section commences:
3.3.1 General
As part of the procedure for authorising you as a warehousekeeper you must demonstrate that you have the ability to keep the commercial records as laid down in Notice 206 Revenue traders records, ensuring that all information is permanent and legible.
Your records must show details of all excise goods received, stored in and removed from the excise warehouse.
Third party owners have no part in the normal warehousing procedures. In the case of distillers selling casks under duty-suspension, this a specialist activity which has become attractive for start-up distillers but is included in the warehousing arrangements for WOWGR since 1999.
Registration of owners of goods in warehouse – “revenue trader” - UK law
Section 100G of the Customs and Excise Management Act 1979 (CEMA) reads:
(1) For the purpose of administering, collecting or protecting the revenues derived from duties of excise, the Commissioners may by regulations under this section (in this Act referred to as “registered excise dealers and shippers regulations”)—
(a) confer or impose such powers, duties, privileges and liabilities as may be prescribed in the regulations upon any person who is or has been a registered excise dealer and shipper; and
(b) impose on persons other than registered excise dealers and shippers, or in respect of any goods of a class or description specified in the regulations, such requirements or restrictions as may by or under the regulations be prescribed with respect to registered excise dealers and shippers or any activities carried on by them.
(2) The Commissioners may approve, and enter in a register maintained by them for the purpose, any revenue trader who applies for registration under this section and who appears to them to satisfy such requirements for registration as they may think fit to impose.
(3) In the customs and excise Acts “registered excise dealer and shipper” means a revenue trader approved and registered by the Commissioners under this section.
…
(6) The regulations may make provision for treating revenue traders as approved and registered under this section in cases where they are members of a group of companies (within the meaning of the regulations) which is approved and registered in accordance with the regulations.”
Section 1(1) of CEMA defines a revenue trader to include
(a) any person carrying on a trade or business subject to any of the revenue trade provisions of the customs and excise Acts or which consists of or includes—
(i) the buying, selling, importation, exportation, dealing in or handling of any goods of a class or description which is subject to a duty of excise (whether or not duty is chargeable on the goods)…
Whether or not that trade or business is an excise licence trade
….
(ii) the financing or facilitation of any such transactions or activities as are mentioned in sub-paragraph (i) above
whether or not that trade or business is an excise licence trade….
HMRC’s Notice 206: Revenue Traders’ Records states, inter alia:
2.1 How do I know if I am a revenue trader?
You are a revenue trader if you are involved in any way with goods or services liable to Excise Duty, whether or not the duty has been paid.
The following list gives the most common types of revenue trader but it is not exhaustive:
…..
· other service industries financing or facilitating revenue traders activities such as guarantors, sureties, agents, insurers, brokers, financiers and financial institutions, analysts, makers of scientific instruments, gaugers, computer consultants
HMRC’s interpretation of the legal term “revenue trader” in the Notice is “if you are involved in any way with goods or services liable to Excise Duty, whether or not the duty has been paid”. This is clear and all-encompassing – HMRC then sets out a list of examples and states the examples are not exhaustive. The last bullet point includes as revenue traders persons barely connected with the excise trade or business itself.
The need for registration as an owner of goods under CEMA s100G and the Warehousekeepers and Owners of Warehoused Goods Regulations 1999 (WOWGR) therefore depends on whether the person(s) involved with the excise goods is a revenue trader who “carrying on a trade or business” which consists of, or includes inter alia, buying, selling or dealing in excise goods. If they do not, they do not have to be registered as an owner of goods in warehouse. If they do carry on a trade or business, they must be registered as an owner of goods in warehouse with HMRC if they have business establishment or fixed establishment in the UK or, in the case of individuals, their usual place of residence is in the UK. If not (ie the person has no presence at all in the UK), that person must appoint a duty representative to act as their agent to own goods in warehouse.
The issue is whether a person buying casks for investment (ie for re-sale) is a revenue trader.
HMRC’s internal manual entitled “Holding and Movement Owners and Transporters manual”. This states:
HMOWTR1060
Background: Are there any owners of excise goods who are not required to register?
Owners are not required to be registered under WOWGR if they:
· are not revenue traders e.g. persons holding small quantities of excise goods in duty suspension for personal or investment purposes;
· the goods are stored in production premises such as wineries not approved as an excise warehouse under either CEMA Section 92 or ALDA S15;
· are an excise warehouse keeper, holding their own goods in their own warehouse (but they must register, as an owner, if they hold goods in someone else’s warehouse);
· hold only hydrocarbon oils in warehouse; or
· hold only wine, which is the subject of an Extra Statutory Concession.
