UK wine production - excise duty notification 163.

Source- click here: GOV UK

This notice explains the rules and regulations for wine production. This includes:
-how to obtain a production licence,
-keeping of records,
-different types of relief,
-accounting for alcohol tax on wine and other fermented products (formerly known as made wine).

This information only applies to commercial wine producers. They do not apply in the case of wine production exclusively for own use.

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1.1 What is this information about?
Concerns the production, storage and settlement of duty on wine and other fermented products (formerly called made wine) by commercial wine producers, explains the effects of the law and regulations on the production, storage and settlement of duty on wine and other fermented products. For a definition of wine and other fermented products, see paragraph 2.1.

Where wine is referred to, it also includes other fermented products, except where specified.

1.2 Who should read this information?
This information is primarily intended for commercial wine producers. If you produce wine solely for your own use and do not sell it or receive remuneration for it, this information does not apply to you.

1.3 Where to find the relevant legislation?
The main legal provisions on the production, storage and movement of wine can be found in:
-Finance Act (No. 2) of 2023,
-Wine and Wine Products Regulations 1989 (Statutory Instrument 1989/1356),
-Alcohol products (excise duty) regulations 2023.

Other provisions may also apply to wine producers. These include:
-The Customs and Excise Management Act 1979,
-Revenue Traders (Accounts and Records) Regulations 1992 (Statutory Instrument 1992/3150), which include record keeping,
-The 2010 Excise Products (Storage, Movement and Excise Duty Points) Regulations, which cover intra-Community movement and storage of goods,
-Excise Products (Duty Drawback) Regulations 1995 (Statutory Instrument 1995/1046).

Detailed information or copies of laws and regulations can be obtained from the Public Sector Information Office.

1.4 Legal force of notices
Sometimes the law provides that detailed rules on a particular matter may be set out in a notice published by HMRC. Paragraphs 5.12, 6.2, 6.3, 11.3, 11.8, 10.1, 11.12, 13.7, 13.8 and 13.13 have the force of law and are indicated in the box.

1.5 Tips
If you need advice or any of the forms mentioned in this notice, please contact the excise hotline:

Telephone:
0300 200 3700
Textphone:
0300 200 3719
Outside UK:
+44 2920 501 261

2. Basics
2.1 Wine and other fermented products
In the Finance (No. 2) Act 2023. "wine" is defined as "any product obtained from the alcoholic fermentation of fresh grapes or must from fresh grapes (whether or not the product is fortified with spirit)".

"Other fermented product" (formerly wine) means a product obtained by alcoholic fermentation of any substance or obtained by mixing a product obtained by alcoholic fermentation of any substance or anything derived from that product with anything else; but does not include beer, cider, wine or spirits."

Other fermented products, for example, will include products similar to wine but not made from fresh grapes and some 'ready to drink' (RTD) products that are made using fermented alcohol.

2.2 Licences and payment of duty
If you produce wine for sale, you must be licensed by HMRC for customs purposes and hold a wine producer's licence (read section 3).

Wine:
-is subject to tax when manufactured (i.e. when its content exceeds 1.2% alcohol by volume (ABV)) or imported ,
-may be held or, in certain circumstances, moved between licensed premises or to excise warehouses under duty suspension - that is, without payment of duty, but always subject to duty.

Customs:
-is charged on the litres of pure alcohol contained in the wine and at ranges determined by the alcohol concentration (ABV) of the wine - read section 5,
-is usually calculated with reference to the quantity and alcohol concentration stated on the package label or invoice - read sections 8 and 9,
-becomes due when wine is released or consumed in licensed premises or excise warehouses - read section 5,
-may also be paid in the event of constructive disposal of wine held in customs suspension in licensed facilities - see paragraph 5.12.

Wine is subject to tax when it has been produced or crossed a UK customs point, which may be the case when it is imported into the UK . In the case of Northern Ireland, excise duty may also be charged on wine transported from Great Britain to Northern Ireland, but you may be able to deduct excise duty paid in Great Britain from the excise duty that arises on entry to Northern Ireland - Receipt of goods into and removal of goods from an excise warehouse (Excise Duty Notice 197).

