Notice

Excise Notice 226: Beer Duty

Updated 1 July 2022

Other notices on this or related subjects

Excise Notice 196: excise goods — registration and approval of warehousekeepers, warehouse premises, owners of goods and registered consignors
Excise Notice 197: Receipt into and removal from an excise warehouse of excise goods
Excise Notice 207: Excise Duty drawback
Excise Notice 209: civil penalties — fixed, geared and daily
Notice 275: Customs export procedures
Notice 431: visiting forces
Notice 700: the VAT guide
Excise Notice 2002: Alcohol Wholesaler Registration Scheme

1. Introduction

1.1 About this notice

This notice explains the effects of the law and regulations covering the production, storage and accounting for duty on beer.

It contains various technical terms and you can find the glossary helpful — check section 34.

The effects of the law and regulations covering the handling of beer in excise warehouses are explained in Notice 196 and Notice 197.

Who should read this notice

This notice is intended for:

• commercial brewers
• packagers of beer
• importers and exporters of beer

1.2 Where to find the relevant law

You will find the main legal provisions relating to the production, holding and movement of beer in:

• The Alcoholic Liquor Duties Act 1979
• The Beer Regulations 1993 (SI 1993/1228)

Other legislation can also apply to brewers and packagers. This includes:

• The Customs and Excise Management Act 1979
• The Revenue Traders (Accounts and Records) Regulations 1992 (SI 1992/3150), which cover the keeping of records
• The Alcoholic Liquor Duties (Beer-based Beverages) Order 1994 (SI 1994/2904)
• The Excise Goods (Drawback) Regulations 1995 (SI 1995/1046)
• The Beer from Small Breweries (Extension of Reduced Rates of Excise Duty) Order 2004 (SI 2004/1296)
• The Excise Goods (Holding, Movement and Duty Point) Regulations 2010

You can access details or get copies of the Acts or Regulations from the Office of Public Sector Information.

1.3 Parts of this notice that have legal force

Sometimes the law says that detailed rules on a particular matter can be set out in a notice published by HMRC. Paragraphs 7.5, 9.24, 9.27, 10.3, 10.8, 17.3, 20.12, 20.13, 20.19 and 31.3 have legal force.

2. The basics

2.1 Beer

In the Alcoholic Liquor Duties Act 1979, beer is defined as including:

• ale, porter, stout and any other description of beer
• any liquor which is made or sold as a description of beer or as a substitute for beer, whose alcoholic strength exceeds 0.5% ABV

This includes mixtures of beer with non-alcoholic drinks, (for example, with lemonade to produce shandy). Also classified as beer for duty purposes are certain mixtures of beer with alcoholic liquors or substances where the final product strength does not exceed 5.5% ABV — check section 19. No duty is chargeable in the UK on beer that does not exceed 1.2% ABV

2.2 How the duty system works

Brewers and their production premises must be registered with us for Beer Duty purposes — read sections 3 and 4.

Beer:

• becomes liable to duty when it is produced or imported — see section 7
• can be held on or moved between registered premises or to excise warehouses without payment of duty — this is known as duty suspension — see section 9

Packagers of beer can apply for registration to receive bulk beer for packaging and to hold that packaged beer without payment of duty — see sections 3 and 5.

Duty:

• is charged on the quantity and alcoholic strength (alcohol by volume) of the beer — see section 7
• is normally calculated by reference to the quantity and alcoholic strength stated on the package label or invoice — see sections 11 and 12
• becomes payable when beer is released from or consumed in registered premises or excise warehouses — see section 7
• can also be paid on the constructive removal of beer held in duty suspense on registered premises — see paragraph 7.5

2.3 How to calculate and pay the duty

You must:

• keep records of all beer produced
• keep records of all beer leaving registered premises, or otherwise passing the duty point — see paragraphs 7.3 and 7.5
• calculate duty due on all beer released for home use — see paragraph 7.6
• keep a Beer Duty account — see section 13
• complete a Beer Duty return — see section 15
• pay the duty by direct debit unless HMRC has specifically agreed otherwise — for details on duty payment, see section 16

If your beer is small brewery beer, you must:

• keep records of all beer produced in a Beer Production Account — see paragraph 8.9 and section 14
• keep records of all small brewery beer you handle in duty suspension

2.4 Visits by HMRC

We will make visits to make sure duty is being correctly assessed and accounted for on all beer leaving registered premises. Assurance is based on auditing your commercial, accounting and management control systems and on physical checks. We will carry out physical checks on production, stock and movements of beer in duty suspension.

2.5 Appointments

When we intend to carry out our checks we’ll normally make an appointment. Occasionally, we can make visits without appointment but the attending officer will give the reason for the unannounced visit. At any reasonable time you must permit our officers access to any area of the registered premises. You must make sure that all your security personnel are aware that we can visit without an appointment. All of our officers carry identification and will show this when they arrive.

2.6 If you fail to meet your legal obligations

If you fail to comply with the law and regulations relating to this notice (see paragraph 1.4) or do not account for the correct amount of excise duty, we can take action including the issue of assessments and/or civil penalties. These are explained in Notice 209. You can also be liable to penalties if you fail to apply to register with HMRC at the right time or if your monthly duty return is inaccurate — see paragraphs 3.9 and 15.8. In many cases you will have the right to appeal.

Full details of the appeals procedure are set out in section 33.

3. Registration: general

3.1 General information

You must be registered as a brewer before you start brewing unless you’re covered by one of the exemptions listed in paragraph 4.4. The proprietor, partnership or company intending to brew beer must apply for registration. A separate registration is required for each premises in which beer is produced.

If you are not a brewer but you package bulk beer, you can apply to be registered if you want to receive the beer in duty suspension for packaging.

You must also register for the Alcohol Wholesaler Registration Scheme if you sell duty paid alcohol to another business. It is the responsibility of any business who purchases alcohol for onward sale or supply to check that the wholesaler they purchase from has been approved by HMRC.

Therefore, from April 2017, any business purchasing beer for onward sale or supply from you should check that you have been approved as an alcohol wholesaler. To apply for approval, see Notice 2002: Alcohol Wholesaler Registration Scheme.

Changes in ownership

Where an existing business (including all of its assets, liabilities and obligations) is sold to a new owner, they must apply for registration prior to trading. The existing registration will not transfer to the new owner upon the sale of a business.

Upon the sale of the business, the new owner should apply at least 45 working days in advance of the date they intend to start trading. The new owner will not be able to trade until they have received confirmation from HMRC that their application has been successful. If they do so, they will be treated as trading without approval.

This only applies where there has been a complete change in ownership. Significant changes must still be notified to HMRC.

Examples of when a change of ownership takes place and a new application is required include:

• share sales: involving a complete transfer of shares of the business from the original owner to the new owner, including all assets, liabilities and obligations
• business sales: involving a complete transfer of all assets, liabilities and obligations as part of the terms of the sale of the business

A partial sale of shares or a business’s assets or liabilities, where an original owner remains in place may not require a new application, but any changes must still be notified to HMRC as set out in this section.

The above examples are not exhaustive. If you are unsure if a new application is required, you should contact HMRC for clarification.

The new owner should also ensure that any financial security required by HMRC from the business, such as a guarantee, is valid and in place when they take over the business. Guarantees held by the previous owner may not necessarily transfer to the new owner, who should seek clarification from HMRC and the guarantor if necessary.

3.2 What registration covers

Registration covers the:

• production of beer
• holding of beer in duty suspension
• classes of beer which can be held

Only producers and packagers of beer can be registered under the Beer Regulations 1993. If you’re not a producer or packager of beer, you can hold beer in duty suspension in an authorized excise warehouse. This is explained in Notice 197.

3.3 The classes of beer

The classes of beer are as follows:

Class	Type of beer
A	Bulk beer held at the same or adjacent premises at which it was produced.
B	Packaged beer held at the same or adjacent premises at which it was produced or packaged.
C	Bulk beer, which was produced elsewhere.
D	Packaged beer, which was produced elsewhere.

Brewers and their brewery premises will normally be registered to produce, hold and move the beer they produce in duty suspension — classes A and B. Additionally they can be registered to receive and hold in duty suspension — classes C and D.

Packagers can be registered to hold the beer they have packaged in duty suspension — class B and to receive and hold bulk beer in duty suspension for packaging — class C.

Brewers who hold class D are allowed to receive, hold and move third party packaged beer in duty suspension either purchased by them or owned by other parties. However, this practice is restricted in that it must be incidental to the main activity in the registered premises which is the brewing of beer. Where this is not the case, you can have to apply for approval as an excise warehouse.

3.4 When to apply for registration

At the very least 14 days before you intend to start brewing or want to begin packaging in duty suspension. However, note that, in some cases, it can take up to 45 working days to process your application — see paragraph 3.6.

You can only start to brew or package beer if you hold a valid registration (unless exempt under paragraph 4.4). Refer to paragraph 3.9.

3.5 How to apply

See section 4 if you intend to brew beer and section 5 if you wand to be registered for packaging in duty suspension.

3.6 After applying for registration

Your application will be vetted and is subject to background checks. Should these checks provide insufficient assurance that the business is suitable for registration, more information can be requested. Until this information is received, your application will be put on hold. A visit to your place of business can also be required.

If we accept your application, we will issue you with a Certificate of Registration, which will confirm the date of registration plus details of any conditions that we’ve placed on your registration. You should keep the certificate on the premises to which it refers and make it available to our officers on request.

Acceptance will register your premises as a tax warehouse but not as an excise warehouse. Information on excise warehouses can be found in Notice 196 and Notice 197.

If we refuse your application, we will inform you in writing and give our reason or reasons. We will offer you a review of our decision or you can appeal direct to the independent tribunal — see section 34.

3.7 How long registration lasts

Registration will last until production or packaging has ceased. You must notify us in writing:

• if you intend to cease production or packaging
• when you’ve actually ceased production or packaging

If you sell your business, your registration will not transfer to the new owner. The new owner must apply to register prior to trading. Check section 3.1.

3.8 When a registration would be changed or revoked

We will revoke a registration if a brewer ceases production, or a packager no longer packages bulk beer.

Where we have reasonable cause, we can vary or revoke the terms of registration or restrict the premises, which are registered. For example, where appropriate due diligence checks are not being carried out — see section 32.

When this is necessary, we will inform you in writing giving our reasons for our action. We will offer you a review of our decision or you can appeal direct to the independent tribunal — see section 33.

3.9 Production by unregistered persons or on unregistered premises

Except where registration is not required (see paragraph 4.4), the production of beer by a person who is not registered, or on premises which are not registered is an offence for which there is a penalty. You can avoid a penalty by applying for registration at the correct time. If you have not applied for registration, you must notify us as soon as possible. Depending on the circumstances, we may be able to reduce the penalty.

Read HMRC compliance checks factsheets for more information.

You have the right to appeal if we impose such a penalty. For more information on appeals, see section 33 and the following link.

Read Disagree with a tax decision for more information.

3.10 Conditions of registration

There are standard conditions that must be complied with in order to remain registered. You must:

• continue to brew or package beer (see section 3.1)
• follow all the procedures set out in this notice, including the application of appropriate due diligence checks (see section 32)

We can also impose conditions affecting your registration. These can include:

(a) limitation of the extent of registered premises

(b) restriction of the classes of beer which can be received or held on registered premises, or

(c) financial security for the duty on beer in duty suspension

Any conditions we impose under (a) and (b) will be included on your registration certificate, any other conditions will be notified to you in writing.

3.11 Register temporary storage facilities in association with registered premises

If you have a temporary need for additional storage space (due to seasonal demand) you can apply for temporary registration of any premises under your control within 5 kilometres of your registered premises.

4. Registration of producers

4.1 Do producers and their premises have to be registered

You must be registered if you produce beer unless you’re exempted under paragraph 4.4.

4.2 Premises that must be registered

You must apply to register:

(a) all breweries where you produce and hold beer in duty suspension and premises where you want to receive beer in duty suspension for packaging

(b) any adjacent premises you occupy, that is, not more than 5 kilometres from your premises registered under (a), in which you want to hold beer in duty suspension

4.3 How to apply for registration

To register simply complete form BPH1 and a detailed plan of your proposed registered premises. The plan must include the position of the vessels or plant you intend to use in the production of beer and where the beer is to be stored.

The plan must be A4 size or less and in black and white with duty suspended areas shaded accordingly. If you intend to have adjacent premises (as described in 4.2(b)) for storage of beer, you should include a plan of the adjacent premises and a map, showing the distance between the brewery and the storage premises, along with your application.

Send them as soon as possible to:

HMRC
Excise Processing Teams
BX9 1GL

If you have an enquiry once your application form has been sent, you can contact the Excise Processing Teams (EPT). For any enquiries before this stage, contact the Excise helpline.

You must make a reasonable estimate of the volume of beer that will be produced in the current calendar year in your brewery and enter details in the application form. You must make a note in your business records of how you’ve made the estimate.

If you also want to either hold or package beer (or both) in duty suspension, which was produced elsewhere, you should make application for the relevant classes — see paragraph 3.3.

All producers applying for registration for the first time are required to arrange for a guarantee to cover any duty due on beer, removed from your registered premises to the UK home market, until it is paid to HMRC — see section 6.

4.4 Exemption from registration

You do not need to apply for registration to produce beer in the following circumstances:

• brewing solely for your own domestic consumption
• brewing only for research or experimental purposes — see section 17

If you’re registered, any beer you produce for your own domestic consumption will be liable to Beer Duty.

4.5 Changes affecting your registration particulars

You must write to the EPT (see paragraph 4.3 for the address) giving details of any changes that can affect your registration. The following changes would need a new application to be completed:

• change of legal entity, for example, formation of a limited company
• change in the ownership or control of your business, check paragraph 3.1

It can take up to 45 working days to process your new application, so let the EPT know of any changes as soon as possible.

The following other changes must also be notified in writing:

• changes to partner details — if a partnership
• changes to director details — if a limited company
• change of address of your registered or adjacent premises — this requires a plan that must include the position of the vessels or plant you intend to use in the production of beer and where the beer is to be stored
• cessation of production or packaging
• the production of other excisable goods on your registered premises
• financial difficulties or impending insolvency
• you become VAT-registered or de-registered

It can take up to 15 working days to make changes to your current registration, so let the EPT know of any changes as soon as possible.

Also, you must apply in writing to make any changes to the classes of beer you’re registered to hold.

You must notify the Beer Duty Accounting Centre of the following changes:

• change of bank account details
• change of your duty guarantor

The Beer Duty Accounting Centre address is:

Beer Duty
HMRC
St Mungo's Road
Cumbernauld
Glasgow
G70 6AD

5. Registration of packagers

5.1 You must apply for registration

If you package but do not produce beer (that is you put bulk beer produced elsewhere into containers) you must apply for registration if you want to package the beer in duty suspension.

If you:

• are a secondary packager, that is, you repack packaged beer (for example, reformat 24 can packs into 15 can packs, or repack into special promotion cartons) and want to pack in duty suspension
• intend to pack any other alcoholic products, other than beer, in duty suspension

You cannot apply for registration under the Beer Regulations 1993 but can apply for authorisation of your premises as a trade facility warehouse under the terms of Notice 197.

However, if you seek approval as a trade facility warehouse to carry out either of the above operations, then you need not apply for registration as a packager of beer, the packaging of beer can also be done under the warehouse authorisation.

5.2 What registration covers

Registration covers persons and their premises, in which they want to:

• receive bulk beer produced elsewhere
• hold beer in duty suspension

Also, it will cover:

• the classes of beer which can be held

5.3 Which premises must be registered

You must apply to register:

a) all premises where you intend to package duty suspended bulk beer

b) any adjacent premises you occupy, that is, not more than 5 kilometres from your premises registered under above, on which you want to hold bulk beer for packaging, or beer, which you’ve packaged

5.4 How to apply for registration

To register simply complete form BPH1 and a detailed plan of your proposed registered premises. The plan must include the position of the equipment you intend to use in the packaging of beer and where the beer is to be stored.

The plan must be A4 size or less and in black and white with duty suspended areas shaded accordingly. If you intend to have adjacent premises (as described in 5.3(b)) for storage of beer, you should include a plan of the adjacent premises and a map, showing the distance between the packaging premises and the storage premises, along with your application.

Send them to the EPT (see paragraph 4.3 for address) as soon as possible.

If you have an enquiry once your application form has been sent, you can contact the EPT. For any enquiries before this stage, contact the Excise helpline.

All packagers applying for registration for the first time are required to arrange for a guarantee to cover any duty due on beer, removed from your registered premises to the UK home market, until it is paid to HMRC — see section 6.

5.5 Changes affecting your registration particulars

You must write to the EPT (see paragraph 4.3 for the address) giving details of any changes that can affect your registration. The following changes would need a new application to be completed:

• change of legal entity, for example, formation of a limited company
• change in the ownership or control of your business, check paragraph 3.1

It can take up to 45 working days to process your new application, so let the EPT know of any changes as soon as possible.

The following other changes must also be notified in writing:

• changes to partner details — if a partnership
• changes to director details — if a limited company
• change of address of your registered or adjacent premises — this requires a plan that must include the position of the equipment you intend to use in the packaging of beer and where the beer is to be stored
• change of name of the registered person, for example, change of company name (where the same company number is retained)
• cessation of packaging
• the production of other excisable goods on your registered premises
• financial difficulties or impending insolvency
• you become VAT-registered

It can take up to 15 working days to make changes to your current registration, so let the EPT know of any changes as soon as possible.

You must notify the Beer Duty Accounting Centre (see paragraph 4.5 for address) of the following changes:

• change of bank account details
• change of your duty guarantor

6. Financial security

6.1 What is financial security

For the purpose of this notice financial security is a guarantee given by an approved guarantor (for example, a financial institution) who undertakes to pay money to us in the event of an irregularity covered by the guarantee. Guarantees are the only form of security acceptable to us.

6.2 Why a guarantee is required

Depending on the circumstances, we will or can require a guarantee to safeguard the duty on the following:

A guarantee may be required for movements of duty suspended beer within the UK — see paragraph 6.3.

However a movement guarantee is always required for imports and exports of beer to or from brewery registered premises.

A guarantee is required if you want to defer payment of duty, that is, for beer that has been produced in the UK and has passed the duty point but for which duty has not been paid to HMRC; although you can be eligible for exemption under the Excise Payment Security System (EPSS) — see paragraph 6.4.

6.3 How to arrange for a movement guarantee

To arrange a guarantee for movements of beer in the UK if requested by us, or intra-EU movements in Northern Ireland, you should refer to section 10 of Notice 197 and then make a request in writing and send to:

HMRC
Excise Processing Teams
BX9 1GL

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

6.4 When a guarantee to defer payment of duty not required

You will not be required to provide a guarantee if you’re eligible for authorisation under EPSS. Where an eligible business is approved for EPSS, they can defer payment of duty without providing a guarantee — see paragraphs 6.4.1 and 6.4.2.

6.4.1 The EPSS authorisation criteria

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

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

Read Excise Payment Security System (EPSS): authorisation criteria for more information.

6.4.2 How to apply for authorisation to make payments without providing a guarantee

You must complete an application form EPSS(B) Excise Payment Security System: application for authorisation to make payments of excise duties without a guarantee or contact the Excise helpline.

You must send the completed application form to:

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

6.5 How to arrange for a guarantee if you do not qualify for EPSS

Your guarantor must complete form C1201 BDAC (Guarantee for payment of sums due to the Commissioners of HMRC) or contact the Excise helpline.

You must send the completed form to:

Beer Duty
HMRC
St Mungo's Road
Cumbernauld
Glasgow
G70 6AD

Your guarantee amount should be set at a maximum amount that is sufficient to cover all the duty likely to be due, on beer removed from your registered premises to the UK home market, in one calendar month.

