VPDS133020 - Vaping Products Duty and Vaping Duty Stamps: Financial guarantees: Calculating the level of guarantee: UK manufacturers
This covers the monthly deferred duty liability; in the event they fail to pay their monthly return. The guarantee is geared.
The guarantee must fully cover the first £5 million of the applicants expected monthly duty liability. Any additional monthly duty liability of between £5 million and £50 million need be only partly secured. This means that the applicant will have to provide a guarantee for the first £5 million plus 10% of their duty liability between £5 million and £50 million.
If, for example, their monthly duty liability was £50 million, their guarantee would be £9.5 million that is, £5 million (for the first £5 million of the total liability) + £4.5 million (that is, 10% of the remaining £45 million of the total liability).
The maximum guarantee that they may be required to provide for this is £9.5 million. This is because no extra guarantee is required for monthly liabilities above £50 million. The guarantor may be liable for up to twice the amount shown on the guarantee. This is because you can defer duty payment in one month and then again in the next month before you have paid for the first month.
Examples
Business A has a monthly duty liability of £2million. Their guarantee value would be £2million.
Business B has a monthly duty liability of £8million. Their guarantee value would be:
£5million + 10% of the remaining £3million = £5million + £300,000 = £5.3million.
Business C has a monthly duty liability of £55million. Their guarantee value would be:
£5million + 10% of the remaining £50million = £5million + £5million = £10million.
However, the maximum guarantee required is capped at £9.5million. This means that they would be required to provide a guarantee for £9.5million.
It is anticipated that the vast majority of VPD manufacturers will be similar to Business A.