HMRC: The Value Added Tax (Disclosure of VAT Registration Information) (EU Exit) Regulations 2018

Written by Daryl Chesney Friday, 07 December 2018

The Value Added Tax (Disclosure of VAT Registration Information) (EU Exit) Regulations 2018

• If the UK leaves the EU without an agreement, UK businesses will be able to continue to use the EU VAT number validation service to check the validity of EU business VAT registration numbers and HMRC is developing a service so that UK VAT numbers can continue to be validated.

• The EU VAT Registration Number Validation service allows businesses to check whether a customer or supplier’s VAT number is valid.

• UK businesses will be able to continue to use the EU VAT number validation service to check the validity of EU business VAT registration numbers. UK VAT registration numbers will no longer be part of this service. In the event of no agreement HMRC is developing a system so that UK VAT numbers can continue to be validated. We know this is important for certain businesses to carry out due diligence.

HMRC: November 2018: Customs SI package

Written by Daryl Chesney Friday, 07 December 2018

November 2018: Customs SI package

 

Overview presentation Joint Alcohol and Tobacco Consultative Group: Excise Brexit Sub Group

 

Contents

 

• Overview

• Summary of SI first tranche package

• Overview of each SI

• Questions and comments

 

Context

• The Withdrawal Agreement and Political Declaration on the future relationship between the UK and EU was endorsed by leaders at a special meeting of the European Council on 25 November. The government will lay these before Parliament ahead of the parliamentary debate and vote on the approval of these documents.

• The government does not want or expect a no deal scenario. It is however the duty of a responsible government to continue to prepare for a range of potential outcomes including the unlikely event of no deal.

 

Customs SIs expected to be laid shortly.

• The Customs (Import Duty)(EU Exit) Regulations 2018

• The Customs (Special Procedures and Onward Processing (EU Exit) Regulations 2018

• The Customs (Temporary Storage Facilities, Approval Conditions and Miscellaneous Import Amendments ) (EU Exit) Regulations 2018

• The Customs Transit Procedure (EU Exit) Regulations 2018

• The Statistics of Trade (Amendment) (EU Exit) Regulations 2018

• The Customs (Contravention of a Relevant Rule) (Amendment) (EU Exit) Regulations 2018

• The Wharves and Temporary Storage Facilities (Approval Conditions) Regulations 2018

• The Wharves, Airport Examination and Temporary Storage Facilities (Approval Conditions) 2018

• Also the VAT (Disclosure of Information Relating to VAT Registration) EU Exit Regulations 2018

The Customs (Import Duty)(EU Exit) Regulations 2018 (slide 1 of 2)

 

Will ensure that goods can continue to arrive, without interruption from lengthy customs controls, at UK entry points before being made available to the UK market. In particular, it regulates:

• the arrival of goods in the UK;

• the presentation of goods to UK customs;

• the making of declarations to customs procedures and temporary storage declarations;

• existing approvals and authorisations – for example those UK-established operators who currently benefit from certain simplified import procedures and facilitations (such as authorised economic operators) and in doing so ensure that they can continue to do so;

• new approvals and authorisations – for example UK-established operators who do not currently have access to simplified import procedures and facilitations and ensure that they can apply for these facilitations by reference to the relevant eligibility criteria;

• customs agents;

• how goods are valued;

• guarantees, and other forms of payment and in doing so ensure that those that can be used currently can continue to be used under UK legislation;

• how liability to import duty will be notified and discharged by HMRC;

• repayment and remission of liability by HMRC (where appropriate);

• the importation of parcels;

• the importation of goods in personal baggage;

• the imposition of fees by HMRC and Border Force when asked to fulfil its duties outside normal working hours.

 

The Customs (Import Duty)(EU Exit) Regulations 2018 (slide 2 of 2)

• This SI also implements a core part of our plan to avoid potential queues at certain Roll on Roll Off (RoRo) locations and to help trade flow. It does so by mandating that all traders going through those locations must complete customs declaration in advance of arrival.

• The locations where these obligations apply have been chosen in consultation with individual RoRo ports, based on criteria aimed to target RoRo ports where customs formalities would be impeded if declarations were not pre- lodged, and will be clearly set out in a public notice.

• Another part of the instrument follows the principles of the Interpretation Act 1978 that were adopted when the UK joined the EU. This means that goods underway prior to exit, and the procedures that relate to the goods, will continue to be subject to EU rules until they are declared to the UK customs authorities, or they enter the UK’s domestic market.

• Union goods dispatched from the EU before the UK’s exit but arriving after this time will not need to be declared to customs.

 

The Customs (Special Procedures and Onward Processing (EU Exit) Regulations 2018

This SI broadly replicates the effect of UCC legislation in relation to the outward processing and special Customs procedures. These procedures are facilitative and allow, in certain cases, for the suspension or reduction of import duty that would otherwise be due when goods are brought into the UK. This instrument sets out eligibility requirements, and rules governing the operation of, the following procedures:

• a storage procedure, under which imported goods can be kept in a premises approved by HMRC (customs warehouse) without import duty being due;

• inward and outward processing procedures, which provide for import duty advantages in cases where goods are imported to the UK for processing and then exported, or where domestic goods are exported outside the UK for processing and then returned to UK;

• an authorised use procedure, under which goods imported to the UK for a qualifying use will be subject to a lower rate of duty than would otherwise apply if the goods were imported for a non-qualifying purpose;

• a temporary admission procedure, under which certain goods can be imported to the UK with full or partial relief from import duty.

In addition, what EU legislation refers to as ‘end-use procedure’, is being replaced with the term ‘authorised use procedure’.

 

The Customs (Temporary Storage Facilities, Approval Conditions and Miscellaneous Import Amendments ) (EU Exit) Regulations 2018

• This SI will ensure that temporary storage facilities are only approved where the facilities are able to carry out their function effectively. Operators of those facilities need to be able to satisfy HMRC that the facilities are appropriate and setting out conditions in regulations clarifies what needs to be done for approval to be granted. The conditions introduced by this instrument broadly reflect the conditions for approval currently required under the UCC.

• For goods to be imported legally, they must be presented to customs authorities upon their arrival and must remain under customs control until they are released either to free circulation or a special procedure (such as temporary admission). The mechanisms for such presentation vary between modes of transport (road, rail, air etc). The various mechanisms are covered by specific CEMA based regulations and this instrument is required to update those regulations to ensure that they are consistent with current requirements.

 

The Customs Transit Procedures (EU Exit) Regulations 2018

• The UK is currently a member of the Common Transit Convention (CTC) as an EU member state, and a member of the International Road Transport (TIR) convention. The UK wishes to continue to benefit from the cross border trade facilitation offered by these conventions after EU exit.

• Negotiations on the UK’s accession to the CTC are ongoing.

• This SI is designed to broadly replicate the effect of the EU legislation referred to above to deliver the required legal framework.

• The instrument sets out various rules that will apply when goods are moving in the UK under a transit procedure, including the CTC or the TIR Convention. This includes • a requirement to present goods to HMRC at the start and end of the transit journey in the UK • rules about declaring goods to the procedure

• the obligations on a person who has declared goods to the procedure or a person who is carrying these goods, and rules concerning the discharge of the procedure • requirements on HMRC in relation to the exchange of information and the provision of assistance to other customs authorities in relation to goods moved under the procedure • Providing for the existing simplifications under the procedures

 

The Statistics of Trade (Amendment) (EU Exit) Regulations 2018

• In the event of a no agreement being reached, when the UK leaves the EU, trade statistics relating to imports and exports of goods will in most cases be collected from customs declarations.

• This SI preserves the right to collect trade statistics both through customs declarations and also through intrastat declarations should customs declarations not be required.

 

The Customs (Contravention of a Relevant Rule) (Amendment) (EU Exit) Regulations 2018

• This SI will ensure that HMRC will be able to operate an effective customs civil penalties regime after the UK exits the EU. The SI will apply the existing customs civil penalties approach to UK-EU trade and is consistent with the approach taken to trade with the rest of the world.

The Wharves and Temporary Storage Facilities (Approval Conditions) Regulations 2018

• HMRC considers it necessary to require particular locations handling such goods to meet certain conditions related to basic import and export customs rules before being granted the necessary approval to operate as such a place. (As set out in a separate notice).

• Any processes at the border for day one would represent a stepping stone to a technology-based solution, to be delivered over the longer-term. HMRC are discussing with RoRo ports how best this can be delivered. It is envisaged that this SI will be the mechanism by which HMRC could deliver a technology-based solution with ports.

• This SI places no new obligations itself, and will only be used once we have concluded our longer- term no deal policy in consultation with ports.