Registered brewers who have premises that are also approved as an excise warehouse will need to have a separate deferment guarantee to cover any duty due on removals from the excise warehouse.

6.6 What happens if you do not provide a guarantee

If you fail to provide a guarantee, you’ll be required to pay the duty due when the beer becomes liable to duty, that is, as soon as you produce beer, rather than delaying payment of the duty until the 25th day of the following month.

6.7 Who can act as a guarantor

Only companies approved by us can act as guarantors. Most banks and insurance companies have this approval, but if you want to check a particular company contact Excise Processing Teams (EPT) (see paragraph 6.3).

6.8 How much your guarantee will cost you

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

7. Duty liability

7.1 When beer become liable to duty

Beer becomes liable to duty once it has been produced or when it’s imported into the UK.

7.2 When beer is produced in the UK

We have the power to determine the point of production, however, unless we’ve notified you otherwise, the production of beer normally begins when the mash is made and beer is produced when the earliest of any of the following events takes place:

The time when:

• the beer is put into any package
• beer is removed from the brewery
• beer is consumed
• the beer is lost (see section 10)
• beer reaches that state of maturity at which it is fit for consumption

In relation to the above events, ‘beer’ includes unfinished beer.

7.3 What is the duty point

Paragraph 7.1 and paragraph 7.2 explain when beer becomes liable to duty, but duty only becomes payable when the beer passes the duty point, that is when it leaves duty suspension. In addition, beer is considered to have left duty suspension when there is a failure to comply with any requirements relating to the duty suspension arrangements. Duty ceases to be suspended when:

(a) the beer leaves registered premises, unless it is delivered:

• to other registered premises
• to an excise warehouse
• for export

(b) the beer is received by registered premises not entitled on their registered holder certificate to hold that class or description of beer

(c) the beer is constructively removed (see paragraph 7.5)

(d) the beer is consumed

(e) the beer is lost

(f) the beer is irregularly diverted

(g) you’re no longer registered

(h) the premises on which you’re holding the beer cease to be registered

(i) the beer is produced and you’re not registered to hold beer in duty suspense

7.4 When to pay

Normally, the duty should be paid by the 25th of the month following the calendar month in which the beer passed the duty point — see section 16.

7.5 Can I pay duty in advance of beer leaving registered premises

If you consider that it would help your business to account for duty on any duty suspended beer in advance of delivery from registered premises, you can do so. This is known as ‘constructive removal’ and allows the registered holder of the beer to change the status of the beer held on registered premises from duty suspended to duty paid, on payment of the proper duty, without the need to remove the beer from those premises. The duty should be paid by the 25th of the month following the calendar month in which the beer was constructively removed.

The following requirements have the force of law and are made under regulation 15A(3) of the Beer Regulations 1993

You must record:

• the date of any change of status of any beer from duty suspended to duty paid
• the products

When beer has been constructively removed, it cannot be returned to duty suspension in registered premises.

7.6 The basis of the duty charge

The duty is based on the quantity and alcoholic strength of the beer and the rate of duty applicable when it passes the duty point — see sections 11 and 12. The rate of duty for brewers who produce more than 60,000 hectolitres is known as the standard rate and the current standard rate of duty can be obtained from the Excise helpline.

Brewers with an annual production of not more than 60,000 hectolitres can be eligible for a reduced rate of duty — see section 8.

7.7 How to work out the duty at the end of the accounting period

Unless HMRC has permitted the use of an alternative method of calculation that does not disadvantage the revenue, you must work out each stage of the duty calculation process to a minimum of 4 decimal places.

However, in order to complete form Beer Duty Return (EX46 ) declaration, you should truncate quantity (that is, bulk hectolitres and hectolitres %) to 2 decimal places.

Step	Action
1	Total the quantity of beer expressed to 4 decimal places at each particular strength, which has passed the duty point in the accounting period.
2	Where necessary, convert the quantity to litres.
3	Divide litres by 100 to convert to hectolitres (hl), expressed to 2 decimal places.
4	Multiply the result by the strength of the beer to convert to hectolitre percent (hl%), expressed to 2 decimal places.
5	Add together all the hl% totals for the beers of different strengths.
6	Multiply the total hl% by the applicable duty rate to find the duty figure.

The following is an example of the excise duty calculation using the standard rate of Beer Duty:

Beer A

148 × 18 gallon kegs of beer × 4.2%

Conversion factor: 1 gallon = 4.546 litres

4.546 × 18 = 81.828 litres per keg

81.828 × 148 = 12,110.544 litres in total

12,110.544 ÷ 100 = 121.10544 hl, truncated to 121.10 hl

121.10 × 4.2 = 508.62 hl%

Beer B

1684 cases of beer, each containing 24 × 440ml cans × 3.7%

24 × 440mls = 10.56 litres per case

10.56 × 1684 = 17,783.04 litres in total

17,783.04 ÷ 100 = 177.8304 hl in total, truncated to 177.83

177.83 × 3.7 = 657.971 hl%, truncated to 657.97

Beer C

898 cases of beer, each containing 24 × 275ml bottles × 3.8%

24 × 275mls = 6.6 litres per case

6.6 × 898 = 5926.8 litres in total

5926.8 ÷ 100 = 59.268 hl in total, truncated to 59.26

59.26 × 3.8 = 225.188 hl%, truncated to 225.18

Total hl% =

508.62 +

657.97 +

225.18 +

= 1391.77

Total duty payable = 1,391.77 hl% × duty rate of £19.08 = £26,554.9716 truncated to £26,554.97

If you’re eligible to a reduced rate of duty see paragraphs 8.26 to 8.28 for details of how to calculate your duty rate.

High Strength Beer Duty is payable on beer exceeding 7.5% ABV that is produced in or imported into the UK. High Strength Beer Duty is payable in addition to the existing General Beer Duty.

The following is an example of the excise duty calculation on beer liable to High Strength Beer Duty

450 cases of beer, each containing 24 × 275 ml bottles × 8% ABV

General Beer Duty

24 × 275 mls = 6.6 litres per case

6.6 × 450 = 2970 litres in total

2970 ÷ 100 = 29.7 hl in total

29.7 × 8 = 237.6 hl%

237.6 × duty rate of £19.08 = £4,533.408, truncated to £4,533.40

High Strength Beer Duty

237.6 hl% × £5.69 = £1,351.944, truncated to £1,351.94

Total duty payable = £4,533.40 + £1,351.94 = £5,885.34

There is a reduced rate of general Beer Duty for lower strength beer (for example, beer exceeding 1.2% ABV but not exceeding 2.8% ABV), produced in or imported into the UK.

The following is an example of the excise duty calculation on a beer liable to the reduced rate of General Beer Duty

375 cases of beer, each containing 24 × 275 ml bottles × 2.8% ABV

24 × 275 mls = 6.6 litres per case

6.6 × 375 = 2,475 litres in total

2,475 ÷ 100 = 24.75 hl in total

24.75 × 2.8 = 69.3 hl%

69.3 × duty rate of £8.42 = £583.506 truncated to £583.50

The duty rates used in the above calculations are those in place at the time of publication of this notice. You can find details of Alcohol Duty rates or contact the Excise helpline.

Information about determining the quantity of beer for duty purposes is in section 11.

For details of the Beer Duty return and duty payment, see sections 15 and 16.

7.8 How to calculate the duty on mixed-packs

You can produce packages containing products of different strengths and/or volumes.

The calculation of volume and ABV for duty purposes on such packages is as follows:
A mixed-pack contains:	4 × 440ml cans @ 3.2% ABV 16 × 500ml cans @ 5.1% ABV 4 × 500ml cans @ 7.0% ABV
Volume calculation:	4 × 0.44 litres = 1.76 litres 16 × 0.50 litres = 8.00 litres 4 × 0.50 litres = 2.00 litres
Total pack volume	11.76 litres
ABV calculation Multiply the volume of each beer by its ABV and total the results. Divide the total by the total pack volume to obtain the weighted ABV.
1.76 × 3.2 = 5.632 8.00 × 5.1 = 40.800 2.00 × 7.0 = 14.000 Total = 60.432 60.432 divided by 11.76 = 5.138

This is the weighted ABV and should be truncated to one decimal place for duty calculation purposes.

The volume for duty of this mixed-pack is 11.76 litres and the ABV is 5.1%.

The method described in this paragraph can only be used when one rate of duty applies. Where there’s more than one duty rate within a mixed-pack then duty has to be calculated on an individual basis. For example, beer exceeding 7.5% ABV is subject to High Strength Beer Duty and is payable in addition to the existing General Beer Duty.

8. Small brewery beer

8.1 What is small brewery beer

Small brewery beer is beer, other than that brewed under licence, produced by eligible breweries, whether in the UK or overseas. Small brewery beer is eligible for reduced rates of duty.

Beer produced under licence is never small brewery beer and is always liable to the standard rate of duty.

8.2 What ‘produced under licence’ means

Production under licence is where permission is given to a brewery to brew another brewery’s beer. In order to determine whether or not production is licensed, the following factors will be taken into account:

• the relationship between you and the other brewery
• contracts of supply
• the name of the product, trade marks or labels and how it is marketed
• any other factors considered relevant

8.3 How to know if the beer you produce is small brewery beer

8.3.1 As an existing brewer with a single brewery not connected with other breweries

You must satisfy all of the following conditions for the beer you produce to qualify as small brewery beer:

• no more than 60,000 hectolitres of beer can have been produced in your brewery in the previous calendar year — see paragraph 8.10
• less than half of the beer produced in the brewery in the last calendar year can have been produced under licence
• you must reasonably estimate that in the current calendar year your brewery will produce no more than 60,000 hectolitres of beer — see paragraph 8.7

8.3.2 As an existing brewer connected to other small breweries

You must satisfy all of the following conditions for the beer produced in your brewery and any connected breweries:

• no more than a combined total of 60,000 hectolitres of beer in your brewery and any connected breweries can have been produced in the previous calendar year — see paragraph 8.10

• less than half of the beer produced in your brewery or any connected brewery in the last calendar year can have been produced under licence — see below

• you must reasonably estimate that in the current calendar year your and any connected breweries will produce a combined total no more than 60,000 hectolitres of beer — see paragraph 8.7

This means that if one brewery in a group of connected breweries has licensed production of 50% or more, the whole group is excluded from the scheme. The licensed production in each individual brewery must be less than half of the total production of that brewery.

8.4 What ‘connected breweries’ means

If you produce beer in just one brewery at any time during a calendar year and you’re not connected with any person (as described below), who also produces beer in the same brewery or any other brewery in that year, your brewery is a single brewery for the purpose of the reduced rates scheme.

If you produce beer in more than one brewery during a calendar year, or you’re connected with any person who produces beer in any other brewery in the year, your brewery is part of a group of connected breweries for the purposes of the reduced rates scheme.

8.5 Connected breweries

Any question as to whether a person is connected with another is determined in accordance with section 1122 of the Corporation Tax Act 2010. The definition of ‘connection’ is very wide but some examples of the circumstances in which people are ‘connected’ are set out below:

Examples:
Individuals are connected	by marriage, family relationships and the like.
A partner is connected with	his/her business partners and their spouses.
Companies under the same control are connected with	each other, and the persons controlling them. A person has control has control of a company if that person exercises, or is able to exercise or is entitled to acquire direct or indirect control over the companies’ affairs.
A company is connected with	any shareholder (whether an individual or a company) which has control of the company, whether on its own or together with persons who are connected with the shareholder.
Companies are connected	as a result of their being controlled by connected persons, for example, husband controlling company A and wife controlling company B.

8.6 Why it matters if you have more than one brewery or are connected to another brewer in some way

This is to prevent, for example, a large business being artificially split into a number of small breweries, each of which would individually be below the 60,000 hectolitres limit.

8.7 How to make a reasonable estimate of the current calendar year’s production

You must take all of the relevant factors into account including any contracts you already have to supply beer and any expansion plans.

Be as accurate as possible. If you make an untrue estimate by stating the brewery will produce 50,000 hectolitres in the current calendar year when you know that a reasonable estimate would be 70,000 hectolitres, we can recover all of the duty underpaid.

8.8 When to notify HMRC of your estimate

You only have to tell us how much beer you reasonably estimate that you’ll produce in a brewery when you apply for registration with us in respect of that brewery. You do not need to notify us of subsequent estimates but you must record in your business records of each calendar year’s estimate at the time you make it, together with details of how you arrived at the estimate. This information must be kept in the form of a Beer Production Account.

8.9 Beer Production Account

The following requirements have the force of law and are made under regulation 6 of the Revenue Traders (Accounts and records) Regulations 1992

You need to keep a Beer Production Account showing the following information:

Estimate of current year’s production

You must keep a record of your estimate of the current year’s production (see paragraph 8.7) together with details of how you arrived at the estimate.

Previous calendar year’s actual production (to be recorded each month)

The calendar month and year in question.

The total quantity (in bulk hectolitres to 2 decimal places) of beer that you’ve produced in that calendar month split if appropriate between your own beer and beer you’ve produced under licence.

The quantity should not be reduced to take account of any beer you subsequently determine to be spoilt or unfit for use or for any returned spoilt beer.

At the end of each calendar year, your annual production totals shown in the Beer Production Account will determine your continued eligibility for the scheme and the reduced rate for the following year.

In addition to the Beer Production Account, all brewers are required to keep a Beer Duty Account, details of which can be found at section 13.

8.10 You need to make an estimate at the beginning of each year

To be eligible for the reduced rates scheme you must use the previous calendar year’s production and your estimated production in the current year. Neither production total can exceed 60,000 hectolitres for you to be eligible.

8.11 How a new brewer estimates the current year’s production

A new brewer must make a reasonable estimate (see paragraph 8.7) of the amount of beer that will be produced in the brewery in the current year and, where appropriate, it must be grossed-up to arrive at a full calendar year’s figure using the formula:

E ÷ (365 - N) × 365

Where E = the amount of your estimate and N = the number of days in the calendar year before the brewery started production.

For example, it’s intended to start producing beer on 1 August and it is estimated, based on the size of the plant, business plans and workforce, that in the 5 months to 31 December, the brewery will produce 6,400 hectolitres.

Using the above formula, the grossed-up estimate is 15,268 hectolitres, being 6,400 divided by 153 (365 less 212 — the number of days from 1 January to 31 July) multiplied by 365.

Until such time as a reasonable estimate is made of the amount of beer that will be produced in the brewery in the current calendar year by the person who first produces beer in that brewery in that year, no beer produced there is small brewery beer.

This applies equally to a group of connected breweries: that is, where, at any time during the year, a reasonable estimate of production does not exist for any brewery within that group (which is made by the person who first produces beer in that brewery in that year), none of the beer produced in the group is small brewery beer.

8.12 If you know that your production in the current year will exceed 60,000 hectolitres

You should account for duty at the full standard rate from the beginning of the current year.

8.13 If your production in the current year exceeds your estimate and 60,000 hectolitres

Provided that you reasonably estimated that production either in a single brewery or a group of connected breweries would not exceed 60,000 hectolitres in the current year, then the first 60,000 hectolitres of beer will be small brewery beer and subject to a reduced rate of duty. Any beer over that amount will not be small brewery beer and will be subject to the standard rate of duty.

If you made an untrue estimate that production would not exceed 60,000 hectolitres but it does, then none of the beer is small brewery beer and the full amount of beer produced in that year will be subject to the standard rate of duty.

8.14 What’s included in the previous calendar year’s production figure

This is the total quantity of beer produced by a brewery or group of connected breweries in the previous calendar year and includes all beer you’ve brewed, whether for yourself or for another brewer or third party. It is not the quantity of beer removed from the brewery. It is the quantity of beer brewed and put into tanks, casks, kegs, bottles, or any other receptacles of a kind in which beer is distributed or sent in bulk to be packaged elsewhere, It includes any beer in stock at the end of the year, any beer consumed on the premises and any beer used for sampling or research.

You must not reduce the production figure by any beer returned to you as spoilt beer.

Details of your production must be kept in the form of a Beer Production Account — see paragraph 8.9.

8.15 If beer production started part-way through the last calendar year

If you started to produce beer in a brewery part-way through a year, you must gross-up the actual production for the period that beer was produced to arrive at a full calendar year’s figure using the formula:

A ÷ D × 365

Where A = the amount of beer produced in the brewery in the previous year and D = the number of days in that part of the previous year.

For example, a brewery started production on 1 April and during the period to 31 December 3,850 hectolitres was produced. Using the above formula, the calendar year production figure for the purposes of the reduced rates scheme is 5,110 hectolitres, being 3,850 divided by 275 (the number of days from 1 April to 31 December) multiplied by 365.

8.16 If more than one person produced beer in the same premises during a calendar year

(a) Where more than one person produced beer in the premises in that calendar year and there was no break in production (because the cancellation and new registration dates are together), the production figure for the purposes of the reduced rates scheme will be the combined total of each person’s production in that year.

For example, company A produced 4,650 hectolitres of beer in the premises from 1 January to 30 September and then sold the premises to company B which produced 1,525 hectolitres in the premises from 1 October to 31 December, the brewery’s production figure for the purposes of the reduced rates scheme is 6,175 hectolitres — the sum of company A and company B’s production figures.

(b) If there was any time during that year when the brewery was not used to produce beer, for example, company A ceased production in July but only sold the business to company B in September, the 2 companies’ production figures must be grossed-up using the formula in paragraph 8.15.

For example, company A produced 2,750 hectolitres of beer during the period 1 January to 15 July and company B produced 1,175 hectolitres between 1 September and 31 December. The grossed-up calendar year production figure for the brewery will be 4,505 hectolitres, being 3,925 (2,750 + 1,175) divided by 318 (the number of days on which the brewery was used to produce beer) multiplied by 365.

In either case, company B will need to know details of company A’s previous production. In the case of a transfer of a going concern, the business records, including the Beer Production Account should be transferred to the new owner.

8.17 If you share brewery premises

Where persons share the use of the brewery premises to produce beer in a calendar year, the production figure for the purposes of the reduced rates scheme will be the total production within the brewery in that year.

For example, company A produced 3,350 hectolitres of beer in the premises from 1 January to 31 December and company B produced 2,675 hectolitres in the same premises from 1 January to 31 December, the brewery’s production figure for the purposes of the reduced rates scheme is 6,025 hectolitres — the sum of company A and company B’s production figures. Therefore, each person will be applying the same rate to any small brewery beer that they produce.

On application for registration, each brewery must notify us if there is another brewery already registered at the premises. The plan, which accompanies the application, must show the position of the vessels, plant and any separate area held for each brewery’s beer.

Each brewery’s beer must be clearly identifiable in the registered premises and in any records, including the duty status of all the beer at any time.

8.18 How production rules apply to breweries that are part of a group of connected breweries

If the group comprises, for example, 6 breweries, 4 of which have been in production for the whole of the previous calendar year, one of which began to produce beer part-way through that year and one is to start producing beer during the current year, you simply determine each brewery’s actual or deemed production figure (as explained in the paragraphs above). You’ll need to add all of those figures together to arrive at the group’s production figure for the purpose of the reduced rates scheme.

8.19 If you’re moving small brewery beer that you’ve stored in duty suspense in the UK

The general requirements for the movement of duty suspended beer are set out in section 9.

You’ll need to use the Excise Movement and Control System (EMCS) when moving beer within the UK, unless the movements qualifies for the simplified procedures for certain intra-UK movements. For more information on the criteria for the simplified procedures and on EMCS, see paragraph 9.12, Notice 196 and Notice 197.

In addition, you must either include the following statement, certifying that beer is ‘small brewery beer’ on the electronic administrative document — eAD if the movement is raised on EMCS — or a certificate of eligibility along with any commercial document, if the movement qualifies for the simplified procedures.

‘It is hereby certified that the product described has been brewed by an independent small brewery’. In addition, you must provide the annual production of the previous year in hectolitres of beer.

