Finance (No.2) Bill

House of Commons

Session 2005 - 06
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Other Bills before Parliament

Finance (No.2) Bill

Finance (No.2) Bill
Part 1 — Excise duties
1

A
Bill
To
Grant certain duties, to alter other duties, and to amend the law relating to the
National Debt and the Public Revenue, and to make further provision in
connection with finance.
Most Gracious Sovereign
WE, Your Majesty’s most dutiful and loyal subjects, the Commons of the
United Kingdom in Parliament assembled, towards raising the necessary
supplies to defray Your Majesty’s public expenses, and making an addition to the
public revenue, have freely and voluntarily resolved to give and to grant unto Your
Majesty the several duties hereinafter mentioned; and do therefore most humbly
beseech Your Majesty that it may be enacted, and be it enacted by the Queen’s most
Excellent Majesty, by and with the advice and consent of the Lords Spiritual and
Temporal, and Commons, in this present Parliament assembled, and by the authority
of the same, as follows:—
Part 1
Excise duties
Tobacco products duty
1
Rates of tobacco products duty
(1)
For the Table of rates of duty in Schedule 1 to the Tobacco Products Duty Act
5
1979 (c. 7) substitute—

Table

1.  Cigarettes
An amount equal to 22 per cent of

the retail price plus £105.10 per

10

thousand cigarettes.

Bill 161 54/1

Finance (No.2) Bill
Part 1 — Excise duties
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2.  Cigars
£153.07 per kilogram.

3.  Hand-rolling tobacco
£110.02 per kilogram.

4.  Other smoking tobacco
£67.30 per kilogram.

and chewing tobacco

(2)
This section shall be deemed to have come into force at 6 o’clock in the evening
5
of 22nd March 2006.
2
Tobacco products duty: evasion
(1)
After section 7 of the Tobacco Products Duty Act 1979 (c. 7) (regulations for
management of duty) insert—
“7A
Duty not to facilitate smuggling
10
(1)
A manufacturer of cigarettes or hand-rolling tobacco shall so far as is
reasonably practicable avoid—
(a)
supplying cigarettes or hand-rolling tobacco to persons who are
likely to smuggle them into the United Kingdom,
(b)
supplying cigarettes or hand-rolling tobacco where the nature
15
or circumstances of the supply makes it likely that they will be
resupplied to persons who are likely to smuggle them into the
United Kingdom, or
(c)
otherwise facilitating the smuggling into the United Kingdom
of cigarettes or hand-rolling tobacco.
20
(2)
In particular, a manufacturer—
(a)
in supplying cigarettes or hand-rolling tobacco to persons
carrying on business in or in relation to a country other than the
United Kingdom, shall consider whether the size or nature of
the supply suggests that the products may be required for
25
smuggling into the United Kingdom,
(b)
shall maintain a written policy about steps to be taken for the
purpose of complying with the duty under subsection (1), and
(c)
shall provide a copy of the policy to the Commissioners on
request.
30
(3)
In this section a reference to smuggling products into the United
Kingdom is a reference to importing them into the United Kingdom
without payment of duty which is—
(a)
chargeable under section 2, and
(b)
payable by virtue of section 1(1) of the Finance (No. 2) Act 1992
35
(c. 48) (power to fix excise duty point).
(4)
The Commissioners may notify a manufacturer in writing that they
think the risk of smuggling into the United Kingdom is particularly
great in relation to—
(a)
products marketed under a specified brand name;
40
(b)
products supplied to persons carrying on business in or in
relation to a specified country or place.

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Part 1 — Excise duties
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(5)
The Commissioners may by notice in writing require a manufacturer of
cigarettes or hand-rolling tobacco to provide, within a specified period
of time, specified information about—
(a)
supply of products marketed under a brand name specified
under subsection (4)(a);
5
(b)
supply to persons carrying on business in or in relation to a
country or place specified under subsection (4)(b);
(c)
demand for cigarettes or hand-rolling tobacco in a country or
place specified under subsection (4)(b).
(6)
The Commissioners may issue guidance about the content of policies
10
under subsection (2)(b).
(7)
The Commissioners may make regulations—
(a)
under which they are required to notify manufacturers of
cigarettes or hand-rolling tobacco where products of a kind
specified in the regulations are seized under section 139 of the
15
Customs and Excise Management Act 1979 (c. 2) in
circumstances specified in the regulations,
(b)
specifying the procedure for notification,
(c)
including provision about access to seized products for the
purpose of determining who manufactured them, and
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(d)
requiring manufacturers to provide the Commissioners with
information or documents, of a kind specified in the regulations
or determined by the Commissioners, in relation to notified
seizures.
7B
Penalty for facilitating smuggling: initial notice
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(1)
Where the Commissioners think that a manufacturer has without
reasonable excuse failed to comply with the duty under section 7A(1)
they may give him written notice that they are considering requiring
him to pay a penalty.
(2)
In determining whether to give notice to a manufacturer under
30
subsection (1) the Commissioners shall have regard to—
(a)
the content of the manufacturer’s policy under section 7A(2)(b),
(b)
compliance with that policy,
(c)
action taken pursuant to any notice under section 7A(4),
(d)
compliance by the manufacturer with any notice under section
35
7A(5),
(e)
the number, size and nature of seizures of which the
manufacturer has been given notice by virtue of section
7A(7)(a),
(f)
compliance by the manufacturer with any requirement by
40
virtue of section 7A(7)(d),
(g)
evidence about the level of demand for the manufacturer’s
products for consumption outside the United Kingdom, and
(h)
any other matter that they think relevant.
(3)
A notice must specify the matters to which the Commissioners have
45
had regard in determining to give it.