 

The Wharves, Airport Examination and Temporary Storage Facilities (Approval Conditions) 2018

• Current requirements for amenities and facilities (such as parking for official cars, office space and toilet facilities) that ports, airports, etc. are expected to provide, free of charge, are contained in guidance that was agreed in 2007. These have formed the basis of negotiations for the relevant approvals since that time.

• The aim of placing the requirements in legislation is to make the process clearer and more effective. The instrument sets out the full set of requirements, but enables HMRC and the applicant to agree which of them are actually required, and at what scale, on a case by case basis to avoid unnecessary burdens on business.

HMRC: January 2019: Excise SI package

Written by Daryl Chesney Friday, 07 December 2018

January 2019: Excise SI package

 

Overview presentation Joint Alcohol and Tobacco Consultative Group – Excise Brexit Sub Group

 

Contents

• Overview

• Summary of SI package

• Overview of each SI

• Questions and comments

 

Context

The Government has agreed in principle the terms of the UK’s smooth and orderly exit from the EU, as set out in the Withdrawal Agreement.

The Government firmly believes it is in the interests of both the EU and the UK to agree a deal, and we are close to a Brexit deal with the EU.

• The Government does not want or expect a no deal scenario. It is however the duty of a responsible Government to continue to prepare for a range of potential outcomes including the unlikely event of a no deal.

4 Excise SIs expected to be laid in January 2019.

• The Excise Goods (Holding, Movement and Duty Point) (Amendment) (EU Exit) Regulations 2019

• The Excise Duties (Miscellaneous Amendments) (EU Exit) Regulations 2019

• The Excise Duties (Miscellaneous Amendments) (EU Exit) (No 2) Regulations: 2019

• The Excise Duties (Miscellaneous Amendments) (EU Exit) (No 3) Regulations: 2019

 

 

1. The Excise Goods (Holding, Movement and Duty Point) (Amendment) (EU Exit) Regulations 2019

• The SI establishes the rules for the holding and movement of excise goods into, out of and within the UK.

• In particular, it regulates and provides clarity on: o The arrival of goods in the UK/place of importation for Excise duty point purposes; o Definitions that are no longer relevant/amends others e.g. UK Registered Consignor o Concepts that are being repealed or removed e.g. Distance selling o How liability to excise duty will be notified and discharged by HMRC;

• The changes are a mixture of consequential and substantial amendments to the holding and movement regime in order to ensure a legally operable excise regime upon EU exit.

• The changes include in the main, housekeeping amendments which, among other things, involve removing references to EU concepts and terminologies that will no longer apply when the UK leaves the EU.

 

 

2. The Excise Duties (Miscellaneous Amendments) (EU Exit) Regulations 2019

Makes miscellaneous changes where commons-only negative procedure is required for the following:

• The Excise Duties (Personal Reliefs) (Fuel and Lubricants Imported in Vehicles) (Amendment) (EU Exit) Order

• The Travellers’ Reliefs (Fuel and Lubricants) (Amendment) (EU Exit) Order

 

 

3. The Excise Duties (Miscellaneous Amendments) (EU Exit) (No 2) Regulations 2019

Makes miscellaneous changes where two house negative procedure is required for the following Regulations:

• The Denatured Alcohol (Amendment) (EU Exit) Regulations

• The Duty Stamps (Amendment) (EU Exit) Regulations

• The Excise Goods (Drawback) (Amendment) Regulations

• The Excise Warehousing (Energy Products) (Amendment) (EU Exit) Regulations

• The Excise Warehousing (etc) (Amendment) (EU Exit) Regulations

• The Hydrocarbon Oil Duties (Marine Voyages Reliefs) (Amendment) (EU Exit) Regulations

• The Spirits (Amendment) (EU Exit) Regulations

• The Tobacco Products (Amendment) (EU Exit) Regulations

• The Warehousekeepers and Owners of Warehoused Goods (Amendment) (EU Exit) Regulations

• Excise Goods (Sales on Board Ships and Aircraft)

• Excise Goods (Export Shops) Regulations

 

4. The Excise Duties (Miscellaneous Amendments) (EU Exit) (No 3) Regulations: 2019

• This SI is required to exclude or modify directly effective EU rights saved by virtue of section 4 of the EU Withdrawal Act 2018 where such rights will no longer be appropriate for excise purposes.

• Section 4 (1) of the EU Withdrawal Act 2018 ensures certain rights, such as directive effective rights contained in EU treaties continue to be recognised and available in domestic law after EU exit.

• We are using the power under section 47 of the Taxation (Cross-border Trade) Act 2018 to make these changes, which will allow us to carve out or modify such rights, procedures etc that will be deficient or superfluous upon EU exit.

• The changes are subject to the made affirmative procedure.

HMRC: Excise Duties: Alcohol Helpcard

Written by Daryl Chesney Thursday, 06 December 2018

 

 

Alcohol Duty Duty rate from 1 February 2019
  Rate per litre of pure alcohol
Spirits £28.74
Spirits-based RTDs £28.74
Wine and made-wine: Exceeding 22% abv £28.74
  Rate per hectolitre per cent of alcohol in the beer
Beer – Lower strength – Exceeding 1.2% - not exceeding 2.8% abv £8.42
Beer – General Beer Duty Exceeding 2.8% and is not small brewery beer £19.08
Beer – High strength - Exceeding 7.5% abv – in addition to General Beer Duty £5.69 (+ £19.08)
  Rate per hectolitre of product
Still cider and perry: exceeding 1.2% - less than 6.9% abv. £40.38
Still cider and perry: at least 6.9% - not exceeding 7.5% abv. £50.71
Still cider and perry: Exceeding 7.5% - less than 8.5% abv. £61.04
Sparkling cider and perry: exceeding 1.2% - not exceeding 5.5% abv. £40.38
Sparkling cider and perry: Exceeding 5.5% - less than 8.5% abv. £288.10
Wine and made-wine: Exceeding 1.2% - not exceeding 4% abv. £91.68
Wine and made-wine: Exceeding 4% - not exceeding 5.5% abv. £126.08
Still wine and made-wine: Exceeding 5.5% - not exceeding 15% abv. £297.57
Wine and made-wine: Exceeding 15% - not exceeding 22% abv. £396.72
Sparkling wine and made-wine: Exceeding 5.5% - less than 8.5% abv. £288.10
Sparkling wine and made-wine: at least 8.5% - not exceeding 15% abv. £381.15

Changes to approved depositories (CIP16)

Written by Daryl Chesney Tuesday, 04 December 2018

Changes to approved depositories (CIP16)

Find out why approved depositories will no longer be able to operate under their current approval.

Removal of approved depository authorisation

From 1 May 2019, all approved depositories will no longer be able to operate under their current approval.

Due to the removal of the C3/C5 document and the introduction of the Transfer of Residence (ToR), an electronic declaration is now required.

Approved depositories must now have the same standard as an External Temporary Storage Facility (ETSF).

If approved depositories authorisation holders wish to clear the goods directly to the frontier, they do not have to apply for an ETSF approval. The temporary storage facilitation may not be needed, depending on their business model.

Options

All approved depositories holders have the following options:

  • to make a declaration to a Customs procedure at the frontier removing the need for inland temporary storage
  • to continue to keep these goods in temporary storage at their premises, approved depositories holders are required to apply for a full temporary storage Approval as an ETSF

The new procedures for ToR relief will allow importers to apply for ToR before goods are sent to the UK and will facilitate clearance at the border. Further information on claiming ToR is available in Public Notice 3: bringing your belongings, pets and private motor vehicles to UK from outside the EU.

If you are considering applying for a temporary storage approval you can request a copy of the expression of interest form by emailing: This email address is being protected from spambots. You need JavaScript enabled to view it..

Further information

Find out about the requirements for an ETSF approval by contacting the Border Force National Frontier Approvals Unit on Telephone: 0121 781 7861 or 0121 781 7856.

Published 30 November 2018

Approval of internal temporary storage facilities - remote (CIP17)

Written by Daryl Chesney Saturday, 01 December 2018

Approval of internal temporary storage facilities - remote (CIP17)

 

Approval of internal temporary storage facilities - remote (CIP17)

Find out about the approval of additional internal temporary storage facilities - remote being reinstated.

Introduction

Internal temporary storage facilities - remote (ITSFs-R) are approved temporary storage facilities. They are situated within the immediate vicinity of an approved port or airport but outside the customs controlled area of the frontier (port or airport), where non-Union goods may be placed in storage prior to being placed under a customs procedure or re-exported.

Changes to ITSFs-R

A policy decision has been taken to reinstate the approval of ITSFs-R.

