Posted: March 12, 2016
Apples and Pears and Excise Duty
Not so much Cockney rhyming slang (any guesses for what ‘excise duty’ might be slang for?) but more a summary of two pieces of recent news impacting on the alcohol business sector, one coming from the European Commission and the other from HMRC.
Review of excise duty exemption
The UK government has, since 1976, provided an excise duty exemption for low volume producers of cider and perry. Low volume in this sense meaning less than 70 hectolitres in any 12 month period. The EU legislation does not allow any leeway on the implementation of excise duty in this way, it must be applied universally, and so the UK government is being asked to review and amend this measure. The wording of the Commission’s message is that this is a ‘reasoned opinion’, and UK government has 2 months in which to reply satisfactorily to the Commission.
As this ‘reasoned opinion’ was made at the end of February this means a response is expected by the end of April, and with a General Election on 7 May it may be that government attention will be focused on other matters. If there is no such satisfactory response by the April deadline the UK will face the wrath of the European Court of Justice. The alcohol and drinks sector is a powerful lobbying influence in the UK and the impact of the removal of this exemption is going to be widely felt amongst the craft brewers and artisan manufacturers, and so it is anticipated that, however futile their cause might ultimately be, those involved are likely to make quite a bit of noise in fighting this.
New Alcohol Wholesaler Registration Scheme (AWRS)
The second piece of news introduces a new registration scheme – the Alcohol Wholesaler Registration Scheme (AWRS) – for anyone dealing in trade sales of alcohol. Estimated tax losses relating to alcohol fraud in the UK run to £1.3bn per year, and the registration scheme being introduced from 1 October this year is aimed at reducing those losses.
Currently manufacturers of alcohol have to register and account for excise duty in order to supply their products. This new scheme will introduce a requirement after the payment of excise duty for wholesalers and traders in alcoholic products to register themselves in order to continue to trade in such products. In addition from April 2017 any retailers of alcoholic products will be required to check and confirm that their wholesale supplier is registered and approved by HMRC on this scheme.
As well as the registration process itself, any wholesaler will have to be considered ‘fit and proper’ by HMRC to be allowed on to the registration scheme. The test applied by HMRC on applicants will cover items such as tax debts to HMRC, involvement in previous fraud or criminal activity and adequate systems controls to avoid fraud taking place. HMRC will provide a list of registered wholesalers that will allow any retailer to confirm the status of their suppliers as part of their overall checks. Needless to say there will be monitoring, enforcement and penalties applied to the system for any non-compliance.
So two bits of wooden pews (news!!) that are bound to impact heavily on the alcohol sector in the next few months.
For more information on this, or any other VAT query, please contact Greg Mayne on 01227 454627, or email VAT@burgesshodgson.co.uk