HMRC Demands Excise Tax On Items Posted From Abroad

by Robert Lee, Tax-News.com, London

03 August 2007

HM Revenue and Customs has announced that new rules which went into effect on July 19, 2007, mean that UK excise duty is due on all alcohol and tobacco products sent through the post from abroad, including occasional gifts.

Since 1993, by way of a concession, the UK has not charged excise duty on tobacco and alcohol products sent by post as occasional gifts from an individual in another European Union country. However, following a recent European Court of Justice ruling, HMRC said that it is now obliged to withdraw the concession.

It will still be possible to send excise goods from abroad to the UK by post, but UK duty will now be due. The new arrangements also apply to goods sent by post from non-EU countries.

The recent ECJ ruling - 'Joustra' - was handed down in November 2006. It confirmed that goods are only free of UK duty where they are purchased by private individuals for their own use in another EU country and are transported by them to the UK (e.g. 'cross Channel shopping'). If someone else transports the goods, including the postal service, duty is payable in the UK. HMRC said that the revised rules have been introduced to ensure that the UK complies with this ruling.

The repeal of the Excise Duties (Small Non-Commercial Consignments) Relief Regulations 1986 - which granted the former concession - took effect from 19 July 2007 when the Finance Bill 2007 received Royal Assent.

Under the new rules, goods will have to bear a green Customs declaration on the outside of the package. Royal Mail will then collect duty payment on delivery/collection. The sender will have to make arrangements for a tax representative in the UK to account for the UK duty before the goods are sent.

If the arrangements have not been made to pay the duty (EU countries) or the goods are not declared (non-EU countries) the goods are liable to seizure. In some circumstances, seized goods may be restored for a fee, which will equate to the duty plus a penalty, HMRC said.

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