Changes affect all importers who are involved in the movement of non-Union goods such as a:

  • freight forwarder
  • customs agent
  • warehouse keeper
  • transport company

The approval of additional ITSFs-R has been reintroduced due to a number of reasons, including the need for further infrastructure to meet the demands of trade and the limited space within port boundaries for additional ITSFs.

These facilities are considered to be part of the UK border and as a result must be approved for this purpose by the Border Force. The conditions under which the operation of these temporary storage facilities is permitted will be as set out in the authorisation.

Contact details

You can get full details about the conditions and criteria from the Border Force National Frontier Approvals Unit on telephone: 0121 781 7861 or 0121 781 7856.

If you’re thinking about applying for an ITSF-R approval, you can request a copy of the expression of interest form by email:This email address is being protected from spambots. You need JavaScript enabled to view it..

More information

You can find out more information in:

Published 29 November 2018

RPC: Customs and excise quarterly update

Written by Daryl Chesney Tuesday, 27 November 2018

Customs and excise quarterly update

August 2018

In this update we report on (1) changes to gaming duty accounting periods; (2) HMRC’s policy paper on tobacco duty on heated tobacco; and (3) an amendment to the Export (Penalty) Regulations 2003. We also comment on three recent cases relating to (1) the customs classification of Beyblades; (2) excise duty assessment time limits; and (3) restoration of seized tobacco.

News Changes to gaming duty accounting periods and administration of the tax On 6 July 2018, HMRC published a policy paper in relation to changes to gaming duty accounting periods to bring gaming duty into line with the administration of other gambling duties. more>

Tobacco duty on heated tobacco On 6 July 2018, HMRC published a policy paper introducing “heated tobacco” as a new category of tobacco product in the Tobacco Products Duty Act 1979 (TPDA). The duty rate for heated tobacco will be set at Budget 2018. more>

Amendments to the Export (Penalty) Regulations 2003 On 24 April 2018, HMRC published a policy paper in relation to amendments to the Export (Penalty) Regulations 2003 (the Regulations) to ensure UK law relating to civil penalties is up to date with EU legislation following the introduction of the Union Customs Code, which replaced the Community Customs Code on 1 May 2016. more>

Cases Hasbro European Trading BV – customs classification of a spinning top toy In Hasbro European Trading BV v Revenue and Customs Commissioners, the Court of Appeal has allowed the taxpayer’s appeal against the decision of the Upper Tribunal (UT), and concluded that spinning tops known as “Beyblades” are correctly classified as “articles for ... table or parlour games” within Combined Nomenclature (CN) heading 9504 and not as “other toys” under heading 9503. more>

Any comments or queries

Adam Craggs Partner +44 20 3060 6421 This email address is being protected from spambots. You need JavaScript enabled to view it.

Michelle Sloane Senior Associate +44 20 3060 6255 This email address is being protected from spambots. You need JavaScript enabled to view it.

About this update Our customs and excise update is published quarterly, and is written by members of RPC’s Tax team.

We also publish a Tax update on the first Thursday of every month, a VAT update on the final Thursday of every month and a weekly blog, RPC Tax Take.

To subscribe to any of our publications, please click here.

ADVISORY | DISPUTES | TRANSACTIONS

August 2018 Customs and excise quarterly update 2

Lithuanian Beer – excise duty assessment time limits In Lithuanian Beer Ltd v Revenue & Customs Commissioners, the Court of Appeal has held that the level of knowledge required under section 12(4)(b), Finance Act 1994 (FA), for the purpose of limitation on HMRC’s power to issue an assessment, is actual knowledge rather than constructive knowledge.

more>

Maciej Kotarski – restoration of whole leaf tobacco In Maciej Kotarski v the Director of Border Force, the First-tier Tribunal (FTT) has allowed the taxpayer’s appeal against the decision by Border Force (BF) not to restore seized whole leaf tobacco on the basis that, on the evidence before it, legal ownership was established. more>

August 2018 Customs and excise quarterly update 3

News

Changes to gaming duty accounting periods and administration of the tax On 6 July 2018, HMRC published a policy paper in relation to changes to gaming duty accounting periods to bring gaming duty into line with the administration of other gambling duties.

The way gaming duty is calculated and accounted for is to change. Businesses will have a six month accounting period within which they are obliged to complete returns without the requirement to make payments on account partway through those accounting periods. Gaming duty losses may also be carried forward and offset against future liabilities.

The proposed changes are to be introduced in Finance Bill 2018-19 and if enacted will come into force on 1 October 2019.

A copy of the policy paper can be viewed here.

Back to contents>

Tobacco duty on heated tobacco On 6 July 2018, HMRC published a policy paper introducing “heated tobacco” as a new category of tobacco product in the Tobacco Products Duty Act 1979 (TPDA). The duty rate for heated tobacco will be set at Budget 2018.

Heated tobacco products differ from regular tobacco products as the tobacco is heated but not burned, as in conventional tobacco products.

At present, there are few heated tobacco products on the market and the current legislation principally focuses on tobacco designed for smoking.

The TPDA will be amended to provide a description of heated tobacco and include it as a category of tobacco product.

The new duty will exist from the date of Royal Assent of Finance Bill 2018-19 and the commencement date will be announced at Budget 2018.

A copy of the policy paper can be viewed here.

Back to contents>

Amendments to the Export (Penalty) Regulations 2003 On 24 April 2018, HMRC published a policy paper in relation to amendments to the Export (Penalty) Regulations 2003 (the Regulations) to ensure UK law relating to civil penalties is up to date with EU legislation following the introduction of the Union Customs Code, which replaced the Community Customs Code on 1 May 2016.

A copy of the policy paper can be viewed here.

Back to contents>

August 2018 Customs and excise quarterly update 4

Cases

Hasbro European Trading BV – customs classification of a spinning top toy In Hasbro European Trading BV v Revenue and Customs Commissioners1, the Court of Appeal has allowed the taxpayer’s appeal against the decision of the Upper Tribunal (UT), and concluded that spinning tops known as “Beyblades” are correctly classified as “articles for ... table or parlour games” within Combined Nomenclature (CN) heading 9504 and not as “other toys” under heading 9503.

Background A Beyblade is a form of spinning top set in motion with a rip-cord powered launcher. They are designed to be used in head-to-head battling and launched into a bowl-shaped arena called a “Beystadium”. They can be used without a stadium, for example, in a cardboard box or on a desk or table.

Hasbro European Trading BV (Hasbro) contended that Beyblades are correctly classified as “articles for ... table or parlour games” under heading 9504 of the CN. HMRC argued that Beyblades should be classified as “other toys” under heading 9503. The significance of these classifications was that if Beyblades fall within heading 9504 they can be imported into the EU free of customs duties, whereas if heading 9305 applies, Beyblades are liable to ad valorem customs duties of 4.7%.

Hasbro contended before the First-tier Tribunal (FTT) that Beyblades were correctly classified solely under heading 9504, not 9503. The FTT decided that Beyblades fell under both heading 9503 and heading 9504. Accordingly, the FTT applied the tie-breaker rule in the General Interpretative Rules (GIR) 3(a), under which the heading which provides the most specific description of goods is to be preferred to a heading which provides a more general description. The FTT concluded that heading 9503 provided the more specific description. It found that heading 9503 specifically referred to “spinning ... tops” whereas heading 9504 referred to “articles ... for table or parlour games”, which the FTT considered was less specific.

Hasbro appealed the FTT’s decision to the UT on the basis that the FTT had proceeded incorrectly in considering the relevant Harmonised System Explanatory Note (HSEN) for the heading 9503, which was not in the heading itself. Hasbro contended that the FTT should not have considered the HSEN when deciding which heading provided the more specific description for the purposes of GIR 3(a). In addition, Hasbro argued that once the HSENs were put to one side, heading 9504 provided a more specific description than heading 9503.

The UT dismissed the appeal, holding that there was nothing precluding the FTT from taking into account the relevant HSENs when comparing two headings. The UT found that what was required was a “comparison of what is covered by the two headings, not a comparison of the wording of the two headings”. As for Hasbro’s second argument, the UT held that the term “toy”, used in heading 9503, was more specific than the terminology “articles”, used in heading 9504.

Hasbro appealed to the Court of Appeal, where the main issues to be determined were:

• did the FTT and UT attach excessive importance to the HSEN in respect of heading 9503?

• if yes, does heading 9503 nonetheless provide a more specific description of Beyblades than heading 9504 (ie the question under GIR 3(a))?

• what is the significance of the words “which equally merit consideration” in GIR 3(c)? 1. [2018] EWCA Civ 1221.

