Excise Duty and International Trading

Moving certain goods into and out of the UK may mean your business has to set up systems to handle customs and excise duty payments. When you sell goods to international markets your trading partner’s country may charge you excise duty on the goods that are being imported into their country.

From the point of view of your UK based business you only need to consider excise duty when your business imports certain goods. Note the distinction between customs and excise duty. Customs duty is payable on goods that you import from outside of the EU. Excise duty is payable on certain types of goods that are controlled.

HM Revenue & Customs (HMRC) is responsible for managing the excise duty that is payable on a group of goods that include:

• Products that contain hydrocarbon fuel such as petrol
• Beer
• Wine
• Spirits
• Other alcoholic drinks
• Cigarettes and tobacco

If your business is trading in any of these goods, and intend to bring them into the UK for selling on or as part of your business process, you must account for the excise duty that is payable to HMRC. Generally the amount of duty you have to pay is based on the quantity and not the value of the goods you bring into the UK. Exceptions include alcohol (its duty is based on the amount of alcohol in the product) and cigarettes (its duty is based on its overall retail value). You can see the current customs and excise duty rates in the Tariff, which is available in a wide-range of formats. You can also call the Tariff Classification Service Enquiry Line on: 01702 366 077.

Customs and excise will charge your business the current rate of excise duty unless you have set-up and operate one or more of the duty relief schemes that are available to your business. With many of the schemes that are available your business can begin trading in goods that customs and excise would normally charge duty on, but suspend or defer the payment of the duty until a later date. This enables your business to start trading and selling excise goods that have come into the UK and better manage your business’s overall cashflow.

Customs and Excise Relief Schemes

Depending on how you are operating your international business, you have a number of customs and excise duty relief schemes to choose from. It may be possible to operate one or more schemes in parallel. Always consult HMRC if you are in any doubt about if your business can operate a particular relief scheme. Penalties can be severe for businesses that do no properly account for any customs and excise duty they owe on the goods they are trading. You can contact the HMRC helpline on: 0845 000 0200.

Occasional Importers Scheme

This scheme is useful if your business only trades with an international partner on an irregular basis. To use the system you must complete form C&E 1165 for each consignment you bring into the UK that contains goods that would normally attract a customs and excise duty payment. Duty will still have to be paid when the goods clear customs in the UK, but your business does not have to set-up sophisticated customs and excise tracking system that can save your enterprise substantial amounts of money.

Customs and Excise Drawback

If your international trading will be with other EU Member States, your business can apply to receive a refund of any excise duty you may already have paid. This is only possible if the excise goods are just moving between Member States. The goods cannot be consumed in UK if you want to claim the full drawback on any excise duty your business has already paid. As with any claim for excise duty relief, you must provide full documentation including the excise movement certificate. Also note that you will have to provide financial security to the value of the excise duty you are claiming just in case your claim fails.

Selling Wine and Spirits

If your business is importing wine or spirits that contain 30 per cent alcohol in bottles that measure 35 centilitres, your goods must have a duty stamp clearly visible so that customs and excise official can check their status. The stamp shows that you have paid all the duty that is due and that you can start selling those goods in the UK.