HMAG152201 - Excise duty points: irregularity occurring in Northern Ireland during an excise duty-suspended movement between a warehouse in Northern Ireland and an EU member state or between a warehouse in an EU member state and Northern Ireland

The relevant provisions are contained in The Excise Goods (Holding, Movement and Duty Point) Regulations 2010 (as amended) in force immediately before 11pm on 31 December 2020 as modified and applied in relation to excise goods in Northern Ireland by Part 1 of the Excise Duties (Northern Ireland Miscellaneous Modifications and Amendments) (EU Exit) Regulations 2020 (as amended) (commonly known as NI HMDP)).

This section applies when an irregularity occurs or is detected in Northern Ireland during a movement of excise duty-suspended goods between a warehouse in Northern Ireland and an EU Member State (and vice versa).

When there is an irregularity in the course of a movement of excise goods which are moving under a duty-suspension arrangement, which occurs, or is deemed to occur in Northern Ireland, there is a release for consumption under regulations 6(1)(a) and 7(1)(h), with an excise duty point arising under regulation 5.

‘Irregularity’ means a situation occurring during a movement (or part movement) of excise goods under a duty-suspension arrangement and the loss is not an allowable one under regulation 21 or 21A of NI HMDP.

Excise duty point

Where there is a release for consumption under regulations 6(1)(a) and 7(1)(h), an excise duty point arises under regulation 5. There are two regulations which prescribe the time when the goods are released for consumption. These are:

Regulation 80 Irregularity occurring or detected in Northern Ireland

This applies where an irregularity occurs or is detected in Northern Ireland. In this case the goods are released for consumption at the time of the irregularity, or where it is not possible to establish when the irregularity occurred, the time when the irregularity is detected or first comes to our attention. Where an irregularity is detected in Northern Ireland but it is not possible to establish whether the irregularity occurred in Northern Ireland or an EU Member State, it shall be deemed to have occurred in Northern Ireland at the time it is detected or first comes to our attention.  

Regulation 81 Failure of goods to arrive at their destination

This applies where there is a duty-suspended movement of excise goods which started in Northern Ireland, and the movement is not discharged by the arrival of the goods at their stated destination, and no irregularity has been detected in the course of a movement. In this case the goods are released for consumption at the time the movement started (in other words the irregularity is deemed to have occurred at the time the movement started).

It is not necessary to establish the precise nature of the irregularity, instead you need to demonstrate that the goods did not arrive at their stated destination. In most cases this will be due to the fact that the movement remains open on EMCS after four months. In these circumstances, regulation 81(2) applies and an irregularity is deemed to have occurred at the time the movement started. The excise duty point is the time when the goods left the UK warehouse.

This regulation does not apply if the person who guaranteed payment of the duty, or where no guarantee was required the consignor of the goods, is able to satisfy HMRC that the goods did arrive at their stated destination within four months after the movement started.

This regulation also does not apply where the person who is liable to pay the duty did not know, or could not reasonably have known, that the goods have not arrived at their stated destination, is able to satisfy HMRC that the goods did arrive at their stated destination within one month after they have been notified of their liability by HMRC.

Example when Regulation 81 is appropriate

A warehousekeeper based in Belfast consigns a container of beer to a warehouse in France but the movement remains outstanding on EMCS after 4 months. Nothing is known about the whereabouts of the goods and an irregularity is therefore deemed to have occurred under regulation 81(2) at the time the goods were dispatched. However, the person providing the movement guarantee – the owner of the goods in this case, is unaware that the movement has not been discharged and is given an additional month to provide alternative evidence to demonstrate that the goods did arrive at their intended destination. The owner is unable to provide sufficient evidence to satisfy us that the goods arrived at their destination in France. The excise duty point is the time when the movement started e.g. when the goods were released from the warehouse. The person/s liable to pay the duty in this case is the owner of the goods as they provided the movement guarantee. In this case, HMRC was also able to obtain sufficient evidence to support a joint and several liability assessment against the driver of the vehicle.  

Person/s liable to pay the duty

The person/s liable to pay the duty when goods are released for consumption under regulation 6(1)(a) and 7(1)(h), are shown in regulation 9.

Under regulation 9(1)(a), where a guarantee is required the person liable to pay the duty is the person who provided the guarantee. This should be shown on EMCS or the Fallback document.

Under regulation 9(2), any other person who participated in the irregularity and who was aware, or should reasonably have been aware, that it was an irregularity is jointly and severally liable to pay the duty.

Under regulation 9(2)(b), where a guarantee is not required, the person liable to pay the duty is the authorised warehousekeeper.

Under regulation 9(2), any other person who participated in the irregularity and who was aware, or should reasonably have been aware, that it was an irregularity is jointly and severally liable to pay the duty.

Participated

The word ‘participated’ has a wide meaning which can include any person who took part in, became actively involved in, or shared in an activity. The regulation restricts participant liability to those who were aware, or should reasonably have been aware, that it was an irregularity.

Examples of participants who may have a joint and several liability under regulation 9(2) are:

  • the transporter or lorry driver who delivers and/or unloads goods at another address,
  • the owner or person who instructs the transporter to deliver the goods to another address,
  • the person who provides the financial backing for the consignment, and
  • a person who purchases excise goods at a price that is ‘too good to be true’.

In addition, you should consider whether there is anyone else involved, who by their action, also knowingly participated in the irregularity. The test is not that the person or business ‘directly’ participated in the irregularity but that it did participate in some way and was aware or should reasonably have been aware that it was an irregularity.

Each case should be considered on its own merit. Where you are unsure whether the joint and several liability provision can be applied, you should discuss the case with the Alcohol Technical Support team.

Circumstances when excise duty is not due

If the excise goods are lost or destroyed during an excise duty-suspended movement and HMRC are satisfied that the goods have been irretrievably lost or destroyed (for example, due to an accident, the nature of the goods, or some other unforeseeable event) then there is no excise duty point and no excise duty is due on those goods. This is by virtue of regulation 21 or 21A of NI HMDP. 

However, where the excise goods have been stolen during a duty-suspended movement, excise duty is always due on those goods.

Where an excise duty point is deemed to have occurred in Northern Ireland and, within 3 years of the start of the movement, we ascertain that the irregularity occurred in an EU Member State and the duty has been paid or is not due in that EU Member State, the person liable to pay is entitled to a refund of the duty by virtue of regulation 82.