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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 “Tobacco Products Regulations 2001”. The position in the case of duty credit under regulation 26(1) of “The Tobacco Products Regulations 2001” is a little different from drawback claims made under the drawback regulations. Whereas the primary legislation governing drawback is CEMA, the primary legislation governing duty credits under the TP Regulations 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 imply that a tobacco manufacturer is not required to provide the same degree of evidence to support 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 UK manufacturers 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 best way of proving that duty had originally been paid would be if the manufacturer could show that the returned packets had been removed to home- use on a particular TP7 (the payment return 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, you should seek assurance by different means. This may involve such matters as; assuring yourself that the brands involved are manufactured or imported by your trader; the date of manufacture and the average time product spends in duty suspended storage (as a creditability check on the rate of duty claimed); the presence of fiscal marks (an indication that duty was paid on the product); and any established patterns for customer returns and the reasons given for deviations from those patterns. This list is not exhaustive 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 be based on the lowest rate chargeable in the three year period preceding the event giving rise to the claim. You may base the duty credit on the lowest duty rate in the one or two years preceding the event giving rise to the claim, if the manufacturer can show that this is appropriate.

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