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MEMORANDUM-OF-UNDERSTANDING

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MEMORANDUM-OF-UNDERSTANDING

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									MEMORANDUM OF UNDERSTANDING BETWEEN HM REVENUE & CUSTOMS AND THE GIN AND VODKA ASSOCIATION

AND USER GUIDE
1st edition 2005

MEMORANDUM OF UNDERSTANDING BETWEEN HM REVENUE & CUSTOMS AND THE GIN AND VODKA ASSOCIATION

1. Objective 1.1 The purpose of this MoU is to set the framework of co-operation between HM Revenue & Customs (HMRC) and the Gin and Vodka Association (GVA) and its individual members in order to minimise the smuggling or diversion of gin, vodka and associated products onto the UK market without payment of excise duty. 1.2 The parties recognise that they will apply this MoU within the constraints imposed by legislation, including the Commissioners of Revenue and Customs Act, competition law, the Data Protection Act, the Criminal Procedure and Investigations Act, Excise Warehousing Regulations and in particular the Regulation of Investigatory Powers Act. HMRC, the GVA and its individual members will respect the commercial confidentiality of information provided by each other, subject always to any overriding legal obligations. 2. Background Spirits smuggling and fraud are estimated to cost the UK Government millions of pounds in lost revenue each year. The supply of illicit (duty-evaded) spirits also damages the interests of law-abiding producers and, consequently, the GVA and its individual members have co-operated with HMRC to prevent the illicit trade. Often illicit gin and vodka is poor quality and does not originate from members of the GVA. The GVA and its individual members will continue to take active steps to minimise the presence of members’ brands in the UK illicit gin and vodka market. To that end: 3. The GVA and its members agree that: 3.1 Member companies will take action where information indicates any significant smuggling or diversion of their products to identify, so far as is reasonably practicable, the supply routes; 3.2 The GVA and its member companies will advise HMRC where they become suspicious or have information that spirits fraud is taking place, and will assist HMRC in whatever way they can; 3.3 If a member company discovers that the goods which it supplied to a customer have been knowingly or recklessly used to supply the UK illicit market, either directly or indirectly, the member will review its trading relationship with that customer (for example, where clearly appropriate, by supplying only duty-paid product or by terminating that trading relationship); 3.4 Member companies will provide and maintain contacts for all UK-bottled gin, vodka and associated brands to allow “fast track” enquiries from HMRC about specific interceptions of goods, and those contacts will be in a position speedily to provide HMRC with detailed and up-to-date information on brand packaging, labelling and marking in order to aid the identification of product not intended

for the UK market and/or counterfeit or misleading product; 3.5 Member companies will be willing, where appropriate and technically feasible, to consider on a case-by-case basis (in consultation with HMRC) the introduction of methods to help the subsequent tracking and identification of specific brands and/or supplies; 3.6 The GVA and its members will liaise and exchange information with HMRC on specific overseas markets (for example, from which HMRC have evidence that one or more brands of member companies are being diverted onto the UK illicit market); 3.7 Member companies will – subject, where appropriate, to further discussion with local officers over the exact interpretation and scope of the notification criteria – identify selected large outward duty-suspended supplies using the following risk indicators and promptly notify HMRC of:      all new UK sales customers and all new UK and export consignees; all significant, sudden or unusual increases in existing business; all unusual decreases in existing business; any suspicious rejected or cancelled orders; and all cash sales (or by any other unusual means of payment).

Note – For the purposes of this clause, “large” means over 1,200 bulk litres per consignment, “promptly” means within one week of an accepted order and if practicable prior to dispatch, “UK sales customers” means orders serviced by the member company’s UK office for supply from a UK warehouse to a new customer inside or outside the UK, “new” means having had no business within the previous 2 years. Then for each such movement member companies will take the following precautionary steps aimed at preventing its subsequent diversion:  not allow the customer to use the member’s own movement guarantee unless the circumstances are demonstrably low-risk, for example: o the member retains a financial interest in, and therefore control of, the delivery; and/or o the customer is a contracted distributor/concessionaire, a major retailer/wholesaler, or similarly reputable company; confirm with the consignee warehouse before dispatch that it is expecting the consignment; pre-notify the consignment under the Early Warning System; and where the member is not organising the transport, carry out and record all reasonable security checks on the haulier.

  

3.8 In respect of this MoU, members will retain and make available – when reasonably required – the appropriate records of the decision-making process. 4. HMRC agree that: 4.1 They will swiftly impose appropriate sanctions against those shown to be directly involved in the supply of illicit spirits onto the UK market, and will notify the

legitimate UK trade of the action taken, inter alia so that trading relationships can be reviewed as set out in 3.3 above; 4.2 To their best endeavours, in order to protect the commercial interests of GVA members, they will encourage similar swift action against overseas warehousekeepers/traders who are involved in the supply of illicit spirits into the UK market and will notify the legitimate UK trade of the action taken; 4.3 They will promptly notify individual members of the GVA of any major seizures involving their products, provide those members with as much information as possible about the circumstances and the nature of the seized stock and with samples from such seizures and, if desired and possible, give those members access to inspect the seized stock, so that its packaging, labelling, marking and contents can be further examined to identify sales routings where practicable (see 3.1 above); 4.4 They will provide feedback to the GVA or individual members on the outcome of any investigations with which they have assisted; 4.5 They will keep the legitimate UK trade informed of significant successes achieved by their anti-fraud enforcement activities and of any new anti-fraud policy measures/regulations; 4.6 They will share information with the GVA and its individual members, as appropriate and where legally able, on the scale and nature of, and trends in, spirits seizures and fraud so that new joint anti-fraud measures continue to be generated and targeted on the areas of highest risk; and 4.7 They will provide the GVA and/or its members individually with as much information as possible which may assist them to fulfil their commitments under 3.1 and 3.3 above. 5. General Provisions 5.1 Recognising that many counterfeit and misleadingly labelled products are also frequently implicated in duty evasion, the GVA and its members, and HMRC, will also share information and liaise closely on action to identify, prevent and deter the sale in the UK of counterfeit and misleadingly labelled products. The GVA will notify HMRC of new misleadingly labelled brands which appear on the UK market, when it becomes aware of them. HMRC will share information with the GVA on gin, vodka brands detected in, or destined for, the UK illicit market, and be willing to provide the GVA with samples of such brands for analysis. 5.2 HMRC will, where appropriate, consult fully on any new external policies and techniques to curb spirits fraud and seek to minimise their impact on the legitimate spirits trade. The GVA and its members will participate fully and proactively in consultations on the development of such policies. 5.3 HMRC and the GVA will promote good practice on both sides in the identification and prevention of spirits fraud.

5.4 HMRC and the GVA and its individual members may, with the prior consent of the other parties, use the MoU to publicise the HMRC/trade partnership in tackling spirits fraud to the mutual benefit of all parties. 5.5 HMRC and the GVA will review the MoU annually and will monitor, and report on, its implementation. 6. Term This MoU will continue in operation until either side gives the other three months written notice. 7. Legal Obligations The signing of this MoU is not intended to create binding legal obligations on the parties. The MoU is signed by the GVA on behalf of, and with the full agreement and consent of, each of its members. The GVA will use its best endeavours, to the extent that it is reasonable to do so, to secure the compliance of its members with the MoU.

Dated this day of 2005

__________________________________________________________________ Signed by [Name] Signed by [Name] [Title] [Title] on behalf of on behalf of HM Revenue & Customs The Gin and Vodka Association


								
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