Notice

Excise Notice 476: Tobacco Products Duty

Updated 25 January 2021

Foreword

This notice cancels and replaces Notice 476 (October 2019).

1. General information

1.1 What this notice is about

This notice is about Tobacco Products Duty and the fiscal marking requirements for tobacco products. It’s primarily of interest to tobacco manufacturers and importers of tobacco products.

This notice deals with the:

• registration of tobacco factories and stores
• records and returns required for registered factories and stores
• payment and repayment of Tobacco Products Duty including including a Minimum Excise Tax (MET)
• destruction of tobacco products
• requirements for the fiscal marking of cigarettes and hand-rolling tobacco

1.2 Who should read this notice

It’s primarily intended for anyone who manufactures or imports tobacco products. However, anyone holding, transporting, selling or dealing in specified tobacco products should read section 12, Annex 1 and Annex 2.

1.3 The law covered by this notice

The law specifically concerned with tobacco products duty and fiscal marks is the:

• Tobacco Products Duty Act 1979 (as amended by the Finance Act 2006)
• Tobacco Products Regulations 2001 (as amended by the Tobacco Products (Amendment) Regulations 2006) and the Tobacco Products and Excise Goods (Amendment) Regulations 2006
• Tobacco Products (Descriptions of Products) Order 2003
• The Excise Goods (Holding, Movement and Duty Point) Regulations 2010
• The Manufacturing Machinery (Licensing Scheme) Regulations 2018

The law specifically concerned with raw tobacco is the Tobacco Products Duty Act 1979 (as amended by Finance Act 2016).

You should also be aware of your responsibilities under The Revenue Traders (Accounts and Records) Regulations 1992.

This notice explains how we interpret the law. Where appropriate, sections of this notice contain a reference to the relevant law. Sometimes the law says that detailed rules on a particular matter will be set out in a notice published by the commissioners of HMRC, rather than in a Statutory Instrument. Parts of this notice contain certain requirements which are mandatory. They have legal force and supplement the law. These parts affected are noted. They have the force of law by virtue of regulation 7(5) and regulation 7(6) of the Tobacco Products Regulations 2001 unless some other provision is mentioned as giving them that effect.

This notice does not deal in any detail with procedures concerning imported tobacco products, which are cleared at the place of importation, warehoused in an excise warehouse or imported by Registered Consignees (which will apply in Northern Ireland only) or Temporary Registered Consignees (which will apply in Northern Ireland only). If you import or warehouse tobacco products you should read:

• Excise Notice 196 – excise goods – registration and approval of warehousekeepers, warehouse premises, owners of goods and registered consignors
• Excise Notice 197 – receipt into and removal from an excise warehouse of excise goods
• Excise Notice 203a – Registered Consignees – Northern Ireland only
• Notice 204a – Temporary Registered Consignees – Northern Ireland only
• Excise Notice 204b: commercial importers and tax representatives – UK and EU trade in duty paid excise goods – Northern Ireland only
• Excise Notice 2003: tobacco duty – the Raw Tobacco Approval Scheme
• Excise Notice 2004: tobacco duty – Tobacco Products Manufacturing Machinery Licensing Scheme

‘Duty’ means Tobacco Products Duty unless other duties are named.

1.4 Who to go to for advice

If you do not already have existing formal arrangements for contacting HMRC you should, in the first instance, contact the helpline.

1.5 The health labelling and tar content of cigarettes

These are matters dealt with by the Department of Health. Current Regulations for which they’re responsible include the Tobacco Products (Manufacture, Presentation and Sale) (Safety) Regulations 2002.

These cover the health labelling requirements on tobacco packaging and the maximum permitted yields of tar, nicotine and carbon monoxide. You can find further information on the Department of Health website.

1.6 Special health and safety duties towards HMRC Officers

The Health and Safety at Work etc Act 1974 imposes general duties on employers towards their employees and towards persons other than their employees. The latter category of persons includes any of our officers who may be visiting your premises on official business. You must indicate any hazards which we may encounter during the course of our official duties. If you’re asked by one of our officers to cease any activity for the purposes of inspection, you must indicate any residual hazards which may remain after you’ve ceased the particular activity.

1.7 How to avoid paying penalties

On 1 April 2010 we introduced new system of penalties for:

• inaccuracies in tax returns and other documents
• failure to notify - when people fail to register for a tax, declare taxable income or notify a new activity on which tax is due
• VAT and excise wrongdoing

Inaccuracy penalty

We can charge a penalty if your return or other tax documents are inaccurate and as a result you do not pay enough tax or if you do not tell us that a tax assessment we have sent you is too low. We’ll not penalise you if you take reasonable care to get your tax right. Taking reasonable care includes:

• keeping accurate records to make sure your tax returns are correct
• checking what the correct position is when you do not understand something
• telling us promptly about any error you discover in a tax return or document after you have sent it

Failure to notify penalty

We can apply a penalty if you do not tell us at the right time that:

• you’re liable to tax because your new business has made a profit
• your business’ turnover has reached the VAT registration threshold
• you sell an asset and make a capital gain on which tax should be paid
• you start a type of business that’s required to register with us - for example if you begin manufacturing tobacco products
• your circumstances change in another way that affects your tax position

VAT and excise wrongdoing penalties

We’ll issue a wrongdoing penalty where a person:

• issues an invoice that includes VAT which they’re not entitled to charge
• handles goods on which excise duty has not been paid or deferred
• uses a product in a way that means more excise duty should have been paid
• supplies a product at a lower rate of excise duty knowing that it will be used in a way that means a higher rate of excise duty should be paid

This penalty applies to anyone registered for VAT or excise purposes, anyone who should be registered to pay VAT or excise duties and to other members of the general public.

Calculation of penalties

The penalty will be a percentage of the potential lost revenue, such as the amount of duty on any tobacco products manufactured in premises which have not been properly registered. The percentage used will depend on whether the wrongdoing was:

• deliberate and concealed
• deliberate but not concealed
• not deliberate

The penalty may then be reduced to take account of whether, and to what extent, you tried to make us aware of the wrongdoing. The reduction depends on:

• whether the disclosure is unprompted or prompted
• the quality of the disclosure

A disclosure is unprompted if you tell us when you have no reason to believe that we have discovered or are about to discover the wrongdoing.

Read more information on penalties in our Compliance check factsheets.

Civil penalties

HMRC may also charge you with a civil penalty of £250 for failing to comply with a regulation under Section 9 Finance Act 1994.

For further information see Excise Notice 209: civil penalties - fixed, geared and daily.

2. Liability to or payment of duty

2.1 Goods that bear Tobacco Products Duty

The following goods are all liable to Tobacco Products Duty if they are made wholly or partly from tobacco or from any substance used as a substitute for tobacco:

• cigarettes
• cigars
• hand-rolling tobacco
• other smoking tobacco (which includes pipe tobacco)
• chewing tobacco
• tobacco for heating

For the purposes of this notice all references to tobacco products in this notice includes herbal smoking products.

Duty is not charged on nasal snuff. Oral snuff is not liable to Tobacco Products Duty but its sale in the UK is prohibited under the Tobacco for Oral Use (Safety) Regulations 1992.

Cigarette rag and expanded tobacco which can be smoked without further processing are also liable to duty if they pass a duty point (see paragraph 2.19).

You can find detailed descriptions of all of these products in the glossary.

