Chapter 3 – Suspension arrangements for alcohol products

92. Suspension arrangements for alcohol products

Summary

This section deals with the taxation of alcohol products held under an excise duty suspension arrangement, primarily a bonded warehouse. The main purpose of the legislation is to ensure that where a liability to VAT arises on alcohol products held under a suspension arrangement, VAT on the long price (that is, the duty-inclusive price) of the goods will be paid at the time of the removal of the goods from the suspension arrangement.

Details

(1) Subsection (1) contains necessary definitions for the purpose of the section. The products covered by these rules are spirits, wine, beer, cider and perry, other fermented beverages and intermediate beverages. (“Suspension” means that excise duty is suspended.)

(2) The last supply is the only taxable one. Subsection (2) covers the situation where the alcohol products are the subject of a supply while they are held under a suspension arrangement (e.g. within warehouse). Where such a supply takes place it will form the basis of liability to VAT (payable when the goods are being removed from the suspension arrangement) and any previous intra-Community acquisition or importation is disregarded. If there is more than one supply, only the last supply in the State will form the basis of liability.

(3) Subsection (3) deals with the date when VAT is payable in the case of a supply referred to in subsection (2). The default rule is that liability will arise at the same time as the excise duty becomes due. However, where the goods leave the State as a result of such supply (i.e. an intra-Community supply, an export, or a sale in a duty-free outlet) and no excise duty is due, the normal VAT payment dates apply.

(4) Subsection (4) deals with the date when VAT is payable in the case where alcohol products have been the subject of an intra-Community acquisition (ICA), other than cases where the ICA is by a person not entitled to deductibility – see section 11(2). The same rule applies as in the case of an internal supply under subsection (2) - the tax is due at the same time as the duty of excise becomes due.

(5) Subsection (5) deals with the date when VAT is payable in the case where alcohol products have been the subject of an importation from outside the EU. Again, the same rule applies as in the case of an internal supply under subsection (2) - the tax is due at the same time as the duty of excise becomes due.

(6) The taxable amount includes excise duty payable. Subsection (6) ensures that in all cases the value on which the VAT is assessed includes the excise duty chargeable on the goods.

(7) Subsection (7) provides that excise duty payment rules apply to the VAT payments. Where VAT is payable in accordance with the terms of the section, the tax is payable at the same time as the excise duty is payable, and the tax is treated as if it were a duty of excise – that is, paid to Revenue in the same way as the excise duty is paid.

Relevant Date: Finance Act 2020