Guidance

Removing wine from your premises without paying Excise Duty

Find out when you can remove wine and made-wine without paying Excise Duty and how to do it.

From:
HM Revenue & Customs
Published
11 July 2018

In this guide, wine is used to refer to both wine and made-wine.

Removals you must pay duty on

You must pay duty on all removals from your licensed premises for the following purposes if:

  • it’s for UK consumption (usually known as a removal to home-use)
  • it has been constructively removed
  • the wine has been lost
  • other irregularities are discovered
  • you’re no longer licensed
  • the premises in which you’re holding wine stop being licensed premises

Removals you will not pay duty on

As long as you comply with conditions HMRC may impose, you can remove wine from your licensed premises without paying duty for:

You must record all removals in your business records.

Any shortage in removal or transit will be charged with duty if you cannot give us a satisfactory explanation.

Documents you need

All intra-UK movements of wine will be submitted through the Excise Movement and Control System (EMCS) unless they qualify for the simplified procedures.

An electronic administrative document (eAD) will have to be raised on EMCS before the movement can start. EMCS automatically allocates an Administrative Reference Code (ARC) that uniquely identifies the movement.

The ARC will be on the printed copy of the eAD or should be noted on the commercial document and must travel with the goods.

For more information on EMCS procedures, check Excise Notice 197: receipt into and removal from an excise warehouse of excise goods.

If movements of wine are under simplified procedures and are moving between UK licensed producers or third party packagers or excise warehouses, your normal commercial despatch documents will be suitable if they’ve:

  • the name and address of your premises
  • a unique reference number
  • the name and address of the premises you are sending the wine to
  • the date of despatch
  • a description of the wine, including the quantity
  • a statement indicating that the wine is being moved in duty suspension

You must tell us if you’ve been paid, or expect to be paid in cash for the supply of wine in duty suspension (or any service you give for wine in duty suspension).

Guarantees

For the purpose of this guide, financial security is a guarantee given by an approved guarantor (for example a financial institution) who’ll pay money to us if there’s an irregularity covered by the guarantee. Guarantees are the only form of security acceptable to us.

When you need a guarantee

Depending on circumstances, we may need a guarantee to safeguard the duty on:

We may need a movement guarantee for movements of wine within the UK.

How to get a guarantee

To get a guarantee for intra-EU movements of wine or, if asked by us, for movements of wine within the UK, refer to section 10 of Excise Notice 197: receipt into and removal from an excise warehouse of excise goods and then make a request in writing and send to:

HMRC
Financial Security Centre
Cotton House
7 Cochrane Street
Glasgow
G1 1GY

Once we’ve agreed your guarantee amount, we’ll issue the draft wording to your guarantor for completion of the guarantee form and return to the EPT. If satisfied, we’ll accept the guarantee and return a signed copy to the guarantor. We’ll write to you to confirm the guarantee has been approved.

What happens if you do not give a guarantee

If you fail to give a guarantee, you must pay the duty due when the duty point occurs, which is as soon as you despatch wine to home-use from your licensed premises, rather than delaying payment of the duty until the 15th day of the following month.

Who can be your guarantor

Only companies approved by us may act as guarantors. Most banks and insurance companies have this approval, but if you want to check a company, contact the Financial Security Centre.

Cost of guarantee

The cost of the guarantee is a commercial arrangement between you and the guarantor.

Use EPSS authorisation

You will not have to give a guarantee if you’re eligible for authorisation under EPSS. Where an eligible business is approved for EPSS, they may defer payment of duty without giving a guarantee.

Who qualifies for EPSS

To be eligible to apply for EPSS, you must have been VAT registered for 3 years or more. If so, you’ll be assessed against the full EPSS authorisation criteria which includes checks on your VAT, excise and debt compliance history.

If you’re trading beneath the VAT registration threshold, you can apply for EPSS if you’ve been registered in an excise payment regime for 3 years or more. You will not be assessed against the full EPSS eligibility criteria but instead, we’ll make checks on your excise return, payment and debt compliance history.

