In August 2023, the UK introduced a new Alcohol Duty system, marking the most significant reform of this duty in 140 years. As noted in our prior articles on this topic, available here and here, the new system taxes alcoholic drinks based on their alcohol by volume ("ABV"). Small producers of alcoholic products with an ABV of less than 8.5% and an annual production of less than 4,500 hectolitres are eligible for tax relief. Additionally, a reduced duty rate for certain draught products was introduced, benefiting pubs and restaurants.
As part of the next phase in the Alcohol Duty review, the UK Government is set to launch a new digital platform for Alcohol Duty in March 2025: Alcohol Products Producer Approval ("APPA"). This platform aims to simplify the administrative process for UK producers, aligning HMRC's processes with the expectations of a modern tax and customs authority by offering customers a greater digital experience.
The new digital platform will streamline the submission of duty returns and online payments, with the aim of significantly reducing the administrative burden on businesses. Once implemented, the digital service will enable domestic producers of all types of alcohol products to manage and pay their duties with greater efficiency.
HMRC is in the process of writing to producers, approved compounders and rectifiers with details of how to access the new service and will continue to communicate with them as the launch date approaches.
How can businesses prepare?
In the meantime, businesses should keep an eye on their inboxes to ensure they receive important details in advance of the platform's implementation.
Businesses should begin considering how changes to processes will impact their business operations. Recent correspondence from HMRC states that compounders and rectifiers will no longer need to use an excise warehouse and will instead need to be approved as an alcoholic product producer in the new digital service, and submit monthly duty returns and payments. Existing licences will be migrated to the APPA system.
With any new system, there is a risk of technical issues and system downtime. Given HMRC's history of administrative and IT challenges, it is possible that the new platform will encounter some initial problems, which businesses should prepare for. Staying informed about the new system will be crucial to ensure smooth business operations, and businesses may want to make enquiries with others in their supply chains to mitigate temporary difficulties or delays with products reaching the shelves. Businesses should be proactive and take steps now to understand the new Alcohol Duty changes while they have time on their side. DWF can assist businesses to navigate and prepare for the new platform.
Our specialist teams at DWF have significant experience in compliance with alcohol duty across the Consumer sector, and can guide you through these changes, as well as wider queries with duties or general dealings with HMRC.
