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HMRC internal manual

Tobacco Products Duty

Storage: Stock deficiencies, surpluses and offsetting: deficiencies and surpluses

These days all product that passes the PAP will be in retail packs, except for the relatively small quantity of Hand Rolling Tobacco (HRT) and pipe tobacco that is sold in bulk packets for subsequent loose sale by specialist retailers. This means that there should be little or no natural loss in the weight of cigars, HRT and pipe tobacco due to moisture changes whilst in storage. In any case, although these products are dutied by weight, number and size of pack will record them in the stock account.

Deficiencies and surpluses of stock may occur where a trader has large stocks and a high turnover of many different brands and pack sizes. Genuine mistakes in ‘picking’may account for many stock deficiencies or surpluses that are often self-balancing within the month, although some may carry over into subsequent months. It may be necessary, therefore, to consider whether a compensating adjustment for related surpluses is reasonable before payment is required on deficiencies. Such compensating adjustments are known as “offsetting”.