The “guidance” at the first bullet point is imprecise and vague so it provides no certainty to the reader (and is not a correct interpretation of the law that defines a “revenue trader”). Moreover, although it is imprecise, it ought to be more readily available as an interpretation within section 5 of Notice 196. The guidance appears wrong in law because if a person holds goods in warehouse for personal (non-commercial) use, the quantity held is immaterial. That person is not a revenue trader.
The guidance expressly excludes persons from being revenue traders if they are “holding small quantities of excise goods in duty suspension for…. investment purposes”.
HMRC’s interpretation of the definition of a revenue trader is to not include a person’s investment in relation to small quantities of goods, so this brings subjectivity into the interpretation. Specifically, at what point does a “small quantity” cease to be small? Moreover, the law does not provide any discretion to the Commissioners about quantity of goods to enable them to determine whether a person holding goods in warehouse for investment is a revenue trader.
The second bullet point does not work grammatically, is clumsy and is also open to misunderstanding. It reads “Owners are not required to be registered under WOWGR if they: the goods are stored in production premises such as wineries not approved as an excise warehouse under either CEMA Section 92 or ALDA S15”.
HMRC’s officers appear to have a varied approach to this matter. In one case, the officer wrote to a broker in April 2020:
The main concern in regards to the business plan from HMRC’s perspective was relating to the end user/customer and whether they would be classed as a revenue trader or private individual…
The business is required to provide evidence that owners holding a small number of casks in a warehouse for “investment purposes” are not classed as revenue traders, as per the definition in CEMA79, and therefore do not need to register under WOWGR. It is up to the business to provide a reasonable definition for “small number”, and evidence this within the checks carried out on their prospective customers. (HMRC’s emphasis).
This leaves the matter unclear and, moreover, what “evidence” could be provided that owners are “not classed as revenue traders” per s1 of CEMA? Moreover, what is a “small number”?
Anecdotally, HMRC officers also appear to be saying a single cask for investment would not render the owner a “revenue trader”.
That said, trading commodities to resell at some point long in the future for profit is not now automatically something which makes a trade. HMRC’s Business Income Manual states at BIM20230:
Meaning of trade: badges of trade: isolated transactions
A single isolated transaction can amount to the carrying on of a trade for tax purposes, but it is generally not easy to show that that is the case. The transaction, if it is to be trading for tax purposes, has to be a venture in the nature of trade (S989 Income Tax Act 2007, S1119 Corporation Tax Act 2010) (see BIM20050).
Test to be applied
The test to be applied is whether the operations involved in the transaction are of the same kind or character, and carried on in the same way, as those which are characteristic of ordinary admitted trading in the line of business in which the transaction was carried out. See CIR v Livingston and Others [1926] 11TC538 at page 542. This test requires an examination of all the badges of trade to evaluate the extent to which they characterise the facts of the case under consideration.
This approach was adopted in CIR v Fraser [1942] 24TC498. Fraser, who was a woodcutter, had bought a consignment of whisky in bond and sold it through an agent at a profit. Although many of the badges of trade were either neutral or favourable to the taxpayer, the court said at pages 502 and 503:
‘The purchaser of a large quantity of a commodity like whisky, greatly in excess of what could be used by himself, his family and friends, a commodity which yields no pride of possession, which cannot be turned to account except by a process of realisation, I can scarcely consider to be other than an adventurer in a transaction in the nature of a trade… Most important of all, the actual dealings of the respondent with the whisky were exactly of the kind that take place in ordinary trade.’
See also Rutledge v CIR [1929] 14TC490 for a closely parallel case.
The Frasier whisky case might be different if considered today. Buying to resell at some point long in the future for profit is not now automatically something which makes a trade. Assessing whether a particular activity amounts to a trade is a two-stage process with questions of both law and fact. The question of law is what constitutes a trade. The statutory definitions, as applied through case law, form the legal basis of what constitutes a trade. The question of fact is whether the activities meet the criteria to fall within that definition.
These criteria (if applied) render the interpretation of “revenue trader” even more unclear and complex.
Ownership of goods in warehouse
Registration under WOWGR of revenue traders is required for ownership of goods deposited and own in an excise warehouse.