How to apply to make payments without giving a guarantee

You must complete form Excise Payment Security System: application to make payments of excise duties without a guarantee (EPSS(B)). Send the completed application form to:

EPSS Authorisation Team
Ruby House
8 Ruby Place
Aberdeen
AB10 1ZP

Get a guarantee if you do not qualify for EPSS

Your guarantor must complete form Provide a payment guarantee for the Excise Payment Security System (C1201 TAPS)).

Send the completed form to:

HMRC
Environmental Taxes Team
Room ELG-03
St Mungo’s Road
Cumbernauld
Strathclyde
G70 5TR

Telephone: 03000 592 688

Your guarantee should be set at a maximum amount that’s enough to cover all the duty likely to be due on wine removed from your licensed premises to the UK home market, in any given accounting period.

If you are not eligible to apply for EPSS and you do not want to give a guarantee then you can pay your duty liability up front. The payment is an annual one and you must pay a year’s estimated duty in advance. Contact the Environmental Taxes Team to make the arrangements.

Licensed wine producers who have premises that are also approved as an excise warehouse must have a separate deferment guarantee to cover any duty due on removals from the excise warehouse - unless they’re eligible to apply for authorisation to make payments without giving a guarantee.

You will not be authorised for duty deferment unless you have a guarantee or are authorised under EPSS.

Supply wine to other EU member states

Removing wine to other EU member states

All intra-EU movements of wine will need to be submitted through EMCS. Excise Notice 197: receipt into and removal from an excise warehouse of excise goods has more information. You can remove duty suspended or duty paid wine to other EU member states, but the procedures and requirements are different.

Procedures you must follow to remove duty suspended wine to other member states

You must follow the detailed procedures set out in Excise Notice 197: receipt into and removal from an excise warehouse of excise goods which include the following requirements:

  • you must have financial security (guarantee) in place, the minimum level of security for movements is £20,000
  • you must make sure that you’re sending the wine to a warehouse or a registered consignee that the fiscal Aathorities in that member state have approved to receive that type of wine
  • you must access EMCS and raise an eAD before the movement starts and get an ARC that will uniquely identify the movement
  • you must get a valid report of receipt confirming that the consignee got the wine

Send duty suspended wine to a non-licensed trader or private individual in another EU member state

If you’re sending the wine direct to a non-registered trader then you must pay the duty before the wine leaves your licensed premises. You may be able to reclaim the duty as drawback.

If the non-registered trader appoints an agent who is authorised to receive duty suspended excise goods, then you do not need to pay the duty. But the movement must be submitted through EMCS, with the agent shown as the consignee on the eAD.

If you’re sending the wine to a private individual (rather than a trader), this is known as distance selling, you must make sure that you pay the duty before the wine leaves your licensed premises. You may be able to reclaim the duty as drawback.

You, as the seller, are also responsible for ensuring that the duty is paid in the member state of destination. More information on distance selling can be found in Excise Notice 197: receipt into and removal from an excise warehouse of excise goods.

Despatch duty paid wine to other EU member states

The duty in the member state of destination must be secured before the despatch of the goods and then paid on receipt. How this is done depends on the rules in the receiving EU member state. Unless the goods are being despatched to a private individual, the goods must be accompanied at all times by a Simplified Accounting Administrative Document.

You may be able to reclaim the UK duty on the grounds that you despatch. To reclaim the duty, you must observe the conditions of the drawback system in Excise Notice 207: Excise Duty drawback.

Drawback is a relief which provides for the repayment of Excise Duty paid goods that have not and will not be consumed in the UK.

Export duty suspended wine to non-EU countries

Procededures to follow

You must follow the procedures set out in Excise Notice 197: receipt into and removal from an excise warehouse of excise goods when you are consigning duty suspended wine from the UK to non-EU countries either directly (known as ‘direct exports’) through a UK port or airport, or indirectly (known as ‘indirect exports’) by transiting another member state.

Movements of wine must be submitted through EMCS and be covered by a movement guarantee. For indirect exports, this also includes the part of the journey from licensed premises to the UK port or airport of departure.

You must complete an export declaration. Information and guidance is held in the UK Trade Tariff: volume 3.

