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HMRC internal manual

Tobacco Products Duty

From
HM Revenue & Customs
Updated
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Security: physical and financial: Financial Security: form security must take

The only acceptable form of financial security will be a guarantee.

Guarantees will provide:

  • a fixed maximum liability for the guarantor;
  • a period of notice of withdrawal (applicable to both the guarantor and HMRC);
  • cover for premises and/or movements (as applicable); and
  • automatic restitution of the original level of security where, following the submission of a claim, neither party exercises the right to withdraw within the following 30 days.*

*Note: This means that if, following a claim against the guarantee, either the guarantor (i.e. the person underwriting the guarantee) or the Department withdrew from the guarantee, the guarantee would necessarily be cancelled. It follows that the principal (i.e. the trader) would lose the security provided by the guarantee. If, on the other hand, neither the guarantor nor the Department withdrew from the guarantee, within 30 days of a claim, the guarantee would continue in force.

When a claim is made against a guarantee, the cover provided by the guarantee is reducedby the amount of the claim which is made (e.g. if a claim of £250,000 is made against a£1m guarantee, the remaining cover is £750,000). If the guarantee continues in forceafter 30 days following the submission of a claim, the cover provided by the guarantee isonce again the full amount stated in the guarantee.

The three forms of guarantee can be found in TPD4080 - TPD4150). The three types of guarantee, which may be required, are: