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HMRC internal manual

Compliance Handbook

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HM Revenue & Customs
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Penalties for VAT and Excise Wrongdoing: In what circumstances is a penalty payable: Handling goods subject to unpaid excise duty - Examples

Example 1

Jack goes to France on holiday and buys 3,200 duty paid cigarettes for his own use. He brings them into the UK.

His brother Jim also goes to France on holiday. He also buys 3,200 duty paid cigarettes and brings them back into the UK. However, Jim doesn’t smoke. He intends to sell the cigarettes to his workmates at a tidy profit. As the goods were not imported for his own use, Jim should have imported the cigarettes using one of the recognised schemes for commercial goods.

Jim and his workmates may be liable to a penalty for handling goods on which excise duty is unpaid after the excise duty point.

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Example 2

Peter is a registered owner under the Warehousekeepers and Owners of Registered Goods Regulations 1999. He owns excise goods that are held in a UK excise warehouse under duty suspension. This means that duty has not been paid on the goods. Unless the goods are being moved to another approved warehouse, either in the UK or in another EU member state, or are being removed for another permitted purpose, excise duty is chargeable when they leave the warehouse.

Peter arranges for Joe’s transport company to take the goods from this warehouse to a tax warehouse in France under duty suspension. But when the vehicle leaves the UK it is not carrying these goods because they have been diverted to Peter’s garage. The goods are then sold in the UK to Margaret’s off licence as if UK duty had been paid. Margaret is aware that the duty has not been paid.

Because we are satisfied that the irregularity occurred in the UK, the excise duty point is the time the irregularity occurred or when it first came to our attention.

The people involved in handling the goods whilst the duty has not been paid are Peter, Joe and Margaret. Each may be liable to a penalty for handling goods on which excise duty is unpaid after the excise duty point.