Tolley's Excise Duties Handbook

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Tolley's Excise Duties Handbook is the only comprehensive compilation of UK and European legislation in relation to Excise Duties. It is an invaluable tool for anyone working for HM Customs and Excise and tax practitioners specialising in the field of excise duties. It is also useful for managers of companies that have to deal with issues involving excise duties.

The work is compiled by Jeremy White, a barrister at Pump Court Tax Chambers who works in the area of customs and excise law. This handbook provides material relating to the following subjects—

* General Law relating to excise duties
* Product excise duties, namely hydrocarbon oil duties, tobacco products duty and alcoholic liquor duties
* Betting and Gaming Duties
* Air Passenger Duty
* Vehicle Excise Duty

2012 Edition

The Tolley Excise Duties Handbook is designed to complement Tolleys Yellow and Orange Tax Handbooks, and the Customs Duties Handbook as an indispensable source of the tax legislation currently in force. The book covers the product-based excise duties, the betting and gaming duties, air passenger duty, vehicle excise duty, aggregates levy, climate change levy and landfill tax. It is particularly aimed towards practitioners who have dealings with the First-tier Tribunal and Upper Tribunal.

The Excise Duties Handbook is intended to provide busy practitioners and other persons working in the areas of customs, excise and transport with a useful collection of highly relevant materials.

Community Customs Code and Implementing Code
The Community Customs Code and Implementing Code (Council Regulation (EEC) No 2913/92 (together with the Modernised Customs Code, Regulation (EC) No 450/2008) and Commission Regulation (EEC) No 2454/93) as amended are reproduced in the Customs Duties Handbook. The Modernised Customs Code ("MCC") entered into force on 24 June 2008. It will be applicable only when its implementing rules are applicable, which must be before 24 June 2013. However, it became apparent that (a) amendments to the MCC were necessary to make it compliant with the provisions of the Treaty of Lisbon, and (b) many of the electronic systems on which the MCC was dependent would not be in place by 24 June 2013. Consequently a recast version of the MCC, known as the Union Customs Code ("UCC") has been proposed. It is intended that the UCC will come into force at the latest on 24 June 2013 and will repeal the MCC, with the result that the MCC will never be implemented. Details of the proposed UCC may be found in the Customs Duties Handbook.

Opening of postal packages
FA 2012 Sch 38 contains provisions relating to tax agents who engage In dishonest conduct. A "tax agent" for this purpose includes any person who assists other persons with regard to any of the taxes detailed in the Excise Duties Handbook, with the exception of vehicle excise duty. Schedule 38 sets out the penalties for dishonest conduct, and the powers of HMRC to obtain the records, and publish the details, of dishonest tax agents. It comes into force from a date to be appointed.

With effect from 1 April 2012, HMRC's powers are extended such that they can require a person to provide information regarding another person ("the taxpayer") where that information is reasonably required to check the tax position of the taxpayer. This provision has effect in relation to aggregates levy, climate change levy and landfill tax, but not to the other taxes detailed in the Excise Duties Handbook.

Product-based duties
Hydrocarbon oil duties
Under FA 2011 s 20, increases of 3.02 pence per litre in the duty on the main road fuels and equivalent increases in the effective rates of duty on non-road fuels were due to take effect on 1 January 2012. Those increases were deferred to 1 August 2012 by SI 2011/2904 and SI 2011/3604 respectively. These increases are again deferred, on this occasion to 1 January 2013 by FA 2012 s 188. Duty rates on the main road fuels are increased by 3.02 pence per litre (ppl) and effective rates of duty on non-road fuels are increased by the same proportion. The duty on natural gas maintains the differential with the main road fuels, while the differential for road fuel gas other than natural gas is reduced by the equivalent of 1 ppl. Duty on leaded petrol is increased by 3.02 ppl and on aviation gasoline by 1.96ppl.

Fuel duty — Pence per litre (unless stated)
After 6 pm 23 March 2011 before 1 January 2012On and after 1 January 2012 before 1 August 2012On and after 1 August 2012 before 1 January 2013On and after 1 January 2013
Light oils
Unleaded petrol57.9557.95 (adjusted from 60.97)57.9560.97
Light oil (other than unleaded petrol or aviation gasoline )67.6767.67 (adjusted from 70.69)67.6770.69
Aviation gasoline (Avgas)37.7037.70 (adjusted from 39.66)37.7039.66
Light oil delivered to an approved person for use as furnace fuel (rebated rate)10.7011.2610.7011.26
Heavy oils
Heavy oil (Diesel)57.9557.95 (adjusted from 60.97)57.9560.97
Marked gas oil (rebated rate)11.1411.14 (adjusted from 11.72)11.1411.72
Fuel oil (rebated rate)10.7010.70 (adjusted from 11.26)10.7011.26
Heavy oil other than fuel oil, gas oil or kerosene used as fuel (rebated rate)10.7010.70 (adjusted from 11.26)10.7011.26
Kerosene to be used as motor fuel off road or in an excepted vehicle (rebated rate)11.1411.14 (adjusted from 11.72)11.1411.72
Bio-ethanol57.9557.95 (adjusted from 60.97)57.9560.97
Biodiesel57.9557.95 (adjusted from 60.97)57.9560.97
Biodiesel for non road use (rebated rate)11.1411.14 (adjusted from 11.72)11.1411.72
Biodiesel blended with gas oil for non road use (rebated rate)11.1411.14 (adjusted from 11.72)11.1411.72
Road fuel gases
Road fuel Natural gas including biogas24.70/Kg24.70/Kg (effective rate after rebate of 4.37)24.70/Kg29.07/Kg
Liquefied petroleum gas (LPG)31.61/Kg31.61/Kg (effective rate after rebate of 5.73)31.61/Kg37.34/Kg

FA 2012 s 189 amends the Hydrocarbon Oils Duties Act 1979 (HODA 1979). Subsection (1) introduces a new s 14E (7A) into HODA 1979 to provide that a declaration made by a person when purchasing heavy oil or bioblend for use as fuel for propelling a private pleasure craft must include an acknowledgement that any restrictions and prohibitions under the national laws of another Member State on the use of heavy oil or bioblend as fuel for propelling private pleasure craft outside UK waters are not affected by the UK provisions. "United Kingdom waters" is defined by reference to the meaning given in s 1(1) of the Customs and Excise Management Act 1979. Subsection (2) provides for the changes to have effect in relation to supplies made on or after 1 April 2012.

The changes are being made following a challenge by the European Commission to the UK practice of allowing marked "red diesel" with the full duty paid to be used for propelling private pleasure craft, maintaining that it was contrary to EU legislation on the marking of fuels for red diesel to be so used outside UK waters. The changes are intended to ensure that red diesel can continue to be used as fuel for propelling private pleasure craft in UK coastal waters and on the inland waterways in accordance with current procedures.

Tobacco products duty
The rates of duty on tobacco products generally are increased with effect from 6 pm on 21 March 2012 as follows:
  • The specific duty on cigarettes is increased from £154.95 to £167.41 per 1000 cigarettes. The ad valorem rate is unchanged.

  • The rate of duty on cigars is increased from £193.29 to £208.83 per kilogram.

  • The rate of duty on handrolling tobacco is increased from £151.90 to £164.11 per kilogram.

  • The rate of duty on other smoking tobacco and chewing tobacco is increased from £84.98 to £91.81 per kilogram.

Alcoholic liquor duties
The rates of excise duty under ALDA 1979 on all types of alcoholic liquor are increased by 2 per cent above the Retail Price Index with effect from 26 March 2012.

FA 2012 s 187 repeals s 22 of the Alcoholic Liquor Duties Act 1979 (ALDA 1979), which had provided for the repayment (drawback) of excise duty on "British compounds" and "spirits of wine" when they were warehoused for certain purposes. British compounds are spirits which have, in the United Kingdom, had any flavour communicated to them or ingredient or material mixed with them, not being denatured alcohol. Spirits of wine are plain spirits of a strength of not less than 80% manufactured in the United Kingdom. ALDA 1979 s 22 allowed manufacturers of such products to reclaim the excise duty that they had paid on such products when they were exported from the manufacturer's premises or placed in a warehouse for certain approved purposes. Insofar as ALDA 1979 s 22 permitted drawback on export, it was unnecessary, since identical provision was made by the Excise Goods (Drawback) Regulations 1995 (SI 1995/1046). To the extent that s 22 permitted drawback in other circumstances (e.g. shipment as stores and warehousing for certain purposes, including export), it was undesirable, since there was no such provision for other spirits and there was no justification for having different arrangements for British compounds and spirits of wine to those that applied to other spirits. Further, it is doubtful whether s 22 was fully compliant with EU Directive 2008/118, which concerns the general arrangements for excise duty. There was a risk of infraction proceedings.

FA 2012 Sch 39 para 51 amends the definition of beer in ALDA 1979 s 1 to remove the exclusion from excise duty for black beer. The exemption originally dates back to an historical belief that black beer has some medicinal and nutritional benefits. While it was argued that this remains the case during the consultation, the exclusion will be removed with effect from 1 April 2013 in respect of ingredients which include black beer. Para 52 repeals the relevant sections of the Alcoholic Liquor Duties Act 1979 which deem Angostura bitters not to be classed as a spirit for certain duties. This means that, from 1 April 2013, the importation of Angostura Bitters into the UK will no longer be exempted from the payment of excise duty.

Betting and gaming duty
Gaming duty
The gross gaming yield bands for gaming duty are increased in line with inflation for accounting periods starting on or after 1 April 2012. The basis of revalorisation of the bands is the Retail Price Index change for the year ended 31 December 2011.

Amusement machine licence duty
The amounts of amusement machine licence duty (AMLD) payable in respect of licence applications that are received by HMRC after 4pm on 23 March 2012 are increased.

With effect from 1 February 2013, amusement machine licence duty (payable in respect of each machine according to category and period under BGDA s 22) is to be replaced with a new duty payable on the profits from games played on machines. Supplies in relation to the playing of games on machines which are liable to MGD will also become exempt from VAT. The main provisions for MGD are introduced by FA 2012 Sch 24. Implementing regulations are contained in the Machine Games Duty Regulations 2012, SI 2012/2500.

Vehicle excise duty
FA 2012 s 195 provides for changes to certain rates of vehicle excise duty by amendment of the Vehicle Excise and Registration Act 1994 (VERA 1994). Changes to the rates take effect in relation to vehicle licences taken out on or after 1 April 2012. The general rate of duty under VERA 1994 Sch 1 para 1 on vehicles taxed by engine size (generally those registered before February 2001) is increased by £5 to £220 for engine sizes above 1549cc and by £5 to £135 in respect of smaller engines. The graduated rates of duty on light passenger vehicles under VERA 1994 Sch 1 para 1B Table 1 on the first licence are increased by between £5 (the lowest two bands) and £30 (the highest band). Rates on second and further licences (those in Table 2) are also generally increased, except for the lowest two bands. The rates for light goods vehicles in VERA 1994 Sch 1 para 1J are increased by £5. Smaller increases apply to the rates for motorcycles under VERA 1994 Sch 1 para 2(1). Rates on heavy goods vehicles and buses are left unchanged.

Climate change levy
FA 2012 s 207 and Schedules 30 to 32 amend the climate change levy provisions.

Schedule 30
Part 1: Reduced rate supplies on or after 1 April 2011
Part 1 deals with the rate of CCL to be applied where supplies have been wrongly treated as reduced rate. Paragraph 1 amends FA 2000 Sch 6 para 45A(2)(b) changing the amount of levy payable from 80% to 65% where a supply was treated as a reduced rate supply but which is later determined that it should not have been. This amendment has retrospective effect to 1 April 2011.

Part 2: Taxable supplies on or after 1 April 2012 for use in recycling processes
Part 2 revises FA 2000 Sch 6 in respect of removal of the suspended exemption from CCL for taxable commodities used in certain metal recycling processes, and introduces the new reduced rate of CCL that will apply to such processes from 1 April 2012. The metals qualifying are restricted to aluminium and steel. Paragraph 3, 4, 5, 8 and 9 make both consequential and necessary amendments to FA 2000 Sch 6 paras 4, 5, 6, 34 and 39. Paragraph 7 removes FA 2000 Sch 6 para 18A to repeal the exemption for supplies used in the recycling process. Paragraph 6 amends FA 2000 Sch 6 para 14(3A)(a) to remove the reference. Paragraph 10 amends FA 2000 Sch 6 para 42 to apply a rate of 20% of full rates to supplies used in scrap metal recycling. It also inserts a new sub-para (1ZA) to clarify that where a supply would qualify for both reduced rate and the above lower rate, the lower of the two rates applies. Paragraph 11 inserts new FA 2000 Sch 6 paras 43A and 43B. Paragraph 43A specifies the conditions for determining if a supply is for use in scrap metal recycling. Paragraph 43B provides that where an excess of relief has been received, the recipient is deemed to have made a taxable supply to itself and must account for the levy thereon. Paragraph 12 omits FA 2000 Sch 6 para 45A as a consequence of the deemed supply provisions in new para 43B. Paragraph 13 inserts new FA 2000 Sch 6 para 62(1)(ca) and (cb) to provide tax credit where too little relief was received. Paragraphs 14, 15 and 16 remove references to para 18A in FA 2000 Sch 6 paras 101(2)(a) 146(3) and 147 respectively. In addition para 14 adds a new sub-para (iiia) in para 101(2)(a) to provide that the recipient will become liable to penalties should the certificate issued claiming lower rates be incorrect. Paragraph 17 repeals FA 2003 s 188 which introduced the exemption. Paragraph 18 relates to supplies which take place in Northern Ireland. A reference is inserted which gives the lower rate for supplies used in recycling precedence over the lower rate on supplies of gas. It also repeals FA 2011 s 80 which suspended the previous exemption. Paragraph 19 provides that amendments made by paras 2 to 18 will come into effect for taxable commodities made on or after 1 April 2012.

