Downton Distillery has settled a case with HM Revenue and Customs (HMRC) to standardise and extend storage time restrictions for goods that are being held in duty suspension warehouses. 

Led by founder of the British Distillers Alliance, Alan Powell, a judicial review was launched last year to challenge HMRC’s policy for Trade Facility excise warehouses. These premises may be used by alcohol producers for storing products in duty suspension, which allow alcohol, including neutral grain spirits, to be received without duty or VAT being applied for the production of gin and other drinks ‘in bond’. 

The policy “severely limited” the time in which products could be stored in duty suspension in these facilities, with Powell explaining: “The restrictive ‘dwell time’ policy was applied wildly inconsistently by HMRC and caused cash-flow and production headaches.” He noted that this time period could be as “little as 30 days”.

Hugh Anderson, owner of Downton, added:  “It was clear that not everyone had been treated in the same manner by HMRC and caveats were often added that caused distilleries to spend unnecessary monies when budgets were tight.”

Following the review, goods produced and owned by the warehouse keeper may be held in duty suspension indefinitely, while goods held in third party Trade Facility warehouses will now have a 90-day storage time extension from the end of the last permitted operation in the facility such as bottling or packaging. Powell said: “I have advised HMRC’s Policy team this time period may not be sufficient in some circumstances. Moreover, the 90 day “extension” may be extended further for reasonable cause/need – it is a matter of HMRC’s discretion which in law must always be exercised reasonably.”   

Distilleries have praised the policy change, with Kathy Caton, founder and managing director of Brighton Gin, saying: “Getting this ‘dwell time’ standardised across the board will really help us as we can now steadily build our stocks up over the year for key trading periods without the worry suddenly needing to make a big duty payment.”