Extending Schedule 41 Finance Act 2008 penalties to free zones and registered consignors for authorised use
Published 27 October 2021
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This publication is available at https://www.gov.uk/government/publications/extending-schedule-41-finance-act-2008-penalties-to-free-zones-and-registered-consignors-for-authorised-use/extending-schedule-41-finance-act-2008-penalties-to-free-zones-and-registered-consignors-for-authorised-use
Who is likely to be affected
This measure will affect businesses and individuals responsible for excise goods subject to the free zone customs special procedure and authorised use procedure.
General description of the measure
This measure will extend the scope of the excise wrongdoing penalty regime in Schedule 41 to the Finance Act 2008, so it will apply where there have been breaches of excise duty legislation created under section 45 of the Taxation (Cross-border Trade) Act 2018. This will have the effect of covering breaches relating to excise goods in the new free zone customs special procedure, which are being provided for in secondary legislation made under section 45 of the Taxation (Cross-border Trade) Act 2018. A minor amendment is also being made to recognise the authorised use procedure that has replaced the end use procedure where the wrongdoing penalty regime already applied.
Policy objective
This measure aims to safeguard the excise regime against duty irregularities by applying the excise penalty regime in:
- free zones
- the authorised use procedure
This measure is designed to dissuade and tackle serious non-compliance.
It also ensures a coherent approach is applied between suspensive arrangements when dealing with irregularities and wrongdoing regarding excise goods. This will protect revenue and provide a level playing field between businesses dealing in excise goods.
Background to the measure
The government published a consultation response on the new free zone procedure in October 2020. In this, the government confirmed that all excise duties will be suspended when the goods enter a free zone procedure; businesses will accordingly follow similar rules for excise goods in the free zone procedure as those that apply to excise goods in suspension in the rest of the UK. While excise goods can initially enter free zones under existing procedures, arrangements to allow excise goods to enter free zone suspension under the free zone procedure are being prepared in due course.
This measure was announced at Autumn Budget 2021.
Detailed proposal
Operative date
The measure will take effect shortly after the measure is announced at Autumn Budget 2021.
Current law
The excise wrongdoing penalties regime is set out in Schedule 41 to the Finance Act 2008.
Proposed revisions
Legislation will be introduced in Finance Bill 2021-22 to amend Schedule 41 to the Finance Act 2008 on the excise wrongdoing penalty regime:
- The legislation will amend paragraph 1 of Schedule 41 to insert a reference to the authorised use procedure.
- The legislation will also amend paragraph 4 of Schedule 41 to insert a reference to excise duty points created or deemed to be created under section 45 of the Taxation (Cross-border Trade) Act 2018.
Summary of impacts
Exchequer impact (£m)
| 2021 to 2022 | 2022 to 2023 | 2023 to 2024 | 2024 to 2025 | 2025 to 2026 | 2026 to 2027 |
|---|---|---|---|---|---|
| nil | nil | nil | nil | nil | nil |
This measure is not expected to have an Exchequer impact.
Economic impact
This measure is not expected to have any significant economic impacts.
The terms used in this section are defined in line with the Office for Budget Responsibility’s indirect effects process. This will apply where, for example, a measure affects inflation or growth. You can request further details regarding this measure at the email address listed below.
Impact on individuals, households and families
This measure is not expected to have an impact on individuals as there is expected to be no change to what they currently do.
There is expected to be no impact on family formation, stability or breakdown.
Equalities impacts
This measure is not expected to have an equality impact.
Impact on business including civil society organisations
This measure is not expected to have an impact on businesses or civil society organisations, as there is expected to be no change to what they currently do.
Operational impact (£m) (HMRC or other)
HMRC are not expected to see any operational costs in the introduction of this measure.
Gov.uk guidance will be updated to illustrate the application of this measure.
Other impacts
Other impacts have been considered and none have been identified.
Monitoring and evaluation
The measure will be monitored through information collected from tax receipts.
Further advice
If you have any questions about this change, please contact Barry Jordan on Telephone: 03000 522 306 or by email: barry.jordan2@hmrc.gov.uk.