ADVISORY | DISPUTES | TRANSACTIONS

August 2018 Customs and excise quarterly update 5

Under GIR 3(c), if goods cannot be classified by reference to 3(a) or 3(b), they are to be classified under the heading which occurs last in numerical order among those which equally merit consideration.

Court of Appeal judgment The appeal was allowed.

With regard to question 1, the Court held that HSEN can and should be taken into account when deciding whether an item is capable of being classified under a particular heading. Following Kawasaki Motors Europe NV v Inspecteur van de Balastingdienst2, explanatory notes do not have legally binding force, but act as an important aid to the interpretation of the scope of the various tariff headings.

However, the Court was of the view that the FTT and UT were not entitled to attach the importance they did to the HSENs. While explanatory notes were not wholly irrelevant when applying GIR 3(a), the headings could not be treated as if they incorporated words found in the explanatory notes but not in the headings themselves. According to the Court, and contrary to the view of the UT, the focus must be on the wording of the rival headings, not on “what is covered by the two Headings” nor on parts of explanatory notes that are not replicated in the actual headings.

In relation to question 2, the Court stated that in general, the heading encompassing the most limited range of goods can be expected to be the most specific, whilst a heading covering a broader range is likely to be seen as more generic. As for which of headings 9503 or 9504 was most specific, the Court was not convinced by the UT’s reasons as to why it considered 9503 to be more specific. This was partly because “articles for ... parlour games”, unlike “toys”, captured the fact that Beyblades are to be used competitively. Accordingly, it concluded that 9504 was the most specific.

On the basis of its conclusion in relation to question 2, question 3 was no longer relevant.

Comment This judgment provides helpful guidance on the operation of GIR 3(a), as well as the application of HSENs to decisions on classification. It is a useful reminder of the close linguistic analysis that needs to take place in classification decisions.

A copy of the judgment can be viewed here.

Back to contents>

Lithuanian Beer – excise duty assessment time limits In Lithuanian Beer Ltd v Revenue & Customs Commissioners3, the Court of Appeal has held that the level of knowledge required under section 12(4)(b), Finance Act 1994 (FA), for the purpose of limitation on HMRC’s power to issue an assessment, is actual knowledge rather than constructive knowledge.

Background Lithuanian Beer Limited (LBL) carries on a business which includes the import of flavoured ciders. It was common ground between the parties that flavoured cider attracts the excise duty rate applicable to “made wines”, rather than the lower rate applicable to regular cider.

2. [2006] Case C-15/05 3. [2018] EWCA Civ 1406.

August 2018 Customs and excise quarterly update 6

Between December 2007 and January 2011, LBL imported flavoured cider and mistakenly paid the lower level of excise duty that was applicable to regular ciders, instead of the higher rate for “made wines”.

The mistake was discovered and on 14 November 2011, HMRC assessed LBL for the underpaid duty, amounting to £189,662.

LBL appealed against the assessment to the First-tier Tribunal (FTT) on the sole ground that HMRC was out of time to raise the assessment.

The relevant limitation provision is contained in section 12(4) FA. Section 12(4)(b) provides that HMRC has one year, beginning with the day on which evidence of facts, sufficient in the opinion of the Commissioners to justify the making of the assessment, comes to their knowledge.

LBL argued that on two occasions (in February 2010 and on 2 November 2010), HMRC officers attended the premises of LBL and were presented with information that would have given them the opportunity to discover the composition of the cider and the taxation error. It was later conceded by LBL that HMRC did not obtain sufficient knowledge at the February 2010 visit.

The FTT dismissed LBL’s appeal, on the ground that HMRC would have only had knowledge of the composition of the cider when it read the documents containing the information.

LBL’s appeal to the Upper Tribunal (UT) was unsuccessful.

LBL appealed to the Court of Appeal (CA) on the grounds that the FTT and UT should have found that HMRC’s knowledge on 2 November 2010 was sufficient to satisfy the test in section 12(4)(b).

Court of Appeal judgment The appeal was dismissed.

The Court considered that the critical question to be determined under section 12(4)(b) was what matters have to come to the knowledge of HMRC in order to trigger the one year limitation.

In the view of the Court, as section 12(4)(b) refers to “knowledge”, it is necessary to identify some human agent for HMRC who has actual knowledge of the relevant matters.

Applying guidance provided in Pegasus Birds v Customs and Excise Commissioners4, which related to a similar limitation provision in the Value Added Tax Act 1994, the Court confirmed that “knowledge” of the cider’s composition had to be actual and not constructive, and would only be actual, once read and digested by an officer of HMRC. As the second officer, who visited on 2 November 2010, had neither read nor digested the material prior to the 14 November 2010 one year cut-off date, the Court held that HMRC was within time to issue the assessment and dismissed LBL’s appeal.

Comment This judgment provides useful guidance on the state of knowledge required of HMRC for limitation purposes regarding indirect tax matters. Practitioners should always consider whether assessments issued by HMRC are in time. The state of knowledge of HMRC officers is a question of fact and this issue will need to be considered on a case by case basis.

A copy of the judgment can be viewed here.

Back to contents>

ADVISORY | DISPUTES | TRANSACTIONS

4. [2004] EWCA Civ 1015.

August 2018 Customs and excise quarterly update 7

Maciej Kotarski – restoration of whole leaf tobacco In Maciej Kotarski v the Director of Border Force5, the First-tier Tribunal (FTT) has allowed the taxpayer’s appeal against the decision by Border Force (BF) not to restore seized whole leaf tobacco on the basis that, on the evidence before it, legal ownership was established.

Background On 7 August 2015, Maciej Kotarski (MK), was intercepted carrying 602.2kg of unprocessed tobacco. MK purchased the tobacco in Poland before driving in a hire van to Harwich in the UK, where he was stopped. BF alleged that once processed the tobacco would attract excise duty of £669,072.63. BF considered that the goods were acquired with the intention of fraudulently evading excise duty.

The goods were accordingly seized under section 139, Customs and Excise Management Act 1979 (CEMA) as being liable to forfeiture under sections 49(1)(a)(i) and 170B, CEMA. A tobacco cutting machine was also discovered.

In a criminal trial held in February 2017 in connection with the seizure, MK was found not guilty.

MK sought restoration of the goods from BF. On 30 May 2017, BF considered and refused a request to restore the goods on the basis that MK could not prove ownership of the tobacco.

MK then produced an invoice or “Faktura” dated 6 August 2015, showing the supply of 600kg of tobacco for 4050 Polish Zloty (£861 including £63 tax) alongside a bank statement summarising transactions from 4 to 8 August 2015.

BF maintained its decision not to restore the goods on the basis that legal title had not been proven. MK appealed this decision.

FTT decision The appeal was allowed.

BF’s Review Officer gave evidence to the FTT that the bank statement MK provided did not demonstrate that the money withdrawn was used to purchase the raw tobacco and it was insufficient to show that MK purchased the goods in the course of his business. BF contended that the cash could have been used for other purposes, such as to finance the expenses of his trip to the UK.

The FTT had difficulty ascertaining what further information could be provided to evidence a cash transaction other than the source of the cash and a receipt or invoice. BF was not able to provide any assistance to the FTT as to what further documents it required.

The FTT commented that the dates of the withdrawals on the banks statements either matched or were sufficiently near the purchase of the goods, evidenced by an invoice showing MK as the purchaser and that payment was by cash. MK had produced the proof that payment was made for the goods as requested by BF and provided as clear an audit trail through his bank statement as was possible for a cash purchase. The FTT concluded that MK was the owner of the goods and accordingly BF’s decision not to restore the goods was unreasonable.

5. [2018] UKFTT 0278 (TC).

August 2018 Customs and excise quarterly update 8

As the FTT has supervisory, as opposed to appellate, jurisdiction in cases regarding restoration of goods, the FTT directed that BF carry out a further review of the original decision, taking into account information and evidence submitted at the FTT hearing.

Comment This decision illustrates the type of evidence necessary to establish legal ownership of goods where cash payments are made to purchase goods. If cash payments are used, businesses should keep within their records a full audit trail of the purchases made.

A copy of the decision can be viewed here.

Back to contents>

ADVISORY | DISPUTES | TRANSACTIONS

August 2018 Customs and excise quarterly update 9

About RPC

RPC is a modern, progressive and commercially focused City law firm. We have 83 partners and over 600 employees based in London, Hong Kong, Singapore and Bristol.

“... the client-centred modern City legal services business.”

