VAT or not VAT , that is the question ?

[Gordon_H]

This is a question for any Person or group (not a shop....) in the UK who has recently bottled a cask .
Did you pay VAT on the Duty payable on the spirit ?
I always thought you paid VAT on the Admin costs , Bottling costs and Duty but according to the Distillery you only pay VAT on the Admin costs and bottling costs .
Back in 2005 when i bottled my Bloodtub at the same distillery i paid VAT on Admin costs , Bottling costs and Duty , have the rules changed ?
The reason i ask is that our group (10 shareholders) is trying to arrange to get our cask bottled early next year and we were sent an example of costs through which didn't charge VAT on the duty , which i queried due to been charged it in 2005 , but they are adamant that you don't .
I've asked quite a few people in the industry and i've had mixed replies , some saying you do , some saying you don't and i had a very good case put to me by David Woods as to why you wouldn't !
The main thing is that you are talking about over £500 difference on the VAT bill , a very nice saving seeing that everything's been worked out with VAT on Duty but if it is payable and we haven't been charged on it originally it's a bit of a nasty bill to get further down the road !
So if anyones recently bottled a cask , knowing what you've paid would help us .
BTW we have contacted HMC&E and all they did was direct us to a bit of their site that was as clear as mud and made no sense to any of us......

[Gordon_H]

Hmmmm 75 viewings , no replies , i take it no one here from the UK has bottled a cask recently then ?
After speaking to a few more people in the whisky industry the general consensus is that we do have to pay VAT on the duty .
This morning we had a meeting of the shareholders that could make it and have agreed a bottling date (distillery permitting....) , bottling strength and label choice . So it looks like i'll be returning to Islay sooner than expected to hopefully see this cask get bottled (weather permitting , fingers crossed....) .

[Mr Tattie Heid]

Gordon, can't think there'd be anyone here who knows more about the issue than you do, although I wonder why you say "not a shop"--would it not be the same regardless?

And don't you love when they essentially tax tax? It's pretty hard to justify duty as "value added". Since it's the government that added that "value" and benefits from it, I think you ought to tell them to go tax themselves.

[Gordon_H]

LOL Mr TH !
The reason i said not a shop was when i was talking to David he mentioned something about (and i hope i picked this up the right way....) he doesn't pay the VAT till the end of the sale of all the bottles , where as a group or individual has to pay it before the produce are allowed to leave the distillery . Just wanted to confirm like for like .
Yes it's a tax on a tax , which a lot on non-UK people can't seem to get their heads around (before anyone says you can't tax Tax ) . The only good thing at the end of it is we'll end up with a fantastic 10yo Single Cask , Cask Strength , bottling of Port Charlotte for about £20 a bottle......

[Daftmill]

Gordon according to my copy of Notice 197 Excise goods holding and movement May 2004 ( there may be a more recent issue)
In section 61. Accounting for value added tax
61.1 says you should read Notice 702 and 702/9
61.6(a)The goods are sold in warehouse.
The seller does not charge VAT if he sells goods which he holds in an excise warehouse. When the buyer removes and duty pays the goods, he must account for and pay the supply VAT on the W5, W5D, W6 or W6D. The value for the VAT includes the price of the goods and the duty. If the goods are sold several times while in warehouse then only the final owner must account for and pay the supply VAT.

so there you go Gordon Vat is payable however when you read on part (b) says

(b) The goods are not sold in warehouse.
Excise goods manufactured in the UK, not sold in warehouse are NOT subject to VAT when the goods are removed and duty is first paid.

So make of that what you will

[orange_barnet]

Gordon according to my copy of Notice 197 Excise goods holding and movement May 2004 ( there may be a more recent issue)
In section 61. Accounting for value added tax
61.1 says you should read Notice 702 and 702/9
61.6(a)The goods are sold in warehouse.
The seller does not charge VAT if he sells goods which he holds in an excise warehouse. When the buyer removes and duty pays the goods, he must account for and pay the supply VAT on the W5, W5D, W6 or W6D. The value for the VAT includes the price of the goods and the duty. If the goods are sold several times while in warehouse then only the final owner must account for and pay the supply VAT.

so there you go Gordon Vat is payable however when you read on part (b) says

(b) The goods are not sold in warehouse.
Excise goods manufactured in the UK, not sold in warehouse are NOT subject to VAT when the goods are removed and duty is first paid.

So make of that what you will

Thus said the man of Daftmill.

[Exciseman]

VAT = my wages = whisky purchases.