Regulation 5 of WOWGR provides:
(1) For the purposes of section 100G of the Act, the Commissioners may approve revenue traders who wish to deposit relevant goods that they own in an excise warehouse and register them as registered excise dealers and shippers in accordance with section 100G (2) of the Act.
(2) A revenue trader who has been so approved and registered shall be known as a registered owner.
Regulation 6 of WOWGR provides:
(1) For the purposes of section 100G of the Act, and subject to paragraph (3) below, the Commissioners may approve revenue traders who wish to act as the agent of revenue traders who deposit relevant goods that they own in an excise warehouse and register them as registered excise dealers and shippers in accordance with section 100G(2) of the Act.
(2) A revenue trader who has been so approved and registered shall be known as a duty representative.
(3) The Commissioners shall not approve a revenue trader as a duty representative unless he–
(a) has a business establishment or other fixed establishment in the United Kingdom, or
(b) if he is an individual, has his usual place of residence in the United Kingdom.
Regulation 18 of WOWGR provides:
(1) The approval and registration of every registered owner shall be subject to the conditions and restrictions prescribed in a notice published by the Commissioners and not withdrawn by a further notice.
Regulation 19 of WOWGR provides:
(1) The approval and registration of every duty representative shall be subject to the conditions and restrictions prescribed in a notice published by the Commissioners and not withdrawn by a further notice.
The generality of the Commissioners’ conditions and restrictions is set out in Notice 196 (referred to above), although other specific conditions may be imposed by revision of that Notice.
In terms of the published requirements ie tertiary law under HMRC’s statutory powers of discretion, the following paragraphs are relevant:
5.2 Registration process for an owner
To apply for approval to own excise goods in an excise warehouse you must have a UK business address and apply on form EX60 Owners of duty suspended goods held in excise warehouses - application for registration.
You must send an up to date business plan with your application. You may be requested to send further additional business papers to substantiate your application. When all the requested information is held by HMRC we intend to process your application within 45 working days.
If you are unable to provide a business plan or other requested information you should contact the EPT. Failure to do this will result in your application not being processed until this information is received.
In considering your application, HMRC will apply a fit and proper test set out in section 3.2 of this notice….
5.3 Duty representatives
Duty representatives must have a business or other fixed establishment in the UK and may only represent non-UK based owners. HMRC refers to such owners as your ‘principals’. Anyone wishing to act as a duty representative should apply on form EX64. If you are a partnership you must also complete form EXCISE 102. Refer to section 3.1 for detail on who should complete and sign the application form.
Applications for duty representative approval will be considered against the fit and proper criteria set out in section 3.2 of this notice.
Duty representatives must, prior to acting for an owner, carry out checks to make sure that any owner that they represent does not have a business establishment or fixed address in the UK. A duty representative will be expected to retain evidence that they have carried out such checks on each principal before they act for them.
Failure to complete these checks and hold the required evidence will result in the duty representative’s registration being revoked and may also affect any other excise registrations or approvals they hold.
There is nothing more in law than that a person who deposits and “owns” goods in warehouse must be registered under WOWGR or appoint a duty representative. We took QC’s Opinion about what an “owner” is in law for the purpose of WOWGR; the relevant part of the Opinion is set out as an Annex to this note.
The problem is that without a definition of ownership, the situation for ownership of product for investment purposes is unclear.
For example:
Infants requiring WOWGR registration as casks are being bought for them as an investment by their parents.
Pension company ownership requirements.
Joint ownership considerations (Husband and wife or a group of friends etc)
Duty representatives
If cask sales are removed from the category of “relevant goods”, then there is no need for a duty representative to act for a non-UK business or entity. For completeness, and with reference to item 8 of the “to do” list, the following is relevant.
In terms of the legal requirements for a duty representative, all the representative must do in law to represent a non-resident owner of goods in warehouse who is a revenue trader is “carry out checks to make sure that any owner that they represent does not have a business establishment or fixed address in the UK.” Provided a duty representative does this, the law is satisfied and, moreover, a duty representative can act for as many principals as are checked/confirmed for not being resident in the UK.
In terms of spirits duty fraud, the duty representative category pointless and – terms of the decision in the Seabrook case - the evidence for it in terms of proportionality can be criticised as being “thin”. The evidence, in reality, is not merely “thin” it is non-existent; there is no purpose to category of revenue trader since there was, and is, no spirits duty fraud of any materiality. The concept of a duty representative is not necessary or proportionate in (retained) EU law (unreasonable in UK law) so ought not be legal.