Herbal smoking products that are imported into, or manufactured in the UK are also liable to tobacco products duty. These products will be treated for tax purposes as if they contained tobacco, unless they’re licensed to be used exclusively for medical purposes.

2.2 Products affected by the UK leaving the EU

The UK leaving the EU will not change the types of products which are subject to excise duty, but will affect the movement of all tobacco products.

2.3 How the duty is controlled

Anyone manufacturing, importing or storing tobacco products in duty-suspension must comply with certain legal requirements and directions made by the commissioners of HMRC. The following requirements are central to the control and collection of Tobacco Products Duty:

• tobacco products may be manufactured only in registered factories
• UK manufactured tobacco products intended for home use may be stored, without payment of duty, only in a registered store
• UK manufactured tobacco products intended for export or other duty free purpose may be stored, without payment of duty, only in a registered store or an excise warehouse
• imported tobacco products may be stored, without payment of excise duty, in a registered store or an excise warehouse
• specified tobacco products intended for home use must bear a fiscal mark (see section 12, Annex 1 and Annex 2.)

The rest of this notice sets out in detail the requirements to be observed, particularly in respect of registered premises. These requirements may sometimes be supplemented or varied as necessary to secure the revenue or to reflect a trader’s particular circumstances. Where this happens, we’ll notify you in writing. Excise Notice 197: receipt into and removal from an excise warehouse of excise goods, sets out the requirements and conditions for the receipt and holding of tobacco products in excise warehouses.

2.4 How the duty on cigarettes is calculated

The duty on cigarettes has 3 elements:

First element is the ad valorem component, which is a percentage of the retail price added to the Second element, which is a set amount of money per 1,000 cigarettes. This total is then compared to the Third element, the Minimum Excise Tax (MET) rate set per 1,000 cigarettes.

The amount of excise duty payable is the higher amount after the comparison of the 2 calculations has been made.

The current rates of duty for all tobacco products and the MET rate per 1,000 cigarettes are shown in UK Trade Tariff: excise duties, reliefs, drawbacks and allowances. You can also get them from the helpline.

2.5 What the ‘retail’ price means

The retail price is usually taken as the manufacturers or importer’s recommended retail selling price in force at the time the cigarettes become chargeable with duty. That price must include all duties and taxes. If there’s no recommended retail price, duty must be calculated on the highest retail price at which cigarettes of that description are normally sold by retail in the UK.

If you manufacture or import a brand of cigarettes which do not have a recommended retail price, you should contact us for advice.

2.6 The price the ad valorem element of the duty is based on if a brand of cigarettes is sold in more than one pack size

The duty is normally based on the retail price for packets of 20 cigarettes. A brand may, however, also be sold in packets containing a different number of cigarettes (for example, vending packets). In such a case the ad valorem element of the duty is still calculated by reference to the retail price for 20 cigarettes. The retail price for a standard packet of 20 cigarettes of the brand in question is applied, pro rata, to the number of cigarettes in the non-standard packet. If a brand of cigarettes is not sold in packets of 20 you should contact us for advice.

2.7 The length of a cigarette affects the duty

Any cigarette more than 8 centimetres (cm) long (excluding filter or mouthpiece) is treated for duty purposes as though the first 8cm of it, each 3cm portion of the remainder of it and the remaining portion of it (if any) were a separate cigarette. For example, if a cigarette is 12cm long (excluding filter or mouthpiece) it’s to be regarded as 3 cigarettes (one 8cm cigarette, one 3cm cigarette and one 1cm cigarette). The duty payable is reckoned by taking the current percentage of the retail price in the normal way but calculating the specific duty on the equivalent of 3 cigarettes.

2.8 The brand, price and other information you need to provide

Regulation 15 of the Tobacco Products Regulations 2001 requires both manufacturers and importers of tobacco products to provide HMRC with certain information about their brands. The following list details the information that you’re required to provide but is not a reproduction of Regulation 15. You must provide the following:

• a list of the brand names of every tobacco product that you manufacture or import
• the retail pack sizes (that is, number of cigarettes per packet, net weight for hand-rolling tobacco and other smoking tobacco, and both the number per pack and net weight for cigars) for each brand
• details of any brand or pack of tobacco product that you manufacture or import and for which you do not recommend a retail-selling price

You must advise any changes, deletions or additions to that list or details as soon as possible and always before the changes or additions take effect. We would normally expect you to provide this information in the form of your recommended price list. If you do not have a recommended price list then you can forward the information to us on letter headed paper. Manufacturers should, as part of the premises registration procedure, make arrangements to supply this information to us at the relevant time. Importers can forward the information to us on letter headed paper. If possible, send all pricing information electronically to holding.movement@hmrc.gov.uk.

Or alternatively to:

HMRC
Tobacco Team
Indirect Tax
3W Ralli Quays
3 Stanley Street
Salford
M60 9LA

Failure to supply this information amounts to a regulatory breach which can attract a penalty of £250 under Section 9 Finance Act 1994 (see paragraph 1.8).

2.9 How the duty on other tobacco products is calculated

For all tobacco products, except cigarettes, the duty is based on the net weight of the whole product. The current rates of duty are shown in Volume 1, Part 12 of the Tariff. They can also be obtained from the helpline.

2.10 Private individuals and payment of duty on tobacco products made from tobacco grown themselves

A private individual must pay the duty on any tobacco products that they make from tobacco which they have grown. This applies whether the tobacco products are intended for sale or solely for the grower’s own consumption. Anyone intending to manufacture tobacco products must comply with the conditions set out in this notice. You must register the premises which you use to make tobacco and complete form TP7A to account for all tobacco products that you have manufactured for your own consumption and on which duty is due. While all registration applications will be considered on a case by case basis, it is highly unlikely that home premises will meet the registration requirements. (See paragraph 4.5 on the conditions that must be met before we would consider registering premises for the manufacture of tobacco.)

2.11 Selling hand-rolling tobacco and cigarettes to my customers and letting them use my machinery to make cigarettes

We consider any production of cigarettes, other than where a hand-held device is used to make single cigarettes, to be manufacturing. Any premises where cigarettes are produced in this way are subject to the conditions set out in this notice, even if Tobacco Products Duty has already been paid on the tobacco being used. If you’re considering starting a business which operates in this way, you should contact us using the contact information in paragraph 1.5 before you begin.

2.12 Raw tobacco

Raw tobacco is a high risk commodity that brings a certain amount of scrutiny from HMRC, to satisfy us that excise duty is not at risk.

All businesses and individuals are prohibited from carrying on any activity involving raw tobacco unless they hold an approval by HMRC, or are exempted from the requirement to hold an approval. Further details are available in Notice 2003: Tobacco Duty – the Raw Tobacco Approval Scheme.

If you hold an approval from HMRC to sell raw tobacco you must ensure that your customer also holds an approval to acquire raw tobacco.

Any failure to show that the sale of raw tobacco is carried on for a legitimate purpose may result in the seizure of imports of raw tobacco and possible criminal prosecution if we believe the supplies made have facilitated excise fraud.

