Penalties for deliberate wrongdoing involving excise goods before the duty point
Published 28 October 2026
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This publication is available at https://www.gov.uk/government/publications/excise-duty-penalties-for-wrongdoing/penalties-for-deliberate-wrongdoing-involving-excise-goods-before-the-duty-point
Who is likely to be affected
Individuals and businesses involved in deliberate conduct intended to evade UK excise duty before the first excise duty point arises. Compliant individuals and businesses are not expected to be affected.
General description of the measure
This measure will create a new excise wrongdoing penalty under Schedule 41 to the Finance Act 2008. It will enable HMRC to charge a financial penalty where a person takes deliberate steps intended to evade UK excise duty between importation and the first excise duty point, including where excise goods are intercepted, seized and destroyed before a duty point arises.
The measure is a targeted response to a specific enforcement gap. It does not create a wider reform of the excise penalty regime and will apply prospectively to conduct occurring on or after commencement.
Policy objective
The objective is to strengthen the deterrent against excise fraud and smuggling, support a fair trading environment and protect compliant businesses from unfair competition. The measure will make sure that an effective and proportionate financial sanction is available where deliberate conduct intended to evade excise duty is identified before the first excise duty point.
Background to the measure
A gap exists in the current penalty framework where excise goods are intercepted, seized and destroyed before an excise duty point arises, preventing the application of the Schedule 41 penalty.
Detailed proposal
Operative date
The measure will have effect from the date of Royal Assent to Finance Bill 2026-27. It will apply to conduct occurring on or after commencement.
Current law
Schedule 41 to the Finance Act 2008 provides for penalties for certain failures and wrongdoing connected with tax and excise duty. Under the existing provisions, HMRC cannot charge the excise wrongdoing penalty where goods are intercepted, seized and destroyed before an excise duty point has arisen, because the statutory conditions require an excise duty point to have arisen.
Proposed revisions
Finance Bill 2026-27 will create a new penalty under Schedule 41 to the Finance Act 2008 so that a financial penalty may be charged where a person deliberately takes steps intended to evade UK excise duty between importation and the first excise duty point, including where the goods are intercepted before that duty point arises.
The new penalty will apply prospectively and will use the existing Schedule 41 penalty framework.
Summary of impacts
Exchequer impact (£million)
| 2026 to 2027 | 2027 to 2028 | 2028 to 2029 | 2029 to 2030 | 2030 to 2031 | 2031 to 2032 |
|---|---|---|---|---|---|
| negligible | negligible | negligible | negligible | negligible | negligible |
This measure is expected to have a negligible impact on the Exchequer.
Economic impact
This measure is not expected to have any significant macroeconomic impacts.
Impact on individuals, households and families
This measure is expected to affect only individuals engaged in deliberate conduct intended to evade UK excise duty before the first excise duty point. It is not expected to affect individuals who comply with their excise obligations.
The measure is not expected to impact on family formation, stability or breakdown.
Equalities impacts
This measure may apply to individuals regardless of their protected characteristics. HMRC does not hold data that it can use to assess whether there are any disproportionate impacts to protected groups
Administrative impact on business including civil society organisations
This measure is expected to have no additional administrative impact on compliant businesses or civil society organisations. It does not introduce new record-keeping, reporting or other administrative requirements for compliant traders.
The measure is expected to support compliant businesses by strengthening the deterrent against excise fraud and smuggling and helping to address unfair competition.
Operational impact (£million) (HMRC or other)
Operational impacts are expected to be minimal, although the measure creates a new penalty it adds to the current regime therefore utilising existing operational processes and compliance activity.
Other impacts
Other impacts have been considered and none have been identified.
Monitoring and evaluation
The measure will be monitored through information collected from HMRC operational activity and the use of the amended Schedule 41 penalty provisions.
Further advice
If you have any questions about this change, contact the Excise Policy team by email ExciseHoldingandMovementPolicyTeam@internal.hmrc.gov.uk.