2.3 How to calculate and pay the duty?
It should:
-keep records of all wine produced,
-keep records of all wine leaving licensed premises or otherwise passing through the duty point - read paragraphs 5.7 and 5.12,
-calculate the duty due on all wine released domestically in the UK - read section 5,
-keep records of all wine destroyed,
-complete the monthly customs declaration and send it to TAPS and CCL Cumbernauld Accounting Team - paragraph 7.1,
-pay the excise duty on time by one of the methods chosen,
-keep a record of any excise duty deduction calculations made - read Receipt of goods into an excise warehouse and removal of goods from an excise warehouse (Excise Duty Notification 197).

2.4 Responsibilities
You must exercise control over your wine-making activities. While you do not have to own, you must:
-obtain a licence for the premises where the wine is produced,
-entry to the winery site,
-keep business records to acceptable standards,
- submit the required declarations and pay the duty due no later than the due date,
-comply with the requirements of this notice.

You must also register with the Alcohol Wholesaler Registration Scheme if you sell duty alcohol to another company. It is the responsibility of any business that buys alcohol for onward sale or supply to check that the wholesaler they are buying from has been approved by HMRC.

Therefore, from April 2017, any company buying wine for resale or delivery should check whether it has been approved as a wholesaler of alcohol.

3 Licensing

3.1 - 3.4 Wine producer licence
If you produce or intend to produce wine for sale, you must hold an excise licence. For the purposes of this notice, this type of excise licence is known as a wine producer's licence.

You must also hold a licence if you are producing sparkling wine, unless you intend to carry out the process in an excise warehouse. The production of wine and the making of sparkling wine can take place in the same licensed premises.

To obtain an excise permit, complete form WMW1 and submit it online, attaching the premises entry.

A separate licence is required for each set of premises where you intend to produce wine. The licence will be issued in the name of the relevant legal entity (sole trader, partnership, limited company, etc.) However, you can only submit one customs declaration for all licensed premises belonging to the same legal entity.

Wine producers applying for a licence for the first time must arrange a guarantee to cover any duty payable on wine removed from licensed premises for the UK domestic market until it is paid to HMRC.

In the event of a sale of an existing business (including all of its assets, liabilities and obligations) to a new owner, the new owner will need to secure its own licence prior to commencing operations.

In some cases, it can take up to 45 days to process an application.

3.5 - 3.7 What can be done with an excise licence?

As a licensed wine producer you can:
-produce wine in licensed facilities,
-carry out the operations and procedures set out in this notice, including the removal of products under suspension of excise duty to other duly approved warehouses in the UK.

Licensed wine producers, based in Northern Ireland, can also:
-remove products with suspended customs duties to duly approved EU warehouses,
-collect the suspended wine from other duly approved warehouses for further processing,
-take back, under customs suspension, its own product from other duly approved warehouses (which are approved to accept wine) where it has undergone further processing, such as aeration, pasteurisation and bottling.

It is not permitted to accept spirits, beer, cider or imported wine under suspension of excise duty. You are also not allowed to accept wine that has not been previously produced on licensed premises, in a state ready for sale from other licensed premises or approved warehouses. You can do this if you are a commercial grower who holds a 'wine producer' licence, so that you can receive wine produced on your behalf by a licensed producer.

If you wish to receive spirits for fortification or beer, cider or imported wine for use in the production of wine or other fermented products, you must apply for approval as a commercial facilities store.

3.8 Duration of the licence
The licence will be valid until the end of production. The user must inform us of this in writing:
-about the intention to cease production,
-when you stop production.

3.9 Discontinuation of production
Once the production has ceased and the packaging of the wine has been completed, the duty due on any is payable:
-other stocks,
-unexplained deficiencies.

Wine stocks may also be allowed to be destroyed as if they were unsaleable. However, in the event of unexplained shortages, duty must be paid.

Once you have paid all customs duties or destroyed your wine stock, your licence and permission to enter the premises will be cancelled.

Wine duty categories
The 4 duty categories for all alcohol products are:
-1.3% to 3.4% ABV
-3.5% to 8.4% ABV
-8.5% to 22% ABV
-22% ABV and above

What happens if you don't pay duty?
If you fail to pay duty on time, you will be subject to a civil penalty of 5% duty or £250 - whichever is greater. Further penalties may be charged for each day of non-payment of duty. For details of civil penalties, see Excise Notice 209: civil penalties - fixed, dependent and daily.