Second supplementary memorandum from the
Gin and Vodka Association of Great Britain
In response to a question by Mr Bill Tynan (Q
350) at the above session I agreed to respond in more detail about
the annual cost of complying with certain Excise Duty liability
obligations.
Prior to April 1993 spirits producers (warehouse-keepers)
were responsible and liable for Excise Duty until goods were accepted
by UK customers or until exported. Either way the control and
the transport of goods in the UK and related documentation meant
that the warehouse-keeper's responsibility and liability was discharged
at the same time as their responsibility for the physical goods.
Delivery Advice Notes, Airway Bills or Bills of Loading served
as proof of discharge of the Excise Duty responsibility and liability.
From April 1993 the AAD (Accompanying Administration
Document) was introduced and the Excise Duty responsibility and
liability is now only discharged after the principal copy of the
AAD is returned to the originating warehouse-keeper. The AAD goes
with the goods until these are exported outside the EC or accepted
by another designated registered warehouse-keeper within the EC.
This system places additional burden on the warehouse-keeper.
1. It must attempt to control the movement
of goods throughout their transit within the EC, despite the fact
that title to the goods may have passed to a third party at the
UK port.
This increases the resources required and costs
incurred by the warehouse-keeper.
2. It must maintain a system of control
of AADs, ensuring their return within 6 months of original despatch,
despite the fact that the goods may be the property of a third
party who may divert the goods, legitimately or illegitimately,
to ultimate destinations different to that originally designated
on the AAD.
This increases the resources required and costs
incurred by the warehouse-keeper in monitoring and controlling
the transit of goods or incurring additional transit costs in
transferring title to the physical goods at their end destination,
rather than at the UK port.
3. If AAD's are not returned within 6 months
or the goods are lost or stolen in transit, the warehouse-keeper
becomes responsible and liable for the Excise Duty (UK Duty rate
unless it can be shown that the goods were lost or stolen in another
EC territory).
This results in irrecoverable Duty costs that
are a direct charge against profits and/or additional insurance
premiums for transit insurance to cover the additional Duty risk
and additional risk of overseas transportation.
It is difficult to ascertain a definitive and
reliable cost incurred by the Industry. Most players I have talked
to do not segregate these costs and either do not publish or are
unwilling to publish them. For most players, the additional risk
and liability tends to be covered as part of a block transit insurance
policy which will be composite covering all products (incorporating
whisky, rum and other spirits, as well as gin and vodka).
In 2000 my own company suffered duty losses
of £125,000 and wholesale goods losses of £120,000 on
stolen/lost/diverted goods in transit within the EC, emanating
from two principal thefts. Our company policy is to insure the
value of goods and duty, therefore the actual cost of these incidents
is reflected in future insurance premiums reflecting the levels
of losses sustained in previous years. A specific actual or estimated
cost is therefore not available to directly and fully answer the
question tabled.
Mr Fraser Morrison
| 