2.13 Paying duty on tobacco products used in scientific or technical research

Provided that you meet certain conditions you do not have to pay duty on tobacco products used in, for example, scientific or medical research or other experimental work involving tobacco products. If you wish to use tobacco products without paying duty, you must apply in writing to HMRC well before you intend to obtain the tobacco products concerned. (You can find information on how to contact us in paragraph 1.5 of this notice.) Your application must include details of the:

• tobacco products involved
• purpose of the research or experiment
• premises to be used

If we approve your application we’ll advise you in writing of:

• any special conditions to be met
• the records to be kept
• any financial security that may be required

2.14 Herbal smoking products that are used exclusively for medical purposes

Provided your herbal smoking products are granted a UK marketing licence from the Medical and Healthcare Products Regulatory Agency (MHRA) any herbal smoking products that are used exclusively for medical purposes are exempt from Tobacco Products Duty.

2.15 Samples drawn for test by official bodies

Duty is not payable on samples of tobacco products drawn in registered premises for tar, nicotine or other tests required by the Department of Health. You can draw samples in similar quantities without payment of duty for use in your own parallel tests on the premises, provided that the conditions in paragraph 2.11 are met. Duty is not payable on samples drawn for HMRC purposes.

2.16 Samples drawn for production or quality control

You can draw samples of chargeable products free of duty for production control purposes in the factory. You should apply in writing to us stating your intentions. You must then comply with the conditions we set. In particular:

• you must give prior notice
• quantities must be limited to those essential for the tests
• the tests must relate to commercial production or quality control
• people must not smoke the products
• samples must not be sold, given away or used for any unauthorised purpose
• we must have access to the places to which the samples are removed and where the tests are conducted
• samples not used up in the tests must be returned to the production line or destroyed, (you can find further information on destructions in paragraph 11.5)

These conditions will be imposed under powers granted to the Commissioners by paragraph 2(2) of the Tobacco Products Duty Act 1979 and can be the subject of an appeal if you disagree. (See section 13.)

2.17 Tobacco refuse

While tobacco refuse remains fit for consumption it is liable to duty and subject to official control. Our interest in the refuse ceases when we are satisfied that the refuse has been rendered unfit for consumption.

Tobacco products which become unfit for sale prior to removal from registered premises may be treated in the same way as other tobacco refuse and sent for destruction (see paragraph 11.5).

Read more information about the disposal of tobacco plants grown in the UK that have died and become waste in Notice 2003: Tobacco Duty – the Raw Tobacco Approval Scheme.

2.18 Pipe tobacco being used for making into cigarettes

The definition of hand-rolling tobacco in article 6 of the Tobacco Products (Description of Products) Order 2003 includes tobacco ‘that is of a kind used for making into cigarettes’. Pipe tobacco used for making cigarettes could attract duty at the rate appropriate for hand-rolling tobacco. If you know or suspect that any of your pipe tobacco is being used in this way, you should contact us to discuss the situation. (You can find information on how to contact us in paragraph 1.5.)

We’ll investigate where we suspect that a brand of pipe tobacco is being used for making into cigarettes, even if it’s being sold as pipe tobacco and meets the particle width criteria for pipe tobacco (see definitions in the glossary). If we consider that the evidence of use renders the tobacco liable to duty at the hand-rolling rate, we’ll discuss the matter with you as the manufacturer or importer of the brand concerned. We may then advise you that the duty on future removals or clearances of that brand should be paid at the rate appropriate for hand-rolling tobacco.

2.19 When a tobacco product becomes liable to Tobacco Products Duty

Liability to the duty arises when the tobacco products:

• enter the UK
• reach a smokeable condition in the course of manufacture (whether or not they have been packaged or entered into the production account)

You’re potentially liable to pay the duty on any products being processed, stored or transported in a duty-free regime.

Tobacco which can be smoked without further industrial processing is considered to be smokeable, even if it’s not considered suitable for retail sale. This includes cigarette rag and expanded tobacco.

Our policy is that raw tobacco leaf that has been cut, split, twisted or pressed into blocks (including having the stem removed) and is contained in individual packages that are generally less than 20kgs in weight will be considered liable to duty as ‘other smoking tobacco’. This is because we consider such tobacco to be smokeable without further industrial processing. Excise duty is due on such tobacco at importation if pre packed; or at the point where tobacco is packaged in the UK.

2.20 When the duty must be paid

Regulation 14 of the Tobacco Products Regulations 2001 requires that the duty be paid at or before the excise duty point, unless deferment arrangements apply. Further details on duty deferment may be found at section 10.

2.21 The excise duty points for tobacco products

The excise duty points for tobacco products are set out in the Excise Goods (Holding, Movement and Duty Point) Regulations 2010. The duty points which are most relevant to tobacco manufacturing are as follows.

There’s an excise duty point at the time when tobacco products are released for consumption in the UK. This includes where the goods:

• leave a duty suspension arrangement (for example, removal from a registered store)
• are held outside a duty suspension arrangement without UK excise duty having been paid, relieved, remitted or deferred under a duty deferment arrangement
• are produced outside a duty suspension arrangement

This list is not exhaustive. Importers of tobacco products can find more information about the duty points for imported excise goods in the notices referred to in paragraph 1.4.

Where duty suspension arrangements do not apply to chewing tobacco and tobacco for heating which is imported into the UK (or transported from GB to Northern Ireland), the excise duty point is the time the chewing tobacco or tobacco for heating is received by the importer, owner or other person beneficially interested in it.

If tobacco products are relieved from payment of duty and there’s a contravention of any conditions attaching to that relief, the duty point is either the time of that contravention or (if that time cannot be readily ascertained) the time when that contravention first came to the attention of the commissioners.

2.22 When the duty rates and the MET change

If the rate of duty changes, the new rate will apply to any product which passes the duty point when or after the new rate comes into effect. Tobacco product which is removed from a registered store after 11.59am on a day upon which the duty rate is increased, will be deemed to have been removed after the increase took effect. Similarly, tobacco product which is removed from an excise warehouse after 11.59am on a day upon which the duty rate is increased, will be deemed to have been removed after the increase took effect.

This also applies when the MET level changes. The new minimum amount of duty must be applied to all cigarettes that pass the duty point when or after the new rate comes into effect.

2.23 Accounting for and paying duty on imported tobacco products

Tobacco Products Duty, together with any Customs Duty and import VAT, is payable at the time of importation unless the goods are:

• removed from the place of importation to:
  • registered premises (see paragraph 8.11)
  • an excise warehouse (see Excise Notice 197: receipt into and removal from an excise warehouse of excise goods)
• imported under any other duty-suspension or duty free regime

You can find information on import procedures, and how to pay any duties and VAT due, in the Tariff, by contacting our helpline.

2.24 The person liable to pay the duty

Where tobacco products are removed from a registered store, the manufacturer who occupies the store is liable to pay the duty. In the event of an irregular removal from a registered store, the person liable to pay the duty is the occupier of the registered store but any other person involved in that departure is jointly and severally liable to pay. Importers of tobacco products can find more information about who is liable to pay duty at the duty points for imported excise goods in the notices referred to in paragraph 1.4.

3. How to classify unusual tobacco products

This notice is primarily aimed at the manufacture of mainstream tobacco products, namely cigarettes, cigars, hand-rolling tobacco, other smoking tobacco, chewing tobacco and tobacco for heating.

However, new products, outside the mainstream, are increasingly entering the UK market. The aim of this section is to highlight those products and advise on their treatment for duty purposes.

