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HMRC internal manual

Excise Repayment of Overpaid Duty

The reimbursement scheme: what is a consumer

The regulations provide for the reimbursement of persons (consumers), who have, for practical purposes, borne the whole or part of the cost of the original payment by way of excise duty. But the consumers will not necessarily be the claimants’ direct customers.

What this means is best illustrated by way of example:

A revenue trader manufactures a drinks product, which they determine to be dutiable at a rate that is higher than is appropriate. They subsequently establish that a lower rate of duty is in fact applicable.

However in the meantime the revenue trader has paid the higher rate of duty directly to us and has passed this cost on to the high street retailer through the cost of the wholesale supply (the wholesale price reflects the excise duty paid by the manufacturer).

The price that the high street retailer charges the public, in turn reflects the wholesale cost inclusive of the overpaid excise duty.

In this scenario the consumers are the retailers’ customers and so the revenue trader’s reimbursement arrangements must be aimed at the public and not the retailer. If the retailer were to be reimbursed he would be unjustly enriched.

Alternatively the retailer may choose to absorb all of the additional cost by way of the excise duty and not pass it on to their customers. In this case the consumers will be the retailers so the revenue trader’s reimbursement arrangements must be aimed at them.

Therefore by establishing at what point the cost by way of excise duty ceased to be passed on, will determine for the purpose of reimbursement, who the consumer is.