This will let the person who removes the goods from duty suspension know that the beer is small brewery beer liable to the reduced duty rate.

8.20 If you’re receiving small brewery beer in duty suspense

To establish that the beer is small brewery beer you’ll need a validated eAD or a certificate as set out in paragraph 8.19 from the producing brewery, which you should retain in your records. Without this, you will not be able to demonstrate that the beer is small brewery beer and you will not be able to account for the duty on that beer at the reduced rate.

8.21 If you’re moving small brewery beer in the UK produced by someone else

Whether you operate brewery registered premises or an excise warehouse, the records you’re required to keep will contain details of the beer in question including the eAD or certificate provided by the supplier. When moving the beer to another party in duty suspense, the requirements of paragraph 8.19 will apply, and will depend on whether the movement is under EMCS or simplified procedures.

8.22 If you import beer

Beer produced by small breweries in other countries and imported into the UK that meets the requirements of the UK scheme is small brewery beer and eligible for the reduced rates.

You’ll need to establish in advance of the importation that the brewery in the other country and the beer are eligible under our rules. If it is, the person, in the other country consigning the beer to you, should provide a certificate endorsed by the relevant authorities in that country.

At point of entry into the UK, all movements must be submitted through EMCS. If you want to receive beer in excise duty suspension, a registered consignor (which must be the import agent or yourself as the receiving registered brewer) must start the movement to the registered premises on EMCS.

A statement that beer is ‘small brewery beer’ will be required on the eAD, as follows:

“It is hereby certified that the product described has been brewed by an independent small brewery”.

In addition, you must provide the annual production of the previous year in hectolitres of beer.

The certificate and a copy of the eAD should be retained in your records to allow you to calculate the appropriate reduced rate when paying the duty.

If you decide to pay the excise duty at the place of importation, EMCS procedures will not apply.

Find information on import procedures in Notice 197. You can also find information and guidance in Tariff, Volume 3 parts 1 and 2.

If you import beer from an EU member state — this paragraph applies to Northern Ireland only

Beer produced by small breweries in EU member states and imported into Northern Ireland, which meets the requirements of the UK scheme, is small brewery beer and eligible for the reduced rates. Whether you import such beer into brewery registered premises, to an excise warehouse, through a Registered Consignee or Temporary Registered Consignee, you may claim the reduced rate applicable.

You’ll need to establish in advance of the importation that the brewery and the beer are eligible under our rules. If it is, the person in the EU member state consigning the goods to you should include the following statement on the accompanying document:

(a) for beer moved in duty-suspension under EMCS

‘It is hereby certified that the product described has been brewed by an independent small brewery’. In addition, you must provide the annual production of the previous year in hectolitres of beer.

The statement (above) certifying that beer is ‘small brewery beer’ will be required on the eAD. For more information on intra-EU movements through EMCS, see Notice 197.

(b) for beer moved duty-paid under a Simplified Accompanying Document

‘It is hereby certified that the beer has been brewed by an independent small undertaking with a production in the previous year of [insert] hectolitres of beer’.

The certificate should be retained in your records and will allow you to calculate the appropriate reduced duty rate when paying the duty.

8.23 If you export duty suspended small beer

The general requirements for the movement of duty suspended beer are set out in section 9.

You’ll need to establish in advance of delivery or exportation that the consignee is authorised to receive the beer.

If the country you are exporting to operates a small brewery beer scheme, the consignee may ask you to provide a certificate, endorsed by HMRC, that the beer you’re exporting is small brewery beer produced in the UK. This is so they can establish in advance of the importation to their country that the brewery in the UK and the beer is eligible under their rules. It is your responsibility to be aware of the rules and production volume limits of the small brewery beer scheme in the country you are exporting to, so that their requirements are met.

If a certificate is required, you will need to make a self-declaration of your production volumes which HMRC will certify. The following process applies:

• copy the certificate template shown at section 35 and paste or save as a word document
• complete the first part of the document, then print and sign it
• scan the document and attach to an email
• send the email to nru.alcohol@hmrc.gov.uk
• the Excise Processing Teams will validate by completing the ‘Certification — For Official Use’ part of the document and return it to you

The process is temporary until a new print and post iform is available on GOV.UK.

You’ll need to use EMCS when moving beer in duty-suspension to the place of export and in Northern Ireland when moving beer in duty-suspension to EU member states. The following statement that beer is ‘small brewery beer’ will be required on the eAD:

‘It is hereby certified that the product described has been brewed by an independent small undertaking with a production in the previous year of [insert] hectolitres of beer’

The above statement will let the person who removes the beer from duty-suspension to establish that the beer is small brewery beer and calculate the reduced duty rate payable.

A movement guarantee is required for exports.

For more information on deliveries and exports through EMCS, see Notice 197.

8.24 If you export small brewery beer to Ireland, who will validate your APT3 form

Relief for beer brewed in microbreweries is granted in Ireland through a repayment system. In order to qualify for repayment, the importer will need a declaration of your brewery’s production on a form APT3. This form will need to be validated by HMRC for UK breweries. Details of the scheme and the form are available in the Irish Revenue Notice 1888. The completed form for validation should be sent to the EPT (see paragraph 4.3 for the address) who will arrange for its validation and return to you.

8.25 Single Brewer

8.25.1 How to calculate your reduced rate

If you’re a single brewer who does not produce any beer under licence for other brewers and have established your entitlement to the reduced rates scheme, you’ll either have calculated or estimated your beer production in the previous calendar year. This production figure will determine the reduced rate of Beer Duty that will be payable in the current year.

If you only started producing in the current year, you’ll have made an estimate of the current year’s production. This production figure will determine the reduced rate of beer duty that will be payable in the current year.

If the production figure exceeds 5,000 hectolitres but does not exceed 30,000 hectolitres, you’ll need to calculate the reduced rate using the following formula:

Gross product (GP) – 2,500 (hectolitres) ÷ GP

This is then multiplied by the standard rate.

Where GP equals the actual or deemed production in the previous calendar year (or the current year’s estimated production for brewers only who started production in the current year).

For example, if you produced or were deemed to have produced 7,569 hectolitres of small brewery beer in the previous calendar year (or current years estimated production for brewers who only started production in the current year). If the standard rate of duty is £19.08, your reduced rate would be calculated as follows:

(7,569 - 2,500) ÷ 7,569 = 0.6698

0.6698 × 19.08 = a reduced rate of £12.78

Your duty rate in the current calendar year would, therefore, be £12.78.

If the production figure is more than 30,000 hectolitres but is not more than 60,000 hectolitres, you’ll need to calculate the reduced rate using the following formula:

(GP - 2,500) - 8.33% of GP more than 30,000 hectolitres ÷ GP

This is then multiplied by the standard rate.

For example, if you produced, or were deemed to have produced 40,000 hectolitres of small brewery beer in the previous calendar year (or current years estimated production for brewers who only started production in the current year). If the standard rate of duty is £19.08, your reduced rate would be calculated as follows:

40,000 - (2,500 - 8.33% of 10,000) ÷ 40,000 = 0.9586

0.9586 × 19.08 = a reduced rate of £18.29

Your duty rate in the current calendar year would be £18.29.

Remember that you’ll need to carry out this type of calculation at the beginning of each calendar year based on your production in the year before.

8.25.2 If you produce your own beer and brew under licence for another brewer

Beer brewed under licence for other brewers is not eligible for reduced rates of duty.

If the beer you produced under licence constitutes 50% or more of your total production in the previous calendar year, none of the beer you produce in the current calendar year is eligible for a reduced rate as small brewery beer. You will have to pay the standard rate of Beer Duty on all of the beer you produce.

If you’re a single brewer who does produce beer under licence for other brewers and have established your entitlement to the reduced rates scheme you will either have calculated or estimated your beer production in the previous calendar year. This production figure, which must include licensed production, will determine the reduced rate of Beer Duty that will be payable in the current year on that beer which was not produced under licence.

For example, if in the previous calendar year you produced (or estimated production of) 2,000 hectolitres of your own beer and 1,000 hectolitres under licence for another brewery. Your total combined production would be 3,000 hectolitres and as your production under licence constituted less than 50% of your total production you would be eligible for a reduced rate on your small brewery beer. In this example, with a total production of less than 5,000 hectolitres you would be eligible for the reduced rate of 50% on your small brewery beer in the current year, although any beer produced under licence would still attract the standard rate of duty.

If your previous calendar year’s total production exceeded 5,000 hectolitres but did not exceed 30,000 hectolitres, you’ll need to calculate the reduced rate of duty applicable according to the formula for this band.

For example, if you produced in the previous calendar year (or estimated production of) 4,780 hectolitres of your own small brewery beer and 1,500 hectolitres under licence. Your total production would be 6,280 hectolitres. With a standard rate of Beer Duty of £19.08, you would then calculate your reduced rate as follows:

(6,280 - 2,500) ÷ 6,280 = 0.602

0.602 × 19.08 = a reduced rate of £11.49

This means that your production of small brewery beer in the current calendar year would be eligible for the reduced rate of £11.49 provided your current year’s estimated total production, including beer you brew under licence, does not exceed 30,000 hectolitres. Any beer produced under licence would still attract the standard rate of £19.08.

If your previous calendar year’s production exceeded 30,000 hectolitres but did not exceed 60,000 hectolitres, you’ll need to calculate the reduced rate of duty applicable using the formula for this band.

For example, if you produced in the previous calendar year (or estimated production of) 35,000 hectolitres of your own small brewery beer and 15,000 hectolitres under licence. Your total production would be 50,000 hectolitres. With a standard rate of Beer Duty of £19.08, you would calculate your reduced rate as follows:

50,000 - (2,500 - 8.33% of 20,000) ÷ 50,000 = 0.98332

0.98332 × 19.08 = a reduced rate of £18.77

This means that your production of small brewery beer in the current calendar year would be eligible for the reduced rate of £18.77 provided your current year’s estimated total production, including beer you brew under licence, does not exceed 60,000 hectolitres. Any beer produced under licence would still attract the standard rate of £19.08.

8.26 Part of a group of brewers

8.26.1 How to calculate the reduced rate of duty

If you’re part of a group of brewers that does not produce beer under licence for other brewers, you’ll need to establish that the group is entitled to a reduced rate on the beer that it has produced. You must establish that the total production in the previous calendar year of all of the breweries in the group was not more than 60,000 hectolitres and that the current years estimated production for all of the breweries in the group is not more than 60,000 hectolitres.

When you’ve established the group’s entitlement, you should calculate the applicable duty rate.

If the group’s total production figure in the previous calendar year is not more than 5,000 hectolitres, the reduced rate is 50% of the standard rate. Where the reduced rate results in part pennies, it must always be rounded up to the nearest penny.

If the group’s total production figure exceeds 5,000 hectolitres but does not exceed 30,000 hectolitres, you’ll need to calculate the reduced rate using the following formula:

GP - 2,500 (hectolitres) ÷ GP

This is then multiplied by the standard rate.

If the group’s total production figure exceeds 30,000 hectolitres but does not exceed 60,000 hectolitres, you’ll need to calculate the reduced rate using the following formula:

GP - (2,500 - 8.33% of GP in excess of 30,000 hectolitres) ÷ GP

This is then multiplied by the standard rate.

Where GP equals the actual or deemed production of the group in the previous calendar year (or the current year’s estimated production for brewers who only started production in the current year).

The calculated reduced rate can be applied to the group’s small brewery beer produced in the current year.

8.26.2 If the group produce both small brewery beer and beer under licence for other brewers

You must establish that the total production, including licensed production, in the previous calendar year of all of the breweries in the group was not more than 60,000 hectolitres and that the current year’s estimated production, including licensed production, for all of the breweries in the group is not more than 60,000 hectolitres.

You must then establish the licensed production in the previous calendar year of each individual brewery to make sure that it is less than 50% of the total production of that brewery.

If the licensed production of any individual brewery is 50% or more of that brewery’s total production, none of the group’s beer is eligible for a reduced rate.

For example, a group comprises 3 breweries with total production (or estimated production) in the previous calendar year of 20,000 hectolitres, which included 5,000 hectolitres of licensed production.

Brewery A produced 12,000 hectolitres of which 3,000 hectolitres were licensed production.

Brewery B produced 5,000 hectolitres of which 1,000 hectolitres were licensed production.

Brewery C produced 3,000 hectolitres of which 1,000 hectolitres were licensed production.

Each brewery satisfies the 50% licensed production rule, therefore, entitlement to a reduced rate has been established.

The actual reduced rate is then determined in the same manner as described in paragraph 8.26.1.

In the case of the example above:

(20,000 - 2,500) ÷ 20,000 = 0.875

0.875 × 19.08 = a reduced rate of £16.70

8.27 If you receive small brewery beer in duty suspense for subsequent delivery to home use

Whether a UK producer produced the small brewery beer or it has been imported, you must have a certificate from the producing brewer certifying that it is small brewery beer. Without this certificate you’ll have to pay duty at the standard rate.

The certificate will state the production figure in the previous calendar year, which you’ll need in order to calculate the rate using the formula in paragraph 8.25.1.

For example, if the production figures shown on the certificate from the producing brewer is 15,400 hectolitres (that is, not exceeding 30,000 hectolitres):

15,400 - (2,500 - 8.33% of 5,500) ÷ 35,500 = 0.3763

0.3763 × 19.08 = a reduced rate of £7.18

As another example, if the production figure shown on the certificate from the producing brewer is 35,500 hectolitres (that is, exceeding 30,000 hectolitres but not exceeding 60,000 hectolitres):

35,500 - (2,500 - 8.33% of 5,500) ÷ 35,500 = 0.943

0.943 × 19.08 = a reduced rate of £17.99

This reduced rate should be used for calculating your duty liability on the consignment to which the certificate relates. At the beginning of each calendar year, the producing brewer will need to establish his continuing entitlement to the scheme and, if they are, they must make sure that the certificate has been updated to show the preceding calendar year’s production.

The duty rates used in the above calculations are those in place at the time of publication of this notice. You can find details at current duty rates or contact the Excise helpline.

8.28 How reduced rates of Beer Duty are accounted for

Section 15 explains how to complete Beer Duty returns. Notice 197 explains the procedures for removal by duty payment of goods from excise warehouses.

9. Duty suspension

9.1 What is duty suspension

Duty suspension is the term used to refer to the storage, holding or movement of goods liable to excise duty without payment of duty.

9.2 How duty suspension applies to beer

Beer can be held in duty suspension on premises registered for that purpose, as explained in section 3. Beer can be stored in duty suspension in a warehouse, which has been approved by us. Beer can also be moved in duty suspension — see paragraph 9.6.

9.3 Who can hold beer in duty suspension

Only registered brewers, registered packagers, registered owners or authorised warehouse keepers, approved to receive beer, can hold beer in duty suspension.

9.4 Who’s responsible for the duty on beer in duty suspension

The person holding or moving beer in duty suspension will be responsible for the duty on it. If beer cannot be accounted for to our satisfaction, that person will be liable to pay the duty on it.

9.5 Beer you can hold in duty suspension

You can hold in duty suspension only those classes of beer which your registration allows — see paragraph 3.3. These will be shown on your registration certificate.

9.6 Can beer be moved in duty suspension

You can move beer in duty suspension in the following circumstances:

• between your registered premises and other registered premises or excise warehouse — see this section
• from your registered premises for exportation — see section 23

Beer can also be moved free of excise duty for:

• shipment as stores — see section 25
• delivery to entitled diplomats — see section 24
• delivery to entitled members of visiting forces — see section 24

You can also receive beer in duty suspension, provided you’re allowed to receive that class of beer:

• from other registered brewers or packagers
• from an excise warehouse to your registered premises
• direct from importation to your registered premises

If you send duty suspended beer to an excise warehouse (approved under section 92 of the Customs and Excise Management Act 1979) for bottling, packaging or storage, you’ll need to be approved as a registered owner of warehoused goods under the Warehouse keepers and Owners of Warehoused Goods Regulations 1999 (SI 1999/1278).

9.7 What to do when you receive beer in duty suspension

When you receive a consignment of beer in duty suspension you must:

• check the delivery against the document accompanying the beer, described in paragraph 9.11
• issue a receipt to the consignor within 5 days of the beer being received — this applies to all beer received through EMCS or under simplified procedures
• record issue of the receipt, (you can want to keep a copy of it)
• enter the quantity received into your stock records
• keep the accompanying document

9.8 What to do before you move beer in duty suspension in the UK

You must make sure that you’re sending the goods to a brewer, packager, excise warehouse, Registered Consignee or Temporary Registered Consignee (TRC) which is registered or authorised to receive and store the appropriate class or classes of beer in duty suspension.

9.9 How do I know that a trader is registered or authorised to receive and store beer

You should contact the National Verification Centre by email: nvcglasgow@hmrc.gov.uk to confirm whether your intended customer is registered to receive beer in duty suspension. We will keep a record of your request.

9.10 Will you supply details about conditions or restrictions

We cannot legally supply this information.

9.11 What documents must accompany beer moving in duty suspension in the UK

All intra-UK movements of beer will need to be submitted through EMCS, unless they qualify for the simplified procedures — see paragraph 9.12. 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, see Notice 197.

If movements of beer are under simplified procedures and are as described in first bullet point of paragraph 9.12, your normal commercial dispatch documents will be suitable if they contain all the following information:

• a unique reference number
• your name and address
• the name and address of the consignee
• the destination address
• a statement that the beer is in duty suspension
• a description of the beer (that is, product name), the quantity, strength and package size and the date of dispatch from your registered premises

If the beer being moved is small brewery beer which you’ve produced, you must include either the following statement, certifying that beer is ‘small brewery beer’, on the eAD or a certificate of eligibility with any commercial documentation.

‘It is hereby certified that the beer described is ‘small brewery beer’ in accordance with either section 36C or section 36E of the Alcoholic Liquor Duties Act 1979 with an annual production of [insert] hectolitres of beer’.

This will let the person who releases the beer onto the UK market to know that the beer is small brewery beer liable to the reduced duty rate.

If you’ve been paid or expect to be paid in cash for the supply of beer in duty suspension (or for any service you provide in relation to beer in duty suspension), see paragraph 9.29.

9.12 What are the new simplification procedures

Simplification procedures apply to certain UK movements and allows for beer to be moved under duty suspension using commercial documentation or customs documentation instead of EMCS.

These procedures are limited to beer moving between UK registered breweries or 3rd party packagers or, excise warehouses approved to receive and store the beer. Ownership of the beer must remain with the brewer during the course of the movement.

If movements do not meet the above criteria, then it will be necessary to use EMCS.

9.13 Do you need a Beer Duty suspension movement receipt

When you move beer in duty suspension to registered or authorised premises within the UK, you will be responsible for the duty on it until you receive a receipt from the consignee. If the movement is submitted through EMCS, the consignee must complete a report of receipt. If under simplified procedures, the consignee must sign the receipt or a person properly authorised to act on behalf of the consignee. The receipt must contain the information shown in paragraph 9.16.

If you fail to obtain a receipt within 4 months, you will be liable for the duty due on the beer, even though it is no longer in your possession — see paragraph 9.14.

9.14 If you do not receive a receipt

The consignee must issue a receipt within 5 days of the date of receipt of the beer in their registered or authorised premises. If you do not receive a receipt, you should contact the consignee. If it appears that the receipt has not been sent or been lost in transit, ask for a duplicate. Any such replacement should be clearly marked. If you have not obtained a satisfactory receipt for the beer within 4 months of its dispatch, you must pay the appropriate amount of duty on your next return. If you subsequently receive a receipt, you can credit your duty account with the appropriate amount of duty.

Any difficulty in obtaining receipts, within the appropriate time limit, should be referred to the Excise helpline. If no receipt is received, but at a later date you’re able to provide alternative evidence of receipt, you will be able to produce this when our officer next visits you. If the alternative evidence is accepted, the officer will authorise a duty credit. Our officer will contact or visit consignees who fail to issue the necessary receipts.

