Guidance

The Excise Duties (Transitional and Miscellaneous Amendments) (EU Exit) Regulations 2020

Published 27 January 2021

Who is likely to be affected

Businesses and individuals moving excise goods (alcohol, tobacco and energy products) between the United Kingdom (UK) and the European Union (EU).

This measure does not cover movements between the United Kingdom (Great Britain) and Northern Ireland (NI).

General description of the measure

The measure will make amendments to various transitional provisions in secondary legislation that are necessitated by the UK’s exit from the EU. The changes cover existing facilitations whilst introducing specific transitional arrangements.

Policy objective

The measure ensures that excise procedures can continue to operate efficiently after the end of the transition period. The measure also ensures that movements of excise goods that are despatched prior to the end of the transition period and still in the course of their journey after the end of the transition period can be completed under the current legislation and processes.

Background to the measure

The UK left the EU on 31 January 2020 and entered a transition period which ends on 31 December 2020. The current rules around excise regimes are set out within EU Legislation and transposed into UK Legislation. Legislative changes to existing UK excise legislation are required to provide functioning excise regimes at the end of the transition period.

Detailed proposal

Operative date

The measure will have effect from the end of the transition period at 11pm on 31 December 2020.

Current law

This current law is contained in the following laid instruments:

• Excise Goods (Holding Movement and Duty Point) (Amendment etc.) (EU Exit) Regulations 2019
• Excise Duties (Miscellaneous Amendments) (EU Exit) Regulations 2019
• Excise Duties (Miscellaneous Amendments) (EU Exit) (No.2) Regulations 2019
• Excise Duties (Miscellaneous Amendments) (EU Exit) (No.3) Regulations 2019
• Excise Duties (Miscellaneous Amendments) (EU Exit) (No.4) Regulations 2019

Proposed revisions

These proposed amendments remove reference to the term ‘exit day’, which is defined as 31 January 2020 at 11pm under Section 20(1) of the European Union (Withdrawal Agreement) Act 2018 as amended by The European Union (Withdrawal) Act 2018 (Exit Day) (Amendment) (No. 3) Regulations 2019.

The reference ‘exit day’ is to be replaced with ‘IP completion day’ which is defined as 31 December 2020 at 11pm under Section 39(1) European Union (Withdrawal Agreement) Act 2020.

This measure makes amendments to the following excise secondary legislation which will come into force at 11pm on the 31 December 2020:

Excise Goods (Holding Movement and Duty Point) (Amendment etc.) (EU Exit) Regulations 2019

The amendments remove the reference to customs legislation from the definition of the term ”in the course of a movement” and make clear that, where movements of excise goods between the UK (not including NI) and the EU start before the end of the transition period and are still in course at the end of the transition period, they remain under the current EU rules until that movement has been completed. This includes movements of excise goods that have been released for consumption and are transported by individuals for their personal use.

The amendments also substitute ‘exit day’ with ‘IP completion day’ within the Tobacco Products Duty Regulations 2001 to allow movements that have started before exit day to continue under the Excise Goods (Holding, Movement and Duty Point) Regulations 2010 (HMDP) as they are currently in force.

Excise Duties (Miscellaneous Amendments) (EU Exit) Regulations 2019

The amendments substitute ‘exit day’ for ‘IP completion day’ within the Excise Duty (Drawback) Regulations 1995. These amendments will allow for drawback procedures to operate where eligible claimants intend to make a claim for drawback in relation to eligible goods after the end of the transition period in relation to events that occurred prior to the end of the transition period.

Excise Duties (Miscellaneous Amendments) (EU Exit) (No.2) Regulations 2019

The amendments substitute ‘exit day’ for ‘IP completion day’ within the Spirit Regulations 1991 to allow for methods of measuring the strength of spirits, set out in the Annex to Commission Regulation (EC) No. 2870/2000 to continue to apply for UK spirit producers on spirits produced prior to end of the transitional period.

Additionally, they substitute ‘exit day’ for ‘IP completion day’ within the Excise Warehousing (Etc.) Regulations 1988, the Warehousekeepers and Owners of Warehoused Goods) Regulations 1999, the Denatured Alcohol Regulations 2005 and the Duty Stamps Regulations 2006.

Excise Duties (Miscellaneous Amendments) (EU Exit) (No.3) Regulations 2019

The amendments substitute ‘exit day’ for ‘IP completion day’ for excise goods that arrive at Ro-Ro (Roll-on/roll-off) ports. Ro-Ro ports are locations that are listed in a notice published by HMRC in accordance with the Customs (Import Duty) (EU Exit) Regulations 2018 (S.I. 2018/1248).

The changes also remove previous transitional amendments to the Excise Duty Point (External and Internal Community Transit Procedure) Regulations 1998 as these regulations will be revoked upon IP completion day.

Excise Duties (Miscellaneous Amendments) (EU Exit) (No.4) Regulations 2019

The amendments substitute ‘exit day’ for ‘IP completion day’ within the Tobacco Products Regulations 2001, which amends a modification allowing HMRC to adjust the conditions for eligible persons who defer excise duty on tobacco products post transition period.

These regulations will also remove a reference to suspending the effect of the Tobacco Products (Traceability and Security Features) Regulations 2019. Amendments to The Tobacco Products (Traceability and Security Features) Regulations 2019 will be made within a separate statutory instrument for the end of the transition period and covered in a separate Tax Impact and Information Note.

Summary of impacts

Exchequer impact (£m)

2020 to 2021	2021 to 2022	2022 to 2023	2023 to 2024	2024 to 2025	2025 to 2026
nil	nil	nil	nil	nil	nil

Once the UK transitions to its new relationship with the EU, costings, where required, will be subject to scrutiny by the Office for Budget Responsibility and included in their forecasts at a future fiscal event.

Economic impact

The OBR will set out their assessment of any macroeconomic impacts at a future fiscal event.

Impact on individuals, households and families

This measure is expected to have a positive impact on a small number of individuals moving excise goods for their own use between the EU and the UK where their travel into the UK begins before but ends after the end of the transition period.

Customer experience is expected to remain broadly the same as this measure does not alter how individuals interact with HMRC.

There is expected to be no impact on family formation, stability or breakdown.

Equalities impacts

It is not anticipated that there will be impacts on groups sharing protected characteristics.

Impact on business including civil society organisations

This measure is expected to have a negligible impact on fewer than 7,500 businesses moving excise goods between the UK and the EU. This measure ensures excise procedures continue to operate efficiently after the end of the transition period.

One-off costs include familiarisation with the changes. There are not expected to be any continuing costs.

Customer experience is expected to remain broadly the same as this measure does not alter how businesses interact with HMRC.

There is expected to be no impact on civil society organisations.

Operational impact (£m) (HMRC or other)

This measure is not expected to have an operational impact upon HMRC or other government departments.

Other impacts

Other impacts have been considered and none has been identified.

Monitoring and evaluation

The measure will be kept under review through communication and ongoing stakeholder engagement with trade bodies and other representative businesses.

Further advice

If you have any questions about this change, please contact Nicholas Hampson on Telephone: 03000 576 416 or email: nicholas.hampson@hmrc.gov.uk.

Declaration

Kemi Badenoch MP, Exchequer Secretary to the Treasury has read this tax information and impact note and is satisfied that, given the available evidence, it represents a reasonable view of the likely costs, benefits and impacts of the measure.