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HMRC internal manual

Tobacco Products Duty

Duty credits and drawback: Evidence of entitlement to credit of duty under the "Tobacco Products Regulations 2001"

What follows applies to duty credits claimed under regulation 26(1) of the “TobaccoProducts Regulations 2001”. The position in the case of duty credit under regulation26(1) of “The Tobacco Products Regulations 2001” is a little different fromdrawback claims made under the drawback regulations. Whereas the primary legislationgoverning drawback is CEMA, the primary legislation governing duty credits under the TPRegulations is section 2 of the “Tobacco Products Duty Act 1979” (TPDA). Section2 of TPDA contains no equivalent requirement to that in CEMA section 133. This might implythat a tobacco manufacturer is not required to provide the same degree of evidence tosupport each claim for duty credit as he would if making a drawback claim.

There is, however, a need for consistency across the regimes to ensure that the UKmanufacturers and importers of tobacco products receive equivalent treatment. You should,therefore, consider reading the advice currently contained in TA 1/01 to X-43.

In the case of duty credits claimed on product returned to registered premises, the bestway of proving that duty had originally been paid would be if the manufacturer could showthat the returned packets had been removed to home- use on a particular TP7 (the paymentreturn for registered premises). In practice this is unlikely to be possible.

In the absence of a direct audit trail from the claim for duty credit to the TP7, youshould seek assurance by different means. This may involve such matters as; assuringyourself that the brands involved are manufactured or imported by your trader; the date ofmanufacture and the average time product spends in duty suspended storage (as acreditability check on the rate of duty claimed); the presence of fiscal marks (anindication that duty was paid on the product); and any established patterns for customerreturns and the reasons given for deviations from those patterns. This list is notexhaustive and should be considered in the context of good audit practice.

Where it is not possible to establish when the duty was paid, then any credit should bebased on the lowest rate chargeable in the three year period preceding the event givingrise to the claim. You may base the duty credit on the lowest duty rate in the one or twoyears preceding the event giving rise to the claim, if the manufacturer can show that thisis appropriate.

You should discuss the evidence, which your trader can supply in support of claims underregulation 26(1), with your Control Steering Group (CSG) and the Tobacco Control Forum(TCF)