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(4)
After the end of the period of six months beginning with the date on
which a notice is given to a manufacturer, the Commissioners shall give
him notice in writing either—
(a)
that they require payment of a penalty, or
(b)
that they do not require payment of a penalty.
5
(5)
The Commissioners shall comply with subsection (4) during the period
of 45 days beginning with the end of the period specified in that
subsection; and for that purpose they shall consider—
(a)
any representations made by the manufacturer during that
period in such form and manner as the Commissioners may
10
direct, and
(b)
action taken by the manufacturer during that period.
7C
Penalty for facilitating evasion: penalty notice
(1)
A notice under section 7B(4)(a) (a “penalty notice”) must—
(a)
specify the amount of the penalty which the manufacturer is
15
required to pay, and
(b)
state the grounds on which the Commissioners think that the
manufacturer has failed to comply with the duty under section
7A(1).
(2)
The amount specified under subsection (1)(a) must not exceed £5
20
million; and in determining the amount to specify the Commissioners
shall have regard to—
(a)
the nature or extent of the manufacturer’s failure to comply
with the duty under section 7A(1),
(b)
action taken by the manufacturer to secure compliance with
25
that duty,
(c)
the content of the manufacturer’s policy under section 7A(2)(b),
(d)
compliance with that policy,
(e)
action taken pursuant to any notice under section 7A(4),
(f)
compliance by the manufacturer with any notice under section
30
7A(5),
(g)
the number, size and nature of seizures of which the
manufacturer has been given notice by virtue of section
7A(7)(a),
(h)
the loss of revenue by way of duty under section 2, or VAT, in
35
respect of the products seized, and
(i)
any other matter that they think relevant.
(3)
A manufacturer who is given a penalty notice may require the
Commissioners to review the decision to issue the notice; and—
(a)
a requirement must be imposed by notice in writing given to the
40
Commissioners before the end of the period of 45 days
beginning with the date of the penalty notice,
(b)
the Commissioners shall comply with a requirement given in
accordance with paragraph (a),
(c)
the Commissioners shall confirm, vary or withdraw the penalty
45
notice, and
(d)
the Commissioners shall be taken to have confirmed the penalty
notice unless, within the period of 45 days beginning with the

Finance (No.2) Bill
Part 1 — Excise duties
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date of the requirement to conduct the review, they have varied
or withdrawn it by notice in writing to the manufacturer.
(4)
If following a requirement under subsection (3) the Commissioners
confirm or vary the notice (or are taken to have confirmed it) the
manufacturer may appeal to a VAT and duties tribunal.
5
(5)
The tribunal may—
(a)
cancel the penalty notice,
(b)
reduce the penalty, or
(c)
confirm the penalty notice.
7D
Sections 7A to 7C: supplemental
10
(1)
Payment of a penalty imposed under section 7B(4)(a) shall not be
allowed as a deduction in computing income, profits or losses for
purposes of income tax or corporation tax.
(2)
A penalty may be enforced as a debt due to the Commissioners.
(3)
In sections 7A to 7C and this section a reference to a manufacturer of
15
cigarettes or hand-rolling tobacco includes a reference to a person who,
in the opinion of the Commissioners—
(a)
arranges to have cigarettes or hand-rolling tobacco
manufactured, and
(b)
is wholly or partly responsible for the initial supply of the
20
products after manufacture.
(4)
Where a manufacturer is a parent undertaking or a subsidiary
undertaking (within the meaning of section 258 of the Companies Act
1985 (c. 6)) the Commissioners may—
(a)
treat the parent and its subsidiaries as a single undertaking for
25
the purpose of sections 7A to 7C and this section, and
(b)
in particular, enforce a penalty imposed on the single
undertaking as a debt owed by—
(i)
the single undertaking,
(ii)
the parent, or
30
(iii)
any of the subsidiaries.
(5)
A notice or guidance under section 7A(4) to (6)—
(a)
may be issued to manufacturers generally or to one or more
manufacturers or classes of manufacturer,
(b)
may be expressed to apply to or in respect of manufacturers
35
generally or only to or in respect of one or more specified
manufacturers or classes of manufacturer,
(c)
may make provision generally or only in relation to specified
cases or circumstances,
(d)
may make different provision in relation to different cases or
40
circumstances, and
(e)
may be varied, replaced or revoked.
(6)
The Treasury may by order—
(a)
amend the list in section 7B(2) or 7C(2) so as to—
(i)
add an entry,
45
(ii)
remove an entry, or