Guidance on EMCS, including completion of an eAD and movement guarantees, can be found in Excise Notice 197: receipt into and removal from an excise warehouse of excise goods.

For information on customs requirements, read Notice 275: customs export procedures.

Evidence you need to keep

If you’ve followed the correct procedures for exports (direct and indirect) to non-EU countries using EMCS, HMRC will send you a report of export through EMCS which discharges the movement. Where no report of export is given for any reason, HMRC will issue a report of rejected export (an IE839 message).

When you get an IE839 message, you may be asked to show alternative evidence of export as shown in Excise Notice 197: receipt into and removal from an excise warehouse of excise goods.

For direct exports made using Local Clearance Procedures (LCP) from your premises you should get a ‘departure message’ from CHIEF (Customs Handling of Import and Export Freight) which you need to keep as proof of export.

You may be liable for duty if you cannot show evidence that wine removed from your premises has been exported from the UK or through another member state.

More information on reports of export, CHIEF departure messages and alternative evidence of export can be found in Excise Notice 197: receipt into and removal from an excise warehouse of excise goods.

Export duty paid wine to non-EU countries

If you export duty paid wine to a non-EU country and certain conditions are met, you may reclaim the duty under the Excise Duty Drawback system. For more details, read Excise Notice 207: Excise Duty drawback. To reclaim the duty, you must be able to produce evidence that the wine left the EU.

Supply wine to HM ships

HMRC allows certain HM ships to receive wine free from Excise (and Customs) Duty. These removals are treated as exports, with the point of exportation being the delivery of the wine to the ship.

Movements to HM ships are not considered to be in duty suspension and do not move under EMCS procedures. You must complete commercial documentation for the removal of wine from your premises.

You’ll find more information and procedures to follow in Excise Notice 197: receipt into and removal from an excise warehouse of excise goods.

Remove wine as ship’s stores

You may remove wine from your premises to be shipped as stores on board ships within the UK.

These movements are not considered to be in duty suspension but supplied under relief and do not move under EMCS procedures.

The ship’s master must first get authorisation from HMRC before loading new stores onto their vessel. This authorisation is granted on Stores authority for spirits and tobacco products (C945). You should ask to see a copy of this form and keep a photocopy for your records.

You must complete commercial documentation for the removal of wine from your premises. Paragraph 14.5 of Excise Notice 197: receipt into and removal from an excise warehouse of excise goods gives details of the information required on the document.

You must satisfy HMRC that the wine has been shipped as stores.

Supplies to diplomats and visiting forces

You must have an official authorisation for the delivery of the wine. You must complete specific documentation for the removal of wine from your premises. You’ll find more information in Notice 431: visiting forces and Excise Notice 197: receipt into and removal from an excise warehouse of excise goods.

Supply duty suspended wine to entitled organisations in other member states

You must get an order and an exemption certificate when supplying wine in duty suspension to entitled international organisations, embassies and forces elsewhere in the EU. You must use EMCS for the removal of wine from your premises. You’ll find more information and procedures to follow in Excise Notice 197: receipt into and removal from an excise warehouse of excise goods.

Move wine to other licensed premises without payment of duty

All intra-UK movements of wine will need to be submitted through EMCS unless they qualify for the simplification procedures.

You can only remove wine to another licensed winery for:

  • blending or mixing with other alcoholic or non-alcoholic ingredients
  • conditioning and bottling or kegging
  • rendering sparkling
  • destruction

You can only remove apple and pear wine to a registered cider maker for:

  • making cider or perry
  • conditioning and bottling or kegging
  • rendering sparkling

You’ll be responsible for the duty on the wine until you get a receipt. The receiving wine producer or cider maker must:

  • complete a report of receipt, if the movement is submitted through EMCS
  • sign the Wine Duty receipt (for example, the delivery note) if under simplified procedures

The receiving wine producer or cider maker must issue a receipt within 5 days of getting the wine in their licensed or registered premises. If you do not get a receipt, you should contact them. If you do not get a receipt within 4 months, you’ll be liable for the duty due on the wine. If you later get a receipt, you may credit your duty account with the appropriate amount of duty.

