Showcasing the British spirit

Alan Powell

WOWGR and spirits duty stampstwo steps forward, one step back!

In to my previous column (Ding Dong the WOWGR’s dead) I reported on HMRC’s findings of their review of the Warehousekeepers and Owners of Warehoused Goods Regulations 1999 (WOWGR). Their preferred option is to repeal that law, with a target of this year (following an administrative and legal process). The problem is that in fact HMRC has not formally committed to the repeal of WOWGR without ministerial sign-off and, inter alia, resources being available to make the changes to the law which could now take effect next year

In a meeting with Policy officials this month (January 2023), I stated that if HMRC had discounted all other options in their review to amend WOWGR, there seemed no logic not to proceed with their preferred option Moreover, ministers may well have the final say but it would require some special insight by ministers to go against the findings of HMRC’s administrative staff and lawyers. Besides, the industry can, and will, be writing to the HMRC minister (Exchequer Secretary to the Treasury) to make the case that WOWGR never had any legitimacy, is disproportionate, discriminatory and in breach of retained (sensible) EU principles about there being no liability to duty of spirits or beer sitting safely and securely in an excise warehouse even if aspects of the WOWGR provisions had been breached. In summary, this would support HMRC’s preferred option Nothing else would make sense

Some warehousekeepers had expressed concern about having to carry out enhanced due diligence on owners of goods if registration of owners is repealed from the law, particularly in sales of spirits in cask I think this misses the point and is a red herring I see no difference whether beer and spirits are subject to WOWGR or not. An owner of spirits in warehouse may be WOWGR registered but that does not mean the standard due diligence condition is modified. The Due Diligence condition does not constitute tick box checks It is a risk-based “probability” process to identify risk of alcohol duty fraud in the specific supply chain and mitigate any risk identified, the process commencing with “discovering how the fraud occurs”, as the courts have told us In terms of cask sales, say, there is not even a supply chain per se, so one has to assess if there is even a risk to mitigate Sensible and reasonable commercial due diligence augmented by excise duty fraud awareness would be a responsible approach to assess such fraud risk and whether there is any risk to be mitigated This is regardless of WOWGR registration of the owners of the goods (For comparison, wine is not even subject to the due diligence condition per se in the warehousing system (but is for AWRS))

To shortcut extended legal deliberations, I proposed that the simplest step would be an amending Statutory Instrument (SI) to WOWGR to retain the necessary warehousekeeper authorisation and registration and repeal the provisions pertaining to registration of owners and duty representatives. There is no need to change primary law (Part VIIIB of the Customs and Excise Management Act 1979). An amending SI would simply be laid to indicate the amendments to be made and by negative assent of the House This procedure happens all the time More on WOWGR as things develop, but in the meantime

HMRC review of the spirits duty stamps regime

In early December 2022, HMRC invited industry members to provide input to a questionnaire in connection with HMRC’s review into the efficacy and, indeed, need for the spirits duty stamps scheme as an anti-alcohol duty fraud measure HMRC acknowledged that this subject had been raised by respondents to the Call For Evidence exercise in 2020 in relation to the government’s Alcohol Duty Review

The British Distillers Alliance (BDA) is a non-profit making body which provides a professional service for independent and craft businesses in the spirits production industry and supply chain The BDA represents distillers, rectifiers and compounders and those in related sectors New members always welcome

(ADR) but it was felt better (and more appropriate) to treat this matter under parallel modernisation exercises being carried out by HMRC for alcohol excise duty I had, in fact, written to ministers in 2020 and 2021 to set out the case for repeal of spirits duty stamps as well as part of my in response to the ADR and for the British Distillers Alliance (BDA) Just as for the origin of WOWGR, HMCE erred in believing there was any statistically significant duty fraud in spirits after 1998 but rather than acknowledge they had erred, ploughed on with measures that have placed immense and pointless burdens upon the legitimate trade More recent problems have arisen with what has to be done by industry to comply with the law when re-cycling empty spirits retail containers that have been stamped and re-filled The response of members of the British Distillers Alliance to the consultation has been uniform in supporting repeal of the duty stamps legislation Such repeal could be achieved very simply by Parliament not carrying over the duty stamps provisions in the Alcoholic Liquor Duties Act 1979 when it is repealed to make way for the new Alcohol Act currently in the form of a Bill Phew!

Alan Powell

Alan Powell is a specialist excise duties consultant, formerly a Policy official within HMCE’s HQ teams. He is excise duties advisor to the Chartered Institute of Taxation, honorary advisor to the UK Warehousing Association and founded the British Distillers Alliance as a conduit for consultation with, and representation to, Government bodies and to assist and advise on technical matters.

Being staged at Liverpool Exhibition Centre from 15th-16th March 2023, BeerX is back once more. Over the following pages we give exhibitors an opportunity to let brewers, delegates and other visitors to the show, know a little of what they can expect to see and hear on their stands at the show