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No VAT on alcohol excise duty?

Does a UK VAT registered business pay VAT on excise duty when released from bond?

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Good morning all,

I’m hoping that someone can help me out. I’ve had a new client approach me who is in the vodka business. As I’ve never had anyone in this trade before I just wanted to check a few things before I agree to take her on.

They are saying that they pay zero VAT on production costs (invoice does show this) and zero VAT when the goods are released from the bonded warehouse. Is this correct? Surely they would? the figures shown below is actually what came out of the bank account without any VAT paid?

Could someone please advise me if this is correct? if so do I need to account for any VAT on the next VAT return and if so how? Does the client then have to pay this VAT?

  • Excise Duty: 975.14
  • Value for VAT: 1416.90
  • VAT: 0.00
  • Excise sub Total: 975.14
  • Grand total 975.14

Thank you for any help in advance.

Rosie

Replies (3)

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chips_at_mattersey
By Les Howard
07th Jul 2020 09:37

The removal of goods from the bonded warehouse triggers a tax point, so VAT has to be accounted for.
This is the link to the HMRC Notice: https://www.gov.uk/guidance/vat-and-tax-warehousing-notice-70210#account...
Different rules apply if you are selling 'en primeur' wine.

Thanks (1)
Replying to leshoward:
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By 123bookkeeper
07th Jul 2020 09:46

leshoward wrote:

The removal of goods from the bonded warehouse triggers a tax point, so VAT has to be accounted for.
This is the link to the HMRC Notice: https://www.gov.uk/guidance/vat-and-tax-warehousing-notice-70210#account...
Different rules apply if you are selling 'en primeur' wine.

Thank you Les,

Could you advise how I would account for the Vat on the next return based on the above figures? I only said I would help this new client this time as her old accountant seems to have gone to ground!

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Replying to 123bookkeeper:
chips_at_mattersey
By Les Howard
07th Jul 2020 10:25

Rosie
usually, the warehouse prepare the invoice showing output tax. I would revert to them in the first instance.

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