Failure to issue receipts can result in the issue of civil penalties.

If you do not hold a valid certificate of receipt for any beer you’ve sent out in duty suspension, you will be jointly and severally liable to pay the duty with the person who held the beer at the duty point.

9.15 If the receipt shows a discrepancy

If the receipt from the consignee shows that the beer they received differed from that shown on the document accompanying the beer, you should investigate the discrepancy, record the reason and adjust your records as necessary.

For details of procedure under EMCS, see Notice 197.

Duty must be brought to account on any loss where there is no acceptable explanation.

9.16 Information that must be shown on the receipt

The following applies where the movement of beer meets the criteria for the simplification procedures.

Information which must be shown on a Beer Duty receipt is:

• a unique reference number
• the name and address of the consignor
• the date of receipt
• the name and address of the consignee
• the address where the beer was received
• a statement that the beer is in duty suspension
• a description of the beer (that is, product name), the quantity, strength and package size

Personnel authorised by the registered person must sign the receipt. In addition, the signatory’s printed name together with the date of signature must appear on each receipt.

9.17 Discrepancies between beer received and the accompanying document

You must issue a receipt only for the beer you actually receive. If the movement of beer is under simplified procedures and the copy of the delivery note is being used as a certificate of receipt, you must mark it clearly to show the discrepancy and inform the consignor.

If the movement is submitted through EMCS and, any check of beer to the eAD shows excess shortage or loss, then an inventory of this should be included in the report of receipt to the consignor.

9.18 Beer accidentally destroyed whilst moving in duty suspension

You should inform us if beer moving under duty suspension is accidentally destroyed, for example, in a road accident. Any significant losses should be notified to the Excise helpline without delay.

Provided we are satisfied that the beer has not been or will not consumed duty will not be payable.

It is important that you retain any information relating to the incident for our inspection.

9.19 Can you receive beer returned under duty suspension

Yes. Since the beer has not passed a duty point you can receive it back into your brewery on the original delivery documentation.

9.20 Conditions for returning duty suspended beer

Duty suspended beer must always be moved in accordance with the detailed procedures laid down in this section. The beer must be subject to the normal requirements of measurement of volume and strength. Proper documentation must travel with the beer and proper receipts must be obtained. You can need to provide security for the duty as explained in section 6.

9.21 Can you destroy duty suspended beer without having to pay the duty

Yes, as long as you follow the procedures in paragraphs 9.22 and 9.23.

9.22 Notice of destruction you must give

You must give us at least 5 working days’ notice if you want to destroy beer outside your registered premises. You must give details of the proposed method of destruction. You must satisfy us that your proposed process will destroy the intrinsic nature of the beer.

Working days excludes Saturdays, Sundays and public holidays.

9.23 Information to give HMRC

You must write to the Excise enquiries team and give the following details:

• why you want to destroy the goods
• details of the goods
• the amount of duty involved
• where and when the proposed destruction will take place
• the method of destruction

9.24 Conditions for duty suspended beer destroyed away from registered premises

If the beer is removed from registered premises to be destroyed at a specialist destruction site, the following conditions apply.

The following conditions have the force of law and are made under regulation 33A(1) of the Beer Regulations 1993

• there must be a complete audit trail which confirms the beer has been destroyed
• the destruction of the beer must be supervised by either:
  • an ACR of the brewery, or
  • a person within the specialist destruction company who has been appointed by the brewery to supervise the destruction on their behalf. This person must be at management or supervisory level
• a certificate must be obtained from the company as evidence of destruction

9.25 When you can destroy duty-suspended goods without paying duty

We can grant permission if the goods are:

• damaged, or
• in a non-marketable condition

9.26 When beer leaves duty suspension

Beer leaves duty suspension (passes the duty point), when any of the following occur:

(a) the beer leaves registered premises unless it is delivered:

• to other registered premises
• to an excise warehouse
• for exportation
• for shipment as stores
• to entitled diplomats
• to entitled members of visiting forces

(b) the beer is received by registered premises not entitled on their registered holder certificate to hold that class or description of beer

(c) the beer is constructively removed

(d) the beer is consumed

(e) the beer is lost

(f) the beer is irregularly diverted

(g) you’re no longer registered

(h) the premises on which you’re holding the beer cease to be registered, or

(i) the beer is produced and you’re not registered to hold beer in duty suspense

9.27 Record keeping

You need to keep a record of every delivery and receipt of beer under duty suspension arrangements showing the date the beer is delivered or received.

The following requirements have the force of law and are made under regulation 6 of the Revenue Traders (Accounts and Records) Regulations 1992

You must keep an up to date stock record of all beer held in duty suspension showing the quantity, strength and description of the beer (that is, product type), in relation to the following:

• beer produced on your registered premises
• beer received from other registered premises, from importation or authorised warehouses
• beer delivered from your registered premises on payment of duty
• beer delivered from your registered premises duty suspended, including exports, shipment as stores, deliveries to entitled diplomats and entitled members of visiting forces
• beer appropriated for consumption on your registered premises
• beer removed for sampling purposes
• beer removed for reprocessing
• beer removed for destruction
• beer constructively removed
• beer lost or accidentally destroyed

Receipts of stock must include goods received from your own production and should be cross-referred to goods received records. Deliveries from stock should be cross referred to goods dispatched records.

9.28 Holding duty paid beer on your registered premises

You can hold duty paid beer on your premises, in addition to beer which you’ve constructively removed (see paragraph 7.5) you can hold other duty paid beer in your registered premises, but only if we are satisfied that you can clearly identify duty paid and duty suspended beer in your records.

9.29 Duty on samples

You will not normally have to pay duty on samples taken for testing for production or quality control purposes from duty suspended beer held on registered premises. Provided you keep a record of samples taken from such beer and our officer is satisfied that these samples have not been released for consumption, no duty is payable.

Duty must be paid, however, on beer used for market testing, for example, consumption by potential customers visiting the brewery.

There is no duty relief for samples taken from duty paid beer.

9.30 Cash transactions

As a registered brewer/packager, you’re required to notify us if you’ve been paid, or expect to be paid, in cash for the supply of duty suspended beer exceeding £9,000. You must complete form W7 Notification of cash payments for alcohol goods or alcohol related services in duty suspension or contact the Excise helpline.

You must send the completed form to the fax number or email address shown on the form 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 notify us on form W7 when the first cash payment is received.

Provided you have notified the transaction to us, you do not need to wait for us to respond to receipt of the W7 form before removing duty suspended beer to other registered premises or excise warehouses.

You are also required to notify us of any cash payments received (exceeding £9,000) for any service you provide relating to duty suspended beer, for example, storage facilities, handling charges, packaging of beer or use of an Excise movement guarantee.

10. Irregularities, losses and deficiencies in registered premises

10.1 Responsibilities as a registered brewer or packager

As a registered brewer or packager, you’re responsible for the control of beer in your registered premises. You must have the necessary systems in place to control and safeguard your stocks. You must examine critically all losses and deficiencies.

10.2 Duty suspended beer accidentally lost

You do not have to pay the duty, so long as we are satisfied that the beer has been lost in registered premises and has not been consumed.

10.3 Recording losses

You need to keep records of production and processing and these should indicate how much beer you lose during routine operations. For example, the losses you normally incur during packaging operations.

The following requirements have the force of law and are made under regulation 6 of the Revenue Traders (Accounts and Records) Regulations 1992

For accidental losses you must record:

• the date and time the loss occurred
• the description (product name) and the volume of beer lost and the alcoholic strength if the loss occurred after production has been completed
• the reason why the accidental loss occurred

10.4 Unexplained losses

If beer cannot be accounted for after the start of production and there is no acceptable explanation, you’re liable for duty on the missing beer. It is therefore in your own interest to keep proper records of all losses.

10.5 Offsetting stock losses against surpluses

You can do this only if, in the absence of documentary evidence, you can demonstrate that stock losses and surpluses are related. Your records must contain written details of the reasons why any offsetting was carried out in order to justify the adjustments made to stock records following investigation of gains and losses. You must justify each offset. We do not allow you to accumulate losses and surpluses from various sources and then offset gross totals.

10.6 Losses of duty paid beer

Normally there is no duty relief in respect of beer which is lost after it has passed the duty point.

10.7 Spoilt duty suspended beer

You do not have to pay the duty, so long as we are satisfied that the beer has been unintentionally spoilt, contaminated or otherwise rendered unfit for consumption in the registered premises and has not been consumed.

10.8 Records of spoiling you need to keep

The following requirements have the force of law and are made under regulation 6 of the Revenue Traders (Accounts and Records) Regulations 1992

You must record:

• the date and time of spoiling
• the description (product name) and the volume of beer spoilt and the alcoholic strength if the beer was spoilt after production has been completed
• the reason why the beer was spoilt

11. Measurement of quantity

11.1 General

We can require duty to be accounted for on the actual quantity of beer in each container as it passes the duty point. However, most packagers do not measure the quantity in each container as they use the ‘average system’ of quantity control.

Under this arrangement the average contents of packages must not be less than the declared contents (that is, that marked on the can or bottle or label or, in the case of kegs and casks, on the invoice or delivery note). Within specified limits the actual contents of any particular container can be more or less than the declared contents.

11.2 Small pack

11.2.1 The method to use for ascertaining the quantity in small pack

Small pack refers to containers of ten litres capacity and less. Packagers are required to fill these containers in accordance with ‘average contents’ rules (the system referred to in paragraph 11.1). The quantity of beer in a container will be treated as the average of the samples taken for the purpose of complying with average contents rules.

11.2.2 The quantity to use for duty purposes when producing beer in small packages

When using the average system of quantity control, duty should normally be charged on the contents declared on the container for beer delivered in small packages such as cans and bottles.

Evidence of compliance with Weights and Measures legislation will be sufficient to accept the labelled contents as the duty base, unless there are grounds for believing that deliberate duty avoidance is involved. Packagers should exercise ‘due diligence’ to make sure not only that the can or bottle contains on average at least the amount of beer stated on its label, but also that any volume in excess of the declared contents is minimised.

11.2.3 Demonstrating due diligence

You should monitor the filling process to make sure that the quantity put into the package does not regularly excessively exceed the amount declared on the container. You should record these checks and provide an adequate audit trail to satisfy our officer that ‘due diligence’ is being exercised. Where there is evidence of consistent excessive overfilling, additional duty will be due.

11.2.4 When to pay the additional duty

Duty becomes payable at the end of the accounting period in which a container of beer is delivered to home-use. That is, when it passes the duty point.

Where you’ve incurred an additional duty liability as a result of overfilling, the additional duty should be paid in the relevant accounting period when beer is supplied to home use from your registered premises or from registered premises or excise warehouses owned or operated by your company.

In the case of overfilled containers of beer supplied in duty suspension to third parties, you should record details of these deliveries separately in your records. The law requires that the person, holding the goods at the time of their delivery to home-use, is liable for the duty, including that on the volume in excess of the declared quantity. However, if we are satisfied that the third party was unaware that the container had been overfilled and that the third party is entirely independent of you, we will not normally seek to recover the additional duty due. In deciding whether or not to pursue the additional duty we will take into account the following factors:

• the relationship between you and the third party
• contracts of supply, if appropriate
• the price paid for the goods
• any other information considered relevant

If you fail to either properly record or pay the additional duty due (or both) on excess volume that you’ve delivered to home-use, we will assess you for the additional duty due. If you cannot produce accurate records upon which the additional amount of duty can be readily established, including quantities delivered to home-use, we will use ‘best judgement’.

11.2.5 Combining the results of monitoring the volume for 2 or more products

For small pack, we will normally require you to assess the monitoring results separately for each product. However, if in exceptional circumstances, for example, where a small amount of a seasonal product is packaged and separate monitoring would produce an inequitable outcome, we will consider requests for combining the monitoring results for a number of products.

11.2.6 Recording the volume of beer delivered

Your normal commercial records should be acceptable provided that they contain sufficient information for calculating duty. You’ll also need to enter the total volume of beer delivered during the accounting period on the Beer Duty return — see section 15.

11.2.7 Why you must record the volume

Apart from normal commercial considerations, you must record the volume of beer delivered because:

• the volume will affect the calculation of the duty
• if the delivery is under duty suspension and subject to pilferage, an accurate assessment of the loss will be needed
• our officers will want to satisfy themselves as to the accuracy and completeness of your systems and also on the adequacy of duty guarantees

11.2.8 Arrangements for cans with widgets

If the widget you use retains beer, then that retained quantity need not be declared for duty purposes. You must carry out tests to confirm the average retention volume. This average retention must be agreed with HMRC. Once agreed, the ‘due diligence’ concept can be applied to the labelled quantity plus the retained amount.

11.3 Large pack

11.3.1 The method to used to ascertain the quantity in large pack

Large pack refers to containers in excess of 10 litres capacity up to a maximum of 400 litres such as kegs and casks. For containers with a capacity in excess of 400 litres, the quantity for duty purposes is the greater of the actual quantity dispatched or that stated on the delivery note or invoice.

Packagers of large pack containers customarily fill casks and kegs in accordance with ‘average contents’ rules (the system referred to in paragraph 11.1). The quantity of beer in a container will be treated as the average of the samples taken for the purpose of complying with ‘average contents’ rules.

Under these rules, packagers are permitted some latitude in the sampling regime that they adopt. However, in determining volume for duty purposes, packagers will be expected to maintain a minimum sampling rate of one container per filling head per operating day or 0.1% of a production run in excess of 4,000 containers, the samples to be representative of the mix of containers filled. A copy of the sampling protocol, you intend to use for the purpose of assuring compliance with ‘average contents’ rules and for duty purposes, should be retained in your records.

Some smaller packagers do not take samples but use their containers as capacity measures. In order to meet the tolerance requirements in paragraph 11.3.2(d), these packagers should take steps to make sure that the average capacity of their population of containers is such that they are operating within the set limits.

11.3.2 Quantity to use for duty purposes when you produce beer in large pack

The quantity of beer in any container will be treated as the amount ascertained by reference to any information on the label of the container or any information on any invoice, delivery note or similar document issued in relation to the beer, subject to the following conditions:

(a) that you maintain records of the quantity of beer found in samples you take for the purpose of compliance with ‘average contents’ rules

(b) that a proper record is kept of the monitoring and control procedures, including a statement of the sampling protocol, used for the purpose of assuring compliance with these rules

(c) in the case of filling controlled by meter or weighing:

that, in the accounting period, the average volume of the samples for each container size from each racking line does not exceed the following tolerances:

• declared quantity plus 0.5 litres for containers intended to contain a volume not exceeding 100 litres
• declared quantity plus 0.5% for containers intended to contain a volume above 100 litres but not more than 400 litres, or

(d) in the case of containers filled using other systems of control or filling to capacity:

that, in the accounting period, the average volume of the samples for each container size from each racking line does not exceed the following tolerances:

• declared quantity plus 3 litres for containers intended to contain a volume exceeding 200 litres but not more than 400 litres
• declared quantity plus 2 litres for containers intended to contain a volume exceeding 100 litres but not exceeding 200 litres
• declared quantity plus 1 litre for containers intended to contain a volume of 100 litres and less

These tolerances are set out in The Beer and Cider and Perry (Amendment) Regulations 2000 which came into force on 1 January 2001.

Containers of 400 litres or more must be treated individually and duty is liable on the total contents.

At the end of each accounting period, for each target population of containers, you should calculate the average volume from the measured volumes of the samples you’ve taken. These sample volumes are to be expressed to 2 decimal places and truncated if necessary. The accounting period average is to be truncated to 1 decimal place. This calculation should be performed for each racking line for each container size. Individual types of beer can also be treated separately if that is the rule established in your sampling protocol as part of your monitoring and control procedures.

11.3.3 What happens if I exceed the overfill tolerance

In the cases of paragraphs 11.3.2(c) and 11.3.2(d), if the average volume of the samples in a target population of containers for a racking line exceeds the specified tolerance in any accounting period, there will be an additional duty liability when that beer is sent to home use.

The volume on which additional duty is then liable is the whole quantity of beer in excess of the nominal contents for that target population of containers, as specified in paragraph 11.3.2.

You should calculate the additional duty liability as follows:

If you packed by meter or weight control and your target population comprised:

1,000 × 50 litre — containers at 3.6% ABV

500 × 50 litre — containers at 4.2% ABV

and, at the end of the accounting period, your monitoring record shows that the average contents of each container was 50.7 litres, additional duty will be due on the quantity in excess of the nominal quantity, that is, 0.7 litres multiplied by the number of containers delivered to home-use from the target population during the accounting period.

11.3.4 When the additional duty should be paid

Duty becomes payable at the end of the accounting period in which a container of beer is delivered to home use. That is, when it passes the duty point.

Where you’ve incurred an additional duty liability as a result of overfilling, the additional duty should be paid in the relevant accounting period when beer is supplied to home use from your registered premises or from registered premises or excise warehouses owned or operated by your company.

In the case of overfilled containers of beer supplied in duty suspension to third parties, you should record details of these deliveries separately in your records. The law requires that the person, holding the goods at the time of their delivery to home-use, is liable for the duty, including that on the volume in excess of the declared quantity. However, if we are satisfied that the third party was unaware that the container had been overfilled and that the third party is entirely independent of you, we will not normally seek to recover the additional duty due. In deciding whether or not to pursue the additional duty we will take into account the following factors:

• the relationship between you and the third party
• contracts of supply, if appropriate
• the price paid for the goods
• any other information considered relevant

If you fail to properly record and/or pay the additional duty due on excess volume that you’ve delivered to home-use, we will assess you for the additional duty due. If you cannot produce accurate records upon which the additional amount of duty can be readily established, including quantities delivered to home-use, we will use ‘best judgement’.

This system has been devised taking into account as far as possible existing trade practices so minimising your compliance costs. Any attempt to evade duty by under-declaring the quantity on which duty is charged or by manipulating deliveries to evade duty, can lead to prosecution.

11.3.5 Cask conditioned beer

Duty need not be charged on any undrinkable sediment in your cask-conditioned beer, provided:

• your customer (for example, the publican) is made fully aware in writing, at or before the time of receipt, of the quantity of beer on which duty has been charged — if, for example, a barrel (163.7 litres) contains 2.3 litres of undrinkable sediment, the customer must be made aware, by a statement on the label, delivery note or price list and so on, that duty has been charged on 161.4 litres (a copy of the notification to customers must be retained)
• you can, if required to do so, satisfy our officer that only undrinkable sediment has been excluded from the duty charge

Any sediment on which duty has not been charged cannot be included in any subsequent claims for relief on spoilt beer.

11.3.6 How to calculate the amount of undrinkable sediment

There is no prescribed method. You must, however, be able to satisfy us that the method you use gives equitable results.

Sediment levels for each quality of beer and container size must be regularly monitored by brewers and reviewed or amended (as necessary) at least annually and notified to us. Any changes to recipes or ingredients during the year, which would significantly affect sediment levels, must be notified to us and the allowance adjusted accordingly. You must write to the Excise enquiries team.

11.3.7 Is there an undrinkable sediment allowance for polypins, mini-pins and bottle-conditioned beer

There is no undrinkable sediment allowance for polypins and mini-pins sold by brewers to the public or on bottle-conditioned beer.

11.4 Small and large pack

11.4.1 How to deal with imports

International obligations require that we cannot treat imports any less favourably than domestic product. As importers will not necessarily be aware of the actual contents of containers, we will apply the same principle set out in paragraph 11.2.4.

12. Alcoholic strength

12.1 Alcoholic strength

For duty purposes alcoholic strength is the percentage of alcohol by volume (ABV) in the beer. This should be expressed to one decimal place, for example, 4.19% ABV becomes 4.1% ABV. Ignore figures after the first decimal place.

