Excise-Temporary Approvals
Published 15 March 2023
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Who is likely to be affected
Businesses with the following HMRC approvals: Alcohol Wholesaler Registration Scheme, Warehousekeepers and Owners of Warehoused Goods, Registered Dealers in Controlled Oil, Tobacco Products Machinery Licensing, Raw Tobacco Approval Scheme and Fulfilment Houses, whose approval has been revoked and where any subsequent review or appeal has failed.
General description of the measure
This measure provides discretion for HMRC to extend a temporary approval given to an excise business after a review of a decision to revoke an approval (an approval decision) has been upheld and not subsequently appealed or an appeal against an approval decision (or a review of it) has been considered and refused. This will allow HMRC to work positively with the business to extend the temporary approval for a short period, so they are able to wind-down their activities without becoming liable to penalties.
Policy objective
The objective of this measure is to ensure HMRC powers are applied fairly and reasonably.
Background to the measure
Excise businesses must be approved by HMRC to conduct certain controlled activities. HMRC may revoke a business’s approval where it fails to meet HMRC’s ‘fit and proper’ criteria. Finance Act 2021 gave HMRC power to grant temporary excise approval to those seeking a review of or appealing against an approval decision (or a review of it), providing they could demonstrate a real risk that the business could fail before the court heard the appeal. Under that legislation the temporary approval automatically ends once an approval decision has been cancelled on a review, upheld on a review and not subsequently appealed, or an appeal against the approval decision (or a review of it) has been finally determined. For those dealing in the storage of excise goods this approach is unworkable, as it offers no opportunity for the business to wind down its operations if their appeal is unsuccessful.
The measure adds a new discretionary power that would allow HMRC to extend the temporary approval for a short period following a review of an approval decision that has been upheld and not subsequently appealed or an unsuccessful appeal against that decision (or a review of it). This would enable the business to legally sell any excise goods it holds without incurring a penalty. As a minor but necessary change to the operation of temporary excise approvals the measure has not been previously announced or consulted on, but implementation of an effective solution at the earliest opportunity is beneficial for business.
Detailed proposal
Operative date
The measure will have effect on and after the date of Royal Assent to Spring Finance Bill 2023.
Current law
Current law on temporary approvals is contained in sections 16A,16B and 16C of Finance Act 1994 as added by Finance Act 2021.
Proposed revisions
Legislation will be introduced in Spring Finance Bill 2023 to amend section 16B of Finance Act 1994, giving HMRC a discretion to extend a temporary approval for a short period.
Summary of impacts
Exchequer impact (£m)
| 2022 to 2023 | 2023 to 2024 | 2024 to 2025 | 2025 to 2026 | 2026 to 2027 | 2027 to 2028 |
|---|---|---|---|---|---|
| nil | nil | nil | nil | nil | nil |
This measure is not expected to have an Exchequer impact.
Economic impact
This measure is not expected to have any significant economic impacts.
Impact on individuals, households and families
There are expected to be no impacts on individuals as this measure only affects businesses.
Equalities impacts
It is not expected that there will be adverse effects on any group sharing protected characteristics.
Impact on business including civil society organisations
This measure will have a negligible impact on a small number of businesses. They will benefit financially from being able to avoid penalties, wind down their business and sell stock on hand after their appeal against approval revocation has been rejected. One-off costs to the business could include familiarisation with the changes and preparation of evidence to support their negotiations with HMRC. There are expected to be no continuing costs to businesses. This measure is not expected to impact civil society organisations. It is expected to improve business’ experience of dealing with HMRC as it will demonstrate a flexible and reasonable approach with those affected.
Operational impact (£m) (HMRC or other)
There are no financial consequences for HMRC.
Other impacts
Other impacts have been considered and none have been identified.
Monitoring and evaluation
The impact will be assessed by monitoring the number of cases where an agreement is reached to allow a reasonable period for business to wind down after the appeals process has been exhausted. The measure will be kept under internal review with relevant stakeholders.
Further advice
If you have any questions about this change, please contact the alcohol policy team by email: mailbox.alcoholpolicy@hmrc.gov.uk