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HMRC internal manual

Tobacco Products Duty

From
HM Revenue & Customs
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Products dutied by weight: UK manufactured cigars: duty calculated on 'target' weights

To overcome the problems outlined above, duty may be calculated on the manufacturers ’‘target’ net weights, rather than the actual net weights of the cigars concerned. This method of determining the net weight for duty purposes was agreed with the two UK cigar manufacturers in 1992. The details of the scheme are as follows.

  • For the purposes of the scheme, each brand or size of cigar must be treated separately and the manufacturer must set a ‘target’ weight for each brand of cigar. His production should be geared towards achieving the stated target weights.
  • Please note that if cigars of different dimensions or different ‘intended weights have the same brand name, they should be treated as different brands for the purposes of this scheme.
  • Cigars of the same brand may be packed in more than one size of pack. If the packing machines are fed by different production lines, you should treat the different pack sizes as separate brands for the purposes of this scheme.
  • The manufacturer will make daily test weighings. You must agree the points at which the samples for weighing are drawn. All daily test weighings will refer specifically to the cigar brand in question. (Cigars of different brands or sizes within a brand cannot be weighed together nor can the results for different sizes or brands be grouped together or averaged together.)
  • The duty should be calculated on the basis of the manufacturer’s target weight for the brand in question, provided that the test weighings show an annual average variation of no more than 0.5 per cent above or below the target weight.
  • This 0.5 per cent weight tolerance applies to individual brands of cigars. It must not be applied to grouped or combined or weighted results covering two or more brands or sizes.
  • Test weighings within the annual 0.5 per cent tolerance should not result in any calls for additional duty nor in any repayment to the manufacturer.
  • An annual average test weight, for any individual brand, which falls outside the 0.5 per cent tolerance, should result in either a demand for or a repayment of duty. The amount of duty demanded or repaid will be the difference between the annual average weight and the manufacturer’s target weight for the quantity of product cleared during the year. The 0.5 per cent tolerance will not apply when calculating the demand or repayment.
  • Daily or weekly test weighings, which persistently give results above or below the ‘target’ weight, should result in the manufacturer adjusting the ‘target’ weight.
  • Any average annual results outside the 0.5 per cent tolerance should result in the manufacturer adjusting the ‘target’ weight. This (together with the preceding bullet point) should mean that demands for repayments of duty should be rare and not repeated for the same brand.

Please note that this method of determining the net weights is based on a voluntary agreement reached with the trade for the benefit of both trade and control staff. It is essential that you agree the details of your trader’s system of weighing and duty calculation. If faced with any disputes or insurmountable difficulties, you may require that the trader calculate duty on the actual weight of the cigars.