3.1 The relevant law

Many unusual tobacco products are imported into the UK rather than being manufactured here. Often when these goods are imported the Customs Tariff is consulted to categorise the goods and calculate any Customs Duty which may be payable. The Tariff is an internationally agreed system of naming products and although it may give an indication of whether excise duty is payable it does not dictate whether excise duty is due.

Tobacco Products Duty is charged by section 2 of the Tobacco Products Duty Act 1979. The products which are liable to duty are listed in section 1 and further defined in the Tobacco Products (Descriptions of Products Order) 2003.

3.2 Other tobacco products that are liable to duty

This table is not exhaustive but shows some of the products that might need specific clarification in terms of liability to Tobacco Products Duty.

Name	Description	Treated as	Comments
Beedies, bidis	Roughly made rolls of tobacco	Cigarettes
Blunt wraps	Flavoured sheets of reconstituted tobacco	Other smoking tobacco
Gutkha	Chewing mixture made from tobacco, nuts, spices, and so on	Chewing tobacco	Known by many different names, for example, tulsi mix, paan, and so on
Shisha	Tobacco mixed with molasses, fruit, glycerine, and so on Note: this definition includes herbal shisha (non tobacco shisha).	Other smoking tobacco	Known by many different names but made for smoking in a water pipe
Snus (oral snuff)	Tobacco granules and flavourings, designed to be sucked, in small bags or loose.		This product is currently subject to a ban on sale in most European countries and the UK

If a product contains tobacco or herbal smoking mixtures and is smoked or chewed it is liable to Tobacco Products Duty.

3.3 How Tobacco Products Duty is charged

With the exception of cigarettes, tobacco products are subject to duty according to the net weight of the product, that is, the product without its packaging. For tobacco for heating products any encasement or delivery method surrounding the tobacco is excluded for the calculation.

The rate of duty is determined by the classification of the product. The duty is applied to the net weight of the tobacco product, not just the tobacco element. Products made wholly or partly from tobacco, or any substance used as a substitute for tobacco, are liable to duty.

Herbal smoking products that do not contain tobacco are also be liable to tobacco products duty in the same way and at the same rate as their tobacco equivalents.

3.4 Tobacco products that are not liable to duty

Nasal snuff is not subject to tobacco products duty in the UK. You will need to be approved by HMRC if you manufacture nasal snuff, either for personal use or for sale. Approval procedures and exemptions are contained in Notice 2003: Tobacco Duty – the Raw Tobacco Approval Scheme.

Herbal smoking products that are used exclusively for medical purposes and covered by a licence granted by the Medical and Healthcare Regulatory Agency (MHRA) are exempt from Tobacco Products Duty.

If you are in any doubt about these products and their liability to duty you should contact us and provide full details.

3.4.1 Raw tobacco leaf

Raw whole leaf tobacco is not liable to Tobacco Products Duty. All businesses and individuals are prohibited from carrying on any activity involving raw tobacco unless they hold an approval from HMRC or an exemption applies. Approval procedures and exemptions are contained in Notice 2003: Tobacco Duty – the Raw Tobacco Approval Scheme.

Raw tobacco leaf that has been cut, split, twisted or pressed into blocks (including having the stem removed) and is contained in individual packages that are generally less than 20kgs in weight will be considered liable to duty as ‘other smoking tobacco’.

3.5 Contacts for more information

If you wish to manufacture or import tobacco products in the UK and are unsure about the liability, contact the helpline.

4. Registered premises – general information

4.1 Registered premises

Premises used for the manufacture or safe storage of tobacco products must be registered under Regulation 4 or 5 of the Tobacco Products Regulations 2001. Registered premises is the collective term used to describe both registered factories and registered stores.

Registered factories and stores are covered in more detail in sections 5, this section covers general information which applies to both types of registered premises.

4.2 How to apply for registration

If you wish to open a new tobacco factory or store you should write to us. If you already manufacture tobacco products in the UK you’ll have an established contact point. If you’re opening manufacturing premises for the first time your first point of contact should be:

HMRC
Excise Processing Team
BX9 1GL

You must include the following information in your letter:

• the address, purpose, and intended production or storage capacity, of the premises
• a detailed plan of the premises showing the areas where you intend to manufacture tobacco products or process refuse or store tobacco products (see paragraphs 4.7 and 4.8)
• whether the tobacco products to be manufactured or stored are intended for home use, export, or both
• the security arrangements for the premises concerned (see section 7)
• the hours during which the premises will be open
• details of the accounting arrangements including any request for electronic removal (see section 9)
• the definition of your bulk unit (see paragraph 6.8)
• a statement of whether or not you wish to break bulk in the registered store (see paragraph 6.8)
• a request, if appropriate, that the registered store be approved for ‘import account’ (see paragraph 8.11)

Once we’re satisfied that the required conditions (see paragraph 4.4) have been met you’ll be issued with a registration letter. The registration letter will contain details of the premises registered and any particular conditions applying to those premises.

4.3 Applying to register premises for the manufacture or safe storage of herbal smoking products

Herbal smoking products are liable to tobacco products duty and will be treated in the same way as tobacco products. This means that UK manufactured herbal smoking products:

• can only be manufactured in a registered factory unless the products are to be used for the purpose of research and experiment
• on which Tobacco Products Duty has not been paid can only be stored in a registered store
• cannot be stored in your factory for more than one day, which is why you need to register a separate store

If you’re not already registered as a factory or store you must write to the Excise Processing Team. Make sure you write to us well in advance as this will allow us to carry out the relevant checks and avoid any delays.

If your business is under one legal entity and you’re already registered as a factory or store for the manufacture of tobacco products you may be able to extend your registered premises to incorporate the factory and store for the manufacture of herbal smoking products. You should write to the Excise Processing Team and give at least 30 days notice of your intentions.

Where your business is not under one legal entity then you must write to the Excise Processing Team to become a registered tobacco factory or store.

Once we’re satisfied that the required conditions (see paragraph 4.5 and 4.6) have been met you’ll be issued with a registration letter. The registration letter will contain details of the premises registered and any particular conditions applying to those premises.

4.4 When HMRC can revoke the registration of premises

Under powers granted by Regulation 6 of the Tobacco Products Regulations 2001, we may revoke the registration of premises where there has been failure to comply with or contravention of any:

• condition or requirement attaching to the registration
• requirement imposed by this notice which has the force of law (see paragraph 1.4) or for any other reasonable cause

Under powers granted by Regulation 10 of the Tobacco Products Regulations 2001, we may revoke an approval for ‘electronic removal’ in a registered store (see section 9).

Where we revoke your approval we’ll normally give you not less than 3 months notice. However, if in exceptional circumstances, we consider it necessary for the protection of the revenue, we may give less than 3 months notice.

