28 November 2020
HM Government Alcohol Duty Review Call for Evidence 2020 - BDA response
The British Distillers Alliance has responded to the government’s Alcohol Duty Review (ADR) Call for Evidence. Copies of the response are available upon request.
There are two elements to the ADR: rates and structure (HM Treasury) and management of the revenue (HMRC). In terms of the former, the main issues are fairer tax for spirits (tax by unit for all alcohol) and reduced rates for smaller producers. In the case of management of the revenue, this runs in tandem with HMRC’s modernization and simplification programme, for which the BDA has also made submissions, reiterated in the ADR response.
At a Joint Alcohol and Tobacco Consultative group meeting on meeting on 24 November, HMRC addressed the status of the ADR, with the following points:
Stakeholder engagement (other than HMG) comprises industry, economists and the public health sector;
HM Treasury will engage with minister before Christmas and “shape proposals”
There will be consultation on proposals including a “technical” consultation
These consultations will be announced next year — possibly at a “Budget event”, taking matters thereafter into 2022.
Constraints will be (as always) systems capacity and legislative space.
The BDA will participate in further interim discussion.
8 October 2020
BDA welcomes HMRC Policy change to remove requirement for excise warehouse premises guarantees
HMRC has just announced an extremely welcome policy change removing the requirement for a premises guarantee to be in place as a condition of excise warehouse approval. Until this month, a premises guarantee has been a requirement for excise warehouse approval, albeit it has been possible for “trade facility” policy excise warehousekeepers to have a “nil” level of security where there is no more than £100k duty stockholding at month end.
By circular of 28 September 2020 to members of the Joint Alcohol and Tobacco Consultative Group (JATCG), HMRC stated:
“Excise premises guarantees will also be changing from 1 January 2021. This will allow most GB and NI businesses to operate an excise premises without a guarantee. This will be subject to risk and compliance checks by HMRC. This policy change will apply to both storage and production premises.
HMRC is currently reviewing all existing premise guarantees to identify those that can be cancelled. HMRC will notify businesses who do not satisfy the risk and compliance checks, as these guarantees will be retained. It is expected we will complete this work by 1st January 2021.”
At the virtual JATCG meeting of 7 October 2020, HMRC confirmed that excise warehouse premises guarantees would be applied “by exception” ie the requirement for a guarantee would be exceptional, not the norm. HMRC’s position is that a guarantee could be required for cases of non-compliance by a warehousekeeper (or applicant for warehouse approval) or other revenue risk.
Whilst the policy change is welcomed, the BDA nevertheless believes that HMRC misses the purpose (or rather, lack of purpose) of a premises guarantee. HMRC has manifold appropriate sanctions to improve compliance of a warehousekeeper incrementally or with immediate severity. The premises guarantee is not really part of such compliance measures and never covers the full extent of revenue in duty-suspension. Instead, a premises guarantee is really an archaic, blunt “long stop” in the unlikely event that a warehousekeeper did not pay assessments to duty on pilferages or unexplained stock deficiencies.
To put this into context, HMRC has never routinely require licensed wine producers or cider-makers or registered brewers to provide a premises guarantee for excise duty suspension. It is discriminatory, therefore, for a premises guarantees to be imposed upon excise warehousekeepers who may “hold” such alcohol products (as well as spirits). Alan Powell and the BDA have lobbied hard for years for removal of warehouse premises guarantees imposed as a matter of routine by HMRC since they are not necessary or effective for compliance purposes and are discriminatory vis a vis “production” tax warehouses.
2 October 2020
UK Alcohol Duty Review starts - call for evidence
HM Treasury has advised the BDA that the Call for Evidence by the UK government into alcohol, duty rates and structures has commenced. The link to the web site is here: https://www.gov.uk/government/publications/alcohol-duty-review-call-for-evidence
The government committed at Budget 2020 to undertake a review of the alcohol duty system. This area of policy was previously harmonised by EU law. The UK is now able to set its own law in this area.
The aim of the Alcohol Duty Review is said to improve the current system to make it simpler, more economically rational and less administratively burdensome on businesses and HMRC. This call for evidence seeks views from respondents on how well the current system works (both for the individual duties and as a system as a whole), and also looks at whether:
the method of alcohol taxation should be standardised
the duty categories should be changed or unified
products should be consistently distinguished by their strength
distinctions should be made based on the place of retail
small producer reliefs should be extended or standardised
duties could be uprated for inflation in a more consistent manner
a single process for approvals, declarations and payments should be introduced
more could be done to tackle avoidance and evasion of duty
The BDA has been ready to contribute to this call for evidence since the Budget announcement and will participate with submissions to HMT about both duty rates and the entire taxation structure.