Alcoholic Ingredients Relief
Published 1 October 2015
© Crown copyright 2015
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This publication is available at https://www.gov.uk/government/publications/alcoholic-ingredients-relief/alcoholic-ingredients-relief
Who is likely to be affected
Anyone who uses duty paid alcohol as an ingredient in the commercial production and sale of food and beverages.
General description of the measure
This measure will change the criteria for claiming Alcoholic Ingredients Relief (AIR). The changes will:
- remove the £250 minimum claim amount - there will no longer be a minimum value for claims
- extend the time period for making a claim - the new time limit will be submission of a claim within 3 years of any 3 month claim period
- remove the restriction that claims may only be made by wholesale manufacturers
Policy objective
The purpose of the change is to ensure compatibility with European law, while providing an efficient and effective scheme for UK business.
Background to the measure
This measure follows a European Court of Justice judgment relating to the conditions held in the UK’s implementation of Directive 92/83 exempting certain products from Excise Duty. No previous announcement of this measure has been made.
Detailed proposal
Operative date
The amended AIR scheme will be in place from 1 February 2016.
Current law
The current law for the AIR scheme is contained within Section 4 of the Finance Act 1995.
Proposed revisions
The changes will be implemented by way of statutory instrument, changing primary legislation, using the power set out in the European Communities Act 1972. The following subsections of Section 4 of Finance Act 1995 will be amended as follows:
- (3) (a) to (c) will be omitted to remove the wholesale manufacturer condition
- (3) (e) will be amended to remove reference to ‘(a) to (c)’
- (5) (a) the reference to ‘1 month’ will be replaced with ‘3 years’ to extend the period for which a claim can be made
- (5) (b) will be omitted to remove the minimum claim amount of £250
- (6) will be omitted as it relates to (5) (b)
Details of how to make a claim will be contained within Excise Notice 41: Alcoholic Ingredients Relief, as allowed by section 4 of the Finance Act 1995.
Summary of impacts
Exchequer impact (£m)
| 2015 to 2016 | 2016 to 2017 | 2017 to 2018 | 2018 to 2019 | 2019 to 2020 | 2020 to 2021 |
|---|---|---|---|---|---|
| negligible | negligible | negligible | negligible | negligible | negligible |
Economic impact
This measure is not expected to have any significant economic impacts.
Impact on individuals, households and families
There may be a very small positive impact on individuals or households. However, the relief is primarily aimed at commercial enterprises.
Equalities impacts
These proposals are not expected to have any significant impacts on protected groups.
Impact on business including civil society organisations
The overall ongoing impact is expected to be negligible.
Around 100 businesses currently make claims under the AIR scheme each year, and the changes may have a negligible, one-off cost in familiarising themselves with the administrative changes; many will see little or no change to the process. It is anticipated that the overall number of claimants may increase slightly, and new claimants may face one-off costs in ensuring their record keeping satisfies the evidence requirements of the scheme.
This measure is expected to have no impact on civil society organisations.
Operational impact (£m) (HM Revenue and Customs or other)
There will be negligible operational impact as a result of this change.
Other impacts
Other impacts have been considered and none have been identified.
Monitoring and evaluation
Following implementation, routine and ongoing monitoring of the number and value of claims will be carried out in accordance with normal assurance practice.
Further advice
If you have any questions about this change, please contact either:
Chris Gibbons on Telephone: 03000 588 070 or by email: chris.gibbons@hmrc.gsi.gov.uk.
Michael Seward on Telephone: 03000 588 070, or by email: michael.seward@hmrc.gsi.gov.uk.
Declaration
Damian Hinds MP, Exchequer Secretary to the Treasury has read this tax information and impact note and is satisfied that, given the available evidence, it represents a reasonable view of the likely costs, benefits and impacts of the measure.