At RPC we put our clients and our people at the heart of what we do:

• Best Legal Adviser status every year since 2009

• Best Legal Employer status every year since 2009

• Shortlisted for Law Firm of the Year for two consecutive years

• Top 30 Most Innovative Law Firms in Europe

We have also been shortlisted and won a number of industry awards, including:

• Winner – Overall Best Legal Adviser – Legal Week Best Legal Adviser 2016-17

• Winner – Law Firm of the Year – The British Legal Awards 2015

• Winner – Competition and Regulatory Team of the Year – The British Legal Awards 2015

• Winner – Law Firm of the Year – The Lawyer Awards 2014

• Winner – Law Firm of the Year – Halsbury Legal Awards 2014

• Winner – Commercial Team of the Year – The British Legal Awards 2014

• Winner – Competition Team of the Year – Legal Business Awards 2014

Areas of expertise

• Competition

• Construction & Engineering

• Corporate/M&A/ECM/ PE/Funds

• Corporate Insurance

• Dispute Resolution

Tower Bridge House St Katharine’s Way London E1W 1AA T +44 20 3060 6000

• Employment

• Finance

• Insurance & Reinsurance

• IP

• Media

• Pensions

• Professional Negligence

• Projects & Outsourcing

• Real Estate

• Regulatory

• Restructuring & Insolvency

• Tax

• Technology

18458

Temple Circus Temple Way Bristol BS1 6LW T +44 20 3060 6000

11/F Three Exchange Square 8 Connaught Place Central Hong Kong T +852 2216 7000

12 Marina Boulevard #38-04 Marina Bay Financial Centre Tower 3 Singapore 018982 T +65 6422 3000

Winner

Competition and Regulatory Team of the Year WINNER

Law Firm of the Year

WINNER

LegalAwards2014

Brexit update - Cabinet approves Withdrawal Agreement

Written by Daryl Chesney Monday, 19 November 2018

After a Cabinet meeting taking over 5 hours, the Prime Minister confirmed outside Downing Street that her Cabinet has taken the “difficult”, “collective” decision to back the draft Brexit Withdrawal Agreement, which she described as “the best that could be negotiated”. She outlined that the alternatives to the deal were a ‘no deal’ Brexit, or remaining in the EU, and said that she feels the deal is in the national interest.

 

The full text of the 585 page Withdrawal Agreement can be found here: https://ec.europa.eu/commission/sites/beta-political/files/draft_withdrawal_agreement_0.pdf

 

Here are the key points:

  • Transition: There is a clause that states that the transition period – which is due to finish at the end of 2020 - can be extended before 1 July 2020 and to a fixed future date, which has been left blank, but which would not be more than a year in theory. 
  • Governance structure: A joint committee will be set up and make recommendations by mutual consent. 
  • On disputes: 5 person arbitration panel for disputes but cannot rule on matters of EU law – which would have to go to the ECJ.
  • Geographical Indicators: will be offered the “same level of protection under the law of the United Kingdom”, those which cease to be protected by EU will also cease to be protected in the UK
  • On future relationship negotiations: the good faith clause reads, “The Union and the United Kingdom shall use their best endeavours, in good faith and in full respect of their respective legal orders, to take the necessary steps to negotiate expeditiously the agreements governing their future relationship referred to in the political declaration.”
  • Customs and Irish backstop (triggered in the event that no future trade deal between the UK and EU is achieved):
    • “maintaining full alignment with those rules of the Union's internal market and the customs union”
    • A “single customs territory” is established between the UK and EU.
    • It states, “Northern Ireland is in the same customs territory as Great Britain"
    • This essentially means that the UK would stay in a Customs Union, and that, in addition, Northern Ireland would also be in a Single Market for goods. The UK can then decide whether to align Great Britain with the Single Market for goods, meaning border checks between Northern Ireland and Great Britain are minimised.
    • Importantly, The UK would have to gain the EU’s agreement if it wants to quit this part Withdrawal Agreement (i.e. a joint agreement). 
  • On VAT: VAT will continue to apply as it does currently during the transition
  • On Excise:
    • “Council Directive 2008/118/EC1 shall apply in respect of movements of excise goods under a duty suspension arrangement and in respect of movements of excise goods after release for consumption from the territory of the United Kingdom to the territory of a Member State, or vice versa, provided that the movement started before the end of the transition period and ended thereafter.” i.e. the UK can continue to use EMCS through the transition period.
  • Various specialised committees will be set up, including ones on: citizens' rights, separation provisions, and the implementation of the Protocol on Ireland/Northern Ireland

A second, much shorter document about the future UK/EU relationship was also published, covering trade, security and governance. It is light on detail and will form the basis of the next phase of negotiations – should the Government’s deal be approved by Parliament. 

 

Finally, it is worth noting that the DUP (especially), Brexiteers, Labour and the SNP have also voiced serious, but different, concerns. Views from business have been mixed. The next few weeks are likely to be busy in the run up to a crucial ‘meaningful’ vote in Parliament, probably in early December. 

HMRC Check the statistical threshold for the UK in 2019 (CIP15)

Written by Daryl Chesney Monday, 19 November 2018

Guidance

Check the statistical threshold for the UK in 2019 (CIP15)

Find out what the statistical and revalorised thresholds are for the UK in 2019.

Statistical legislation lets member states apply an optional concession where items below a given statistical threshold may be aggregated in their trade statistics. The UK applies this concession. The non-EU statistical threshold is defined in legislation as 1,000 euros (in value) or 1,000kg (in net mass).

It allows simplified export declarations to be made for goods valued below the statistical threshold using export Customs Procedure Code (CPC) 1000097, and, for Memorandum of Understanding approved operators to use Customs Procedure Codes 1000067 and 1000077 along with supplementary declaration CPC 1000007. It can also be used for imports of goods under Merchandise in Baggage.

The UK conducts an annual review of the value aspect of the statistical threshold.

Statistical threshold to apply for 2019

Due to the current pound and euro exchange rate, and the revised legislation brought in under the Union Customs Code, the value aspect of the statistical threshold for the UK in 2019 will remain at £873.

Revalorised thresholds

Revalorised thresholds - consignment of negligible value

The threshold for consignments admitted free of import duties in 2019 will remain at £135 because of the current pound sterling and euro exchange rate, and the revised legislation brought in under the Union Customs Code. Proper use of the Consignments of negligible value relief EC Regulation 1186/2009 Chapter VI Articles 23 to 24 means the relief shall not apply to the following:

  • alcoholic products
  • perfumes and toilet waters
  • tobacco or tobacco products

Revalorised thresholds - gift allowance

The gift allowance for the UK in 2019 will remain at £39 because of the current pound sterling and euro exchange rate, and the revised legislation brought in under the Union Customs Code.

Proper use of the gift relief EC Regulation 1186/2009 Chapter VI Articles 25 to 27 involves a private individual from outside the EU sending occasional gifts to other private individuals established within the EU for personal or family use by the consignee.

On no account can the gifts be sourced and sent direct from retail stores (actual or online), as this is not allowed within the gift relief protocols as all consignments must be of a non-commercial nature.

Revalorised threshold - Low Value Consignment Relief (LVCR)

There’s no change to the current LVCR limit. It will remain at £15. Goods with an intrinsic value of £15 or less will not be assessed for import VAT. Commercial consignments purchased by mail order or internet and sent to the UK from the Channel Islands do not benefit from relief of import VAT.

Contact details

For questions about the statistical threshold email: This email address is being protected from spambots. You need JavaScript enabled to view it..

If you have questions about the implementation of these preferential arrangements in the UK you should email: internationalpostal&This email address is being protected from spambots. You need JavaScript enabled to view it..

For general HMRC queries speak to the VAT, Excise and Customs Helpline on Telephone: 0300 200 3700.

More information

Read Your Charter to find out what you can expect from us and what we expect from you.

Published 13 November 2018

HMRC: Expanded Partnership Pack

Written by Daryl Chesney Friday, 16 November 2018

Dear All,

 

In order that we can help you prepare in the unlikely event of a Day One No Deal scenario, the Government has over the past few months issued Technical Notices and prepared a Partnership Pack which gives advice and guidance as part of the ongoing programme of planning for all possible outcomes. I sent out a PDF version of the Partnership Pack to you on October 24, however they are all widely available on GOV.UK.

 

I am now pleased to announce that we have today issued the second iteration of our Partnership Pack on GOV.UK.

This expanded version now includes cross-government content from other Government Departments, including the Home Office, DEFRA and the Department for Digital Culture, Media and Sport (DCMS)

 

I have included a link below for your convenience for the expanded version which can be widely disseminated to your members.

https://www.gov.uk/government/publications/partnership-pack-preparing-for-a-no-deal-eu-exit

 

There is no need to contact HMRC at this stage as we are unable to supply further information other than what is published, but you can keep up to date via the website.

