Clause 187 - Repeal of drawback on British compounds and spirits of wine

Part of Finance Bill – in a Public Bill Committee at 6:30 pm on 19 June 2012.

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Photo of Chloe Smith Chloe Smith The Economic Secretary to the Treasury 6:30, 19 June 2012

I certainly shall endeavour to answer those points. I think I can offer my hon. Friend sufficient reassurance. Clause 187 makes changes to repeal section 22 of the Alcoholic Liquor Duties Act 1979, or ALDA—as has been made clear to the Committee, with thanks to the hon. Member for Easington—with effect from Royal Assent.

ALDA section 22 provides for the drawback—in other words, repayment—of excise duty on spirits manufactured by licensed rectifiers and compounders that are exported from a producer’s premises or placed in a warehouse for approved purposes. For example, that would be for use as stores onboard ship or for any permitted operation in a warehouse.

The section is being repealed because it is redundant. Rectifiers and compounders no longer regularly claim drawback. That is due to changes in business practices, including an increase in the use of duty suspended spirits, removing the need for duty repayment. I can reassure my hon. Friend that this measure will not pose problems to industry. HMRC consulted all licensed rectifiers and compounders, as well as the Gin and Vodka Association—we never knew it existed—and the Wine and Spirits Trade Association, on its proposals in October 2010, and no objections were raised. I hope that my mention of October 2010 reassures hon. Members that the measure is not being rushed through. Time has been given to its consideration.

Producers and exporters wishing to claim drawback on direct exports of rectified and compounded spirits may do so using the existing provisions of the Excise Goods Drawback Regulations 1995, which I will abbreviate to EGDR. It is the case, again to reassure my hon. Friend, that there is an alternative means by which the end, from the Minister’s point of view, can be achieved.