When wine is delivered to home-use from the receiving winery, duty will become due. Duty must be paid by the producer who finally delivers the wine to home-use.

A finished or packaged product is any product that’s canned, bottled or otherwise packaged and will not undergo any further process of production. Finished or packaged wine must not be moved, without payment of duty, from one set of licensed premises to another, with the following exceptions, bottlers or packagers may return wine to the premises that it was received from, wine may be delivered to a commercial grower, licensed as a wine producer, as long as you’ve produced the wine on their behalf.

Use simplification procedures to move wine in the UK

Simplification procedures apply to certain UK movements and allow for wine to be moved under duty suspension using commercial documentation or Customs documentation instead of EMCS. These procedures are limited to:

  • wine moving between UK licensed wine producers or third party packagers or excise warehouses approved to receive and store the wine - ownership of the wine must stay with the producer during the course of the movement
  • movements for direct export only from the UK where the dispatching wine producer is authorised for LCP and can give a full customs export declaration - movement guarantee details must be shown on the declaration, more information can be found in Excise Notice 197: receipt into and removal from an excise warehouse of excise goods.

If movements do not meet the above criteria, then EMCS will have to be used.

Move wine to an excise warehouse

Movements of wine

All intra-UK movements of wine will need to be submitted through EMCS unless they qualify for the simplification procedures.

You may remove wine, without payment of duty, to an excise warehouse (approved under section 92 of the Customs and Excise Management Act 1979) for the following purposes:

  • fortification
  • export, shipment as stores or removal to the Isle of Man
  • use in the manufacture of goods allowed to be produced in an excise warehouse
  • bottling
  • storage and subsequent delivery to
    • home-use
    • another warehouse
  • rendering sparkling

After fortifying, bottling or rendering sparkling, the wine may be returned to your winery.

In the case of finished and packaged products, each package must carry a satisfactory identifying mark and number. Containers must be full, and each case must hold containers of uniform size.

What documents must accompany the wine

If the movement is under EMCS, an eAD will have to be raised on EMCS before the movement can start. EMCS automatically allocates an ARC that uniquely identifies the movement. The ARC will be on the printed copy of the eAD or should be noted on the commercial document and must travel with the goods.

If the movement is under simplified procedures and are moving between UK licensed producers or third party packagers or excise warehouses your normal commercial despatch documents will be suitable if they have:

  • the description of the wine
  • its alcoholic strength
  • details of the quantity contained in each package (and if appropriate, the capacity of each container)
  • the total quantity sent

Keep a copy of the despatch document, and the warehouse keeper’s receipt, for your own records. For more details on the procedures for inter-warehouse removals, read Excise Notice 197: receipt into and removal from an excise warehouse of excise goods.

Receive wine in licensed premises

Receive wine from inside the EU

All intra-UK movements of wine will need to be submitted through EMCS unless they qualify for the simplification procedures.

When you get the wine you must:

  • inspect the delivery vehicle to make sure it’s secure and any locks and seals are intact
  • examine containers for signs of damage
  • check the delivery against the document accompanying the wine
  • issue a receipt within 5 days of getting the wine - if movement under EMCS, this will be a report of receipt or, if under simplified procedures, a certificate of receipt (for example, copy of delivery note) signed by an authorised person
  • record issue of the receipt
  • enter the quantity received into your stock records
  • keep the accompanying document

If you find a discrepancy between the wine you get and the accompanying document, you must issue a receipt only for the wine you actually get. Show the discrepancy clearly on the certificate of receipt or include an inventory of the shortage or loss in the report of receipt.

The wine you get becomes part of your stock and is subject to the same rules as the product you produce on your licensed premises.

If you are not approved as an excise warehouse, you can only receive wine in a ready for sale state if you produced it yourself, or if you’re a commercial grower who is licensed as a wine producer, and the wine in question has been produced on your behalf.

Receive wine from outside the EU

A VI1 form must accompany wine consignments from outside the EU. Responsibility for completion rests with the consignor and the authorised agency in the country of origin.