 

Many Thanks

 

Mark Riley | Higher Officer |  EU Exit Policy | Excise & Environmental Taxes |  Customs & Indirect Tax |  Customer Strategy & Tax Design |

HMRC

Excise Brexit Sub Group (EBSG) from the Joint Alcohol and Tobacco Consultative Group, DAY ONE, NO DEAL ISSUES

Written by Daryl Chesney Wednesday, 14 November 2018

Excise Brexit Sub-Group 5 November 2018

Day 1 No Deal Issues

This meeting was specifically about dealing with the UK leaving the EU 29 March 2019 with no dealand comprises a summary of HMRC’s consideration and contributions from trade body attendees.

Excise approvals by HMRC to be retained or will be terminated

Excise warehousekeepers and approved excise warehouses (under CEMA s92) to be retained (standard UK law for duty suspension), as will Registered Consignors, a category of trader required to dispatch goods from third countries cleared at the UK frontier under duty-suspension to a UK tax warehouse.  The Registered Consignor “route” will increase because imports from the EU will be third country imports on Day One No Deal.

The Registered Consignee entity will cease.

All categories of approvals for duty-paid movements will cease (eg registered commercial operators and tax representatives).

The entity of WOWGR registered owner will remain, as will the requirement for duty representatives.  NB These entities do not exist in EU law and it is being argued are ultra vires the Holding and Movements Directive.  I am doing so myself in litigation as are others including judicial review.  

I asked (belatedly) about the status of Registered Mobile Operators; my assumption is that this would also cease but will seek clarification.

As the UK will no longer be subject to EU procedures, everything defaults to Rest of World (ie third country) procedures.

Customs/CDS

Currently, third country trade declarations and duty payments made under CHIEF, to be superseded by CDS.  In the run up to March, the two systems will be run in parallel. CDS expected to be fully operational but CHIEF will be available as fall-back.

Preparation by trade is as for all international trade (eg apply for EORI registration, Gov Gateway account to be set up, training for data elements of CDS).

HMRC stated that within two years, the time for authorization for customs procedures/regimes would be halved from 120 days to 60 days by streamlining processes.  This is HMRC’s commitment whether or not there is a deal with the EU.

The government has allocated £8 million towards training and expansion of customs brokers/agents.  Discussion was about who needs to be trained because existing agents will be aware of processes (though more staff will be required).  HMRC anticipates sector “broadening” in effect. Trade reps feel that the training is for businesses new to importing concerning instructions to agents (eg classification of the goods).

Partnership pack

This is a high-level guide for Day One No Deal.

It will be a simplified version of the technical notices and will signpost to Gov.UK.

Thee will be the ability to subscribe to an email alert service.

Changes to notices, forms and guidance

HMRC’s existing notices will run parallel to revised notices (to deal with straddling of law and procedures for movements that occur during pre and post 29 March 2019).  It was suggested that all notices be archived on national Gov archive. To ensure availability, it is sensible for trade bodies and industry to print off and retain notices extant on “Day One”.

Forms will be amended for removal of EU trade/matters.

Excise approvals

Where excise approvals are required to be amended, HMRC stated that, for the short term, the NRU procedures will be undertaken more quickly.  I suggested that request for amendments should be simply made in writing rather than try to use forms that the NRU insists must be used eg EX68, EX69 as these are not fit for purpose to amend approvals.  (One has to explain the requirement for amendment anyway and the forms drive the applicant to provide/repeat details as if for a brand new approval application.)

After the meeting I remembered a commitment HMRC had made to industry experts in a meeting of November 2015 about approval applications to processed on the basis of “triage” (as I had suggested to the former Deputy Director for excise social taxes).  In other words, HMRC waves through low-risk applicants and only scrutinizes unusual applications based on risk-assessment. Moreover, since approved persons must have been judged “fit and proper” by HMRC in the first place, applications for variations to approval must be viewed in that context.  I mentioned the “triage” commitment by HMRC to Mike Gilmore of HMRC after the meeting.

IT changes

This is “back office” work that is part of the Border Systems programme for which excise was introduced in 2017.  UK domestic version of EMCS being re-written (ie excludes data fields etc for intra-EU movements).

VAT

HMRC stated (confirmed) that for imports there would be postponed accounting.

Industry reps queried how VAT in import deferment accounts would be treated (ie would increased guarantees be required).  I pointed out that there could be an extension of the Simplified Import VAT nil security option with access to all rather than those established for three years.  Another rep suggested that import VAT could be treated akin to acquisition VAT (with no cash-flow impact).

HMRC agreed to take these suggestions on board (I would have expected this to have been looked at in the wider scheme of things, by now, not just for excise).

Operational Issues

Movement guarantees

HMRC explained that wording to movement guarantees will need to be re-written (or varied by schedule) to remove reference to EU movements.

I suggested that HMRC simply scraps the requirement for movement guarantees entirely.  The reason is that EU law mandates that a movement guarantee be required for duty-suspended movements to cover the risk inherent in the movement.  This is nebulous, and the UK requires (usually) only a small part of duty of the movement to be provided.   Moreover, the real significance is that person who arranges/provides the guarantee always has full liability for irregularities occurring in a movement, regardless of culpability and HMRC will assess the full duty.  This requires that insurance is in place (in the case of legitimate business), which is far more important than a guarantee.

HMRC responded positively to this suggestion and, indeed, are considering this themselves (ie the necessity for any movement guarantee).

Premises guarantees

Similarly, HMRC themselves suggested/volunteered that premises guarantees might also not be required.  

I applauded this because, as I explained, it had been HMCE policy not to require any premises guarantee in the early 1990s.  Legal advice (wrongly, now, in my view) was that such a blanket exemption breached EU competition rules by giving an advantage to UK tax warehousekeepers, so premises guarantees were re-introduced (with “no claims discounts”).  

But, if there was a need for premises guarantees for tax warehouses that are excise warehouses, then all tax warehouses ought to have required premises guarantees (ie brewery registered premises, wine makers, cider producers) which have never had a guarantee requirement imposed.  This is illogical, discriminatory and a clear breach of law. I have argued this previously with HMRC who have said the regimes require different treatment because of risk, which I insist is nonsense (and said so at the meeting).

HMRC has invited submissions on this, which I will prepare.

Form W1

HMRC reported that the reference to outstanding receipted movement swill need to be removed.

I suggested that rather than amend the form, the W1 form be removed as a mandatory requirement imposed upon warehousekeepers.  I explained that the form is mandated by the warehousing regulations but there is discretion for it not to be required by HMRC at the request of the warehousekeeper.

I explained that, as part of the EICs control philosophy (that I largely worked on implementing when in HMCE Policy in the early 1990s), there was to be no requirement for forms and returns from traders unless they are absolutely necessary.  The philosophy was to be, as for VAT, systems-based controls. In this context, we looked into what the W1 was used for (as it had no place in systems-based controls) and found that they were simply cached in the Southend office (I think) without any purpose.   We took the decision to advise outfield staff that the W1 should be dispensed with unless there was a genuine need for its retention in exceptional cases. I wrote those instructions (actually then called “guidance” in line with HMCE policy) to outfield HMCE staff.   

However, the W1 was re-introduced by HMCE simply to deflect blame from themselves from the fraud they had set up and nurtured in the mid-1990s as if the fraud had been the fault of failings in the warehousing system.  This is appalling and has irked me ever since.  It is a burden, especially for new entrants and again seems to be utterly pointless and not in line with systems-based control.

The “real” current fraud involves the correct duty-suspended movement of certain products to the near continent for smuggling back into the UK as “mirror loads”.  So, stock sent under duty-suspension from the dispatching excise warehouse (Warehouse A) to the EU-based warehouse (B) will be depleted and recorded in its records and the ROR obtained from the consignee warehouse B.  Any stock that is received under duty-suspension by Warehouse A will similarly be entered as a receipt/replenishment. There should be balances in the accounts and records, being the purpose of those records. There is no interface, logically, with the smuggled product.  I am sceptical anyway that HMRC officials make use of W1s in any meaningful way.

Other attendees felt that the W1 was not of any use except as a “discipline” that might be used on a “voluntary” basis by warehousekeepers.  That would be in line with EICS so only to be used if of benefit to the user. My own view is that if the warehouse accounts and records are raised and maintained accurately and properly (as they must for a person to be approved or maintained as “fit and proper”), that is sufficient for excise/tax purposes.  In terms of smaller businesses, the W1 is yet another burden.

