18 August 2019
British Distillers Alliance adds weight to campaign for UK spirits duty freeze
The British Distillers Alliance (BDA) supports the campaign of the newly-formed UK Spirits Alliance to lobby for a freeze in the UK rate of spirits duty as a priority, with a strategic objective of reform of the alcohol duty structure for fairer tax treatment of spirits.
The UK Spirits Alliance has been launched in response to the boom in the UK’s iconic national drinks – including whisky and gin – with new craft distilleries opening in every part of the UK, innovative new products responding to changing consumer demands, and a wider spirits ecosystem that supports premium mixers and the pubs, bars and restaurants at the heart of communities across the country.
The BDA has 150 full members producing artisanal spirits of all types with an associate membership of over 50 businesses that support this dynamic and innovative sector.
17 May 2019
NEW DEFRA SPIRITS REGULATION
DEFRA has today (17/5/19) circulated the new spirits drinks regulation 2019/787 which will repeal 110/2008 on 25 May 2021. This follows representations from the British Distillers Alliance to DEFRA last May. There are some important changes, especially for “craft producers".
Distillation – there is a technical definition of distillation which includes vacuum distillation and methods used by British Distillers Alliance members (Article 4(6)).
Beer spirits - a new category of spirits made from beer
Gin - (no real change but, well, it should be a juniper-flavoured drink ...)
London Gin – the reference to re-distillation using “traditional stills” has been removed
This is a quick alert – please read the regulation
21 APRIL 2019
HMRC losing or misplacing applications for formal approval
The British Distillers Alliance has learned that all, or significant portions, of new distillery and excise warehouse applications are being 'lost' or misplaced by HMRC.
Alan Powell, founder and co-ordinator of the BDA says “Over the past weeks we have received a growing number of reports from members and other businesses that HMRC has been losing application forms between receipt and processing. Several weeks after submitting applications, businesses have been informed they must re-submit all or part of their documentation. In addition, the BDA has learned of HMRC failing to respond to applications within the service level agreement (45 working days).
Powell adds “in another twist, when seeking warehouse approval, HMRC requires site plans to be submitted in triplicate with boundaries for the premises to be “bonded” clearly marked. This is usually done by marking the boundary in red ink. HMRC seems not to be using all these copies and instead is scanning the documents in monochrome and not marking the boundary, so the boundary line on the plan is indistinguishable when the scanned copies are used by visiting officers.”
The BDA has reported these problems to HMRC as a matter for urgent attention.
Powell adds “There is likely to be immense pressure on officials due to Brexit, combined with the inundation of applications from new distillers or those seeking to expand or alter already-approved sites. Accordingly, in many cases we have given advice to members as to how to make such applications or obtain reports from HMRC on their progress”.
The BDA advises it is best practice to send hard copy applications by courier or guaranteed delivery, because HMRC never acknowledges applications.
27 JANUARY 2019
Spirits production and supply - VAT rules
This aspect of spirits production, supply and sales keeps arising in questions to the BDA, so we hope to clarify the VAT rules as simply as possible.
Distilling and warehousing spirits
If you are a distiller and produce spirits which will be entered into the warehousing regime, you have created a new product so there is no value for VAT to be declared on the W5 payment warrant if the spirits are released from warehouse for consumption (i.e. are duty paid). When you supply your goods, please see below.
Rectifiers/compounders in warehouse
For VAT, the supply VAT (i.e. on the neutral spirits you will receive) is suspended under warehousing/duty-suspension; the VAT is due on the last supply in warehouse. However, if you create a new product (change the character) of goods in warehouse, the VAT is extinguished and there is no VAT to account for on the W5 duty payment warrant. You enter nil as the value for VAT. This is explained in Notice 197 and Notice 702/10: https://www.gov.uk/guidance/vat-and-tax-warehousing-notice-70210
See paragraphs 2.3 and 2.4. This also relates to paragraph 6. List of processes that change the character of goods held in a tax warehouse, which includes rectifying and compounding.
Supplies to customers
When you sell (supply) product on a duty-paid basis, you charge the VAT on the total value of the goods in the invoice to your customer who in turn will deduct the VAT as input tax on their VAT return. If you supply goods under duty-suspension to a customer, you do not charge VAT.