4.5 The conditions that must be met before HMRC will register premises as a factory or store

Before we register any premises as a factory or store you must satisfy the following conditions:

• the premises to be registered, as outlined on your plan, must be physically secure (see also paragraph 7.1)
• there must be adequate and acceptable arrangements for the control of goods, persons (including company personnel, visitors, maintenance contractors, refuse collectors and any other persons having authorised access to the premises), and vehicles entering or leaving the premises
• you may have to provide financial security (for example, a guarantee) - see section 7
• your records and accounting systems must be adequate and acceptable to us and should include – the arrangements for submitting form TP7 and accounting for duty - in addition, from 20 May 2017 you must ensure that arrangements are in place, where appropriate, to account for any additional duty due on the TP7, this will apply in cases where the MET is higher than the usual application of duties (see paragraph 8.7 and section 10) – details of whether or not a separate TP7 return is required for each of the registered premises from which tobacco product is removed to home use – details of whether the TP7 is required for daily removals or removals over a longer period (usually the accounting period for duty deferment purposes) – provision of access by us to your computer systems in relation to your business as a revenue trader – the arrangements whereby you notify us of any serious problems, such as a computer failure, must have been agreed by us – the arrangements for monitoring any deferred payment facilities, which may have been granted, must have been agreed by us and – in the case of a factory, the point and time in the production process at which the tobacco product is entered into the production account

Failure to comply with these conditions may result in a refusal to register the premises concerned. You may also be liable to penalties if you fail to apply to register with HMRC at the right time or if your monthly duty return is inaccurate. See paragraph 1.8 for more details.

4.6 The conditions that apply to registered premises in general

The following general conditions apply to registered premises:

• registered tobacco premises must only be occupied by one manufacturer of tobacco products
• tobacco products must not be sold, to persons other than tobacco manufacturers, before removal from registered premises unless the goods are not eligible for removal to home use
• all tobacco products deposited in a registered store must be in packages identified by legible and permanent markings
• all tobacco products deposited in a registered store must be produced without delay on request by us

The following paragraph has the force of law

The physical extent of registered premises must not exceed that shown in the registration letter. Tobacco product held outside of registered premises must not be entered into or remain in the stock records for those premises. (This condition is imposed under Regulation 7(5)(a) of the Tobacco Products Regulations 2001.)

HMRC can impose additional conditions if they consider it necessary for the protection of the revenue.

4.7 What ‘occupied’ means

We consider premises to be occupied by a manufacturer if:

• they’re registered in the name of the manufacturer whose product is going to be manufactured or stored in the premises concerned
• the tobacco product remains the property of the manufacturer (or the responsibility of the manufacturer, in the case of imported product where the manufacturer does not own the goods but takes control as the sole UK agent for the product)
• the manufacturer pays or accounts for any duty due upon the removal of the tobacco product
• the manufacturer gives any premises guarantee that may be required

4.8 The physical area that the registration of a factory or store covers

The registration will always clearly define the area within which, provided that all the conditions are met, tobacco products may be manufactured or stored. When you apply for registration you must submit a plan of the premises which you wish to register as a factory or store. It’s possible for the registered factory or store to cover only part of the commercial premises. Tobacco Products Duty must have been paid, secured or otherwise accounted for on any tobacco products outside registered premises (except as may be allowed in exceptional circumstances by us).

4.9 Registered premises do not have to be a building

‘Premises’ do not have to be a building but do have to be an enclosed area of ground. As a manufacturer you can apply to register, as a store, an area of ground instead of a building or part of a building. We refer to registered stores which are not buildings as ‘open-air’ stores. They’re acceptable in principle provided that all other conditions or requirements concerning the registration of a store can be met. These conditions are set out in paragraph 6.6.

4.10 The conditions that apply to the use of computer records for stock control or accounting purposes

Specific software packages are not endorsed by HMRC. Your obligations regarding stock control, duty payment, and so on, are the same whether you have manual or computer systems. Software packages which have been accepted for use in some warehouses or registered premises may not be appropriate for use in others. If you wish to use computer records you should apply to us sufficiently in advance to allow our requirements to be incorporated into your proposal. Details must be provided of the system that you intend to adopt. Any existing manual system must be maintained until such time as we permit the use of a computer system. You may also apply to us for permission to use computer generated versions of official forms. You should include specimens of the computer generated forms with your application, so that we can check that they meet official requirements. Where we approve the use of computer records, conditions will usually be imposed under section 118A of the Customs and Excise Management Act 1979. The conditions will require:

• the right of access by us to the computer systems and their documentation (including financial and management systems) in relation to your business as a revenue trader
• the provision of any necessary assistance to us during audits of the systems
• the provision of print facilities for the information accessed
• the inclusion of the computer system in your annual audit (and the auditor’s report being made available to us)
• adequate security, fallback and recovery systems
• advance notice of any proposed changes to the system (such changes must not be introduced without our approval)

Failure to comply with these requirements may result in a refusal to register the premises concerned or lead to the revocation of the registration. You must ensure that safeguards exist to protect your system from inadvertent corruption whilst being viewed by us. We suggest that you:

• provide a terminal for official use which is capable only of accessing the system and displaying information on the VDU
• allocate a unique password to us which will allow the system to be accessed on a ‘read only’ basis

Remember that additional conditions apply to ‘electronic removal’ which is dealt with in section 9.

4.11 Notification that must be given if you want to alter or extend the structure of your registered premises, the security arrangements or working hours

Unless you already have alternative arrangements in place with us, you must write to the Excise Processing Team in Glasgow if, at any time after the premises have been registered, you intend to extend or reduce the premises or alter the security arrangements. You must give at least 30 days notice of your intentions. You must also give 7 days notice of alterations to the times when the premises are open. You should also advise us well in advance of any other intended changes, for example, to your computer systems, which may affect the registration of the premises.

4.12 Receiving imported tobacco products into your registered premises without payment of duty

You may receive imported tobacco products into your registered premises either direct from the place of importation or via an excise warehouse, without payment of Tobacco Products Duty provided that any Customs Duty due, other than where duty suspended EU movements are dispatched to Northern Ireland, has been paid or accounted for. That is, the payment has been deferred under duty deferment arrangements agreed with HMRC.

In the case of tobacco products in free circulation, the appropriate arrangements for the receipt of such goods will apply. (See Excise Notice 197: receipt into and removal from an excise warehouse of excise goods.)

In the case of tobacco products entered for free circulation at the port or airport of importation or in a customs and excise warehouse, any examination and account for excise duty purposes may be done at:

• the place of importation
• any other place, including registered premises, which has been approved for this purpose

4.13 The procedures for movements of tobacco products from registered premises to EU member states – Northern Ireland only

Current procedures and instructions for consigning goods to EU member states (Northern Ireland only) are contained in Excise Notice 197: receipt into and removal from an excise warehouse of excise goods. The same rules apply to herbal smoking products.

4.14 Dispatching consolidated goods for export at unauthorised premises

The same general principles apply as for exports from excise warehouses (see Excise Notice 197: receipt into and removal from an excise warehouse of excise goods). Consolidation of duty suspended and other goods at unauthorised premises (within the UK) may be allowed under the following conditions:

• you must not store duty suspended excise goods in unapproved premises
• the movement takes place under a single transport contract for the goods
• you cannot regroup full container loads
• if you group duty suspended and duty paid goods, you must ensure that you load the duty paid goods before the duty suspended goods
• you must not interfere with the goods
• you must produce the container for examination at shipment
• you must record full details of pre and post groupage transport on the accompanying paperwork
• you must notify us of any losses identified at groupage

5. Registered factories

5.1 Registration of factory premises

You must apply for registration of any premises in which you intend to manufacture tobacco products for purposes other than research or experiment. The manufacture of tobacco products other than in registered factories is illegal unless the products are to be used for the purposes of research or experiment. You should contact us if you think that your intended manufacture falls within the scope of research or experiment. See paragraph 4.2 for details of how to apply for registration.

You may also be liable to penalties if you fail to apply to register with HMRC at the right time, see paragraph 1.8.

