Administration of Alcohol Duty

19th Apr 2017


There are around 8,000 businesses who transact with HMRC each year and pay alcohol duty of £10.5 billion annually. At present the payment rules vary for different categories of drinks produced (e.g. beer, wine, spirits and cider), and a growing number of businesses trade in more than one category. Some companies are also involved in importing and exporting alcohol under EU-wide duty suspension procedures, or are approved for the Alcohol Wholesaler Registration Scheme (AWRS).

Alcohol production is an important sector which contributes significantly to UK exports. HMRC has made considerable progress in tackling alcohol duty fraud, but the illicit market still costs the taxpayers around £1.8 billion a year.

The consultation is taking place until 26 April 2017 on a broad proposal to introduce a standardised framework for the different types of registration for the alcohol duty regime, covering production and importing/exporting. This will include a new ‘fit and proper’ persons test. The aim would be to account for all alcohol duties on a single return, with a common monthly return period. A number of options are proposed for standardising payment dates. HMRC also asks for information on how duty deferment and guarantees currently work for traders. Further consultation in detailed proposals will follow in autumn 2017.


Tobacco duty also makes an important contribution to the public finances. Revenues from tobacco duty were approximately £9.4 billion in 2015-16. High duties reduce the affordability of tobacco products and support the government’s public health objective to reduce smoking prevalence.

Evasion of tobacco duty both robs the Exchequer of revenues and blunts the effectiveness of tobacco duty in helping to reduce smoking. The UK cigarette illicit market has reduced by more than a third since its peak and over the same period the illicit market for hand-rolling tobacco has reduced by nearly half.

The availability of raw tobacco in the UK presents a significant and growing risk, fuelling illegal cigarette and hand-rolling tobacco manufacture. To address this issue legislation was introduced in January 2017 for a raw tobacco approval scheme. Also, at Budget 2016, as well as announcing further investment in operational officers to tackle tobacco fraud, we committed to consulting on options for tougher sanctions to strengthen the UK’s response to tobacco smuggling.

The proposals outlined are:

  • a 100% penalty multiplier for lost revenue from repeat offences;
  • a new civil penalty for fiscal mark wrongdoings;
  • reducing the threshold for publishing details of deliberate defaulters to £15,000 in overall lost revenue where the excise wrongdoing was deliberate,
  • imposing a statutory duty of care on landlords of retail properties where tobacco offences are committed, HMRC undertook an informal consultation in 2015 following publication of its revised tobacco strategy paper in March 2015. At Budget 2016, the government announced its intention to consult formally on sanctions to tackle the illicit trade in tobacco and duty evasion.

Rogers & Norton have a Specialist Team handling HM Revenue & Customs (HMRC) claims, in particular relating to the detention of goods, seizure of goods, VAT assessments and adverse decisions. Specialist litigator Peter Hastings comments “HMRC are tightening restrictions on both these areas – as you can see the exchequer both receives and loses considerable sums each year from this industry. At R&N we have considerable experience of handling HMRC tax investigations and tax disputes and acts on behalf of both companies and individuals. Our in-depth procedural and regulatory knowledge of the tax system enables us to advise on the strategy and procedures for negotiating settlements with HMRC and the process for conducting tax-related litigation and investigations.

Many innocent companies are wrongly caught up in issues with HMRC due to the nature of the business importing and exporting alcohol and tobacco, our experience and knowledge can help support them through the challenging and intricate processes involved when dealing with HMRC”

The added benefit of using a solicitor is that all communications between the client and solicitor are subject to legal privilege.

If you have any queries or issues you can contact Peter at or on 01603 675639.