12.2 How to measure alcoholic strength

You can use any method you want to measure the strength of beer as long as it produces results that agree with those that would be achieved using the reference method described in section 2.

If you do not have your own facilities for determining ABV by analysis and you do not add priming sugar, you can use the method (based upon the degrees of attenuation in the beer) which is reproduced at section 30.

If you do add primings to your beers you can use the method which is reproduced at section 30.

Additionally, for these or any other methods not based on laboratory analysis, an independent analyst must test the ABV of each of your products, at least annually, to confirm consistency with calculated results. The results of the independent analyses must be held in your business records.

12.3 Alcoholic strength used for duty purposes

For duty purposes, the alcoholic strength of brewery-conditioned beer is the greater of the actual strength or the label or invoice or delivery note strength of beer when it passes the duty point.

For duty purposes, the alcoholic strength of cask or bottle conditioned beer or any other unfinished beer is the greater of the strength which the beer is reasonably expected to have when sold by way of retail or otherwise supplied for consumption or the label or invoice or delivery note strength of the beer.

However, if you comply with certain conditions, we will accept for duty purposes the strength stated on the package label, invoice, delivery note or similar document (this is known as the declared strength).

12.4 Conditions for using the declared strength

If you want to use the declared strength for duty purposes, you must be able to demonstrate that you’ve exercised due diligence in the control of your process to make sure that, on average, the actual ABV of each finished product equates to that which you’re declaring on the label and so on.

12.5 Demonstrating due diligence

You must continuously monitor and record your ABV results, which should normally fall randomly on either side of the target strength. The average of your results should equate closely with the target which must be the declared strength.

It is recognized that ABV can occasionally vary, but provided appropriate action is taken quickly to return the strength of the beer to within its normal specification, due diligence will have been demonstrated. You must keep records of action taken to maintain product strength within control limits.

12.6 Measure the strength of each product

You must establish the strength of each discrete batch for each of your products. Where beer from one batch is packaged into different container types, for example, cans and bottles, you can combine the results.

12.7 Infrequent or one-off brews

If you can demonstrate to us that based on available information and experience, due care was taken when deciding target ABVs for either new or infrequently (or both) brewed products (and that all decisions, actions and so on were properly recorded), we will accept the label or invoice or delivery note strength for duty purposes.

12.8 How HMRC checks accuracy

Our officer will examine your results and your record of actions taken. Where the results have consistently fallen above your target, they’ll want to confirm that action was taken as soon as the problem was identified to bring the process back into control or to change the declared ABV. If you’ve failed to take such action, an assessment will be raised for the additional duty due.

12.9 Do I use the same arrangements for measuring strength of beer which can be delivered under duty suspension

Yes, because it is likely that the beer will subsequently be delivered on payment of duty, the same arrangements must apply for all beer you produce.

It is the responsibility of the person holding the beer at the duty point to account for the duty. Therefore, if you dispatch packages in duty suspension on which the strength is understated on the label, invoice or delivery note, you must inform the consignee accordingly.

12.10 If there’s a dispute over the strength

Our officer can take samples of beer which will be analysed using the reference method described in section 29. The analysis result will establish the actual dutiable strength of the beer for legal purposes.

12.11 Cask and bottle conditioned beer

12.11.1 The alcoholic strength used for duty purposes on cask and bottle conditioned beer

Cask and bottle conditioned beers will continue fermenting after removal from registered premises. This will result in an increase in strength. You must account for duty on the strength at which you expect the beer to be when it is consumed. This is also the strength which must be shown on the label or invoice or delivery note.

12.11.2 Additional due diligence requirements for cask and bottled conditioned beer

In addition to the procedures laid out in paragraph 12.5 which establishes the ABV at packaging, you must regularly monitor and record the actual strength of each quality of cask and bottled conditioned beer at the expected time of consumption, to establish its alcoholic strength. The precise method and frequency of checking is a matter for you, but you must be able to satisfy us of the accuracy of your results.

13. Beer Duty account

13.1 What a Beer Duty account is

A Beer Duty account is a summary of the Beer Duty due in each accounting period.

You must keep an account which contains the following information the:

• amount of duty due on all beer which leaves duty suspension — see paragraph 7.3
• amount of duty reclaimed on spoilt beer which has been reprocessed or destroyed — see section 20
• amount of duty reclaimed on drawback — see paragraph 23.4
• amount of any underdeclarations from previous periods — see paragraph 15.9
• amount of any overdeclarations from previous periods — see paragraph 15.9
• net amount of duty due for the period and the date and method of payment

You should keep the Beer Duty account in a specific book or ledger opening. An example of a Beer Duty account is shown in paragraph 13.3, but another form of account containing the same information can be acceptable.

13.2 Keeping your duty account on computer

You can keep your account on your computer so long as you’re able to print a copy of the account whenever we require you to do so.

13.3 Example of a Beer Duty account

Period from 1 June 2017 to 30 June 2017
Duty due on all beer released from duty suspension for consumption (separate totals are required for each rate of duty).	124,571.20
Underdeclarations from previous periods
Overdeclarations from previous periods
Net Duty Due	124,571.20
Spoilt Beer (including any relief for reprocessed beer)	- 402.80
Drawback	- 350.00
Net amount of duty due for the month	123,818.40
Paid on 25 July 2017 by Direct Debit

14. Records

14.1 General

As a revenue trader you need to keep and preserve certain records and accounts as evidence of your business activities (The Revenue Traders (Accounts and Records) Regulations 1992). If your records do not satisfy our requirements we can direct you to make the necessary changes.

You have to give us access to all your business records.

14.2 Types of record to keep

You have to keep a record of:

• production
• stock
• handling
• buying
• selling
• importation
• exportation of beer

As a registered produced or packager of beer we also require you to keep a Beer Duty account (see section 13), a spoilt beer record (see section 20) and records of beer in duty suspension (see section 9).

To demonstrate that you qualify for small brewery beer, you must keep a Beer Production Account as set down in paragraph 8.9).

If you handle duty suspended small brewery beer, you must hold the documentation set out in paragraph 8.20.

14.3 How long to keep records for

You must normally keep your business records for 6 years. If, however, this causes problems, ask the Excise helpline if you can keep some of your records for a shorter period. You must get our agreement before destroying any of your business records that are less than 6 years old.

14.4 Keeping original documents

You can keep your records on any form of storage technology, provided that copies can be easily produced and that there are adequate facilities for allowing our officer to view them when required.

Obtain agreement from the Excise helpline before you transfer records. You can be required to operate the old and new systems side by side for a limited period of time. We can refuse or withdraw approval if any requirements are not met.

Make sure that you keep your original registration certificate in a safe place.

14.5 Computer records

You can also keep your records on a computer, for example, on magnetic tape, disc and so on, provided they can be readily convertible into a satisfactory legible form and made available to us when required. If you do keep your records on a computer we require access to it so that we can check its operation and the information stored. We can ask for help from you or anyone else having charge of, or otherwise concerned with, the operation of the computer or its software.

If a computer bureau is employed, you’re responsible for arranging for the bureau to make your records available to us when we want to see them. Normally this will be at your principal place of business.

If, after you’ve been registered, you decide to use a computer or the services of a computer bureau for Beer Duty accounting, you should contact the Excise helpline. Where you intend to use your own computer, you should notify our helpline at the systems design stage or earlier.

15. Beer Duty returns

15.1 What a return is

A Beer Duty return (form EX46) is used to declare your liability for Beer Duty and movement of beer in each accounting period.

15.2 How often to make a return

You must make a return of your Beer Duty liability each accounting period, which will normally be a calendar month.

If your duty liability for the month is nil you must still send us a return.

15.3 If you do not submit a return

If you fail to submit a return on time you’ll be liable to penalties — see paragraph 2.6. We have the authority to estimate the duty which would have been due and to pursue that debt through the civil courts — see paragraph 16.6.

If you foresee any problems, you should immediately contact:

Beer Duty
HMRC
St Mungo's Road
Cumbernauld
Glasgow
G70 6AD

Telephone: 03000 583 920

15.4 How to get a return

EX46s are routinely sent out to all registered brewers and packers. If you fail to receive a return, you should contact the Beer Duty Accounting Centre.

15.5 How to complete the return

The EX46 form has instructions on how to complete the return.

15.6 The signing declaration

The proprietor, a partner, the Company Secretary or a Director of the company should sign the declaration on the return. If this is not possible, you can authorise someone to sign the return on your behalf.

15.7 Submitting a single duty return for multi-site operations

If you have more than one registered premises owned by the same legal entity you can, on request, combine the duty liability for each in the one duty return.

However, an individual beer duty summary should be maintained for each site and consolidated in a beer duty account by the site submitting the return.

You should note that if you submit a single duty return for more than one set of registered premises, you must still declare details of all dispatches of beer sent out in duty suspension in box 2 of your return including duty suspended beer sent from one of your registered premises to another.

You must declare details of all receipts of beer received in duty suspension in box 3 of your return, including duty suspended beer received by one of your registered premises from another.

15.8 Accuracy

You can avoid a penalty by checking that you’ve given complete and accurate information in your duty return. You can be liable to a penalty if your return is inaccurate and, as a result, you do not pay enough duty or if you do not notify us that a duty assessment we’ve sent you is too low.

If you’re aware you’ve made a mistake on your return, you must notify us as soon as possible. Depending on the circumstances, we may be able to reduce the penalty.

If you deliberately make a false duty return, you can face prosecution for the offence and incur a heavy penalty.

For more information on penalties, see paragraph 3.9.

You have the right to appeal if we impose such a penalty. For more information on appeals, see section 33 and paragraph 3.9.

15.9 If you discover errors relating to earlier accounting periods

If you discover under declarations relating to previous accounting periods which total less than £1,000 duty, you must enter the amount in your duty return for the current accounting period.

Similarly, if you discover overdeclarations totalling less than £1,000 duty, you must enter the amount in your return. You do not have to send a written advice, but details of the errors must be retained for inspection.

If however, either the total underdeclaration or total overdeclaration (or both) is £1,000 duty or more, you must, in addition to making the adjustments outlined above, send full details in writing to the Beer Duty Accounting Centre (see paragraph 15.5 for the address).

15.10 When to send a return

You must submit your return so that it arrives not later than the 15th day of the month following the accounting period. When the 15th day falls at a weekend or on a public holiday the return must be received by the previous working day.

15.11 Where to send the return

All registered brewers and packers must send returns to the Beer Duty Accounting Centre. See paragraph 15.3 for the address.

15.9 Submitting returns produced on a computer

If you keep your records on a computer and want to make your Beer Duty return using a computer prepared form, you must contact the Beer Duty Accounting Centre (see paragraph 15.3 for the address).

The format of your return must conform to that of the official form EX46 Beer Duty Return.

16. Duty payment

16.1 Finding the rate of duty

The Excise helpline will advise you of the current rate on request, or you can find the current duty rates online.

16.2 Budget changes

You are responsible for declaring the correct amount of duty from the effective date of change. When the duty rate changes, we will attempt to advise you of the new rate, the effective date and the time of the change.

Following the budget, you can find details of the duty rate changes on this website or contact the Excise helpline.

When the rate changes during an accounting period, you must complete separate EX46 forms for the period at the old and new rates, showing pre or post budget as appropriate.

16.3 Who is liable

The person holding the beer at the duty point is liable for the duty. This can not necessarily be the owner of the beer.

16.4 When to pay

You must pay the duty shown on your monthly Beer Duty return no later than the 25th day of the following month.

If the 25th falls on a Saturday, Sunday or public holiday, you must pay by the previous working day.

16.5 How to pay

HMRC accepts payment by a range of methods but recommends you pay electronically using one of the following options. If you want to pay by any method other than Direct Debit, you must contact the Beer Duty Accounting Centre in advance (see paragraph 15.3 for the address and telephone number):

• Direct Debit
• approve a payment through your online bank account
• Bacs (Bankers Automated Clearing System) Direct Credit
• CHAPS (Clearing House Automated Payment System)
• internet or telephone banking

For more information and help go to Paying HMRC.

Following the introduction of a cap on 31 May 2012 by the board of Bacs Payments Schemes Ltd (Bacs) which limits the maximum value of any single Bacs transaction, HMRC are no longer able to collect Direct Debits in excess of £20 million. If you have a payment to make which exceeds £20 million, you need to make arrangements with your own bank to make sure payment reaches HMRC on the due date, by an alternative payment method such as CHAPS.

16.6 If you do not pay the duty

If you fail to pay the duty by the due date, you will be liable to a civil penalty of 5% of the duty or £250 — whichever is greater. In addition, further penalties can be incurred for each day that you fail to pay the duty. Details of civil penalties are contained in Notice 209. If you fail to pay on time, we can direct you to pay duty as soon as a duty point occurs rather than allowing you to defer payment of duty liability until the 25th of the following month.

At any time after the due date for payment, our officer can take action to take possession of all beer, materials and equipment used in brewing and packaging or connected with your trade as a brewer or packager, which are either owned by you or are in your possession and auction them to recover duty due plus pay any Taking Control of Goods fees. See also paragraph 2.6.

17. Experimental brewing

17.1 Registering

If you brew solely for the purposes of research or experiments in the production of beer, you do not need to register for Beer Duty purposes nor pay duty on the beer. However, you must still notify us, see paragraph 17.3.

However, if you intend to sell or give away any of the beer you produce you must apply for registration and pay duty on such beer.

If you initially brew solely for the purposes of research or experiments but intend at a later date to sell or give away any of the beer you produce, you must apply for registration at the outset.

17.2 Is duty payable on beer brewed for experimental purposes by registered brewers

No. Duty relief will be given on any beer brewed by a registered brewer which is to be used only for research or experiments in the production of beer. The relief from duty is subject to conditions.

17.3 Tell us of your intention to produce beer for experimental purposes

If you’re not a registered brewer you must, before you start the production of beer for research or experimental purposes, write to the EPT (for address, see paragraph 4.3).

The following requirements have the force of law under regulation 6 of the Revenue Traders (Accounts and Records) Regulations 1992

You must advise the EPT of:

• your name and the address at which you intend to produce beer
• your normal business or occupation
• the quantity of beer you expect to produce each month
• how you intend to dispose of the beer
• details of any other trade you have in goods liable excise duties

As well as providing the information shown above, you must also observe the conditions shown in paragraph 17.5 and keep the records specified in paragraph 17.6, otherwise duty will be payable on the beer.

17.4 Research and experiment

To qualify for relief, the beer must be brewed to test new brewing processes, equipment and ingredients. The relief can apply to trials by registered brewers who want to test the suitability of new brewing methods or materials, and do not intend to sell the beer.

17.5 Disposal of beer produced by registered brewers

To qualify for relief from duty, you must not sell or give away any of the beer produced. You can conduct taste tests among your employees, but the beer must not be consumed in any other circumstances. Taste tests must not include prospective or actual customers.

When the research or experiments are finished all the remaining beer must be destroyed.

17.6 Record keeping

You must keep a record showing:

• the date of production
• the quantity and ABV of beer produced
• the date and method of destruction
• the quantity destroyed

Records must be in a form acceptable to our officer and produced at any reasonable time. Records must be kept for at least 6 years, unless otherwise agreed with our helpline.

17.7 Selling the finished beer

You can do this only if you’re a registered brewer. If so, any beer that you dispatch for consumption becomes liable for duty in the normal way.

18. Mixing of beer

18.1 What mixing means

The term mixing in this section means the mixing of beer from one brew with that from another and the mixing of beers of different alcoholic strengths.

18.2 Mixing restrictions

Beer that is not in duty suspension can not be mixed with duty suspended beer.

Beers of different strengths that have passed the duty point can not be mixed until they are sold by retail or otherwise supplied to the consumer.

You can mix duty suspended beers only on registered premises or in an excise warehouse.

However, there are no restrictions on the mixing of beers of the same strength that have passed the duty point.

18.3 Record keeping

Your own commercial records will be sufficient if they include the date of mixing and the quantity, type and alcoholic strengths of the beers you mix.

18.4 Mixing small brewery beer

You can mix small brewery beer with beer of a different rate of duty in duty suspension. However, the resultant mixture will not be small brewery beer and, therefore, not eligible for reduced rates of duty. The finished product will be liable to the standard rate of duty.

You can not carry out any operation on small brewery beer which would result in the beer being subject to a different rate of duty than would otherwise have been the case.

19. Additions to beer

19.1 Priming

19.1.1 What priming is

Adding sugar solution to beer to encourage secondary fermentation and increase its alcoholic content — see paragraph 12.2 and section 30.

19.1.2 Where beer can be primed

Beer can be primed on registered premises and on any other premises which we approve. If you’re a registered brewer or registered holder and you want to prime beer on premises which are not registered, you must seek our approval. When you obtain such approval you must keep a record on your registered premises of any such premises at which priming takes place.

If you’re not a registered brewer or registered holder you can not prime beer unless we’ve approved the arrangements.

19.1.3 How to get approval of premises for priming

You must write to the Excise enquiries team giving the following details:

• the address of the premises at which you want to undertake priming
• the addresses of registered premises from which the beer will be received
• the estimated annual quantities of the beer to be primed
• the destination of the primed beer

19.1.4 Record keeping

Your records must include the following:

• the date and time of the priming
• the type of beer (product name) that is primed
• the quantity and strength of beer that is primed
• the type and quantity of priming’s added
• the quantity and expected strength of the resulting product

These records should be kept on the premises where priming is carried out and made available to our officer when requested.

19.2 Dilution

19.2.1 Water added to beer

Beer in duty suspension on registered premises can be diluted with water. If you want to add water to beer elsewhere, before it is sold or supplied to the consumer, you must obtain our approval.

You must write to the Excise enquiries team.

19.2.2 Dilution of small brewery beer

If you add water to dilute small brewery beer after it has left registered premises in which it was produced, it will no longer be small brewery beer.

Reasonable dilution is allowed in the process of packaging small brewery beer, provided it does not reduce the strength of the beer by more than 0.1% ABV and that the final volume counts towards the annual production figure. Allowable dilution includes:

• cask conditioned bottled beers that could ferment above the label strength by a fraction prior to bottling and need a very slight amount of dilution to bring it back to the declared strength
• filtering prior to bottling can involve filter powder which is diluted and results in addition of small quantity of water to achieve clarity of beer

19.2.3 Records keeping

Your normal commercial records should be sufficient for our purposes if you dilute beer on registered premises after it has been produced — see paragraph 7.2. But if we approve dilution elsewhere, we will expect your commercial records to contain the following information:

• the quantity and strength of beer before dilution
• the quantity of water added
• the quantity and strength of beer after dilution

19.3 Finings

19.3.1 Where finings can be added

You can add finings (provided they do not contain alcohol), to beer on any premises.

19.3.2 Record keeping

We do not require any record to be kept of the addition of finings to beer but, if you do keep records, we can ask to see them.

19.4 Other additions

19.4.1 Other additions allowed

Once beer has passed the duty point, no substance which causes or can cause an increase in the duty liability of the beer can be added to it until the beer is sold or supplied to the consumer, unless we’ve approved the addition of that substance. If you want to mix beer with any such substance, including non-alcoholic beverages, after the duty point, you must seek prior approval.

You must write to the Excise enquiries team.

However, if you only intend to produce drinks whose alcoholic strength is not more than 1.2% ABV, you do not need to seek our approval.

19.4.2 Beer mixed with spirits where the finished product exceeds 1.2%

Beer mixed with spirits will be liable to the spirits rate of duty. This applies even if the majority of the product is sourced from the beer rather than the spirits. There are only 2 instances where an element of spirit can be used in the manufacture of ‘beer’ products, without the finished product incurring the spirits rate. These are where:

• there are no spirits in the final product, for example, the spirits are used as a carrier for a flavouring which is added at an early stage of production and the actual spirits are burnt off during the course of production. Duty would be liable on the finished product which is the manufactured beer, or
• the spirits added to the product and which form a part of the finished product, are of such a token amount as to make them completely insignificant (that is, the spirits added to the beer are of such a small quantity, they do not lead to a recognizable increase in the alcoholic strength of the beer)

If you’re unsure of the duty category (beer or spirits) that will apply to the product you intend to produce, you should contact the Excise helpline before production begins.