5.2 Storage of tobacco products in your registered factory

You must remove all tobacco products from your registered factory by the end of the first business day following the day of manufacture. We may allow you to dispense with this condition in exceptional circumstances but you should contact us as soon as possible if you feel that this is necessary. For the purposes of this requirement, the tobacco product is considered to have been manufactured once it crosses the Production Account Point (see paragraph 5.4). This should mean that, in practice, the day of manufacture will be the day the tobacco product is recorded in the production account (see paragraph 8.2).

5.3 Removal of tobacco products direct from your registered factory to home use

Subject to any fiscal marking (see section 12, Annex 1 and Annex 2) or other requirements, you may remove tobacco products from your registered factory to home use on payment of the duty. This amounts to a ‘factory gate’ duty point and you should discuss the implications with us.

5.4 The Production Account Point

This is the precise, clearly defined physical point through which all tobacco products are channelled after manufacture, but before they enter a registered store, where the production account is raised.

6. Registered stores

6.1 Storage premises that can be registered

We may register premises for the safe storage of tobacco products without payment of duty, provided that they are:

• secure
• under your direct control
• properly operated
• covered by your accounting system using documentation and an audit trail acceptable to us

6.2 Applicants for a registered store

Only a manufacturer who occupies a registered factory can apply for a registered store. The definition of ‘manufacturer’ is that given in Regulation 3 of the Tobacco Products Regulations 2001 (see glossary).

6.3 Registering, as a store, storage facilities that are leased rather than owned

Manufacturers can lease a facility, which is owned and operated by an unrelated storage company, provided that the:

• store is registered in the name of the manufacturer whose product is going to be stored in the premises concerned
• tobacco product remains the property of the manufacturer (or the responsibility of the manufacturer, in the case of imported product where the manufacturer does not own the goods but takes control as the sole UK agent for the product)
• manufacturer pays or accounts for any duty due upon the removal of the tobacco product
• manufacturer gives any premises guarantee that may be required

6.4 Registering part of an excise warehouse as a registered store

The same area of a building cannot be both an excise warehouse and a registered store. It is, however, possible for a registered store to be physically part of a larger building and for the rest of the building to be an excise warehouse. Where the registered store is physically attached to an excise warehouse all of the following conditions apply:

• entrances and exits are to the outside and not through the excise warehouse
• there’s no access through the registered store to any other building or part of the building
• any dividing wall between the registered store and any other building or part building, whether or not under HMRC control, should preferably be a solid wall of brick or concrete block
• such a dividing wall may, however, consist of heavy gauge metal grid provided that it’s permanent, immovable, extends from floor to ceiling or roof, is of a small enough mesh to prevent the removal of tobacco products and be as proof against forced entry or accidental impact as the rest of the store walls
• there should be no uncertainty as to the extent or separate nature of the registered store and any adjoining building, whether or not any adjoining building is under HMRC control

Failure to comply with these conditions may result in a refusal to register or the revocation of the registration of the premises concerned.

6.5 Storing tobacco product in an excise warehouse instead of a registered store

Tobacco product that has been manufactured in the UK and which is intended for home use may only be stored in duty-suspension in a registered store. UK manufactured tobacco product which is intended for export or any other duty-free purpose may be stored in an excise warehouse but may not be removed to home use from the excise warehouse. Imported tobacco products which are intended for removal to home use in the UK can be stored in an excise warehouse.

6.6 Other conditions that apply to the registration of ‘open air’ stores

‘Open air’ stores are described in paragraph 4.9.

The following additional conditions also apply to premises that are to be registered as an open air store:

• the store must be secure
• accurate records of the tobacco product received into, stored within and removed from the store must be kept
• the tobacco product must be identifiable against the records for the purposes of stock checking
• all conditions pertaining to electronic removal must be met (if approval for electronic removal is requested)
• a detailed plan of the premises to be registered as an open-air store must be provided to the Excise Processing Team
• the premises to be registered as an open air store must be on land that’s occupied by the manufacturer, although there need not be a registered factory on the same land
• the premises that are to constitute an open-air store must be enclosed by a wall or a fence at least 3 metres tall
• the boundary wall or fence demarcating the store must be robust, fixed into the ground and secure enough to prevent cases of tobacco product from being passed over, under or through it
• any fence must consist of a heavy gauge metal grid or mesh small enough to prevent the removal of anything larger than individual retail packs of tobacco products
• the wall or fence demarcating the open-air registered store may, if necessary, also form part of the site perimeter fence provided that we consider the particular premises to be secure and suitable for the safe storage of tobacco products, any common wall or fence that both demarcates the open-air store and also forms part of the perimeter of the manufacturers whole site must be as high as the perimeter wall or fence if that is higher than 3 metres and may be required to be more substantial than the rest of the fence enclosing the store
• in addition, CCTV or other surveillance should allow detection of illicit entry or removal of tobacco products at any time of day or night
• access and egress, to and from the registered store, must be controlled by the manufacturer
• the open-air store can only be used for the storage of tobacco products in road, rail and sea transport containers, unless additionally approved for the storage of innocent goods (see paragraph 6.10)
• tobacco products must be kept in uniquely identified transport containers within the registered open-air store
• the transport containers must be parked or placed within clearly and permanently marked locations within the open-air store
• the location of each transport container must be shown in the store records
• the pallets within the transport containers must be individually identified
• the contents of each separately identified transport container must be recorded in the store records down to pallet and case level
• tobacco product, which your records show as being held in the open-air registered store, should not be held anywhere other than in that store

6.7 Re-packing tobacco products in a registered store

You can re-pack tobacco products in a registered store provided that you give us reasonable notice of your intentions. We would normally expect the period of notice to be at least 24 hours, not including weekends and public holidays. If you intend to carry out continuous or regular re-packing you may agree standing arrangements with us.

Your re-packing operations may affect your registration conditions relating to ‘breaking bulk’ and ‘offsetting’ (see paragraphs 6.8 and 8.10). You should discuss this with us.

6.8 ‘Breaking bulk’ in a registered store

‘Bulk’ in this context means the bulk production unit (for example a stock case or tray) in which the products have passed the Production Account Point, as distinct from the smaller units (for example, 20 or 200 cigarettes) in which they are normally put up for retail sale. You must agree what is to be regarded as the ‘bulk unit’ with us. Breaking bulk, means opening bulk units to remove internal packages. ‘Offsetting’ (see paragraph 8.10) may be allowed only if you’ve elected not to break bulk within the registered store. If the terms of your premises registration permit you to break bulk within the registered store, you’ll be expected to account for the duty on all stock deficiencies and not take credit for any surpluses that might otherwise be offset.

See section 9 for particular conditions applying to registered stores which are approved to use ‘electronic removal’.

6.9 Imported tobacco products and your registered store

If you do not wish to put imported tobacco products into your registered store there are a number of alternatives available to you. For information about importations into warehouses read the notices detailed in paragraph 1.4 or consult the helpline.

6.10 Storage of ‘innocent goods’ (goods that are not subject to excise duty) in your registered store

If you wish to store innocent goods in your registered store, you should make a written request to us. Your request should be made either when applying for the registration of the store, or later as a request for variation of the conditions of the registration.

