Guidance

Excise and insolvency — insolvency practitioner bulletin 5 (2025)

Published 14 April 2025

What you need to know

Excise duties are indirect taxes levied on: 

• goods at the point of manufacture, packaging, or importation such as alcoholic products, hydrocarbon oils and tobacco products
• services, such as betting and gaming

HMRC approves and monitors excise approvals and is responsible for collecting excise duties.  

This excise note covers the following areas:   

• alcohol duties (beer, cider, perry, spirits and other fermented products)
• gambling, gaming, and bingo duties
• hydrocarbon oils duty — now officially called fuel duty, which cover fuels used for heating or by motors or engines
• Tobacco Duty

Many businesses involved in producing or handling goods liable to excise duty use reliefs and will need to be approved by HMRC to carry out certain activities. The following is a list of excise reliefs and approvals that a trader may operate:  

• registered consignee or consignor
• goods for storage and distribution warehouse (excise warehouse)
• excise drawback
• the alcohol wholesaler registration scheme (AWRS)
• warehouse keeper approval
• owner of goods approval
• producers, holders and users of industrial (denatured) alcohol

Anyone trading excise goods must be approved before trading. They must not trade in non-duty-paid goods, unless authorised. These requirements also apply to insolvency practitioners, as they apply to any other trading business. 

This note provides guidance on the areas in which the rights of insolvency practitioners to recover assets subject to excise duty, and to sell those assets, can potentially conflict with excise duty requirements.

HMRC has functions to prevent the trade in non-duty-paid goods, and to enforce excise duty legislation.

How HMRC excise powers can conflict with insolvency legislation

Excise duty legislation provides HMRC with unique powers to seize goods where HMRC officers suspect duty has not been paid on goods liable to excise duty. This can conflict with the asset protection measures contained in insolvency procedures, which automatically transfer responsibility for an entity’s assets to the appointed insolvency practitioner. 

Excise legislation may require anyone trading in excise goods to be approved and to meet certain conditions. This includes insolvency practitioners. There can be issues with approvals when an insolvency practitioner:

• takes over a business trading in excise goods
• tries to realise assets that are subject to excise duty 

There can be severe consequences for the insolvent customer if they incorrectly trade in excise goods, including: 

• assessments for the duty liabilities
• the seizure and destruction of excise goods
• criminal prosecution and the possibility of a jail sentence
• civil penalties up to 100% of the amount of unpaid excise duty

There can also be negative consequences for HMRC if we incorrectly seize excise goods from an insolvent customer or prevent them from selling excise goods, including: 

• reputational damage
• receiving no dividend or a reduced dividend from an insolvency procedure
• wasted time and effort including higher fees in an insolvency through dealing with negotiations and legal disputes

This note provides advice about: 

• the responsibility for the completion of excise returns
• the responsibility of an insolvency practitioner to ensure that excise duty is paid on goods they sell, or how to ensure they are authorised to sell excise goods non-duty-paid
• how an insolvency practitioner can ensure they are correctly approved to trade in excise goods
• what to do where HMRC have seized excise goods and an insolvency practitioner wants them back

Excise records

Anyone who is involved in any way with goods liable to excise duty is considered a ‘revenue trader’ by HMRC. They are required by HMRC to keep records associated with this trade. This requirement includes insolvency practitioners. 

Excise Notice 206 provides more detail on what records and accounts you should expect any insolvency practitioner trading in goods liable to excise duty to keep.

Insolvency practitioners are also required to carry out due diligence checks on suppliers and customers if they plan to buy or sell non-duty-paid goods. The Excise due-diligence condition guidance manual provides detailed information about this.

Dealing with excise goods in insolvency

If you are dealing with an insolvent business which is involved in the supply of goods liable to excise duty, such as alcohol or tobacco, then you should undertake a stocktake of:

• what excise goods the business possesses
• the duty status and location of the goods

You should also reconcile that information with the business records, the duty accounts and returns the business has submitted to HMRC so you can correct any errors and inform HMRC of any discrepancies.  

If an insolvency practitioner sells any excise goods after their appointment, they must account for excise duty which is due, as an expense of the insolvency. They should also be aware of their responsibility to carry out checks on any customers they wish to supply excise goods to. This is to reduce the risk of involvement in fraudulent supply chains and to make sure that if they supply non-duty-paid goods then the insolvency practitioner and their customers have the correct approvals in place to permit this.  

If an insolvency practitioner decides to destroy alcohol or tobacco they should inform HMRC of their intention to destroy the goods:

• 2 days before the date of destruction, if in approved premises
• 5 days before the date of destruction if in non-approved premises

The insolvency practitioner should contact HMRC using this email address: niualcohol@hmrc.gov.uk

Excise approvals

In certain circumstances the trade in some excise goods requires approval by HMRC. Insolvency practitioners should confirm that they have:

• notified HMRC
• been appointed to control that business
• been approved by HMRC to trade in those excise goods

Alcoholic products producer approval (APPA)

Insolvency practitioners must contact HMRC excise and gambling enquiries as soon as possible after their appointment to a business in which they intend to produce alcohol products. This is to inform HMRC of their appointment.

Alcohol wholesaler registration scheme (AWRS)

Insolvency practitioners must contact HMRC excise and gambling enquiries as soon as possible after their appointment to a business in which they intend to sell alcohol to other businesses. This is to inform HMRC of their appointment.

If the business already holds an AWRS approval, then HMRC may approve the amendment and continuation of that approval when contacted by the insolvency practitioner. If the business does not have an AWRS approval, then the insolvency practitioner must apply to HMRC for approval.