Conclusion
It is evident the Commissioners are considering the removal of duty representatives from excise law and whether cask spirits should be “relevant goods” for the purposes of WOWGR.
It is requested that the Commissioners “fast track” these actions for a “quick win” which would be a great boost for the industry without too much work required from an administrative point and view. It would also be a good way to promote HMCE and industry working together in a common cause. It would also ease pressure on HMRC resources by no longer requiring staff to needlessly process such WOWGR applications or supervise them when registered.
Annex
Senior Counsel’s evaluation of the meaning of “owner” from wider Opinion
I turn now to the specific legislation in issue, WOWGR and its parent Act — CEMA. Neither
has a definition of “owner.” Again, one must fall back on reading all the provisions together
to see what meaning was intended by the word (and its cognate forms) and to see whether it
was intended to bear a meaning different given in other spheres of the law, most notably
SOGA 1979 and the CPA 2015.
Starting with WOWGR, there are repeated references to “owner” and “own” and cognate
forms of those words: see regs 5(1), 6(1), 9(2), 11(3), 12(2), 13(1), 17(2)-(3), 19(3), (6), 20(7) and 21.
It is difficult to extract much from these provisions, however it may be noted:
· It is apparent from regs 13(1) and 19(6) that a person who has bought goods is not necessarily the owner of those goods.
· It is implicit in reg 21(1) that after goods have been deposited in an excise warehouse (but remain in the warehouse), there may be a change in ownership of those goods.
Turning to the parent Act (CEMA), the position is not much clearer. There is a definition of
“owner” in relation to an aircraft and a pipe-line (s 1(1)), but neither of those sheds much light on the questions here.
What is more illuminating is s 93, dealing with the regulation of warehouses and warehoused goods. As noted above, the authority to make WOWGR derives primarily from s 93, which confers power on the Commissioners to make warehousing regulations as described in that section.
So far as relevant, s 93(2) provides:
“Warehousing regulations may, without prejudice to the generality of subsection (1) above, include
provisions—
(a) imposing or providing for the imposition under the regulations of conditions and restrictions subject to which goods may be deposited in secured in, kept in or removed from warehouse or made available there to their owner for any prescribed purpose;
(b)-(f) ...
(g) imposing or providing for the imposition under the regulations of requirements on the occupier of a warehouse or the proprietor of goods in a warehouse or goods which have been in or are [required] to be deposited in a warehouse to keep and preserve such records as may be prescribed relating to his occupation of the warehouse or proprietorship of the goods;
(h) imposing or providing for the imposition under the regulations of requirements on such an occupier or proprietor to preserve all other records kept by him for the purposes of any relevant business or activity, except any records which (or records of a class which) the Commissioners specify as not needing preservation;
(j) imposing or providing for the imposition under the regulations of requirements on such an occupier or proprietor to produce or cause to be produced any records which he has been required to preserve by virtue of paragraph (g) or (h) above to an officer when required to do so for the purpose of allowing the officer to inspect them, to copy or take extracts from them or to remove them at a reasonable time and for a reasonable period;
(k) imposing or providing for the imposition under the regulations of requirements on such an occupier or proprietor to furnish the Commissioners with any information relating to any relevant business or activity which they specify as information which they think it is necessary or expedient for them to be given for the protection of the revenue;
(l) ...”
What will be noticed in the quotation from s 93(2) is the concept of “the proprietor of goods.” This phrase is used again in CEMA ss 97, 99 and 127. The term “proprietor” is defined in s1(1):
“’proprietor,’ in relation to any goods, includes any owner, importer, exporter, shipping or other person for the time being possessed of or beneficially interested in those goods”
The coda to the definition (ie “other person for the time being possessed of or beneficially
interested in those goods”) implies that those listed before, ie owner, importer, exporter etc has the quality of being possessed of or beneficially interested in the goods. Despite the repeated use of “proprietor” in section 93 of CEMA, WOWGR does not use the term, preferring instead “owner.” As can be seen from the definition of “proprietor” in s 1(1) of CEMA, “owner” is defined as a sub-set of “proprietor” with the embedded characteristic of someone possessed of or beneficially interested in the goods.
While it is not much to go on, it is as much as there is to go on in terms of working out what
was meant by “owner of goods” in WOWGR.