You should consider the following points before you request this facility:

• stores are registered for the safe storage of tobacco products without payment of duty, it follows that, wherever possible, you should request the de-registration of premises or part-premises which are to be used for the storage of goods other than tobacco products
• where such de-registration is not practicable, you may request a variation to the registration of the store concerned, to allow the storage of innocent goods therein
• any particular conditions relating to such storage will be stated in the registration letter for the premises concerned
• innocent goods must be physically segregated within the store, unless the store’s (electronic removal) computer stock record system is capable of recording and tracking the movement of the innocent goods into, within and out of the store concerned
• any Customs Duty, import or acquisition VAT due on the innocent goods, must be paid or accounted for before the goods enter the registered store
• you’ll not be permitted to store other exciseable goods (goods containing alcohol or oil products) in your registered store
• the storage of innocent goods within registered factories will not be permitted

6.11 Receiving back into your registered store tobacco product that was inadvertently removed to an excise warehouse

Product that has been inadvertently removed to an excise warehouse can be received back into your registered store subject to the following conditions:

• the product was removed to an excise warehouse for export in accordance with Regulation 9 of the Tobacco Products Regulations 2001
• the product was not fiscally marked and was not intended for home-use
• that we allow the goods to be removed from warehouse under regulation 16(1)(e) of the Excise Warehousing (etc) Regulations 1988
• you have retained ownership of the goods, or take ownership of the goods before you receive them back into your registered store

6.12 Removing tobacco products from your registered store without payment of duty

Subject to any fiscal marking (see section 12, Annex 1 and Annex 2 or other requirements, you may remove tobacco products from your registered store without payment of duty for any of the following purposes:

• removal to other registered premises
• warehousing in an excise warehouse for any purpose other than home use
• exportation, removal to the Isle of Man or shipment as stores
• destruction or other disposal to the satisfaction of the commissioners
• such other purpose (except home use) as the commissioners may permit
• may remove herbal smoking products from your registered store without payment of duty for any of the purposes shown above, in addition any herbal smoking products that have been granted a UK marketing licence from the Medical and Healthcare Products Regulatory Agency can also be removed from your registered store without payment of duty

6.13 Storing tobacco products manufactured by other UK manufacturers in your registered store

You can store tobacco products which were produced by another manufacturer in your registered store provided that you take ownership of them.

6.14 Wholesalers or retailers storing UK manufactured tobacco products in duty suspension

UK manufactured tobacco product, which is intended for home use and on which duty has not been paid, can be stored only in a registered store. Such storage is limited to the companies involved in the manufacture of tobacco products.

7. Security – physical and financial: information for manufacturers

7.1 Responsibilities for the physical security of your registered premises

You’re responsible for protecting tobacco products in your registered premises from improper interference or removal. This responsibility is not reduced by our official checks or presence. You should pay special attention to your security arrangements between the stage at which raw material first becomes dutiable and the point at which the Production Account is raised.

The structural security of your premises and the control of goods, persons having authorised access to the premises, and vehicles entering or leaving your premises are your responsibility. We can, however, require you to make improvements in your arrangements if we think that the registered premises have become unsatisfactory for the purpose for which they’re registered.

You should also ensure that all persons on your registered premises are aware that:

• duty may not have been paid on the tobacco products on your premises
• illicit removal is a revenue offence for which they may be prosecuted

Our warning Excise Notice 50: duty free warehouse warning is available for display throughout your premises but you can use your own form of notice if it carries a similar warning.

7.2 Financial security

It’s compulsory to provide financial security for goods which are in transit in the UK. Additionally, we can, if we deem it necessary for the protection of the revenue, require you to provide security for the duty on tobacco products which is chargeable but has not yet been paid or accounted for. This applies to products:

• in registered premises
• used for research or experiment in approved premises

7.3 Entering and inspecting registered premises

Our officers have powers:

• of entry to your premises at any reasonable hour
• to inspect vehicles on, entering or leaving your premises
• to require the production of documents relating to the tobacco products
• to require access to your computer systems in relation to your business as a revenue trader

8. Records and returns: information for manufacturers

8.1 Records of materials that must be kept for a registered factory

The following 3 paragraphs and bullets have the force of law

As the occupier of a registered factory you must keep records showing the quantities and descriptions of:

(a) all materials received

(b) all materials used in each manufacturing batch or during any period of manufacture agreed with us

(c) all materials disposed of

(d) any refuse deriving from materials used

(e) all refuse disposed of and

(f) all tobacco products in your possession prior to their entry into the production account.

You must also record, in relation to the records kept under paragraphs 8.1 (a), (b), (c) and (e) above, the date of receipt, use or disposal of the materials or refuse concerned.

These records must be preserved for a period of 6 years, or such lesser period as we may allow.

8.2 Records of production that must be kept for a registered factory

Under Regulation 14(3) of the Tobacco Products Regulations 2001 you are required to keep a Production Account. This is a continuous daily account of the quantity of tobacco products made in the factory.

For each tobacco product the Production Account must show the:

• quantity produced
• type, brand and size of retail packet
• date of production and entry into that account

The Production Account need not show any products intended for immediate recycling in the same factory.

The Production Account will normally be based on the number of retail packs per bulk unit, for example, stock case or tray (see paragraph 6.8) in which the products are to be stored. The point at which the Production Account is raised is the accounting point for establishing the daily quantity of tobacco products that you manufacture. It must be based on accurate physical counting of all products made.

The point at which the account is raised must be before the product is removed from the factory. The time at which the Production Account is raised may be when the tobacco products are first put into a state suitable for consumption, or put into a state suitable for removal, or packed for delivery. The point and time at which the Production Account is raised, as agreed with us, will be detailed in the registration letter for the premises concerned. If you wish to alter the Production Account Point you must obtain approval from us.

You are required to preserve the Production Account for not less than 6 years, unless we allow otherwise.

8.3 Record of materials reconciliation that must be kept

You should reconcile the quantities of materials received into your factory with the quantities of tobacco products that you manufacture.

Under section 8(1) of the Tobacco Products Duty Act 1979 you may be required to provide a written statement or return accounting for tobacco products, or materials for their manufacture, which are or have been in your possession or under your control. The length of the period covered by the statement or return must be agreed with us. This period can be suited to the size and nature of operations and the accounting arrangements at the factory, but it will not normally exceed 3 months. Your own reconciliation procedures will normally form the basis for the statement or return and will be subject to audits and checks by us.

8.4 Records that must be kept of tobacco products removed from a registered factory

As the occupier of a registered factory you must keep an account of all tobacco products removed from the factory. You must keep each such account at the registered factory unless we advise you in writing that you may do otherwise.

Each account must contain the following details for tobacco products which have been removed from the registered factory:

• the date
• the type of tobacco product
• the brand
• the size of retail pack
• whether or not the packs bear a fiscal mark
• the quantity of tobacco products in each outer package or carton and the number and distinguishing marks of such packages or cartons
• the date of the entry in the production account or the number and date of the delivery document

These must be preserved for a period of 6 years, or such lesser period as we may allow.

8.5 Accounts and records that must be kept for a registered store

As the occupier of a registered store you must keep stock accounts of all tobacco products received into the store, operated upon within the store and removed from the store. You must keep each account at the registered store unless we advise you in writing that you may do otherwise.

These records must be preserved for a period of 6 years, or such lesser period as we may allow.

