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HMRC internal manual

VAT Supplies in Warehouse and Fiscal Warehousing

HM Revenue & Customs
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Treatment of services associated with goods held within warehouses: Processes that change the nature of a product

Some services or processes applied to goods change the nature of the goods to such an extent that new product is considered to have been created - for example, refining crude oil into petrol. The new product is then treated as having been produced in the UK. If the original product was either imported, acquired or supplied before processing, any VAT that would have been due on it is extinguished.

The following processes change the character of goods and create a new UK product when they are performed in a tax warehouse.

## Excise warehouse ### Alcoholic liquids:
  • fortifying made-wine
  • fortifying wine
  • mixing beer or wine with made-wine to produce made-wine
  • producing beverages/foodstuffs of low alcoholic strength qualifying for duty relief
  • rectifying and compounding spirits
  • “rendering” made-wine sparkling
  • aerating/carbonating made-wine)
  • the maturation and processing of plain spirits until they can legally be defined as whisky
  • the blending or marrying of different whiskies (but see VWRHS3060)      
      ## Registered premises ### Beer, Wine, Cider and Perry:
  • blending
  • mixing (including making shandy and low alcohol drinks)
  • dilution
  • pasteurisation
  • carbonation
  • sterile filtration
  • de-alcoholisation
  • fortification
  • the fermentation and processing of fresh grapes, or the must of fresh grapes, until they can legally be defined as wine
  • rendering wine sparkling
  • disgorging
  • rendering cider sparkling     
      ## Mineral oil production plant ### Refining processes including:
  • synthesis
  • oil to oil     
      ## Tobacco manufacturing ### Cigarettes
  • leaf to rag
  • rag to cigarette

Hand rolling tobacco

  • leaf to finished product


  • leaf to blended and flavoured rag (prior to pressing)
  • blended and flavoured rag (prior to pressing) to finished product


  • leaf to filler
  • filler to cigar