What is excise duty?
An excise tax is a legislated indirect tax and is chargeable, in addition to any Customs Duty which may be due, on the following goods:
- Alcohol: including beer, wine, cider, and spirits;
- Tobacco products: including cigarettes, cigars, rolling tobacco, and chewing tobacco;
- Gambling activities: including bingo, the National Lottery, machine games, and online games that involved the betting of money; and
- Hydrocarbon fuels: including light fuels, heavy fuels, biofuels, and road fuels.
These goods may be either of UK origin, received following an intra EU movement or imported from outside the EU.
The duty falls due at the time when the goods leave any duty suspension arrangements including when:
- they are released for consumption or otherwise made available for consumption (generally via the warehouse system) registered trader (REDS) or occasional importer receives them in the UK
- a vendor makes a delivery under distance selling arrangements
- missing consignments and other dutiable shortages are discovered
- goods imported for personal use are then sold or put to commercial use
I deal in duty-paid excise goods
If you intend to import into the UK, or arrange the importation of excise goods that are duty-paid or released for consumption, in another EU Member State for a commercial purpose, the goods will be liable to excise duty in the UK.
There are three different ways in which duty-paid excise goods can be imported into the UK for a commercial purpose:
- the standard UK duty-paid scheme for unregistered commercial importers
- the Registered Commercial Importer scheme
- distance selling arrangements for sales to private individuals
What rate applies to my goods?
Different rates can apply to different sub categories of goods. In addition to the commodity description and code number each excisable item is allocated a tax type code number (for example, 419 for still or sparkling wine, exceeding 22% alcohol). The codes identify the type and rate of Excise Duty payable. These codes are set out in the UK Trade Tariff: Box 47(a) tax type codes.
I’ve received a penalty from HMRC
If you have failed to pay excise duty on goods e.g. the supply of alcohol, or you have you may be liable for a penalty from HMRC.
“When any person uses spirits or hydrocarbon oils for a purpose that attracts a higher rate of Excise Duty (this is called ‘misuse’), for example, red diesel (normally used in farm machinery) carries a lower duty than diesel for road vehicles if someone uses red diesel in a road vehicle, this is misuse, which is a wrongdoing”
“For example, someone goes on holiday to France. They buy cigarettes to bring back into the
United Kingdom (UK) with the intention of selling them. As the cigarettes were not imported for
their own use, they should have paid the duty on them. They have committed a wrongdoing.
The person they sold the cigarettes to has also committed a wrongdoing for handling the goods.”
HMRC has set out its guidance on the penalties for excise duty wrongdoing. The penalty percentage will fall within a range depending on whether the wrongdoing was deliberate and whether the disclosure to HMRC was prompted or unprompted. For example, a prompted disclosure of deliberate wrongdoing can result in an additional penalty in the region of 50% to 100% of the tax owed.
If you have received a penalty you will normally have a 30 day time limit by which you have to submit an appeal against the penalty. If you dispute the penalty it is important you seek legal advice as soon as possible to protect your position.
My goods have been seized
If you fail to pay excise duty on goods falling within the regime, your goods may be seized and you will receive a Notice of Seizure (Notice 12A).
You can challenge the Notice and must do so promptly. If you fail to do so in good time, or within any tie limits prescribed by HMRC, you may lose your rights to challenge the Notice in the Tribunal at a later date.
The complex nature of the excise duty regime means there are various situations where those involved in the supply chain can become liable, where a duty point has arisen, for unpaid duty and/or can be liable for a penalty. If you are a business dealing in the aforementioned goods it is important to assess your supply chain carefully and carry out adequate due diligence to check who will be paying the excise duty and that it doesn’t go unpaid.
I want to contact HMRC about an excise enquiry
Telephone: 0300 200 3700 / Outside UK: +44 2920 501 261
HM Revenue and Customs Excise Written Enquiries Team, Ground Floor, Portcullis House, 21 India Street, Glasgow, G2 4PZ
Need Expert Tax Advice?
If you are unsure of your obligations under the excise duty regime or you have received a penalty from HMRC, it is important you seek legal advice as soon as possible.
Whether you are an individual or business, our expert tax solicitors and barristers can assist you in managing HMRC’s investigation and entering into negotiations by providing comprehensive legal advice and robust responses to the investigators. Our tailored team which can also comprises of specialist forensic accountants and tax advisors can calculate what you owe and make representations on your behalf to HMRC.