Alan Powell, specialist excise duties consultant at Alan Powell Associates said the European Union (Withdrawal Bill), commonly referred to as the 'Great Repeal Bill', must protect the status of excise duty as a tax on consumption, as outlined by EU law.
In June 2016, as the UK prepared to vote for Brexit, a landmark case in the EU court (CJEU case C‑355/14Polihim-SS) confirmed excise duty as a tax on consumption, a principle Powell claims HMRC has previously refuted.
This means that the duty is not due until the goods are released for consumption and should be suspended as near to the consumer as possible.
For example, a brewery would only need pay the suspended duty when they physically move their beer from the warehouse to be sold.
Powell called upon HMRC to protect and implement this EU law, post-Brexit.
He said: “The UK has failed to apply these principles in most cases and, in terms of duty charged for 'technical irregularities' has been unlawfully plundering alcohol businesses for many years. HMRC must immediately recognise and implement EU law correctly.
“The best principles of EU law for excise duty in UK law must be confirmed during the Great Repeal Bill; especially that excise duty is a tax on consumption.”
“If industry does not press its case there is a risk - as evidenced by HMRC’s latest attacks on the alcohol sector - that HMRC will look to drive the duty point further back for alcohol products as they have for oil and tobacco and become, in effect, an 'early' tax and burden on business.”
Cash flow problems
Powell added that “customs have always hated that excise duty is a tax on consumption", and went on to suggest that HMRC could unpick EU law and legislate domestically to deny that fact and withdraw alcohol duty suspension entirely.
He warned that this could cause serious cash flow problems for drinks producers such as brewers and distillers wanting to store their product in the UK prior to being released for consumption.
There was a mixed reaction to the Government’s publication of the European Union (Withdrawal Bill) on Thursday (13 July). Jonathan Mail, chief campaigns officer at the Campaign for Real Ale, claimed it would create “a real opportunity to reduce the excessive tax burden” on pubs.
In the spring Budget, chancellor Phillip Hammond announced that duty on beer, cider, wine and spirits would rise in line with inflation. The British Beer and Pub association said that this would put an extra 2p on every pint of beer.