Review of HMRC's Powers, Deterrents and Safeguards

Excise compliance checks

Changes for excise duties on alcohol, tobacco, energy products, betting and gambling and Air Passenger Duty

Changes have been made with effect from 1 April 2011 to create a robust compliance checking framework for excise duties that is proportionate to the risks in this area of work. These are in line with the new compliance checks framework for other taxes. Excise was considered as a whole because of the need for generic legislation and the significant risk of fraud. The priority is to protect legitimate trade and the revenue.

Finance (No 3) Act 2010 amends the Customs and Excise Management Act (CEMA) 1979 to

• clarify the scope of the inspection power
• extend powers to inspect goods to allow for inspection of documents related to goods and
• introduce a new formal information notice to access information held by third parties.

Changes have also been made to

• align record keeping requirements and
• increase the time limits for assessments and claims from three to four years to bring them back into alignment with those for other taxes

The changes to record keeping and time limits are the same as for other compliance checks.

There are transitional arrangements so the new time limits do not become fully operative until 1 April 2012. These ensure that periods which have already gone out of time for assessments or claims do not come back into time.

These changes were announced at Budget 2010 (Budget Note 69). On 22 June 2010 it was announced that the Government intended to legislate (Budget Note 38 (PDF 38K)). Draft legislation and an explanatory note were published on 12 July 2010.

Information on how HM Revenue & Customs carries out excise compliance checks from 1 April 2011

More information can be found at – Powers to tackle excise fraud are strengthened.

Finance (No.3) Act 2010

Section 29 (Opens new window) and Schedule 13 (Opens new window) of Finance (No 3) Act 2010 make these changes.

Statutory Instrument

The following Statutory Instrument brings into force the legislation in Finance (no.3) Act 2010

• 2011 No. 777 (C.31) (Opens new window) The Finance (No. 3) Act 2010, Schedule 13 (Record Keeping, Time Limits and Information and Inspection Powers) (Appointed Day and Transitional Provision) Order 2011

How the new Excise Compliance Checks legislation was developed through consultation

A first consultation on excise modernisation and compliance checks was published in July 2009.

A second consultation,'Excise: Modernisation and Compliance Checks: the next stage' , published at the Pre-Budget Report 2009, listed the responses and proposed updating the existing compliance checking framework which is mainly in the Customs and Excise Management Act 1979.

Draft legislation to supplement that consultation was published on 14 January 2010 and a summary of responses to that consultation together with an Impact Assessment (PDF 194K) were published on 24 March 2010. An Impact Assessment was published on 22 June 2010.

Excise modernisation

The 2009 consultation on compliance checks also covered options for simplifying excise administrative law. These are being taken forward separately and no legislation is currently planned.