I pointed out to HMRC that I intend to prepare a request for a warehousekeeper client for variation to standard terms of approval under EWER regulation 5 ie no requirement for a W1 and, if the response from HMRC is to reject that request, it is a matter subject to appeal, which I will carry out, referencing the history of the withdrawal and re-introduction of that form by HMCE Policy.  This will include the WOWGR provisions (see below). So, it is best for them to parley.

WOWGR registered owners and duty reps

Returning to WOWGR registered owners and duty reps, these do not exist in EU law and are ultra vires.  I have no problem with HMRC having details of owners (this is proportionate) but the conditions attaching to registration and approval are not, are in clear breach of proportionality, impose restrictions and limit rights under EU law.  Indeed, the Crown is using the same arguments (in the abstract) I am making in on-going litigation about there being no duty point in EU law for, inter alia, technical breaches of WOWGR in court when it suits them: firstly in the Butlers Ships Stores Upper Tribunal and very recently the James Murray FTT case.  Yet they are denying what EU law means when they assess substantively for duty for breaches of WOWGR (or seize the goods).

And, again, the WOWGR registration of owners was another response to the fraud HMRC had instigated and nurtured which HMRC knew had ceased to exist in 1999 (the time WOWGR was enacted).  This is why original WOWGR approvals seldom, if ever, had any conditions attached and why the regime was operated originally with a very light touch.

Excise as a tax on consumption

Following on from the above, I stated to HMRC that, as excise duty is a tax on consumption as tenet of EU law (and having consequences for when goods are really released from warehouse (and not when they are still in the warehouse)), that principle should be retained on grounds of logic and justice.  We should not have to be fighting over this. HMRC listened and took it in board (obviously without commitment).

Drawback

All drawback will involve third country trade, so there will be no intra-EU preparation (including the duty being guaranteed and paid in the destination Member State and the mirror procedures (joining up) for drawback.  

HMRC intimated that the UK could re-introduce warehousing (repayment of the duty and return to duty-suspension) for drawback in the case of alcohol.  This would be sensible. The revocation of the facility did not really have a counter-effect to the alcohol fraud using drawback. Moreover, with “frontiers” reintroduced, the current mode of duty fraud using EMCS must, logically, be curtailed.

For movements of duty-paid goods between the UK, Northern Ireland and ROI, an alternative arrangement will have to be considered.  This might involve alternative evidence of receipt of goods etc. This is too knotty to get too immersed in at this stage.

Next meeting – Legislation - significant

The next meeting – for the end of November – will deal with legislation to be effective from Day One No Deal.

These will cover excise, VAT and customs.

There are five excise statutory instruments that “stitch together” the provisions that are relevant.  These drafts are of key importance for scrutiny and discussion with HMRC.

The customs provisions are a massive re-write and will be available in a reading room for several hours.

Alan Powell

8 November 2018

HMRC CDS timetable

Written by Daryl Chesney Friday, 09 November 2018

HMRC CDS timetable

  • November 2018
  • Release 2 part 1 (Supplementary Declarations only, extending beyond pilot functionality – duty suspension procedures etc).
  • Trade Test Messaging (TTM6) (normal import functionality) onto developer site. 
  • Late December / Early January 2019 Release 2 Part 2 (Import Inventory linked); will depend on CSP availability; not clear if full import functionality will be here (e.g. cash accounts / FAS or whether that will come between Release 2.2 and Release 3).  
  • From March 2019 Release 3 Exports.

HMRC: Budget 2018: Tax related documents

Written by Daryl Chesney Friday, 09 November 2018

Budget 2018: Tax Related Documents

Key Points between BWA & HMRC meeting

Written by Sophie Whittle Sunday, 06 May 2018

Please click the link to read information said between BWA & HMRC meeting; key points.doc

Customs Declaration Services Programme (CDS)s

Written by Sophie Whittle Sunday, 06 May 2018

CDS presentation 

Fraud Alert

Written by Sophie Whittle Thursday, 12 April 2018

Some information on fraud alert - fraudalert.doc

Report Fraud to HMRC

Written by Sophie Whittle Thursday, 05 April 2018

https://www.gov.uk/government/organisations/hm-revenue-customs/contact/customs-excise-and-vat-fraud-reporting

Telephone : 0800 788 887

Online Learning Package Including Examples of Suspect Behaviours

Written by Sophie Whittle Thursday, 05 April 2018

Online learning package including examples of suspect behaviours : http://www.hmrc.gov.uk/courses/syob3/Alcohol_external/Alcohol_external/HTML/Alcohol_external_menu.html

 

Enhanced Excise Due Diligence Guidance

Written by Sophie Whittle Thursday, 05 April 2018

Enhanced excise due diligence guidance: https://www.gov.uk/hmrc-internal-manuals/excise-due-diligence-condition

Customs Declaration Service

Written by Sophie Whittle Thursday, 05 April 2018

HMRC will begin a phased launch of the Customs Declaration Service (CDS) in August 2018. For more information please click the link - CDS.pdf

Brexit HMRC

Written by Sophie Whittle Tuesday, 13 February 2018

Please click on the following link to read more on Brexit, from the department for exiting the European Union.

https://www.gov.uk/government/policies/brexit

Minimum Unit Pricing

Written by Sophie Whittle Tuesday, 13 February 2018

A Q&A on minimum unit pricing; q&a.pdf

The Repeal Bill

Written by Sophie Whittle Tuesday, 13 February 2018

Click on the following two links for information on the Repeal Bill given by the Department for Exiting the European Union.

Factsheet 1
Factsheet 2

HMRC Compliance Checks

Written by Sophie Whittle Tuesday, 13 February 2018

The following link contains general information about compliance checks into excise matters; HMRC Fact Sheet

Letter from Senior Ministers

Written by Sophie Whittle Tuesday, 13 February 2018

Please click on the following to read a letter written by senior ministers to business leaders; letter.pdf

Customs Declaration Services Programme (CDS)

Written by Sophie Whittle Tuesday, 13 February 2018

Please click on the following Customs Declaration Services Programme HMRC presentation to read about CDS.

Alcohol Duty Simplification

Written by Sophie Whittle Sunday, 12 November 2017

HMRC have published the response to Simplifying the administration of alcohol Duty which we (BWA) had previously contributed to.  Please click on the link below to view HMRC's response.
 

Brexit White Paper

Written by Sophie Whittle Thursday, 09 November 2017

The UK Government has now published ​its White Paper referred to as the Customs Bill. This White Paper sets out the government’s approach to legislating for a future customs regime, and to creating a framework that supports intra-European trade.

Read more: Brexit White Paper

Dawn Raid by HMRC

Written by Sophie Whittle Friday, 27 October 2017

HMRC dawn raid

A step-by-step guide to managing an HM Revenue & Customs dawn raid

Read more: Dawn Raid by HMRC

Court Decisions Involving the Alcohol Wholesalers Registration Scheme (AWRS)

Written by Sophie Whittle Friday, 27 October 2017

Michelle Sloane of RPC, the BWA's honorary legal advisor, comments on some recent Court decisions involving the Alcohol Wholesalers Registration Scheme, the scope of The Excise Goods (Holding, Movement and Duty Point) Regulations 2010, and the operation of the Beer Regulations 1993 constructive removal provisions.

Read more: Court Decisions Involving the Alcohol Wholesalers Registration Scheme (AWRS)

Brexit

Written by Daryl Chesney Sunday, 22 October 2017

Next planned Brexit meeting with HMRC Policy team will take place on Tuesday 24th October in Manchester. Representatives from the BWA committee will be discussing current issues and their effects. This is a part of the ongoing engagement with HMRC to ensure that our members interests are channelled effectively.

Truck Cartel

Written by Daryl Chesney Sunday, 22 October 2017

You may be aware that the European Commission has fined truck producers nearly €4 billion for participating in a cartel – http://europa.eu/rapid/press-release_IP-16-2582_en.htm / http://europa.eu/rapid/press-release_IP-17-3502_en.htm

Read more: Truck Cartel

Skills for Logistics

Written by Daryl Chesney Sunday, 25 January 2015

The BWA has been working closely with Skills for Logistics throughout 2014 to develop NOS's (National Occupational Standards) for Excise warehousing.