Finance (No.2) Bill
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(iii)
amend an entry;
(b)
amend sections 7A to 7C and this section so as to alter the class
of tobacco products in relation to which they apply.
(7)
An order under subsection (6)—
(a)
may include transitional, consequential or incidental provision,
5
(b)
shall be made by statutory instrument,
(c)
shall be laid before the House of Commons, and
(d)
shall cease to have effect unless approved by resolution of the
House of Commons within the period of 28 days beginning
with the date on which it is laid (disregarding any period of
10
dissolution or prorogation or of adjournment for more than four
days).”
(2)
At the end of section 9 of the Tobacco Products Duty Act 1979 (c. 7)
(regulations) (which becomes subsection (1)) add—
“(2)
Regulations under this Act—
15
(a)
may enable the Commissioners to dispense with compliance
with a provision of the regulations (whether absolutely or
conditionally),
(b)
may make provision generally or only in relation to specified
cases or circumstances,
20
(c)
may make different provision in relation to different cases or
circumstances, and
(d)
may include transitional, consequential or incidental
provision.”
(3)
This section shall come into force in accordance with provision made by the
25
Treasury by order.
(4)
An order under subsection (3)—
(a)
may include transitional, consequential or incidental provision, and
(b)
shall be made by statutory instrument.
Alcoholic liquor duties
30
3
Rate of duty on beer
(1)
In section 36(1AA)(a) of ALDA 1979 (rate of duty on beer) for “£12.92”
substitute “£13.26”.
(2)
This section shall be deemed to have come into force at midnight on 26th
March 2006.
35
4
Rates of duty on wine and made-wine
(1)
For Part 1 of the Table of rates of duty in Schedule 1 to ALDA 1979 (rates of
duty on wine and made-wine) substitute—

Part 1
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Finance (No.2) Bill
Part 1 — Excise duties
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Wine and made-wine of a strength not exceeding 22 per cent

Description of wine or made-wine
Rates of duty per

hectolitre

£

Wine or made-wine of a strength not
53.06

5

exceeding 4 per cent

Wine or made-wine of a strength exceeding
72.95

4 per cent but not exceeding 5.5 per cent

Wine or made-wine of a strength exceeding
172.17

5.5 per cent but not exceeding 15 per cent

10

and not sparkling

Sparkling wine or sparkling made-wine of a
166.70

strength exceeding 5.5 per cent but less than

8.5 per cent

Sparkling wine or sparkling made-wine of a
220.54

15

strength of 8.5 per cent or of a strength

exceeding 8.5 per cent but not exceeding 15

per cent

Wine or made-wine of a strength exceeding
229.55

15 per cent but not exceeding 22 per cent

20
(2)
This section shall be deemed to have come into force at midnight on 26th
March 2006.
5
Repeal of provisions of ALDA 1979 of no practical utility etc
(1)
The following provisions of ALDA 1979 shall cease to have effect—
(a)
section 12(4) (power to refuse or revoke distiller’s licence where
25
premises near to premises of a rectifier, registered brewer or vinegar-
maker);
(b)
section 14 (duty on spirits - attenuation charge);
(c)
section 15(4) (provision of accommodation in distiller’s warehouse);
(d)
section 18(5) (power to refuse licence as a rectifier where premises near
30
to premises of a distillery);
(e)
section 21 (restrictions relating to rectifiers);
(f)
section 24 (restriction on carrying on of other trades by distiller or
rectifier);
(g)
section 26 (importation and exportation of spirits);
35
(h)
section 32 (restriction on transfer of British spirits in warehouses);
(i)
section 35 (returns as to importation, manufacture, sale or use of
alcohols);
(j)
section 55A (wine and made-wine of a strength not exceeding 5.5%);
(k)
section 67 (power to regulate keeping of dutiable alcoholic liquors by
40
wholesalers and retailers);