Part 3: Rate of CCL for supplies on or after 1 April 2013
Part 3 amends the rates of CCL applying from 1 April 2013 to electricity under a climate change agreement and also gas supplies in Northern Ireland. Paragraphs 20 and 21 provide for the level of CCL payable on reduced rated supplies of electricity to be 10% and make the consequential amendment to the table of rates and to the new FA 2000 Sch 6 para 43B (see "Part 2" above). Paragraph 22 amends FA 2011 s 79(3)(a) to revise the rate of CCL applying to gas supplies in Northern Ireland before 1 November 2013. Paragraph 23 provides that the amendments made by paras 20 to 22 to have effect for supplies treated as taking place on or after 1 April 2013.

Schedule 31
Participants in a climate change agreement (CCA) are entitled to a reduced rate of CCL in return for energy or efficiency savings. Schedule 31 introduces amendments to FA 2000 Sch 6 regarding administration of the CCA scheme from 1 April 2013. Paragraph 2 substitutes "Administrator" for "Secretary of State" in FA 2000 Sch 6 paras 44(1)(a), (2A) and (2C) to ensure that the reduced rate of levy applies where the Administrator issues and varies certificates. Paragraphs 3, 4, 5 and 6 provide consequential amendments to effect the role of the Administrator. Paragraphs 7 and 8 amend FA 2000 Sch 6 para 48 where there is a combination of umbrella and underlying agreements under the CCA scheme. Review timescales are increased to seven yearly or more frequently, agreements must be entered into with the Administrator rather than the Secretary of State, and a number of consequential amendments are made. Paragraph 9 inserts new FA 2000 Sch 6 paras 52A to 52F setting out the provisions for the appointment of the Administrator, the Administrators powers, including provision for regulations regarding issue of penalties. Paragraph 10 amends FA 2000 Sch 6 para 137 to add the Administrator to the list of persons to whom disclosure of information can be made to by the Commissioners for Revenue and Customs. Paragraph 11 provides that CCAs entered into before the Finance Bill receives Royal Assent (17 July 2012) will not be affected.