If HMRC rejects an application by an insolvency practitioner for the continuation of an AWRS approval for a business they are appointed to

The insolvency practitioner is still able to make wholesale sales of alcohol: 

• in the 30 days immediately following the date of refusal, if the value of the sales is £3 million or less
• in the 45 days immediately following the date of refusal, if the value of the sales is more than £3 million

This provides businesses who have been refused an AWRS approval with a ‘run-off’ period so they can legally sell their stock without an immediate impact to ongoing business. 

HMRC Excise Notice 2002 contains further details about how the AWRS scheme operates.

Denatured alcohol products

Insolvency practitioners must contact HMRC excise and gambling enquiries as soon as possible after their appointment to a business where they intend to produce, distribute or use denatured alcohol products.

Duty free spirits

Insolvency practitioners must contact HMRC excise and gambling enquiries  as soon as possible after their appointment to a business where they intend to use duty free spirits for manufacturing, scientific or medical purposes.

Warehousekeepers and Owners of Warehouse Goods (WOWGR)

Insolvency practitioners must contact HMRC excise and gambling enquiries as soon as possible after their appointment to a business which holds excise goods in duty suspension, for example, the business holds non-duty-paid goods.  

If the business already holds a WOWGR approval

HMRC may approve the amendment and continuation of that approval when contacted by the insolvency practitioner.

If the business does not have a WOWGR approval

The insolvency practitioner must declare and pay any excise duty due on the goods which have incorrectly been held in duty suspension without a valid WOWGR approval.

HMRC Excise Notice 196 contains more details about how the scheme operates. 

Read about how to pay the excise duty due on receiving, storing and moving excise goods.

Registered dealers in controlled oil (RDCO)

If an insolvency practitioner is appointed to a business and plans to sell oils subject to a rebated rate of duty they must both:

• check the business already holds an RDCO approval from HMRC
• inform the HMRC mineral oils reliefs centre of their appointment

This is so HMRC can carry out checks and amend the approval.

If the business does not already hold a RDCO approval on appointment, the insolvency practitioner must apply for a RDCO approval using form HO4 if they plan to sell controlled oils.

HMRC Excise Notice 192 provides further detail about the RDCO scheme and how it operates.

Tobacco manufacturers, factories, and stores

If an insolvency practitioner takes over a business carrying out any activity involving the manufacture, production or storing of tobacco goods they must ensure that all manufacturing, production, and storage premises have been registered with HMRC for this purpose.

As soon as possible after the insolvency practitioner is appointed they must contact excise and gambling duties enquiries to tell them about their appointment.

Excise Notice 476 contains more details about tobacco products duty and registering premises with HMRC. 

Read about how to submit TP7 returns to pay duty on tobacco products.

Tobacco Products Duty — Raw Tobacco Approval Scheme (RTAS)

If an insolvency practitioner takes over a business carrying out any activity involving raw tobacco, they must be approved by HMRC under the RTAS scheme.

As soon as possible after the insolvency practitioner is appointed they must contact HMRC to tell them about their appointment.

Excise Notice 2003 contains more details about how the scheme operates.

Temporary approvals

If HMRC rejects or revokes an excise approval then an insolvency practitioner may be able to apply for a temporary approval to continue excise trade until their request for an independent review or appeal to tribunal has been heard.

Pre-pack administrations

Where an insolvency practitioner intends to conduct a pre-pack administration which will involve the sale of goods liable to excise duty which cannot be traded without the approvals set out above, the insolvency practitioner will need to contact HMRC before the sale.

This is so HMRC can act to either:

• amend the approval so that the insolvency practitioner can sell the goods
• direct the insolvency practitioner to reapply for approval

The insolvency practitioner must also make sure that the buyer in the pre-pack administration process holds the necessary excise approvals before completing the pre-pack administration process.

Excise goods owned by insolvent customers

Excise fraud poses a significant risk to HMRC.

HMRC has significant powers to seize goods liable to excise duty under s139 Customs and Excise Management Act 1979. This can conflict with the rights of an insolvency practitioner to gain control of an insolvent business’s assets where either:

• there is a moratorium on creditors’ action in an administration
• a stay is granted to a company under s130(2) Insolvency Act 1986 when it is placed into compulsory liquidation

This conflict means we do not advise insolvency practitioners to continue to obtain and sell excise goods without the relevant approval. This could result in HMRC issuing an excise assessment and possibly a penalty directly to the insolvency practitioner.  

This also applies where the goods have been seized because HMRC suspects that excise duty has not been paid.

Where an insolvency practitioner has identified that excise goods have been seized by HMRC, they should try to obtain as much documentation as possible about the seized goods.

If the insolvency practitioner has evidence that the goods HMRC seized were excise duty paid they can challenge the right of HMRC to seize the goods and get the goods back, or receive compensation. 

Unless the insolvency practitioner can provide evidence that excise goods have been incorrectly seized, HMRC will contest attempts by insolvency practitioners to take possession of the non-duty-paid goods. 

Insolvency practitioners should always try to resolve any issues with excise goods seized by HMRC before taking legal action to recover the goods, by contacting the HMRC officer named on the seizure notice.

If no contact details are available for the officer who seized the goods insolvency practitioners can contact the excise appeals team by email at: admin.excise.appeals.team@hmrc.gov.uk.

If an insolvency practitioner applies to court to challenge an excise seizure notice on the basis that the continuing seizure action is prevented by a moratorium or stay granted under insolvency law, HMRC will consider a request to court for an order that the insolvency moratorium or stay, should be set aside for the non-duty-paid excise goods.

Further questions

If you have any questions about this insolvency note, please direct them to R3, or your representative group, who will take them forward with HMRC.