Licensees can claim duty credit on wasted beer

Duty on out-of-date beer that hasn't been sold due to the Government's lockdown can be claimed back by operators.

A source, who is closely linked to pubs and breweries but did not want to be named, said: “It's about declaring the beer in your cellar as ullage [generally defined as spoiled beer], because if you can report it as ullage, then licensees are in their right to collect duty credit."

The brewer will then not pay for that portion of the duty on the returned beer.

Reducing the strain ​

The British Beer & Pub Association (BBPA) chief executive Emma McClarkin said: “The BBPA is pleased that HMRC has listened to our concerns and provided additional flexibility in these extraordinary times.

“We believe this will help in the short term by providing assurances to both pubs and brewers by facilitating these processes and getting excise for unsold beer back to brewers and credit to pubs.

“We are also mindful that it will help in the longer term, when it comes time to uplift and reopen pubs, by reducing the strain on the logistics of uplifting partial or full containers.” 

Means of proof​

However, in order to successfully claim the credit, it is critical the pub receives advanced permission from the brewer that the beer can be disposed of and that it is recorded correctly.

Yesterday (30 March), HMRC introduced a temporary measure to help brewers and publicans in the destruction of spoilt beer during coronavirus which retains social distancing.

Therefore, for the brewer to claim the relief, they must be happy that destruction has taken place and keep suitable evidence which, for example, can be in the form of a video.

The agreed person at the premises can record this and give this to the brewer for their records.

The Society of Independent Brewers (SIBA) and BBPA have also jointly offered some advice on how to approach this.

Retaining social distancing measures

SIBA head of public affairs Barry Watts said: “The key thing here is that the brewery must give advanced permission to the pub that the beer can be disposed of, only then are publicans permitted to destroy spoilt beer on their premises without the need for a responsible representative of the brewery to supervise it – and the pub must video record the disposal as means of proof.

“This measure is important and welcome, as it means breweries and publicans can retain social distancing measures and claim back duty more easily on unsold beer.”

Normally, the destruction of beer must be supervised by a responsible person from the brewery. However, due to social distancing requirements this is currently difficult for brewers and publicans to follow.

Brewers can now appoint the publican or an agreed person at the premises to carry out the destruction of spoilt beer. An Authorised Company Representative (ACR) from the brewery does not need to be present.

Sufficient details ​

McClarkin also reiterated how imperative it is that licensees must not destroy beer unless they have explicit permission from the brewer beforehand and how it must be noted.

She said: “It is critical that pub staff understand what to record when destroying beer. If they fail to provide breweries with sufficient details, breweries will not be able to reclaim that excise duty from HMRC and, therefore, will not result in credit being extended to the pub.  

“We are currently drafting industry best practice to help support the sector by providing designated pub staff with additional guidance.

“We want to ensure that destruction is done in a way that is environmentally responsible and safe for staff, but also compliant with HRMC protocol to protect against fraud and guarantee it is done correctly.

“We will be publishing this guidance on our website later this week and would urge all licensees and operators to review it.”

What you need to do as a brewer

You must continue to keep:

• an audit trail confirming destruction of duty paid beer
• evidence that a full credit of the duty paid goods has been passed to the owner of the goods at the time they were spoiled
• a spoilt beer record