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'Major win' over duty deferment

Published:  23 July, 2008

The wines and spirits trade has secured a major win' over the HM Revenue & Customs (HMRC), according to the WSTA's Jeremey Beadles, after the government agreed to make significant changes to the Duty Deferment Guarantee System - which could result in millions of pounds of tied-up capital being released.

Following pressure from a number of trade bodies, including the WSTA, from 1 February 2007, a large number of businesses making deferred payments of excise duty when beverage alcohol products are released to the UK market from an excise warehouse or on importation, or making payments from a UK production premises, will not be required to tie up capital (of up to 10% of the full cost of the duty) as a duty guarantee. Beadles said: Currently, a great deal of money is tied up this way and is just sitting in a bank account or biting into overdrafts.'

Applicants for approval to operate without a guarantee will be assessed by HMRC on criteria that tales into account past behaviour, prompt payment and a good excise duty payment history. Separate eligibility and approval criteria will apply to any business that is trading below the VAT registration threshold of 61,000.

Interim arrangements will apply between 1 October 2006- 31 January 2007 and traders who are currently operating in the UK will be automatically assessed (without the need to apply) for suitability.

Beadles added: The WSTA urged the Government in its Budget Submission earlier this year to introduce a "risk based" approach to duty deferment guarantees, which would reduce the cost burden for legitimate traders with a good track record. We are delighted with the new system which we believe will significantly reduce the cost burden for many members.'