Vaping Products Duty and Vaping Duty Stamps guidance

VPDS131000 - Vaping Products Duty and Vaping Duty Stamps: Financial guarantees: Background

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)
• 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

A financial guarantee is a legal agreement between the trader (referred to as the ‘principal’) and a guarantor (a financial institution, normally a bank) whereby if the trader defaults on a payment to HMRC, we can legally recover the costs from the guarantor. It is important to note that the trader is not required to lodge any money with HMRC (this used to be called a ‘bond’). The guarantor will charge for the privilege of providing the guarantee, usually for a monthly premium – this is a commercial arrangement for the trader to manage.

Reg. 11 VPPDSC 26 gives the requirement for a guarantee in relation to securing the excise duty on eligible vaping product held on approved premises.

Reg 21 VPPDSC 26 gives the requirement for a guarantee in relation to a UK representative for duty stamps.

If the trader requires a financial guarantee and one is not in place at the time that the approval is to be issued, then they must not be approved.