The Do's & Don'ts for Suppliers and Importers of Alcohol in the UK
With alcohol and alcoholic beverages, there are government-controlled factors that affect how goods are handled.
Notwithstanding the level of competition for on-trade shelf space, as well as listings in the on-trade (HoReCa) sectors, the dynamic UK alcoholic market is still a place where drinks producers, suppliers and importers can do good business. It’s a dynamism that also exists for UK companies supplying and exporting alcoholic drinks.
The stats are impressive: the UK is the world’s 6th largest wine market and the second by volume and value, whilst the UK wine and spirits industry as a whole generates over £21 billion in UK sales and over £8 billion in international trade. Whilst the wine trade balance may be heavily weighted to imports – some 93% imports vs 7% (re-)exports, this is reversed for spirits – 17% imports vs 83% exports – amounting to over 1.25 billion litres (mainly whisky, but also gin & vodka) being exported.
Whether a producer, supplier or importer, and whether based in the UK or outside, here’s a brief outline of the do’s and don’ts when importing or exporting – or just selling alcoholic beverages in the UK – in fact, anything that involves the movement of such goods within UK borders.
Alcohol Duties & Taxes
- HM Revenue & Customs (HMRC) strictly control any and all movements of alcoholic goods in the UK. The rules are stringent, and the penalties for non-compliance can be swinging, so any company handling alcoholic drinks needs to follow the rules extremely carefully.
- In terms of imports into the UK, once goods reach a port, typically UK duties and taxes become due and have to be paid in order for goods to be released.
- However, alcoholic beverages effectively trump this: firstly, they’re almost always zero customs duty-rated; secondly, excise duty is an ‘inland’ tax, and goods are almost always handled and stored in ‘duty suspension’ by a registered excise dealer and shipper (REDS). As such, the duty only becomes payable at the time they leave these strictly controlled and restrictive ‘in bond’ conditions, such as when released for consumption.
- What is true in every case is that every alcoholic beverage shipment also needs to be accompanied by the right paperwork – absent, or wrong, or incomplete documentation and paperwork will see goods held up at customs, or worse, the goods can be seized by HMRC and even destroyed.
Alcohol Handling & Distribution
- Excise duties are charged on top of any customs charges, if due. These duties, unlike excise duties, are required to be paid as soon as the goods arrive at a port.
- Goods liable to excise duty – so all wines and spirits with an alcoholic content above 1.2% – can only be moved between people and places that are government sanctioned. This requires a UK-based producer, supplier or importer either to register as an approved consignor or consignee in their own right or hire a registered company to act on their behalf.
- Holding and storing alcoholic beverages has to be in a government-approved excise warehouse which has to meet stringent requirements, among which are minimum monthly or minimum annual potential duty liabilities.
- As an aside, spirits that are being stored in order to complete a maturation process can be handled in a trade facility warehouse where the requirements are somewhat different from those other storage and distribution facilities.
Imports From The EU
- If importing alcoholic beverages from within the EU to the UK, the transportation must happen between government-approved people (consignees registered by HMRC to receive and account for duty from other countries within the EU) and approved places (registered warehouses) and must be recorded using the EMCS (Excise Movement and Control System) computer program.
- If alcohol has been released for consumption in another EU country it’s classed as duty paid, but, if imported into the UK on a commercial basis, UK duty is nevertheless chargeable, payable either under deferred terms or before goods are dispatched.
Imports From Outside The EU
- Essentially the same rules apply, except that movement between the entry point to the excise warehouse must be carried out by a registered consignor (not consignee). In addition to an excise warehouse requirement, it’s necessary to obtain customs warehouse approval for premises.
Exports From The UK
- The UK is world famous for 2 spirit drinks: whisky and gin. As far as HMRC is concerned, spirits duty is payable on any spirits, or any mixture or combination of spirits with anything else, at a strength of more than 1.2% alcohol by volume (ABV).
- Any company producing or handling alcoholic beverages in the UK before excise duty has been paid has to be registered with HMRC.
- Registration allows the dispatch of excise goods to export markets, either within or outside the EU (although some countries outside the EU will require a 'certificate of free sale' before they will let products into their country) and do this without paying UK excise duty. For this to apply, once again the same strict requirements have to be followed. It’s also possible for these companies to claim back UK excise duty, if it has already been paid, through the UK excise duty drawback system.
- As another aside, single grain, blended malt, blended grain or blended Scotch whisky can only be exported outside Scotland if the whisky is bottled and labelled for retail sale, or is going to someone who is registered with HMRC as a blender, bottler, labeller or approved bulk importer. No scotch whisky can be exported in a wooden cask or holder.
Paying Excise Duty
- It can’t be avoided – the whole point of all this control is to ensure the tax take is maximised from what are some of the highest duties of any market (up again in 2019: it’s one of the reasons why the UK accounts for over 40% of all alcohol duties collected in the whole of the EU). Excise duty becomes payable immediately on – actually this means ahead of – the release of goods from the duty-suspended warehouse where they are being held in bond.
It’s not just Great Britain where the commercial opportunities lie – much of the world has a thirst for alcoholic beverages – it just pays to understand the structures and find the right path through the minefield of rules and regulations.