19.4.3 Beer-based mixed drinks between 1.2% and 5.5%

When beer is mixed with alcoholic (other than spirits) or non-alcoholic beverages, the resulting product is classified as beer.

19.4.4 Beverages within these limits deemed to be beer

These beverages are:

• shandy made with lemonade or a mixture of beer and lemonade, lemon cordial, lemon flavourings, lemon juice, or lemon squash
• lager and lime, or a mixture of beer and lime cordial, lime flavouring, lime juice, lime squash or limeade
• ginger beer shandy, shandygaff, or a mixture of beer and ginger, ginger cordial, ginger, ginger flavouring, ginger squash or unfermented ginger beer
• a mixture of beer and fruit cordial, fruit flavourings, fruit flavoured carbonated water, fruit juice or fruit squash
• a mixture of beer and any alcoholic liquor or alcoholic substance (other than spirits — see paragraph 19.4.2)

19.4.5 Beer mixed with other liquors (other than spirits) or substances where the finished product exceeds 5.5%

Beer mixtures containing dutiable liquors are liable at the appropriate made-wine rate of duty.

Beer mixed with non-alcoholic liquors and substances will also be liable at the appropriate made-wine rate of duty.

If you’re unsure of the duty category that will apply to any product you intend to produce, you should contact the Excise helpline before production begins. They will also advise you of any additional approvals you can need (for example, made-wine producer’s licence).

19.5 Alcoholic carbonates

19.5.1 General

These products are sometimes referred to as flavoured alcoholic beverages, but are more commonly known as ‘Alcopops’. They are not necessarily made using beer as an ingredient. If you intend to manufacture products of this type which contain beer, the advice in paragraphs 19.4.2 to 19.4.5 should be followed.

19.5.2 Producing alcoholic carbonates that do not contain beer

Such products will be classified for duty purposes as either made-wine or spirits. Consequently, additional approvals and licences will be required. You should contact the Excise helpline before you commence production.

19.5.3 Packaging alcoholic carbonates that are not classified as beer

Additional approvals will be required and you should contact the Excise helpline in advance.

20. Relief of duty on beer which has become spoilt or otherwise unfit for use

20.1 Beer that’s eligible for duty relief

Any beer which meets all the following conditions:

• it has been charged with duty
• it has become spoilt or otherwise unfit for use
• unless delivered in bulk, it is presented for duty reclaim in the same container in which it left duty suspension — however, where not possible for health and safety or other practical reasons, the beer can be transferred to other containers subject to prior approval from HMRC

20.2 Who can claim the relief

Normally the registered brewer or registered holder who accounted for the duty is the person who can claim relief. Relief cannot be claimed until reprocessing has commenced and destruction has taken place. If either the producer of the beer or the brewer reprocessing the beer did not account for the duty but wants to claim relief, our prior approval to the arrangements must be sought.

You must write to the Excise enquiries team.

If a registered brewer purchases duty paid beer which becomes spoilt and they want to destroy the beer and claim spoilt beer relief, they must apply to us for approval to do so (see above).

In the case of beer which was imported on payment of duty, only the person who accounted for the duty on importation will normally be entitled to claim relief, but our helpline will be able to give more information in these circumstances.

In the case of multi-site brewers or packagers, provided the registered premises are operated by the same registered person, claims on behalf of the group can be made and offset on one duty return.

20.3 You do not have to destroy the spoilt beer to claim duty relief

The spoilt beer can be either destroyed or reprocessed.

20.4 What reprocessing means

The relief from duty for reprocessing includes the following operations:

• beer which is to be mixed with other beer on registered premises
• beer which is to be filtered or repasteurised

20.5 If you want to claim relief

You must keep a spoilt beer record containing the particulars shown in paragraph 20.19.

20.6 What quantity to claim relief

You can only claim for the actual quantity of beer destroyed or reprocessed on which duty has been charged.

This will depend on whether you:

• use a spoilt beer vessel
• destroy directly from cask, keg or other package
• a combination of both

If you want to decant beer to determine the volume for relief, you must use a gauged and tabulated spoilt beer vessel or establish the volume by using a properly calibrated meter.

If you destroy or decant for reprocessing directly from cask, keg or other containers, you can only claim for the actual quantity of beer returned on which duty has been charged. In the case of un-broached containers, you should use the declared contents. Broached containers and depot leakers, which can be un-broached, should have their actual contents measured for duty reclaim purposes.

Remember to exclude any undrinkable sediment allowance from the quantity claimed.

20.7 The strength you should base your claim on

Your claim must be based on the strength on which duty was charged.

If you destroy directly from cask, keg or other containers, your claim must be based on the strength on which duty was charged.

Where you use a spoilt beer vessel to claim relief, you must take a representative sample of the beer for laboratory testing to establish the strength. This must be recorded in support of your claim.

20.8 How to claim

At the end of the accounting period, total the entries in the spoilt beer record (including those in respect of destructions and reprocessing of spoilt beer) and transfer the total to your Beer Duty account. To claim relief, enter this total (that is, the spoilt beer relief claimed) in your Beer Duty return.

20.9 Spoilt beer that’s excluded

The following are excluded:

• unconsumable beer (for example, sediment in cask conditioned beer) on which duty was not charged is ineligible for relief
• diluted beer is ineligible (unless we approved the addition of water)
• adulterated beer (that is, beer containing additions which we have not approved) is ineligible
• where no satisfactory audit trail is available

If any beer becomes spoilt more than 3 years after the duty was paid on that beer, you cannot claim relief.

20.10 How to identify ineligible beer

You should satisfy yourself that the beer returned is the same beer which was in the container at the time it left duty suspension. The contents of any containers suspected of containing diluted or adulterated beer, should be rejected as ineligible or subjected to laboratory testing.

20.11 The percentage of containers you should sample for laboratory testing

If you take samples from all containers for laboratory sampling, you will be able to identify and exclude all ineligible beer from spoilt beer claims.

If you do not sample 100% for laboratory testing, you should establish a sampling plan which should be set out in a formal written procedure.

If you decide that a random sampling rate of 10% is appropriate and 5% of the containers tested are found to contain ineligible beers, then the total duty element of the claim should be reduced by 5%.

20.12 When you can destroy spoilt beer

Subject to any notice of destruction being required (see paragraphs 20.14 and 20.15), you can destroy spoilt beer at a time of your own choosing. However, entitlement to reclaim duty on spoilt beer will depend on the conditions below being met.

The following conditions have the force of law and are made under regulation 26(2) of the Beer Regulations 1993

• a full audit trail is maintained
• requirements of other regulatory authorities are observed (for example, environmental)
• proper control practices are maintained, including appropriate action at management and supervisory levels

20.13 Additional conditions for reclaiming duty on beer destroyed away from registered premises

The following conditions have the force of law and are made under regulation 26(2) of the Beer Regulations 1993

(a) Destructions in pub cellar:

• there must be a complete audit trail which confirms the beer has been destroyed and that it was duty paid
• the destruction of the beer must be supervised by a responsible representative of the brewery, for example, an Authorised Company Representative (ACR) — the ACR must be appointed by the brewery as an ACR in their records and be trained in that brewery’s requirements. This condition also applies to an ACR who supervises destructions for more than one brewery

The requirements of other regulatory authorities must be observed.

(b) Destructions at specialist destruction sites:

• there must be a complete audit trail which confirms the beer has been destroyed and that it was duty paid
• the destruction of the beer must be supervised by either an ACR of the brewery, or a person within the specialist destruction company who has been appointed by the brewery to supervise the destruction on their behalf. This person must be at management or supervisory level
• a certificate must be obtained from the company as evidence of destruction

(c) Spoilt beer relief will depend upon there being evidence of a full credit of the duty paid value, or replacement of the goods to your customer (or owner of the goods at the time they became spoilt)

20.14 Notice of destruction

You can destroy the beer whenever you want. However, there can be circumstances where we require prior notification. If this is the case, an officer will contact you and the requirements in paragraph 20.15 will apply.

20.15 The notice you must give

If notice is required, you must give us at least:

• 2 working days notice if you want to destroy beer in your registered premises
• 5 working days notice if you want to destroy beer outside your registered premises

You must give details of the proposed method of destruction.

Working days excludes Saturdays, Sundays and public holidays.

20.16 How you must destroy spoilt beer

You must destroy the beer in a way acceptable to us and which makes it unsaleable as a beverage.

20.17 Budget changes

When the duty rate changes, separate entries must normally be made in the spoilt beer record for beer charged with duty at the old and new rates.

However, we do not object to bulking of beer at 2 rates in one destruction, so long as a system to apportion the total has been agreed in advance with our officer. In these circumstances, only one entry on the spoilt beer record is necessary for the destruction.

20.18 How long you must keep your records for

Normally you must keep your records for 6 years from the date that the relief is claimed. However, if you want to destroy them earlier contact the Excise helpline for our approval.

20.19 Particulars of the spoilt beer record

When beer is either returned to the brewery for destruction or reprocessing or destroyed remotely, you must enter the following particulars in the destruction or reprocessing sections of your spoilt beer record:

• the total volume of spoilt beer destroyed or beer reprocessed
• the strength of the spoilt beer destroyed or beer reprocessed
• the date and time of the destruction or when beer was returned for reprocessing
• the place and method of destruction

The above requirements are provided for under regulation 30(1) of the Beer Regulations 1993.

• evidence that the duty has been charged or paid
• evidence of the amount of duty charged or paid

The above requirements are provided for under regulation 33(1)(b) of the Beer Regulations 1993.

In addition, the following requirements have the force of law and are made under regulation 33(1)(a) of the Beer Regulations 1993

• the volume and strength of the beer in each container from which the spoilt beer was directly destroyed or in which the beer was returned for processing
• the description of the beer returned by each purchaser in respect of which a claim is made
• the name and address of each purchaser
• the numbers and sizes of each container in which the beer was returned by each purchaser returning the beer

Unless we allow a longer period, your spoilt beer record must be completed within one hour of reprocessing taking place.

When kegs are returned to the brewery and residues removed for destruction, if you want to reclaim previously paid duty, you must enter the following particulars in the destruction section of your spoilt beer record:

• the total volume of keg residue destroyed
• the strength of the keg residue destroyed
• the date and time of the destruction,
• evidence that the duty has been charged or paid
• evidence of the amount of duty charged or paid

Residues from returned kegs which contained low, standard or high strength beers must be physically segregated and decanted into separate vessels and accurately measured to determine the quantity for relief. HMRC will not accept estimations for duty reclaim purposes. Residues from kegs returned from export do not qualify for this relief.

Residues are not considered to be spoilt beer and, as such, they do not meet the provisions for spoilt beer relief under the Beer Regulations 1993. However, as a concession and for administrative purposes, residues can be entered in the spoilt beer record and duty can be claimed, along with duty on spoilt beer, on the Beer Duty return. Alternatively and subject to certain conditions, provision is also available for reclaiming duty on keg residues under the Excise Goods (Drawback) Regulations 1995.

At the end of the accounting period, total the entries in the spoilt beer record of all destroyed and reprocessed beer and transfer the total to your Beer Duty account for claiming relief in your Beer Duty return.

21. Return of duty paid beer to duty suspension and co-storage of duty paid and duty suspended beer

21.1 You cannot return duty paid beer to duty suspension

Unless duty paid beer is spoilt and comes back for reprocessing it cannot be returned to duty suspension. For more information, see paragraph 20.4.

21.2 What happens if duty paid beer is returned to registered premises because of a failed delivery

If duty paid beer is returned to your registered premises because a customer is unwilling or unable to accept a delivery or an erroneous delivery has been made, the beer must be separately identified from duty suspended stock in your records. As duty will have already been accounted for on the beer when it was initially dispatched, your records will not need adjusting either when the beer is returned or when it is subsequently redelivered.

21.3 If your accounting system cannot distinguish between beer held in duty suspension and duty paid beer returned to registered premises because of a failed delivery

If you’re unable to modify your accounting system to overcome the problem, you can adopt the following procedure:

• set up a failed delivery account — enter the following information into the account for each failed delivery returned to your registered premises
• the date the beer was returned and the reason
• sufficient information to identify the original dispatch of the beer in your records
• the amount of duty involved

When beer returned because of failed deliveries is subsequently redelivered, charge it with duty in the normal way.

When all beer returned on a particular day because of failed deliveries has then been redelivered, credit yourself with the duty in the failed delivery account for the day of return (this credit will offset the second duty charge).

For example, if there were 3 failed deliveries during the accounting period and the total duty charge was £1,200.50, you would credit yourself with that sum from the failed delivery account at the end of the accounting period provided all the beer had been redelivered and duty recharged.

This procedure can be used only for genuine failed deliveries if your accounting system cannot distinguish between them and beer held in duty suspension. In cases of doubt or difficulty, you should contact the Excise helpline.

21.4 If there’s a duty rate change between the date beer is returned because of failed deliveries and the date it’s then redelivered

You must make an appropriate adjustment of the duty when you credit yourself from the failed delivery account. If, in the example in paragraph 21.3, the duty rate increased by 6% before the beer was redelivered, you would increase the £1,200.50 by 6% (£72.03) and credit yourself with £1,272.53 once you had redelivered and charged duty at the new increased rate.

21.5 Storing duty paid beer and duty suspended beer

Beer on which any duty due has been paid can, subject to certain conditions, be co-stored with duty suspended beer in your registered premises. Beer could either be received duty paid or have duty paid on them while held in your registered premises. No physical segregation of duty suspended and duty paid beer is necessary. The change of status of any beer from duty suspended to duty paid must be recorded and the products clearly identified in your records.

Duty paid beer cannot revert to duty suspended status and duty suspended beer cannot be shown as duty paid without prior payment of duty.

22. Removing alcohol from beer

22.1 If you want to remove alcohol from beer

You must get our approval before you intend to start the process.

You must write to the Excise enquiries team.

The alcohol produced from de-alcoholisation processes or extracted from yeast (other than that produced by traditional yeast pressing) is classified as spirits.

22.2 Dealing with the extracted alcohol

The extracted alcohol can be:

• destroyed
• delivered for vinegarisation
• used to produce other alcoholic drinks

If you intend only to destroy or deliver it for vinegarisation and you currently hold a Commissioner’s Direction allowing you to extract alcohol from beer, you need take no further action.

If you do not hold a Commissioner’s Direction or you intend to reprocess the alcohol, see paragraph 22.3.

22.3 Requirements needed if you want to reprocess the extracted alcohol

As the alcohol you’ve extracted is classified as spirits, you must:

• be licensed as a distiller
• hold a distiller’s warehouse approval
• comply with the appropriate requirements of the Spirits Regulations 1991

When alcohol extracted from beer (for example, waste or surplus beer) is re-introduced to beer products (where the spirits form a replacement source of alcoholic strength), the resulting product is classified as spirits and will be liable to the spirits rate of duty, unless treatment of such a mixture is as described in the 2 instances in paragraph 19.4.2. You will also require a compounder’s licence to manufacture such mixtures.

If you want to produce other alcoholic drinks using the extracted alcohol, you can need to obtain additional approvals. You will need to contact the Excise helpline who will advise you accordingly.

23. Exports of beer

23.1 Procedures you must follow to export duty suspended beer

You must follow the procedures set out in Notice 197 when you’re exporting beer.

You can also check if you need to declare goods you bring into or take out of the UK.

23.2 Customs declarations to use

You must complete and Export Declaration. Find information and guidance in the Tariff volume 3 parts 1 and 2.

23.3 Getting evidence of export

Providing the correct procedures have been followed for exports using EMCS, HMRC will send you a report of export via EMCS which discharges the movement. Where no report of export is given for any reason, HMRC will issue a report of rejected export (an IE 839 message). On receipt of an IE839 message, you may be requested to provide alternative evidence of export as shown in Notice 197.

23.4 Exports of duty paid beer — claiming drawback

Drawback is a relief that provides for the repayment of excise duty paid on goods that have not and will not be consumed in the UK.

To reclaim the duty paid on beer you export, you must observe the conditions of the drawback system in Notice 207.

Registered brewers and packagers should offset the amount of drawback claimed during the accounting period by completing box 28 on their duty return (EX46). The claim should be for completed movements only and supported by the necessary documentary evidence as required by Notice 207.

24. Exports of beer

The following section applies only to Northern Ireland

24.1 What beer you may remove to EU member states

You may remove duty-suspended beer or duty-paid beer to EU member states.

24.2 The procedures are different

The procedures and requirements are totally different.

24.3 The procedures you must follow to remove duty-suspended beer to EU member states

You must follow the procedures set out in Notice 197 and these 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 beer to a warehouse or registered consignee which the fiscal authorities have approved to receive that type of beer
• you must access EMCS and raise an eAD before the movement starts and obtain an administrative reference code (ARC) that will uniquely identify the movement
• you must receive a valid report of receipt confirming that the consignee received the beer

24.4 The procedures you must follow to dispatch duty-paid beer to the EU

The duty in the EU member state of destination must be secured before the dispatch 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 dispatched to a private individual (see paragraph 24.5) the goods must be accompanied by a simplified accompanying administrative document (SAAD).

You may be able to reclaim the UK duty on the goods that you dispatched. In order to reclaim the duty, you must observe the conditions of the drawback system which are contained in Notice 207.

Registered brewers and packagers should offset the amount of drawback claimed during the accounting period by completing the duty return (EX46). The claim should be completed for movements only and supported by the necessary documentary evidence as required by Notice 207.

Drawback is a relief that provides the repayment of excise duty-paid goods that have not and will not be consumed in the UK.

24.5 You may send duty-suspended beer to a non-registered trader or private individual

If you are sending the beer direct to a non-registered trader then you must make sure that the duty is paid prior to the beer leaving your registered premises. You may be able to reclaim the duty as drawback (see paragraph 24.4).

If the non-registered trader appoints an agent who is authorised to receive duty-suspended excise goods, then the UK duty does not need to be paid. However, the movement must be submitted through EMCS with the agent showing as the consignee on the eAD.

If you are sending beer to a private individual (rather than a trader) this is known as distance selling. You must make sure that the duty is paid prior to the beer leaving your registered premises. You may be able to reclaim the duty as drawback see paragraph 24.4.

Additionally you as the seller are responsible for ensuring that the duty is paid in the EU member state of destination.

More information on distant selling can be found in Notice 197.

24.6 Notification of cash transactions

As a registered brewer or packager you’re required to notify us if you have been paid or expect to be paid in cash for supply of duty-suspended beer exceeding £9,000 (or equivalent in other currencies). You must complete form W7 Notification of cash payments for alcohol goods or alcohol related services in duty-suspension or contact the Excise helpline.

For information on the completion of the W7, refer to explanatory notes on the reverse of the form.

You must send the completed form to the fax number, or email address shown on the W7.

If you are paid or expect to be paid in 2 or more instalments which individually are below the £9000 notification threshold but in total will exceed this amount you must also notify us on form W7 when the first cash payment is received.

Provided you have notified the transaction to us, you do not need to wait for us to respond to receipt of the W7 before removing duty-suspended beer to EU member states.

24.7 Exports of beer to non-EU countries

The procedures set out in section 23 apply in Northern Ireland for exports of beer to non-EU countries.

25. Supplies to diplomats and visiting forces within the UK

When supplying excise goods to diplomats and visiting forces within the UK, you can only remove the goods from your warehouse free of duty and VAT on presentation of completed, specific documentation.

These movements are not considered to be in duty suspension and therefore do not take place under EMCS. You must have an official authorisation for the delivery of the beer.

