Monday, July 11, 2016

Potential Changes in Alcohol Excise Duty Procedures are Welcomed by Warehousing Body

Long Awaited Rationalisation by HMRC Finally in Sight
Shipping News Feature
UK – An area where the country has always been regarded as a little ‘quirky’, particularly by our continental cousins, concerns the treatment of alcohol products and the way they are taxed. Nowhere is this more apparent than when it comes to warehousing the finished product and now it seems things may be about to change following initial moves by Her Majesty’s Revenue & Customs (HMRC) which has announced new proposals for current excise alcohol law with procedures to be simplified and rationalised.

Alan Powell is the United Kingdom Warehousing Association’s (UKWA) advisor on Excise Duty issues and he has studied the HMRC proposals with interest, commenting:

“Excise law is long overdue an overhaul, so the proposals are very welcome. There are currently far too many different bureaucratic and often ancient obligations to trade in excise goods in different regimes, including requirements for licenses, registrations, approvals, authorisations and making entry of premises and plant. It is confusing for HMRC as well as the industry.

[For example] within ‘production’ tax warehouse regimes, brewers, cider-makers and wine-makers currently work in periods and make a single period return, whereas in the warehousing tax warehouse regime, duty has to be accounted for when products are entered for removal from the warehouse and duty has to be paid before the goods can be removed from the warehouse. Under deferment, the duty may be deferred for 28 days but the accounting warrants have to be entered daily, unless HMRC has approved twice-monthly ‘scheduling’, which has no statutory basis and is, in effect, a ‘concession’.”

“Changes were planned by the government in the early 1990s but, when the Labour party came to power in 1997, the plans were dropped because there was insufficient legislative room in the new government’s programme. Consequently, UK law for the approval of excise businesses and duty accounting has largely remained unaltered. There are now a range of significant proposals by HMRC for streamlining application processes, amendments to approvals and consistency of conditions, which is all good stuff. One key thing to bear in mind is the suggestion that all alcohol returns and payments be consolidated.”

HMRC’s stated plan in ‘pre-consultation’ is to transform how businesses transact with HMRC across the alcohol taxes by:

  • simplifying tax across disparate alcohol regimes
  • digitising transactions in line with HMRC’s digital ambition for 2020
  • streamlining processes to support business growth

The business of trading in alcohol has, unfortunately resulted in a high number of unscrupulous individuals involving themselves in the trade. This has led to even more legislation, such as the alcohol wholesaler registration scheme (AWRS). In response to this latest set of proposals, for which the industry has waited almost thirty years, UKWA’s CEO, Peter Ward, commented:

“It is clear that the warehousing industry would welcome any changes that simplify and streamline the current process and reduce the administrative burden. The industry must consider the options and make its voice heard during the consultation process and UKWA will be taking soundings from its members to ensure that this happens.”