Review of HM Revenue & Customs (HMRC) Powers, Deterrents and Safeguards

Excise Modernisation and Compliance checks

Compliance checks

This area of the review’s work builds on legislation in Finance Acts 2008 and 2009 which established a new compliance checking framework which consists of:

  • information and inspection powers
  • aligned rules on record keeping
  • aligned time limits for assessments and claims

FA 2008 (Schedules 36, 37 and 39) covered Income Tax, Capital Gains Tax, Corporation Tax, PAYE (Pay As You Earn) and VAT and came into effect on 1 April 2009.

FA 2009 (Schedule 47, 48, 50 and 51) extended this framework to the environmental taxes, Insurance Premium Tax, Stamp Duty Land Tax, Stamp Duty Reserve Tax, Inheritance Tax and petroleum revenue tax. This is expected to come into effect on 1 April 2010.

The review is now looking at what compliance checking powers are needed for excise duties. It was decided to consider excise as a whole because of the generic legislation and the special considerations with this area, not least the significant risk of fraud.

Excise modernisation

For the last few years there has been a joint initiative between the Alcohol and Tobacco trades and HMRC, working towards a 'desired future state'. The Powers Review’s programme has provided an opportunity to consider modernisation of excise law more generally.

Consultation

The first round of consultation on both these elements began on 9 July 2009 with an initial consultation document ‘Excise: Modernisation and Compliance Checks’ setting out proposals.

The proposals on compliance checks are:

  • For the non-goods based duties such as gambling duties and Air Passenger Duty Schedule 36 is likely to be a good model.
  • For the other duties based on goods (alcohol, tobacco and energy products) Schedule 36 powers may not be sufficient to address the nature of the trade and the risk. The priority is to protect legitimate trade and the revenue.
  • To align time limits on four years (now three) and the record keeping rules as for the other taxes.

The proposals on Excise Modernisation are to:

  • streamline and rationalise the current registration and approvals systems
  • consider the feasibility of introducing a unified warehousing system with common rules, conditions and procedures for all types of excise premises
  • rationalise and simplify the alcohol return and payment process
  • adopt an error correction process for minor errors similar to other taxes
  • change other current obligations (eg remove the historic requirement to 'make entry' of premises in the Customs & Excise Management Act)

Views are also sought on:

  • how excise law could be changed to simplify processes or reduce costs to business
  • the throughput level for general storage and distribution warehouses and eligibility to operate a trade facility warehouse

Consultation finishes on 1 October 2009.

Later in the year we will develop the proposals with a view to another round of consultation with draft legislation.

Excise: Modernisation and Compliance Checks – Consultation Document July 2009. Comments by 1 October 2009.