Find more information in Notice 431 and Notice 207.

26. Removal of goods to HM Ships and as ship’s stores

26.1 Removing beer to HM Ships

HMRC allows certain HM Ships to receive beer free from Excise (and Customs) Duty. You should treat these movements as exports, the point of exportation being the delivery of the beer to the ship.

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

You will find more information on this and the procedures to follow in Notice 197.

26.2 Removing beer as ship’s stores

You can remove beer 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, therefore, do not move under EMCS procedures.

The ship’s master must seek prior authorisation from HMRC to load new stores onto his vessel. This authorisation is granted on form C945 Alcohol and Tobacco Duty: stores authority for spirits and tobacco products. 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 beer from your premises. Paragraph 14.5 of Notice 197 gives details of the information required on the document.

You must satisfy us that the beer has been shipped as stores.

27. Imports

The following paragraph only applies to Great Britain (England, Scotland and Wales).

27.1 Duty is payable on imported beer

The rate of excise duty on imported beer is the same as that on UK produced beer. Beer produced by small breweries in other countries and imported into the UK, which meets the requirement of the UK scheme, is small brewery beer and eligible for the reduced rates — see paragraphs 8.22 and 8.23. The duty is based on:

• the quantity imported
• the strength (ABV)
• the previous calendar year’s production volume of the producing brewery

27.2 The procedures at importation

This notice does not attempt to explain all the procedures for imports of beer. The main questions are answered below. A summary, in the form of a table, of import procedures is at paragraph 27.13. The table details each type of importation and indicates what documents are required and where more information can be found.

27.3 Importing beer under duty suspension

Payment of duty can be suspended in the following circumstances:

• if you’re a registered brewer or packager importing the beer directly into your registered premises, providing they are registered to receive beers of the relative class or description, or
• the imported beer is delivered directly to an excise warehouse approved for the receipt of beer

27.4 When duty is due on beer imported under duty suspension

The following paragraph only applies to Great Britain

If you’re a registered brewer or packager and you import beer which is delivered directly to your registered premises, you will not have to account for the duty until such time as the beer ceases to qualify for duty suspension — see section 9.

27.5 Procedures for duty suspended importations

Any Customs Duty must be paid at importation (unless placed under a customs suspensive regime, for example consigned to an approved customs warehouse). There is no requirement to provide a receipt to the consignor, but you should retain your supplier’s invoices and a copy of the Import Declaration.

Upon payment of any Customs Duty at point of entry into the UK, all movements must be submitted through EMCS. A registered consignor (which must be the import agent or yourself as the receiving registered brewer) must start the movement to the registered premises on EMCS.

Details of each consignment must be entered in your records for the receipt of beer under duty suspension — see section 9 and Notice 197. More information and guidance is contained in the Tariff, Volume 3 parts 1 and 2.

If you decide to pay the excise duty at the place of importation, EMCS procedures will not apply.

If you have type C or D approval (see paragraph 3.3) and wish to import beer from outside the UK to your registered premises, you will need a CHIEF approval number to quote in Box 49 (warehouse ID) of the import entry (SAD). If you do not already have a CHIEF number, contact: nru.alcohol@hmrc.gov.uk.

The following paragraph applies only to Northern Ireland

27.6 The procedures for duty-suspended importations from countries outside the UK or EU

Any Customs Duty must be paid at importation — unless placed under a customs suspensive regime, for example consigned to an approved customs warehouse. There is no requirement to provide a receipt to the consignor, but you should retain your supplier’s invoices and a copy of the Import Declaration.

Upon payment of any Customs Duty at point of entry into the UK or EU all movements must be submitted through EMCS. A registered consignor (which must be the import agent or yourself as the receiving registered brewer) must start the movement to the registered premises on EMCS.

Details of each consignment must be entered in your records for the receipt of beer under duty-suspension — see section 9 and Notice 197. More information and guidance is contained in the Tariff, Volume 3 parts 1 and 2.

If you decide to pay the excise duty at the place of importation, EMCS procedures will not apply.

The following paragraphs apply only to Northern Ireland

27.7 The procedures for duty-suspended importations of beer from EU member states

As a registered brewer or packager, your registered premises will be a tax warehouse and you can receive beer, duty-suspended.

All movements of beer from EU member states must be submitted through EMCS. This procedure is explained fully in Notice 197.

The details of the consignment must then be entered into your records for the receipt of beer under duty-suspension — see section 9.

27.8 Receipts for received goods

You must provide the consignor in the EU member state of dispatch with a report of receipt, using EMCS, within 5 days of receiving the beer at your registered premises.

The following paragraph applies only to Great Britain

27.9 If you do not qualify to hold goods in excise duty-suspension

When the beer is imported the duty must be accounted for immediately.

The following paragraph applies only to Northern Ireland

27.10 If you do not qualify to hold goods in excise duty-suspension

When the beer is imported the duty must be accounted for immediately.

If the beer comes from an EU member state, then more information on these procedures may be obtained from Notices 203a and 204a.

The following paragraph applies only to Northern Ireland

27.11 How to receive beer that has been duty-paid in an EU member state

When receiving beer that has been duty-paid in an EU member state, you must use the appropriate UK duty-paid movement scheme. You must notify HMRC of the movement and secure or pay the UK duty before the goods are dispatched. Full details are available in Commercial importers, certified traders and tax representatives — EU trade in duty paid excise goods (Excise Notice 204b).

27.12 Excise warehouses

Beer can be deposited in an excise warehouse on importation, provided that the warehouse is authorised to receive packaged or bulk beer as appropriate.

You’ll be able to check this through the National Verification Centre who has access to the community wide list of authorised tax warehouses.

Telephone: 03000 576 109
Email: nvcglasgow@hmrc.gov.uk

Notice 197 has more information about warehousing.

27.13 Importing beer concentrate

If you want to import beer which has been subject to a concentration process, you should establish duty liability before importation. The concentration process is often distillation which could mean that the concentrate will be classed as spirits for duty purposes, liable at a higher rate than beer.

If you intend to import beer concentrate you should contact the Excise helpline before you start.

27.14 Specific information needed on import documents

In addition to the general information required on the various import documents, the following specific detail is needed in respect of beer:

• the total volume actually imported in litres
• the alcohol by volume expressed as a percentage to 0.1% (for example, 4.2%)
• if the beer meets the requirements of the UK reduced rates scheme, a certificate of the previous year’s production of the producing brewer — see paragraphs 8.22 and 8.23

27.15 If you do not know the ABV

It is your responsibility to make sure that a full and accurate declaration is made. If you do not know the ABV of the beer, either:

• ask the supplier for it and request that it is, in future, provided on the containers or accompanying invoices, or
• request our permission for you to sample the beer for analysis in advance of the full declaration

In the latter case, you should write to our officer at the place of importation advising:

• your full name and address
• the location of the beer to be sampled
• all other details needed to identify the beer

You should be aware that if you under-declare the ABV of the imported beer, you’ll have to pay any additional excise duty. Additionally, you can be prosecuted for any false declaration and the beer can be liable to forfeiture.

27.16 Beer can be cleared in advance of sample results

But only if you:

• pay a deposit to cover any additional duty based on the declared ABV, plus 0.5%
• agree in writing to pay any additional duty due if the sample result reveals a higher ABV

27.17 HMRC can want to take samples

Our officer can want to examine and sample the beer. It is your responsibility to provide all the facilities necessary to examine packages and containers. This is particularly important with beer under pressure in kegs or bulk containers.

The following paragraph applies only to Great Britain

27.18 Import procedures

(a) Imports by registered brewers and packagers

Contingency	Documentation	More information
to registered premises	Import declaration eAD	See paragraph 27.7 of this notice
to an excise warehouse	Import declaration eAD	Notice 197
to a customs suspensive regime	Import declaration	Relevant notice for the customs regime declared

(b) Imports by non-registered persons

Contingency	Documentation	More information
to excise warehouses	Import declaration eAD	Notice 197
to non-registered premises	Import declaration HMRC duties (and VAT) to be paid at importation	Customs Tariff
To a customs suspensive regime	Import declaration	Relevant notice for the customs regime declared

The following paragraph applies only to Northern Ireland

27.19 Import procedures

(a) Imports by registered brewers and packagers

from EU countries:

Contingency	Documentation	More information
to registered premises	eAD (submitted through EMCS) eAD	receive goods into and remove goods from an excise warehouse Excise Notice 197
to an excise warehouse	eAD eAD	receive goods into and remove goods from an excise warehouse Excise Notice 197
to a non registered premises	eAD	Notice 203a Registered Consignees Notice 204a Temporary Registered Consignees

From non-EU countries

Contingency	Documentation	More information
to registered premises	Import declaration eAD	See paragraph 27.7 of this notice
to an excise warehouse	Import declaration eAD	receive goods into and remove goods from an excise warehouse Excise Notice 197
to a customs suspensive regime	Import declaration	Relevant notice for the customs regime declared

Contingency	Documentation	More information
to registered premises	Import declaration eAD	See paragraph 27.7 of this notice
to an excise warehouse	Import declaration eAD	receive goods into and remove goods from an excise warehouse Excise Notice 197
to a customs suspensive regime	Import declaration	Relevant notice for the customs regime declared

(b) Imports by non-registered persons

from EU countries:

Contingency	Documentation	More information
to an excise warehouse	eAD eAD	receive goods into and remove goods from an excise warehouse Excise Notice 197
to a non registered premises	eAD	Notice 203a Registered Consignees Notice 204a Temporary Registered Consignees

From non-EU countries

Contingency	Documentation	More information
to registered premises	Import declaration eAD	See paragraph 27.7 of this notice
to an excise warehouse	Import declaration eAD	receive goods into and remove goods from an excise warehouse Excise Notice 197
to a customs suspensive regime	Import declaration	Relevant notice for the customs regime declared

Contingency	Documentation	More information
to excise warehouses	Import declaration eAD	Notice 197
to non-registered premises	Import declaration HMRC duties (and VAT) to be paid at importation	Customs Tariff
To a customs suspensive regime	Import declaration	Relevant notice for the customs regime declared

28. Accounting for VAT

28.1 Where to find information about VAT

The following paragraphs give a brief summary of the treatment of beer entered into, supplied within and removed from registered premises or excise warehouses. You can get more information from the Excise helpline.

General information on VAT can be found in Notice 700.

28.2 Beer you produce and supply duty paid to customers

If you produce beer in duty suspense in your registered premises and you supply it duty paid to customers, you must account for VAT as output tax on your VAT Return.

28.3 The value for VAT you must use

The value for VAT is the duty inclusive price you charge your customer.

28.4 Beer you supply in duty suspension to other registered premises or excise warehouses

Any supply of UK produced beer within the warehousing regime (that is, supplies of beer in duty suspension from one registered premises to another or from registered premises to an excise warehouse approved to receive beer) is disregarded for VAT purposes under the VAT Act 1994, sections 18(2) and (3).

28.5 Beer you receive in duty suspension from other registered premises or excise warehouses

If you receive beer in duty suspension from other registered premises or excise warehouses and you supply the Beer Duty paid to customers, you must account for VAT on both the purchase and supply of the beer.

VAT becomes due only when beer is removed from registered premises or excise warehouses to home use and is normally payable together with any suspended duty by the person who removed the goods. This means that the last holder of the beer in duty suspension, who is not necessarily the owner, accounts for and pays (or defers) the VAT on the beer together with the excise duty when the goods are removed to home use.

28.6 How to account for VAT

You account for VAT on the purchase of the beer on form EX46 (VAT) — VAT due on alcoholic beverages supplied under VAT Act section 18.

28.7 When to account for the VAT on the purchase of the beer

You account for the VAT at the end of the period in which you remove the goods from your registered premises.

28.8 The value for VAT of these purchases

The value for VAT is the cost of the beer to you plus the duty.

28.9 How to reclaim the purchase VAT

You should check the send a VAT Return to find out how to reclaim the purchase VAT as input tax.

28.10 The evidence you need to reclaim the purchase VAT

If you’re the owner of the goods you will be issued with a VAT certificate (C79) during the month after payment of the VAT on the EX46 (VAT). The C79 is the official evidence you need to claim VAT paid on warehouse removals as input tax.

Where postponed VAT accounting has been used to account for the import VAT you should retain the evidence of the payment of the VAT to make any reclaim. The payment and the reclaim should be on the same VAT Return.

If you’re not the owner but the goods were removed to home use from your registered premises, you should recover the EX46 (VAT) paid by you from the owner of the goods by disbursement invoice.

28.11 Imported beer received in duty suspension

If you receive beer in duty suspension at your registered premises and you supply the Beer Duty paid to customers, you must account for VAT on both the purchase and supply of the beer. The VAT on the purchase is called acquisition VAT.

28.12 How to account for the VAT

Send a VAT Return to account for acquisition VAT and supply VAT.

28.13 When you should account for VAT

You account for the VAT at the end of the period in which you remove goods from your registered premises.

28.14 How to reclaim import VAT

You should follow the procedures outlined in paragraphs 27.9 and 27.10.

28.15 How to get the EX46 (VAT) form

You can fill in and submit the EX46(VAT) online.

28.16 Completing and sending the form

There are instructions on the form on how to complete it and where to send it to.

28.17 VAT rules are not always the same for duty suspended beer you receive for processing

Some services or processes applied to existing beer can change its nature to the extent that a new product is considered to be created. The new product is then treated as having been produced on your registered premises and any VAT that would have been due on the import, acquisition or supply before processing, is extinguished. More information can be obtained from the Excise helpline.

29. Distillation analysis

(Referred to in section 12)

Distillation analysis: Method of determining the strength of beer

The procedure for distillation analysis is described in Schedule 4, The Beer Regulations 1993 which is reproduced below:

Method of determining the strength of beer

1.

(1) Subject to sub-paragraph (2) below, the strength of beer shall be determined in the following manner:

(a) a representative sample is to be taken and, after first being cleared of sediment and gas by filtration in an approved manner, a definite quantity thereof by measure at the temperature of 20 degrees Celsius shall be distilled

(b) the distillate shall be made up at the temperature of 20 degrees Celsius with distilled water to the original measure of the quantity before distillation

(c) the strength of the distillate made up in accordance with paragraph (b) above shall be ascertained by determining its density in air at the temperature of 20 degrees Celsius by means of an approved pycnometer used in an approved manner

(d) the strength of beer shall be taken to be the percentage of alcohol by volume in the table entitled ‘Laboratory Alcohol Table’ which corresponds to the density determined in accordance with paragraph (c) above except that where the density so determined is between 2 consecutive numbers in the table aforesaid the strength shall be determined by linear interpolation

(2) Where the result ascertained by the method specified in sub-paragraph (1) above is rendered inaccurate by the presence of substances other than alcohol that method shall be adjusted in such manner as can be approved for the purpose of producing an accurate result

2.

In this Schedule:

(a) ‘approved’ means approved by the Commissioners

(b) ‘Laboratory Alcohol Table’ means a table of which a copy, signed by the Chairman of the Commissioners and identifying it as relating to the Spirits Regulations 1991, has been deposited in the office of the Queens Remembrance at the Royal Courts of Justice

30. Calculation of alcoholic strength

(Referred to in section 12 in this notice).

30.1 If you have no or minimal laboratory facilities

If you have no or minimal laboratory facilities, you can calculate the alcoholic strength of your beer by multiplying the number of degrees by which the beer has attenuated by a factor. In order to make sure that your calculations are accurate, it is essential that the original gravity (OG) be established as soon as possible after collection and before fermentation commences, which will normally be within one hour of completion of filling the fermenting vessel.

If you add priming sugar to promote secondary fermentation you’ll need to calculate the alcoholic strength of the finished product as outlined in section 31.

30.2 Calculating the alcoholic strength

1. Measure the OG within one hour of collection*
2. Wait until fermentation is completed — for cask-conditioned beer this will be after secondary fermentation in the casks, then
3. Measure the present gravity (PG) (also known as the specific or final gravity)*
4. When you’ve taken your readings, calculate the alcoholic strength using the formula, (OG — PG) × f = a% ABV, where:

• OG is the original gravity of the beer
• PG is the present gravity of the beer
• a is the beer’s alcoholic strength
• f is the factor connecting the change in gravity to alcoholic strength — the value of ‘f’ is not constant because the yield of alcohol is not constant for all fermentations — in lower strength beers, more of the ‘sugars’ available for fermentation are consumed in yeast reproduction than in producing alcohol — the table at 30.3, produced by the Laboratory of the Government Chemist, shows the changing value of ‘f’ depending on the alcoholic strength of the beer

*Use a suitably calibrated saccharometer adjusted for the temperature of the representative sample.

30.3 Value of factor ‘f’ for various alcoholic strengths

(OG — PG)	% ABV	Factor
Up to 6.9	Up to 0.8	0.125
7.0 — 10.4	0.8 — 1.3	0.126
10.5 — 17.2	1.3 — 2.1	0.127
17.3 — 26.1	2.2 — 3.3	0.128
26.2 — 36.0	3.3 — 4.6	0.129
36.1 — 46.5	4.6 — 6.0	0.130
46.6 — 57.1	6.0 — 7.5	0.131
57.2 — 67.9	7.5 — 9.0	0.132
68.0 — 78.8	9.0 — 10.5	0.133
78.9 — 89.7	10.5 — 12.0	0.134
89.8 — 100.7	12.0 — 13.6	0.135

The table indicates that for the majority of popular UK beers, the factor for calculating the estimated strength would lie in the range 0.129 and 0.130. For strong beers (exceeding 6% ABV), the factor would be in the range of 0.131 — 0.133. Whilst it is important that the correct value for ‘f’ is used, you should be aware that this table is primarily for your guidance. Some brewing methods and materials can affect the factor. If in any doubt you should get more advice.

As with other methods of calculating alcoholic strength confirmatory testing by an independent analyst or the HMRC approved analyst should be done at least annually, or whenever you change the specification of a product, so that the accuracy of gravity readings can be confirmed.

31. Calculation of ABV when priming sugar is added to beer

(Referred to in section 12).

If you add priming sugar at the maturation stage to promote a secondary fermentation and use the calculation method to ascertain the ABV of the finished beer, you’ll need to make calculations based on the steps outlined below.

A barrel contains 163.6 litres which comprises 161.6 litres of beer which had an OG of 1040 and 2 litres of added priming sugar with an OG of 1110. The final gravity of the mixture after secondary fermentation is 1010.

1. Calculate the ABV of the fermented beer using the formula, (OG - PG) × f = a% ABV, where:
   • OG is the original gravity of the beer
   • PG is the present gravity of the beer (that is, final gravity after all fermentation has ceased)
   • a is the alcoholic strength
   • f is the factor connecting the change of gravity to alcoholic strength (1040 - 1010) × 0.129 = 3.8
2. Calculate the ABV of the priming sugar using the same formula, (1110 - 1010) × 0.135 = 13.5
3. Calculate the ABV of the contents of the container using the formula, (Vb × Sb) + (Vp × Sp) divided by Vm = Sm, where:
   • Vb = volume of beer in the container
   • Sb = ABV of the beer in the container
   • Vp = volume of priming’s in the container
   • Sp = ABV of priming’s in the container
   • Sm = ABV of the container contents
   • Vm = volume of container contents
   • (161.6 × 3.8) + (2.0 × 13.5) divided by 163.6 = 3.9185

31. Yeast slurry

31.1 What is yeast slurry

Yeast slurry is a waste product generated during the brewing process. It usually contains between 4 and 8% alcohol by volume.

31.2 Yeast slurry can be liable to duty

Although yeast slurry contains ethyl alcohol, it’s classed as destroyed and duty is not charged on the ethyl alcohol contained in it, if it’s sent to be used as livestock feed. However if ethyl alcohol is extracted from the yeast slurry, the ethyl alcohol will be liable to spirits duty.

