I've only skimmed the thread so apologies if this information has already been given.
Pharmacies are meant to ask for proof of exemption at the point of collection, but cannot withhold the item(s) if no proof is given - there's a box on the back of the script for the pharmacy to mark if proof of exemption is NOT seen. Generally speaking I don't bother where a patient is obviously medically exempt (e.g. script for insulin), though they do still need to sign it. People exempt due to receipt of benefits (other than WTFC where you're sent a little card) very rarely have any proof since the demise of the Post Office book, and generally aren't happy to show people their letter of entitlement as it also says how much money they get.
Paper prescriptions are sent away every month to the NHSBSA for payment for the medicines, fees etc. A proportion of exempt scripts are checked through whichever government database applies (benefits, medical exemption, pre-payment etc) and if a fraudulent claim is found, the patient is contacted and fined. They even send you a copy of the back of the script in question. The pharmacy is NOT liable unless they were daft enough to fill out the back themselves. There is a phone number available for reporting known fraudulent claims.
If you're averaging 4 or more items every 3 months get a pre-payment - the item charge keeps going up but the cost of a PPC hasn't moved in years.
As for patients coming into England with Scottish or Welsh scripts - a charge will be levied if they are not exempt for one of the reasons applied in England. I once had to charge a Welsh patient for insulin as he hadn't bothered to renew his medical exemption as scripts are free over there, and thus couldn't make a declaration in England. I did phone the NHS first to check, and he took it very well all things considered.
I believe that if you take an English script (or have an English address) into Scotland or Wales you still get charged.