A VI2 form is used when consignments of wine from non-EU countries are then split for sending to different destinations within the EU. You can get form VI2 from the Excise Enquiries Helpline. Once the VI2 form is completed, it should be kept and presented to visiting HMRC officers to endorse and stamp the form.

The Wine Standards Branch, part of the Food Standards Agency, has a Brief introduction to the Common Agricultural Policy Wine Regulations of the EC, setting out requirements for documentation, composition, description and presentation.

Move wine to a trade facility warehouses

What is a trade facility warehouse

A trade facility warehouse is an excise warehouse approved under the Customs and Excise Management Act 1979 section 92(1). You will need a trade facility warehouse approval, as well as your winery licence, if you want to receive and store duty-free:

  • spirits for fortifying
  • beer, cider or imported wine for use in the production of wine

HMRC will restrict any approval as a trade facility warehouse to the specific trade need as detailed on your application. For more details on approval of premises and HMRC requirements, read Excise Notice 196: excise goods - registration and approval of warehousekeepers, warehouse premises, owners of goods and registered consignors.

Physical security in a trade facility warehouse

You may have to provide a secure compartment for storage of dutiable materials. The entrance door and any approved compartments must be secured in accordance with the requirements for warehousing premises - Excise Notice 196: excise goods - registration and approval of warehousekeepers, warehouse premises, owners of goods and registered consignors.

Guarantee as security

You’ll need to get a guarantee to have part of your winery approved as a trade facility warehouse - Notice 196: Excise goods - registration and authorisation of warehouse keepers, approval of warehouse premises, owners of goods and registration of registered owners.

How to deal with receipts into warehouse

The deposit of goods in a trade facility warehouse is governed by the Excise Warehousing (etc) Regulations 1988 (Statutory Instrument 1988/809). Any Customs Duty due on imported materials to be used in the production of wine must have been accounted for before receipt into the trade facility warehouse.

The procedure and requirements set out in paragraph 24.1 of this notice and in Excise Notice 197: receipt into and removal from an excise warehouse of excise goods for operations in a trade facility warehouse apply to the receipt of all eligible goods deposited in a trade facility warehouse.

You must keep a record of all receipts and usage of goods deposited in your warehouse.

Conditions and restrictions to operations in trade facility warehouses

You must follow the general procedures set out in Excise Notice 197: receipt into and removal from an excise warehouse of excise goods for operations in a trade facility warehouse. We’ll tell you of any restrictions or conditions on your operations or the way you conduct them.

You may fortify wine in your trade facility warehouse if it’s been:

  • produced in your winery
  • received from another winery without payment of duty

Unless we inform you in writing, you may start operations as soon as you’ve recorded what you intend to do in your production records.

Classification and duty liability of products

Conditions or restrictions on the fortification of wine

Fortification of wine (including UK produced wine) is governed by EU Regulations which are administered by the Department for Environment Food and Rural Affairs (Defra). It may be necessary to consult Defra before we can approve your application.

You can fortify wine with added alcohol, as long as the final strength does not exceed 22% alcohol by volume (ABV) and the resulting product would not be classified as a spirit under the Integrated Tariff of the United Kingdom (Combined Nomenclature).

If you fortify wine to a strength above 22%, or the resulting product would fall to be treated as a spirit under the Tariff, then the product will be dutied in line with the spirits rate.

How to tell if your product would be classified as a spirit under the UK Tariff

A fermented beverage, that’s had distilled alcohol added, will stay classified as such if it keeps its character. If it does not, it must be classified as a spirituous beverage.

Previously, in classifying such products, we applied the ‘3-stage’ test, which looked at whether the:

  • fermented beverage or the added spirit accounted for more of the overall volume of the product
  • fermented beverage or the added spirit accounted for more of the alcohol content
  • external characteristics of the product (for example, its taste, presentation and labelling) were those of a fermented or spirituous beverage

If the answers to 2 or more of the questions were ‘the fermented beverage’, the beverage was classified as a fermented beverage. Otherwise, it was be classified as a spirituous beverage.

HMRC still considers these 3 factors but in a less rigid way. In most cases, if a product ‘ticks 2 boxes’, that will settle the question as before.

