TPD4080 - Security: physical and financial: Financial Security: Premises Guarantees
Manufacturers of tobacco products will not be required to provide a premises guarantee, unless:
- significant irregularities have been identified in respect of the operation of those premises. (There is no formal definition of “significant irregularity” but it should be regarded as “any action that puts at risk a significant amount of revenue” whether or not such action results in an actual revenue loss.)
You may require a manufacturer to provide a premises guarantee if you believe that there are risks associated with the trader or premises beyond the norm for the regime.
The level of security required in such cases is shown in the following table:
| Potential Duty | Level of security |
|---|---|
| Less than £100,000 | Nil |
| More than £100,000 but less than £400,000 | £100,000 |
| More than £400,000 but less than £1 million | 25% of the potential duty |
| More than £1 million but less than £25 million | £250,000 |
| More than £25 million but less than £100 million | 1% of the potential duty |
| More than £100 million | £1 million |
The potential duty refers to the potential duty on the duty suspended product held in the premises at the end of the average month. The “average” month, in this case, is the average of the previous 12 months.
The potential duty, in the case of new manufacturers, will be the potential duty on the forecast amounts of duty suspended product that the manufacturer expects will be held in the premises at the end of the average month. The “average” month, in this case, is the expected average of the next 12 months.
If you believe that the manufacturer requires a security in any particular case, you should discuss such cases and agree the appropriate action with the CCM and advise both the Tobacco Team and the Holding and Movements Team.