HMRC - Perils and Pitfalls. 19 September 2017

Transcription

1 HMRC - Perils and Pitfalls 19 September 2017

2 Todays Agenda 1. Introduction to Johnston Carmichael Brewing & Distilling 2. HMRC Licensing and VAT Distilling and the HMRC Licences required Dealing with HMRC during the licencing process and beyond On the Horizon Brexit

3 Introduction Paul Cochrane Tax Director We are the Largest Scottish accountancy firm with 57 Partners and over 650 staff and over 14,000 clients including 400 food & drink businesses The Brewers Association of Scotland and The Scottish Craft Distillers Association were both formed in our office We are immersed in the industry, understand the issues, have specialist expertise and can make a difference to your business

4 Introduction Paul Cochrane Tax Director Specialise in VAT and Customs Duty 15 years experience within HMRC, Big 4 and JC Advisor to a range of businesses including a number of distillers, brewers, warehouse keepers and bottlers

5 Licenses required to produce and store Summary Distillers License - Plant and Processes Distillery License Security and Construction Warehouse License (WOWGR) Alcohol Wholesalers Registration (AWRS) Rectifiers or Compounders EMCS if receiving or shipping duty unpaid Spirit Drink Verification Scheme

6 Geographical Indication (GI) Scotch Whisky Verification HMRC verifies product as Scotch Whisky - controls use of the term through Spirit Drink Verification Scheme. Visits to verify existing distilleries compliance expected to rise, particularly in order to verify age statements Guidelines which cover; Plant and Processes Ingredients including enzymes Equipment Casks oak, fully drained and hollow<700 litres No shipment in cask Labelling

7 Dealing with HMRC during licensing process Expect a detailed meeting and regular contact 45 day approval period Not Ready rejections do not affect subsequent applications Missing forms can be added and HMRC will often make amendments themselves following discussions Local applications subject to national approval - expect further enquiries Pay special attention to any specific conditions - can be removed later

8 Dealing with HMRC during licensing process What to expect Delays! Heightened perception of risk The majority of information required is not evident from the application forms, E.g. a Business Plan 2-3 years or financial projections. Information specific to the directors or controlling minds Fit and Proper Status Duplication

9 Dealing with HMRC during licensing process Follow up information request 1. Written Authority from controlling mind of the business to discuss matters with agents/employees 2. Photographic ID of key personnel plus their full names, home addresses, dates of birth & national insurance numbers 3. Evidence to substantiate the sources of funding for the project 4. Costings and Projections 5. Site plan highlighting location of fire doors/fire routes 6. Health & Safety Risk Assessment 7. Disaster Plan 8. Details of Security in operation at site 9. If acquiring plant & equipment from an existing distiller/distillery operator, HMRC would require this operator to formally request cancellation of whatever authorisations are held. 10. Intentions to trade from suppliers and customers 11. Details of raw materials to be used in the production of spirit 12. Details of Plant & processes that will be used to produce spirit 13. What type of spirit will be produced 14. Maximum amount of Spirit that will be stored on site 15. Hauliers that will be used 16. Details of Commercial Insurance

10 Dealing with HMRC during licensing process Follow up information request 1. Written Authority from controlling mind of the business to discuss matters with agents/employees 2. Photographic ID of key personnel plus their full names, home addresses, dates of birth & national insurance numbers 3. Evidence to substantiate the sources of funding for the project 4. Costings and Projections 5. Site plan highlighting location of fire doors/fire routes 6. Health & Safety Risk Assessment 7. Disaster Plan 8. Details of Security in operation at site 9. If acquiring plant & equipment from an existing distiller/distillery operator, HMRC would require this operator to formally request cancellation of whatever authorisations are held. 10. Intentions to trade from suppliers and customers 11. Details of raw materials to be used in the production of spirit 12. Details of Plant & processes that will be used to produce spirit 13. What type of spirit will be produced 14. Maximum amount of Spirit that will be stored on site 15. Hauliers that will be used 16. Details of Commercial Insurance

11 When things go wrong Reasons for licence refusals or cancellations Previous tax debts due to HMRC Directors are not Fit and Proper people Suspicion that alcohol has been produced before the licence application was made Insecurity of funds The licence was not being used at the time Weakness of financial reporting systems and adherence to money laundering checks.

12 When Things go Wrong What can be done about it No Absolute right to a licence 2 nd officer reviews Special licence conditions Changes to the board An offer to pay lost tax?

13 Brexit - What does the future hold? Beyond Brexit Principally concerning importers and exporters Some Indirect Taxes will be largely unaffected, VAT and excise duty in goods for home use. Import VAT, Customs and Excise Duties most affected VAT and or Customs Union with the EU? Free Trade State? or Free Trade Deals?

14 The Customs Challenge Red Tape UK The Frictionless Border EU 1. Certificate of origin 2. Security certificates 3. Transit Permit 5. Freight Documentation Commercial Invoice drawn up for customs 4. Commercial tariff Invoice calculation changes purposes - additional invoice detail needed 6. VAT certification 7. Health checks 8. Customs Valuation

15 Johnston Carmichael potential role HMRC Licensing and VAT 1. Prepare business plans and license applications 2. Registration for taxes and ongoing compliance/completion of accounts 3. Raising investment - Corporate Finance 4. Fiscal Agency - meeting all HMRC s statutory record keeping requirements 5. Staff secondment and training

16 Thank you for your attention Keep in touch Johnston Carmichael 227 West George Street, Glasgow, G2 2ND jcca.co.uk