There’ll be some cases which may differ. For example, a product might derive slightly more of its volume and alcoholic strength from the fermented beverage, but taste and smell overwhelmingly like a spirituous beverage and be marketed as such. In such a case, the product will be classified as a spirituous liquor.

Conversely, if a product tastes and smells very much like a fermented beverage, and is marketed as such, it will not matter that the added spirit might slightly predominate in terms of overall volume and alcohol content.

If the beverage has already been fortified, the spirituous liquor used in the fortification counts towards the total contribution of spirituous liquor.

Taste tests

We may also carry out taste tests to make a decision about the proper classification of a product. Tests are carried out by a UKAS-accredited laboratory approved by HMRC and in line with approved methods designed to give the most objective results. If we perform a test, you’ll need to give us samples of the product.

You can get information about tests and samples from the Tariff Classification Service.

We do not carry out tests if the finished product falls under the Combined Nomenclature headings 2204 or 2205, detailed in Volume 2, Part 2 of the UK Tariff.

Getting a Binding Tariff Information (BTI)

A BTI is a written decision on the proper tariff classification of a product. It’s given by HMRC on application, as long as it relates to an import or export in contemplation. The application must be made to the Tariff Classification Service on form C103 and you should also give samples of the product.

A BTI is legally binding on HMRC and all other customs authorities in the EU for 6 years from the date of issue (although in some circumstances it may be revoked or annulled before then). You’re under no obligation to get a BTI and you should find it possible to work out for yourself how your products should be classified by reading the Tariff and consulting the guidance in this notice.

The tariff classification does not always govern Excise Duty liability and other countries in the EU may apply a different rate of Excise Duty to your product.

For help and advice, contact the Tariff Classification Service.

Records

In all cases you should keep records giving the full product specification, the step-by-step manufacturing process and any labelling and marketing material as well as a clear audit trail showing how you worked out the duty liability of the product.

This must include calculations you’ve made to decide how your product should be classified.

Additional authorisations

Besides your warehouse authorisation, you’ll need to be licensed as a compounder if the products you’re manufacturing are compounded spirits.

Mix wine with beer

You can mix wine with beer, but only in a trade facility warehouse. If the alcoholic strength of such mixtures does not exceed 5.5% ABV, do not contain any spirits and the predominant ingredient is beer, they’ll attract the beer rate of duty.

Mixtures exceeding 5.5% ABV that do not contain spirits are chargeable with duty as made-wine at the rate appropriate to their strength band.

Accounting for duty

For products classified as made-wines, duty is paid in the normal way on your EX606.

For those classified as beer or spirits, duty is accounted for on form Remittance advice for alcohol goods (W5) or Deferment advice for alcohol goods (W5D).

Complete a stock return

On a monthly basis, excise warehouse-keepers must submit:

  • stock returns
  • schedules and more information we need relating to the goods

The authorised warehouse-keeper (the warehouse proprietor, a partner, or if a company, a director or company secretary) must certify each return as true and complete.

Tell HMRC if you’re paid in cash for duty suspended wine

If you’re paid in cash for the wine supply

As a licensed wine producer, you must tell us if you’ve been paid, or expect to be paid, in cash for the supply of duty suspended wine which is more than £9,000 (or equivalent in other currencies).

How to tell HMRC about the supply

You must fill out form Notify HMRC of cash payments for alcohol in duty suspension (W7). For information on completion of the W7, check the explanatory notes on the reverse of the form.

Send the completed form to the fax number or email address shown on the W7.

If you’re paid, or expect to be paid, in 2 or more instalments, which individually are below the £9,000 notification threshold but in total will exceed this amount, you must also tell us on form W7 when you get the first cash payment.

As long as you’ve told us about the transaction, you do not need to wait for us to respond to receipt of the W7 before removing duty suspended wine to other licensed premises, excise warehouses or member states.

You must also tell us of any cash payments you’ve had exceeding £9,000, for any service you give relating to duty suspended wine, for example, storage facilities, handling charges, packaging of wine or use of an excise movement guarantee.

Published 11 July 2018
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