Would-Be Alcohol Wholesaler Falls Foul of the ‘Fit and Proper Person’ Test


Would-be entrants into the alcohol wholesaling business must satisfy HM Revenue and Customs (HMRC) that they are ‘fit and proper persons’ to participate in such a heavily regulated trade. The demanding hurdles that must be jumped in order to pass that test were illustrated by a First-tier Tribunal (FTT) ruling.

When a woman sought registration as an approved wholesaler of alcoholic goods under the Alcohol Wholesaler Registration Scheme, HMRC asked her to provide a raft of information, including a detailed business plan, bank statements, letters of intent from prospective customers and an explanation of her sources of income.

In refusing her application, an HMRC officer was not satisfied that she was a fit and proper person to carry on the activity of an alcohol wholesaler. On the information that she had provided, the officer expressed doubt as to whether her proposed business would be credible or financially viable.

The officer found that she had failed to provide a list of all her monthly income sources or to explain how her business’s start-up capital would be funded. Certain figures in her business plan were confused and she had given details of only two prospective customers. The officer further questioned whether she would be able to run an alcohol wholesaling business alongside her other commitments.

In dismissing her appeal against the officer’s decision, the FTT noted that an alleged error in one of her tax returns cast doubt on her ability to operate as a wholesaler of alcohol, a controlled activity that requires careful record-keeping and transparency when mistakes are made. On that basis, the officer was fully entitled to consider that she had not satisfied the fit and proper person test.

The officer was further concerned that she had made inconsistent statements about her income and that she had not satisfactorily explained certain payments, including multiple large deposits of cash, into her bank account. Given the lack of clarity and credibility of some of her answers to HMRC’s queries, the FTT could not see how the officer could have reached any other decision.

The FTT emphasised that it was open to her to apply for registration again and that, if she succeeded in addressing HMRC’s objections and establishing her credentials as a fit and proper person, she should be able to obtain the approval sought.

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