Read more: Skills for Logistics

HMRC to introduce Due Diligence measures from 01st Nov 2014

Written by Daryl Chesney Sunday, 21 September 2014

Excise due diligence.
Changes to the conditions of HMRC excise registration / approval(s)

Read more: HMRC to introduce Due Diligence measures from 01st Nov 2014

Wholesalers Registration

Written by Daryl Chesney Monday, 01 September 2014

The Chancellor of the Exchequer announced in his Autumn Statement 2013 the introduction of a scheme to tackle alcohol duty fraud. The Alcohol Wholesaler Registration Scheme (AWRS) is expected to be introduced in legislation in the Finance Bill 2015.

http://www.hmrc.gov.uk/sdvs/alcohol-wholesaler.htm

Harvey's of Edinburgh

Written by Daryl Chesney Thursday, 22 May 2014

Harvey's of Edinburgh, in partnership with Historic Royal Palaces, officially launched Spey Royal Choice

Read more: Harvey's of Edinburgh

Top 10 richest UK drinks barons

Written by Daryl Chesney Tuesday, 20 May 2014

The UK is home to a bevy of millionaires, and billionaires, who have made their wealth from the drinks trade, as the recently published Sunday Times Rich List 2014 proves.

http://www.thedrinksbusiness.com/2014/05/top-10-richest-uk-drinks-barons/?article-source=newsletter&source=880&date=2014-05-20

 

Smugglers jailed over £2m Alcohol Fraud

Written by Daryl Chesney Friday, 09 May 2014

Two men have been jailed for evading nearly £2 million in alcohol duty by hijacking the details of legitimate companies and faking paperwork to claim they were importing vinegar, fruit juice, detergent and water into the UK from Europe.

Read more: Smugglers jailed over £2m Alcohol Fraud

UK retailers warned over illicit alcohol sales

Written by Daryl Chesney Monday, 10 March 2014

Following a string of raids on independent retailers across the UK, the FWD, police, Trading Standards and HMRC have revealed that illegal alcohol products on which UK duty has not been paid is costing the Government £1.2 billion in lost revenue each year.

Read more: UK retailers warned over illicit alcohol sales

Chief downtime

Written by Daryl Chesney Monday, 03 March 2014

Scheduled downtime for CHIEF on Tuesday the 25th February. HMRC explain what happened

Read more: Chief downtime

Operation Warehouse

Written by Daryl Chesney Wednesday, 22 January 2014

Operation "Warehouse": Major joint customs operation prevents large losses to the EU's and Member States' budgets

Read more: Operation Warehouse

Alcohol Fraud Consultation report

Written by Daryl Chesney Friday, 17 January 2014

Results of the alcohol fraud consultation have now been released by HMRC. The BWA along with other Government and Industry stakeholders have made significant contributions to influence the outcome of this review.

Read more: Alcohol Fraud Consultation report

HMRC launch Spirits Drink Verification Scheme

Written by Daryl Chesney Monday, 13 January 2014

The Spirit Drinks Verification Scheme
HM Revenue & Customs (HMRC) today published details of a new scheme. The Spirit Drinks Verification Scheme is designed to safeguard the reputation and authenticity of UK spirit drinks with a Geographical indication (GI) and will start by assuring the processes involved in the production of Scotch Whisky.
The scheme for Scotch Whisky begins on 10 January 2014. HMRC expects each cycle of verification will take approximately two years and when complete details of verified production facilities, processes and brands will be published online.

HMRC Spirits Drink Verification Scheme

Russia measures affecting TIR movements as of 1st December 2013

Written by Daryl Chesney Friday, 29 November 2013

Russian measures affecting TIR movements as of 1 December 2013

European Commission Services Information note on Russia TIR

Scotch Whisky Verification Scheme

Written by Daryl Chesney Monday, 14 October 2013

Scotch Whisky Verification Scheme: HMRC has published a consultation document on how to protect Scotch Whisky from inferior competitiors.The new proposals are designed to ensure that the 'real thing' goes through the 5 specified processes of fermintation, distillation, maturation, blending and bottling/labelling. 

Read more: Scotch Whisky Verification Scheme

DB Schenker Rail UK transportation of Scotch Whisky

Written by Daryl Chesney Tuesday, 01 October 2013

DB Schenker Rail UK trials transportation of Scotch Whisky

Lifting the Spirit' project will reduce lorry movements on busy roads

Read more: DB Schenker Rail UK transportation of Scotch Whisky

HMRC tackle illicit alcohol

Written by Daryl Chesney Monday, 16 September 2013

HMRC and the UK Border Force tackle those involved in illicit alcohol and tobacco

Read more: HMRC tackle illicit alcohol

TIR movements to Russia

Written by Daryl Chesney Monday, 16 September 2013

Additional financial guarantees for goods moving by road to Russia from Saturday 14 September 2013 

Read more: TIR movements to Russia

Unraveling the mystique of HMRC

Written by Daryl Chesney Monday, 02 September 2013

Bonded Warehousekeepers Asociation

The BWA have joined forces with the prestigious Drinks and Spirits Magazine, the UK leader in our sector. The article titled ' Unraveling the Mystique of HMRC' was published in the August edition of the Drinks magazine and highlights the benefits of becoming a member of the BWA.

New Members

Written by Daryl Chesney Monday, 05 August 2013

Growth in Membership of the BWA is strong....  A number of companies have recently decided to join the BWA and take advantage of being a member. Meachers Global Logistics, Langdon Systems, Culina, Central Automation Systems and Amathus Drinks have all  recognised  the benefits of becoming a member and are using the services offered such as Awareness Training and consultancy.

Harrods and The Dalmore create World's Rarest Whisky Collection

Written by Daryl Chesney Wednesday, 31 July 2013

The world's leading luxury retailer has teamed up with one the world's finest malt whisky brands to create a truly unique collection of rare whiskies.

The Dalmore Paterson Collection - the only one of its kind in the world - goes on sale and will take pride of place in the newly refurbished Fine Spirits Room at Harrods from 16 July 2013 for £987,500.

Read more: Harrods and The Dalmore create World's Rarest Whisky Collection

Movement Guarantees

Written by Daryl Chesney Friday, 31 May 2013

Good news at last from HMRC on Movement Guarantees.

Following representations from UK businesses and Associations, HM Revenue & Customs have revised their policy to allow

Read more: Movement Guarantees

Movement Guarantees-Croatia

Written by Daryl Chesney Friday, 17 May 2013

DO YOU HAVE A MOVEMENT GUARANTEE? If so you need to be aware 

Read more: Movement Guarantees-Croatia

HMRC Compliance checks/penalties

Written by Daryl Chesney Tuesday, 07 May 2013

Penalties for VAT and Excise wrongdoing
This factsheet contains information about the penalties we may charge you for a
VAT or Excise wrongdoing.

Read more: HMRC Compliance checks/penalties

Updated Public Notice for Beer

Written by Daryl Chesney Tuesday, 30 April 2013

Updated PN 226  explains the effects of the law and regulations covering the production,
storage and accounting for duty on beer.

1.2 What's changed?

The notice has been updated to inform you of a new section on yeast slurry and the
record keeping requirements - see section 32.
Reference to 'black beer' in the notice has been removed following the abolition of
the excise duty exemption for this product (with effect from 1 April 2013).
This notice and others mentioned are available on our website at Catalogue of
publications.

Read more: Updated Public Notice for Beer

Fake Customs officers jailed

Written by Daryl Chesney Tuesday, 30 April 2013

Fake 'Customs Officers' jailed

Press Release • Apr 11, 2013 12:00 BST

Three men who attempted to steal alcohol and cash from a warehouse in Brierley Hill, West Midlands by impersonating HM Revenue and Customs (HMRC) officers have been jailed.

Read more: Fake Customs officers jailed

CFSP Traders with in-house duty management packages

Written by Daryl Chesney Thursday, 28 March 2013

CFSP Traders with in-house bespoke duty
management packages/Software Houses providing Duty
Management systems to CFSP traders 

CHIEF volumetrics and a potential degradation in performance

Read more: CFSP Traders with in-house duty management packages

JCCC- Union Customs Code

Written by Daryl Chesney Wednesday, 06 March 2013

Joint Customs Consultative Committee

Meeting: February 2013
Agenda Item: 4
Author: Peter Starling

UCC - State of Play  

Read more: JCCC- Union Customs Code

HMRC Taskforce target Scottish Alcohol Industry

Written by Daryl Chesney Thursday, 28 February 2013

New HMRC Taskforce to Target Scottish Alcohol Industry

HMRC announced in November 2012 that it has established a new "intelligence led" taskforce to specifically target the alcohol industry in Scotland and will focus on alcohol manufacturers and retailers.

Read more: HMRC Taskforce target Scottish Alcohol Industry

Removal of cigarettes to home use-Jan 2013

Written by Daryl Chesney Friday, 15 February 2013

Anti forestalling restrictions on removals of cigarettes to home-use 

Read more: Removal of cigarettes to home use-Jan 2013

Copyright 2018 © The Bonded Warehousekeepers Association. All Rights Reserved.