Small spirits producers campaign for duty break
A group of small distillers has banded together to campaign for a reduction in spirits duty for small producers.
The British Distillers Alliance claims the current duty structure is manifestly unfair and that it acts as a barrier to domestic growth.
Small brewers enjoy a tax break under the progressive duty system, and cidermakers have also benefited from a similar scheme, so the BDA is calling for help in this respect.
Alan Powell set up the group in 2016 and it now has more than 100 members from across the spirits category.
He said: “The sector has expanded rapidly over the last few years and is important for employment, tax revenues and, increasingly, exports. The paradox is that the high rate of spirits duty in the UK, and the time it must be paid, acts as a barrier to domestic growth and, moreover, there is no reduction of the duty rate for smaller spirits producers, as there is for small brewers.
There is a confluence of events that give rise to a strategy being devised at this point: the incredibly rapid expansion of small and successful UK producers of spirits; extension of exemptions and reduced rates in EU law for small producers of other alcohol products; the UK may set its own duty rates post Brexit, so HMRC can be lobbied for reduced rates for small spirits producers; if the UK remains in transition and subject to single market rules during EU exit process, or, if indeed, the UK does not exit the single market, scope for seeking a derogation for reduced rates of spirits duty for small producers; unbalanced UK alcohol duty hierarchy – there are hidden quirks and tax avoidance for other products that discriminate against spirits; the alcohol tax avoidance scheme, known as Post Duty Point Dilution of made-wine and brought to the fore in the Budget, runs for another 18 months and benefits wines, flavoured ciders, light spirits including “liqueurs”, and all manner of lower strength products, including RTDs.
“Spirits duty is linear, so there is no possibility of distillers ever being able to gain a duty advantage by such avoidance. Spirits producers must compete in the same UK drinks market as diluted alcohol products, many of which appear to be spirits, or spirits-based.
“Our campaign has commenced with BDA members contacting MPs and other influencers to ask for support of our case for a reduction in spirits duty for small producers.
“We will then be seeking meetings with all relevant ministers to make the case, especially in comparison with the lop-sided and unfair alcohol duty structure. We are also seeking advice from senior expert EU lawyers. All we are asking is that the playing field is made more level.”