31.3 Yeast slurry record

The following requirements have the force of law and are made under regulation 6 of the Revenue Traders (Accounts and Records) Regulations 1992

To allow relief from payment of duty on yeast slurry, you must keep a record showing the following information:

• the amount of yeast slurry produced
• details of any yeast slurry removed to be used as livestock feed, including
• the amount of yeast slurry removed
• the name and address of where the yeast slurry is sent to
• date the yeast slurry is removed from the brewery
• details of any yeast slurry removed to a distillery, including
• the amount of yeast slurry removed
• the name and address of the distillery
• date the yeast slurry is removed from the brewery
• details of any yeast slurry used for any other purpose, including
• the amount of yeast slurry removed
• the name and address of where the yeast slurry is sent to
• date the yeast slurry is removed from the brewery
• details of the use to which the yeast slurry is put

32. The due diligence condition

32.1 What due diligence is

Due diligence is the appropriate reasonable care a company exercises when entering into business relations or contracts with other companies, and how it responds in a deliberate reflexive manner to trading risks identified.

32.2 Why a due diligence condition is required

Without effective safeguards in place, there are considerable risks to all businesses along alcohol supply chains of becoming implicated in illicit trading.

This condition requires that all excise registered businesses operating in the alcohol sector consider the risk of excise duty evasion as well as any commercial and other risks when they are trading. Doing so will help to drive illicit trading out of alcohol supply chains and reduce the risk to businesses of financial liabilities associated with goods on which duty has been evaded.

32.3 What you’re expected to do

From 1 November 2014 it becomes a condition of your approval as a registered producer or packager of beer that you must:

(a) objectively assess the risks of Alcohol Duty fraud within the supply chains in which you operate

(b) put in place reasonable and proportionate checks, in your day to day trading, to identify transactions that can lead to fraud or involve goods on which duty can have been evaded

(c) have procedures in place to take timely and effective mitigating action where a risk of fraud is identified

(d) document the checks you intend to carry out and have appropriate management governance in place to ensure that these are, and continue to be, carried out as intended

32.4 How to assess the risks in your supply chains

The fraud risks within a supply chain are unique to each business, and objective assessment of the likelihood of your trading activities contributing to fraud is an essential first step to developing effective due diligence procedures. You’ll need to consider the full range of trading relationships you’ve established and the potential for fraud in each.

The main risks within the alcohol sector include:

• involvement in the supply of goods for fraud
• receiving goods that have been smuggled or diverted into the UK
• inadvertently facilitating fraud by providing import or warehousing services

A key feature of the smuggling or diversion of alcohol to the UK market is the ability to source product either where the excise duty has been suspended or it has been refunded under drawback provisions. To assess your exposure to this risk you’ll need to objectively assess if there is potential for duty evasion resulting from your trading activity. You’ll need to know who you’re selling to and where the goods are destined for and understand the market for these products. Without this, there is a risk of supplying goods directly or through a third party into illicit supply chains.

Import and warehousing procedures are often exploited to provide cover for the illicit movement of goods. Fraudsters will seek to distribute duty evaded goods as well as counterfeit alcohol into legitimate retail supply chains. To assess your exposure to this risk you’ll need to objectively consider whether the supply chain and trading activity is credible which includes knowing who you source goods from and provide a service to.

High level indicators of risk include goods being received from unusually complex or apparently uneconomic supply routes. If you’re sourcing duty paid goods you’ll also need to consider the credibility of suppliers and the level of evidence you can obtain to demonstrate the provenance and duty status of goods.

Paragraph 33.9 gives more detail on risk indicators.

32.5 Checks you should carry out

Once you’ve established the main risks of fraud you can be exposed to, your regular checks during trading should be of a type and level sufficient to establish the integrity of the excise transactions and supply chains you’re trading in. This level needs to be reasonable and proportionate to the risk.

Depending on the nature of your business and complexity of your transactions, checks will need to be individually tailored. In particular, they must be sufficiently sensitive, yet robust enough, to pick up potential fraud risks. These checks should provide protection from the threat of fraud or you becoming inadvertently involved in fraudulent activity.

As a general rule ‘FITTED’ checks should normally focus on:

• financial health of the company you intend trading with
• identity of the business you intend trading with
• terms of any contracts, payment and credit agreements
• transport details of the movement of the goods involved whether or not you’re directly involved in this
• existence or provenance of goods — where goods are said to be duty paid you should normally seek sufficient detail to satisfy yourself of the status of the goods
• the deal, understanding the nature of the transaction itself, including:
  • how the cost of the goods is built up, for example, whether it includes appropriate taxes, transport etc
  • why is it being offered
  • whether it is too good to be true
  • how the deal compares to the market generally

Paragraph 33.10 gives more examples.

32.6 How you should respond to a fraud risk in your supply chains

It is expected that your due diligence procedures will provide effective control over the risks of fraud within your supply chains. Where your checks indicated real concerns, we would normally expect aspects of your supply chain to be changed to address this, for example, the supplier or the destination of the goods. However, a decision of whether or not to trade with another party remains a commercial decision for your business to take.

If your checks lead you to suspect duty fraud you should tell our Fraud Hotline. You can contact them on 0800 788 887 or by completing the secure online form.

You can also notify them by post at:

HMRC Fraud Hotline
CARDIFF
CF14 5ZN

32.7 HMRC will review the due diligence checks you have in place

As part of our enforcement and general audit programmes, we will consider whether or not the steps you’ve taken to embed anti-fraud due diligence into your trading activity are sufficient and timely to address fraud risks in your supply chains. We will aim to establish whether you have objectively assessed the risks in your supply chain, and you must be able to demonstrate that you’ve put in place reasonable and proportionate checks and effective procedures to respond to fraud risks when they arise.

32.8 What HMRC will do if your due diligence checks are found to be insufficient

If your due diligence procedures are considered insufficient to address fraud risks, we will carefully consider the facts of the case before taking more action, but where appropriate we will seek to support you to strengthen your procedures.

In more serious cases such as a failure to consider the risks, undertake due diligence checks or respond to clear indications of fraud, we will apply appropriate and proportionate sanctions. For serious non-compliance, such as ignoring warnings or knowingly entering into high risk transactions, we can revoke excise approvals and licences.

You are also reminded that handling goods liable to excise duty held outside a duty suspension arrangement can cause you to become liable for any excise duty due on those goods and an excise wrongdoing penalty. Any of those goods you currently hold could also be liable to forfeiture.

Paragraphs 34.9 and 34.10 provide more details on risk indicators and outline some of the checks that you can carry out to identify high risk transactions. These are not intended to be prescriptive or exhaustive. Once you’ve established the most appropriate due diligence tests for your business, these should be used to test both new and existing transactions and supply chains linked to your business. Some checks can be more appropriate to your business than others.

32.9 Due diligence risk indicators

You should be concerned about a prospective transaction where you identify one or more of the following indicators in both suppliers and customers, the presence of which can lead you to make more inquiries. This list is not exhaustive.

Financial health of the company you intend trading with

• there is no, or poor, credit ratings but it is still able to finance substantial deals
• there are high levels of debt
• they are buying high value goods on extended credit
• they are a new company with little or no trading history
• there are little or no fixed assets

Identity of the business

• there is a lack of detail about the business’ identity, for example, no address details, or HMRC approval number
• they do not appear to be on Companies House records as originally described
• they are dealing in high value goods from short term lease accommodation and/or residential addresses
• there is no general visibility of the company you intend trading with, for example, they do not appear to advertise or have a website
• they have returned only partly completed application or trading forms
• if you’re a warehousekeeper, receiving duty suspension goods on behalf of a third party who is not WOWGR registered where they would otherwise be required to be registered

Terms of contract, payment and credit agreements

• an insistence on dealing in cash, especially where the deal is a high value one
• cash payments made using money couriers
• offers of credit appear to be outside normal business practice — payment terms are normally 21, 31 or 45 days but high risk transactions can have short payment terms, for example, 48hrs
• you’re asked to make payment to an account or person which does not appear to be linked to the seller, or other unusual payment arrangements requested by the seller — the same applies to customers
• a valid pro-forma or purchase invoice is not or will not be provided
• the circumstances of the trading arrangement seem false or contrived — for example, a supplier provides you with the details of a customer for the goods they are selling to you, or offers you a contract with no financial loss to you

Transport

The goods are to be received from an unusual source or supply route, for example, UK produced goods are sourced from another country and directly compete with those from a more direct supply route.

Existence or provenance of goods

• the goods are claimed to be duty paid but your supplier (or person on whose behalf you’re storing the goods) cannot provide reasonable evidence of duty payment to support the status of the goods — (for more detail about what constitutes evidence of duty payment refer to Notice 207)
• individuals in the company have little knowledge of your trade sector
• where samples are provided or the goods have been received:
  • for spirits there is no duty stamp in circumstances where there should be one or the duty stamp does not fluoresce (refer to guidance)
  • the goods appear counterfeit, in that, the quality of labels and or packaging is poor when compared to the genuine article
  • the supporting paperwork seems false
  • the goods are older than supporting evidence (such as documents demonstrating duty payment) suggest, for example, the best before dates indicate an earlier production date whereas documentation gives the impression you were buying newer stock
• the company has only been trading for a very short period of time but has managed to achieve a large income in that short period of time

The deal

• customer demand for specific brands in other countries exceeds expected levels of consumption there
• the goods are to be moved in an unusual supply route that in itself would add significant logistic costs and bring into question the economics of that trade (unless duty was to be evaded)
• supplies are offered via unsolicited emails or flyers received out of the blue
• goods are offered at incredibly low prices which seem too good to be true
• free gifts of similar or other excise goods not fully documented and in themselves would place a question over the deal as a whole
• There are other incentives such as contingency discounts which overall make the deal sound too good to be true

32.10 Examples of due diligence checks

Financial health

• obtain, undertake credit checks or other background checks on the business you intend trading with
• where a poor credit rating is identified, establish how the transactions will be funded, what security can be offered that you will be paid
• where credit is offered by the business, who is providing the credit facility
• what payment terms are offered and are they commercially viable

Identity

• check company details provided to you against other sources, for example, website, letterheads, telephone directories and so on
• ask whether your customer or supplier is a member of a relevant trade association
• obtain copies of certificates of incorporation, VAT registration certificates and excise registration certificates where appropriate and where a trade class is quoted on these check whether or not it relates to the type of trade you’re engaging in
• verify VAT and excise registration details with HMRC (we recommend that these checks are undertaken regularly for new trading arrangements and proportionately longer for trusted ones, unless you suspect a problem)
• if you’re a warehousekeeper receiving duty suspended goods into your warehouse then you should be satisfied that the owner of the goods is registered under Warehouse-keepers and Owners of Warehoused Goods (WOWGR) where required
• obtain signed letters of introduction on headed letter paper and references from other customers or suppliers
• insist on personal contact with a senior official of the prospective supplier and where necessary, make an initial visit to their premises — you should use this opportunity to confirm the identity of the person you intend doing business with and keep a record of your meeting
• establish what your customer’s or supplier’s history in the trade is and can this be evidenced
• obtain the prospective customer’s or supplier’s bank details (in the case of an import or export, does the supplier or recipient share the same country of residence as their bank)
• establish who you’ll be paying (is this the same company as the one you’re directly dealing with)
• if you’re providing a service, who will be paying for it

Terms of any contracts, payments and credit agreements

• carefully consider the terms of any contracts and credit agreements before entering into these and challenge elements which appear unusual
• what recourse there is if the goods are not as described
• if payment is to be made to or from a third party, is there a sound commercial reason for this
• if payment is to be made to or from a third party, is it to or from an off shore account
• are there normal commercial arrangements in place for the financing of the goods
• where payment is made from an overseas business how is it to be made
• has your supplier referred you to a customer who is willing to buy goods of the same quantity and brand as being offered by the supplier
• does your supplier offer deals that carry no commercial risk for you, for example, no requirement to pay for goods until the payment is received
• are the goods adequately insured
• are high value deals offered with no formal contractual arrangements
• where you’re buying from a broker:
  • what overall value does this link in the supply chain add
  • is it possible to source more directly
  • how competitive is the broker’s pricing to those from a more direct route
  • how are the savings made in a longer supply chain to make it viable
• where transactions are being financed by a third party, is this person a regulated financial body such as a bank

Transport

• establish where the goods will be sourced from — is this the country of production? If not why are the goods being routed in this way?
• who is responsible for the transport? Is the cost of the goods inclusive of transport? If so, does this mean that the potential logistical costs make the unit price unrealistic?
• details of delivery vehicles should be retained and if necessary any variations to expected transport arrangements recorded

Existence or provenance

• how has the trader contacted you
• do the goods exist
• can you inspect the goods before purchasing them
• are they in good condition and not damaged
• do the quantities on offer seem credible for the type of business you intend trading with
• where goods are said to be duty paid, seek sufficient detail to satisfy yourself that they are — this will be easier the closer you’re in the supply chain to production — this point is also important where you intend holding goods on behalf of a third party

The deal

• the nature of the transaction, including:
  • does it just look too good to be true
  • is the demand for the type of alcohol credible — if the demand is purportedly from abroad what is the real market (consumption) for them in that country
  • if the alcohol has come from abroad but is of UK origin, how did this occur and why
  • where incentives are offered, when these are taken into consideration does this make the overall deal seem too good to be true
  • why is it being offered
  • have normal commercial practices been adopted in negotiating prices
  • how does the price compete with that offered by competitors
  • what is the age of the goods — if the stock is old you should seek an explanation as to its provenance
  • does the price seem realistic — you should be aware of unit cost when duty and VAT values are removed
• if you’re already established in a trading agreement we would also recommend that you continue to monitor correspondence and business paperwork to identify changes in those arrangements and take any follow up action as necessary

33. Review and appeal procedures

33.1 If you disagree with any decision we make about your affairs

When we make a decision that you can appeal against, we will tell you and offer you a review. We will explain the decision and tell you what you need to do if you disagree.

For example with:

• the amount of an assessment
• the issue of a civil penalty
• a decision specifically connected to the relevant duty

You’ll usually have 3 options. Within 30 days you can:

• send new information or arguments to the officer you’ve been dealing with
• have your case reviewed by a different officer
• have your case heard by an independent tribunal

A review will be handled by a different officer from the one who made the decision. If you prefer to have an independent tribunal hear your case, you must write directly to the Tribunals Service.

33.2 The time limit to ask for a review

If you want us to review a decision, you must write to the person who issued the decision letter, within 30 days of the date of that letter. We will complete our review within 45 days, unless we agree another time with you.

You cannot ask the tribunal to hear your case until the 45 days (or the time we agreed with you) has expired, or we’ve told you the outcome of the review.

If you are not satisfied with the review’s conclusion, you have 30 days within which to ask the tribunal to hear your case.

If we cannot complete our review within 45 days, or any time we agreed with you, we will ask you whether you’re willing to agree to an extension so that we can complete the review. If you do not agree to an extension, the review is treated as concluding that the decision being reviewed is upheld.

We’ll write and tell you this, you then have 30 days from the date of that letter to ask the tribunal to hear your case.

33.3 What you must include in your request for review

Your request should set out clearly the full details of your case, the reasons why you disagree with us and provide any supporting documentation. You should also state what result you expect from our review.

33.4 If you do not want a review

If you do not want a review, you can appeal to the independent tribunal. You need to send your appeal to the Tribunals Service within 30 days of the date on the decision letter.

33.5 Where you can get more information

You can find more information about reviews and appeals in fact sheet HMRC1.

34. Glossary

Term	Description
AAD	Administrative Accompanying Document.
ABV	Alcohol by volume (see alcoholic strength).
Accounting period	A calendar month, or such other period as can be authorised.
Adjacent premises	Premises not more than 5 kilometres from registered breweries or registered packaging premises.
Alcoholic strength	Ratio of the volume of ethyl alcohol contained in any liquor to the volume of liquor, including the alcohol (expressed as a percentage to one decimal place).
ALDA	The Alcoholic Liquor Duties Act 1979.
Attenuation	Decrease in gravity during fermentation.
Authorised warehouse keeper	Occupier or operator of a tax warehouse.
Beer	See paragraph 2.1
CEMA	The Customs and Excise Management Act 1979.
Co-operated brewery	See section 8. If beer is produced in more than one brewery during a calendar year, or a person is connected with any person who produces beer in any other brewery in the year, then that person’s brewery is part of a group of connected breweries for the purposes of the small brewery beer reduced rates scheme — ALDA section 36E and The Beer and Excise Warehousing (Amendment) Regulations 2002.
Duty point	The time when the duty becomes payable, whether or not payment is deferred.
Duty suspension	An arrangement, which allows goods liable to excise duty to be produced, processed, held, received and dispatched without payment of duty.
eAD	Electronic administrative document that is submitted by the consignor using the computerised system EMCS.
EMCS	Excise Movement and Control System
Excise duty	The duty charged on beer under ALDA section 36.
Excise warehouse	A place approved by HMRC under CEMA section 92 for the storage of goods on which excise duty is suspended.
Gravity	The ratio of the weight of a volume of any liquid to the weight of an equal volume of distilled water.
Hectolitre	One hundred litres.
Large pack	Containers in excess of 10 litres (casks and kegs).
Original gravity	The specific gravity of wort before fermentation.
Our officer	An officer of HMRC
Package	To put beer into tanks, casks, kegs, bottles or any other receptacles of a kind in which beer is distributed to wholesalers or retailers.
Product	A description of beer according to its brand name, package size and alcoholic strength.
Registered brewer	A person who produces beer on any premises in the United Kingdom registered under ALDA section 47(1) in respect of those premises.
Registered brewery	Any premises in respect of which a registered brewer is registered under ALDA section 47(1).
Registered holder	A packager of beer or a registered brewer registered under ALDA section 41A in relation to any registered premises.
Registered premises	A brewery or store registered under ALDA section 41A on which a registered holder can hold duty unpaid beer without payment of that duty.
Strength	Alcoholic strength.
Small brewery beer	See section 8. Beer, other than that brewed under licence, produced by eligible breweries in the UK or overseas — ALDA sections 36 and 36A — H.
Small pack	Containers of 10 litres or less (bottles and cans).
Tariff	Integrated Tariff of the United Kingdom.
Tax warehouse	Premises, in which Excise goods can be produced, processed, held, received and dispatched under duty suspension. Registered premises and excise warehouses are tax warehouses.
Widget	Device inserted into cans and bottles which recreates the effect of draught beer when it is poured.

35. Small brewery beer export declaration

PRODUCTION CAPACITY CERTIFICATION FOR THE REMOVAL OF SMALL BREWERY BEER FROM THE UK

I CERTIFY that the below mentioned brewery (enter brewery name and address as per Brewery certificate):

XXX XXX XXX XXX

Excise number: (enter excise number as per Brewery certificate)

Departmental Trader Registration Number: (enter DTRN as per Brewery certificate)

Meets the cumulative conditions of the following criteria:

• The brewery has an annual commercial production of (enter amount) hectolitres of beer.
• The brewery is legally and economically independent of all other breweries.
• The brewery uses production equipment that is physically distinct from all other breweries.
• The brewery does not produce beer under licence.

Full name: …………………………

Signature: …………………………

Date: ………………..

Certification – For Official Use

I certify that the above declaration is consistent with the production records for the year ending 31 December 20 , of the above mentioned brewery.

HMRC Officer Full Name: …………………………

HMRC Address: …………………………………………………………………………………………………………….. ……………………………………………………………………………………………………………..

Signature of HMRC Officer: …………………………

Date: ………………..

Official HMRC Stamp

Your rights and obligations

Read the HMRC Charter to find out what you can expect from us and what we expect from you.

Comments or suggestions

If you have any comments or suggestions to make about this notice, write to:

HMRC
Alcohol Team
3rd Floor West
Ralli Quays
3 Stanley Street
Salford
M60 9LAB

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