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HMRC internal manual

VAT Time of supply

Tax points for specific categories of supplier: wine merchants

Some UK wine merchants deal in what is known as ‘en primeur’ wine. This is wine that is offered for sale while it is still lying in the producer’s cellars abroad, for delivery in the UK by the wine merchant, some time in the future. Trade practice is normally to require the customer to pay the net price of the wine when submitting an order. Further charges, based on the duty and VAT payable, together with the costs of transportation, and so on, become due from the customer at the time of delivery.

The characteristics of the en primeur wine trade mean that applying the normal tax point rules to the payments received at the time an order is accepted, can present considerable difficulties for wine merchants. For example, it is not certain that the wine will ever actually be removed to the UK. Even if it is, the wine may be sold by the customer, before taking delivery, while it is still subject to a warehousing regime in the UK. Where this happens the wine may remain in the wine merchant’s warehouse or it may be transferred to another warehouse in accordance with the new owner’s instructions. There may also be further in- warehouse supplies before the wine is finally removed to home use.Therefore, at the time an order is received, it is not always known whether the supply will actually be liable to UK VAT.

As a result of these difficulties it has been agreed that for supplies that do become liable to VAT, the tax may be accounted for at the time the customer is invoiced immediately prior to delivery in the UK.