Schedule 32
Part 1: Main provision
Part 1 removes the exemption from the CPS for supplies of fossil fuels supplied to combined heat and power (CHP) stations, and introduces a lower rate for such supplies. An abated rate for supplies of fossil fuels to power generating stations equipped with carbon capture and storage (CCS) technology is introduced and certain power generators are required to self-account for the carbon price support "CPS") rates of CCL. These changes will have effect on and after 1 April 2013. Paragraph 2 amends FA 2000 Sch 6 para 4(2)(b) to include deemed supplies under FA 2000 Sch 6 paras 42C and 42D within the definition of "taxable supply". Paragraph 3 amends FA 2000 Sch 6 para 6(1A) and (2A) making supplies of gas to CHP stations liable to the CPS rates of CCL. Paragraph 4 amends FA 2000 Sch 6 para 14 to introduce an exemption from paying CCL where the generating capacity of a generating station, or generating stations owned by connected persons combined, is 2 megawatts or less. An exemption from CCL is also given for all coal used at non-CHP generating stations with a gross calorific value of 15 gigajoules per tonne or less. Paragraph 5 amends FA 2000 Sch 6 para 15 so that the exemption introduced by para 4 above applies only to the supply of electricity. It also introduces the same provisions for a CHP station that are introduced by para 4 for non-CHP generating stations. Paragraph 6 inserts new FA 2000 Sch 6 para 15A. This provides that where a generating station produces electricity and non-electricity supplies the Treasury may, by regulations, determine the extent to which the non-electricity supply is exempt from CCL. The paragraph also provides for the regulations to have retrospective effect and includes the required reference to the European Union State aid General Block Exemption Regulation (Commission Regulation (EC) No 800/2008). Paragraph 7 inserts new FA 2000 Sch 6 para 24(4A) and (4B) which provide that a recipient is deemed to have made a supply to itself that is subject to the CPS rates where a supply was not treated as taxable that should have been, or the recipients intentions have changed. Paragraphs 8 and 9 amend FA 2000 Sch 6 para 26, and insert new FA 2000 Sch 6 para 28A to provide for time of supply rules in respect of gas where the person liable to account for the levy is the person to whom the supply is made. Paragraph 10 disapplies, in respect of special utility schemes, FA 2000 Sch 6 para 29 in cases where the new para 28A applies. Paragraphs 11 and 12 make consequential amendments to FA 2000 Sch 6 paras 34 and 39 respectively. Paragraph 13 amends FA 2000 Sch 6 para 40 to introduce CPS self accounting requirements for electricity generators using fossil fuels subject to CPS. Paragraph 14 amends FA 2000 Sch 6 para 42A to make supplies of certain fossil fuels to CHP stations that are attributable to the production of electricity, liable to the CPS rates of CCL and provides for related regulations. It also amends the taxable commodity definition "any other taxable commodity (apart from electricity)" to "coal" and amends the basis of taxation for this commodity from "per kilogram" to "per gigajoule". It also provides that the Commissioners may include provision to determine whether FA 2000 Sch 6 para 42B(2) applies (reduction in CPS rates for generating stations with CCS technology), and if so the rate of CPS. Paragraph 15 inserts new FA 2000 Sch 6 paras 42B, 42C and 42D. These paragraphs set out the formulae and define the terms and conditions for calculating how much of a supply is subject to the CPS rates where the generator applies CCS technology, and build in self-supply provisions to correct underpayments of CPS arising. Paragraph 16 amends FA 2000 Sch 6 para 62(1) to provide for a recipient to reclaim the appropriate amount of CPS rate where it has been overpaid. Paragraphs 17 and 18 cancel FA 2011 Sch 20 para 7 that related to civil penalty provisions where incorrect supplier certificates are issued for reduced rate CPR supplies of fossil fuels, and make some consequential amendments. Paragraph 19 provides for the anti-forestalling measures set out in FA 2011 Sch 20 para 8 to apply to the amendments introduced by this Schedule. It also provides for special time of supply rules for supplies taking place between 21 March 2012 and 1 April 2013 of certain taxable commodities that will become liable to the CPS rates of CCL from 1 April 2013.

Part 2: Carbon price support rates from 1 April 2014
Paragraph 20 amends FA 2000 Sch 6 para 42A(5) to set out increased CPS rates from 1 April 2014 for gas (£0.00175 per kilowatt hour), LPG (£0.02822 per kilogram), and coal (£0.85489 per gigajoule).

Part 3: Electricity produced in combined heat and power stations
Paragraph 21 inserts new FA 2000 Sch 6 para 20A(1)(e) (exemption from CCL for electricity produced in CHP stations) that provides that the exemption only applies where actually supplied before 1 April 2018. This provides for a transitional period for the allocation of Levy Exemption Certificates. In addition only electricity produced in either a fully exempt or partly exempt CHP station before 1 April 2013 is considered CHP electricity for the purposes of the exemption. Paragraph 22 provides for consequential repeals needed as a result of the amendments made by para 21 and makes provision for the repeals made by para 22 to come into force on the day appointed by HM Treasury in a statutory instrument.

Landfill tax
The standard rate of landfill tax for disposals made or treated as made from 1 April 2013 increases from £64 per tonne to £72 per tonne. The Government's intention is to increase the standard rate by £8 per year up to and including 2014, when it will reach £80 per tonne. The lower rate remains at £2.50.
FA 2012 s 106 introduces retrospective legislation to correct an omission in landfill tax legislation in relation to the definition of a landfill site in Scotland. The legislation will have retrospective effect, with FA 1994 s 66(ba) deemed to have been in force in Scotland from 21 March 2000. This measure brings Scotland into line with the rest of the UK.

Air passenger duty
FA 2012 s 190 and Schedule 23 provide for APD rate increases. They also extend the scope of APD to private jets by reducing the de minimis weight limit below which aircraft were not subject to APD from 10 tonnes to 5.7 tonnes. In addition, they give statutory effect to the rate reduction applied, since 1 November 2011, to certain flights departing from Northern Ireland, and provide for the long term devolution of these rates to the Northern Ireland Assembly, including setting the higher rate of APD with a default position of that rate being twice the standard rate.

The handbook covers the following:
  • hydrocarbon oil duties;

  • tobacco products duty;

  • alcoholic liquor duties;

  • betting and gaming duties;

  • air passenger duty;

  • vehicle excise duty and graduated vehicle excise duty;

  • aggregates levy;

  • climate change levy; and

  • landfill tax.

As at November 2012


Jeremy White , Barrister, Pump Court Tax Chambers Consultant editor