The following sentence and 7 bullets have the force of law

Each such account must contain the following details for tobacco products which have been received, operated upon, or removed:

• the date
• the type of tobacco product
• the brand
• the size of retail pack
• whether or not the packs bear a fiscal mark
• the quantity of tobacco products in each outer package or carton and the number and distinguishing marks of such packages or cartons
• the date of the entry in the production account or the number and date of the delivery document

Each account must be balanced and reconciled with stock held in the store on a regular basis as agreed with us.

8.6 Records that must be maintained on the receipt of tobacco products from other registered premises

Tobacco products received from other registered premises must be entered in the store records in the usual manner. These will be subject to inspection and audit by us.

8.7 Returns that must be made if you remove tobacco products to home use

Duty is payable on all removals to home use.

If you remove product to home use from registered premises you are required to submit a return (TP7) showing the quantities of products delivered to home use and the amount of duty due. Further to the introduction of the MET on 20 May 2017 from 31 March 2017 a revised TP7 includes new boxes to account for any additional duty due in cases where the MET is higher than the usual application of duties. A TP7 return must be submitted daily unless you are approved for duty deferment. In that case you may be permitted to submit the TP7 on a monthly basis. The submission of a monthly TP7 must be agreed by us.

8.8 Returns or records that you, as the occupier must make or keep for tobacco products removed without payment of duty from registered premises

You will not normally be required to complete an official return for removals for purposes other than home use. In most cases the records that you are required to keep and your commercial documentation, which accompanies the tobacco products, will be sufficient. We must agree your record systems and be satisfied that your commercial documents are sufficient for our purposes.

The following sentence and table have the force of law

For each type of duty-free removal you must keep the records and supporting commercial documentation specified in the following table.

Type of duty free removal from registered premises	Manufacturer’s own records and commercial documentation required instead of a return
Exports (including consignments to EU member states – Northern Ireland only)	Store or factory records showing removal. (See paragraphs 8.4 and 8.5) Consignment note Invoices
Removals to the Isle of Man	Consignment note Invoices Store or factory records showing removal. (See paragraphs 8.4 and 8.5)
Destruction or recycling of damaged/unwanted/unusable stock. (This does not include customer returns – see section 10 below)	Store or factory records showing removal. (See paragraphs 8.4 and 8.5) Consignment note (if appropriate) Certificate of destruction (if destroyed at third party premises)
Supply to entitled international organisations and diplomatic missions or for sale to visiting forces	Store or factory records showing removal. (See paragraphs 8.4 and 8.5) Consignment note In addition to these requirements you may also provide supporting copies of invoices
Supply for duty-free shops/ships stores. (This does not include tobacco products intended for use as merchandise by registered mobile operators) – Note – Registered mobile operators will only apply in Northern Ireland for cruises between Northern Ireland and the EU	Store or factory records showing removal. (See paragraphs 8.4 and 8.5) Consignment note Invoices
Removals to other registered premises (that is, stores or factories)	Store or factory records showing removal. (See paragraphs 8.4 and 8.5) Consignment note (remember that such removals must also be supported by the records kept in the receiving store or factory.)
Permanent removal to an excise warehouse for purposes other than home use	Store or factory records showing removal. (See paragraphs 8.4 and 8.5) Consignment note
Supply to a person authorised to receive duty free tobacco products for the purpose of testing, research or experiment	Store or factory records showing removal. (See paragraphs 8.4and 8.5) Evidence that the consignee is entitled to receive the goods in duty-suspension. Consignment note Invoices
Temporary removal of product, not bearing a fiscal mark, to an excise warehouse for a permitted operation (for example, repacking)	Store or factory records showing removal. (See paragraphs 8.4 and 8.5) Consignment note Consignment note for returning goods Store records showing receipt back into the dispatching store (See paragraph 8.6)

The requirement to keep store and factory records and keep and preserve consignment notes and invoices is imposed under powers granted to the Commissioners by the Revenue Traders (Accounts and Records) Regulations 1992. The records required must be preserved for a period of 6 years, or such lesser period as we may allow.

The following requirements are imposed under powers granted to the Commissioners by Regulation 6 of the Revenue Traders (Accounts and Records) Regulations 1992.

The following sentence and 8 bullets have the force of law

For each duty-free removal the store and factory records referred to in the table above must show the following information:

• purpose of the duty-free removal (for example, export)
• product type (for example, cigarettes)
• brand and/or the product code number
• quantity (that is, number of cigarettes, kilograms of other tobacco products)
• pallet or other packaging unit identification
• date of dispatch
• destination warehouse name and address (if appropriate)
• destination warehouse registration number (if appropriate)

The requirement for any customs entries, transit documents or other official forms (for example, C88, eAD, FAD, C426 or C185) is additional to the records and commercial documentation listed above.

8.9 About stock discrepancies

You’re required to notify us without delay of any discrepancy you find between the quantities shown in your stock records and those actually held in the store. You’re potentially liable to pay duty on any:

• deficiencies found in the physical stock
• surplus quantities not properly recorded in your stock accounts

8.10 Offset of deficiencies of stock against surpluses of stock

Minor picking errors may occur from time to time resulting in discrepancies, (surpluses or deficiencies), in the stock records which cancel each other out over the monthly accounting period. In other cases it may be possible to show that individual deficiencies and surpluses result from related bookkeeping errors, rather than from actual changes in the physical stocks.

As a concession you may be allowed to offset individual deficiencies and excesses provided that:

• you do not break bulk within the registered store (see paragraph 6.8)
• you notify us of any discrepancies as soon as you discover them (or at such other times as agreed with us)
• you can provide the necessary evidence to satisfy us that the individual discrepancies represent no more than bookkeeping or simple picking errors
• the errors involve packets of the same brand and retail price and do not result in any actual deficiency or surplus of stock
• all offsetting arrangements must be agreed with us
• any offsetting arrangements are without prejudice to the fiscal marking requirements and Regulations
• a request to ‘offset’ stock in this manner constitutes a claim that duty has been paid or secured on the discrepancies, the burden of proof for this lies with you as the occupier of the registered store concerned

If the errors are not self-balancing within the monthly accounting period, you may be allowed to carry a surplus forward to the following month. This will only be allowed if a compensating error is expected to cancel out the apparent surplus. A surplus cannot be carried forward for more than one accounting period. Deficiencies cannot be carried forward. Duty must be paid on any unresolved deficiencies within the accounting period.

8.11 The procedure for receiving imported tobacco products

The procedures are the same as those shown in Excise Notice 197: receipt into and removal from an excise warehouse of excise goods, for excise goods imported to an excise warehouse. But any Customs Duty must be paid or accounted for before the tobacco product is received into the registered store.

8.11.1 Import account raised at the registered store

Tobacco products may be removed from the port of importation to the registered store for examination, provided that they are:

• entered correctly for deposit in registered premises
• imported in secure containers containing no other goods

Approval for the first account of the goods (the ‘import account’) to be taken at the registered store must be contained in the registration letter referred to in paragraph 4.2. You may also apply in writing at a later date to us.

8.11.2 Containers selected for examination at the port

Imported tobacco products may be selected for examination, and an import account raised, at the port of importation. You may, with our prior agreement, request that the goods be examined at your registered store. In such cases the goods will be officially sealed before leaving the port and you must not break the seals until authorised by us. In order to minimise delays you should notify us in good time of the expected arrival of containers under official seal.

8.11.3 Containers cleared at the port

Imported tobacco products cleared at the port will not be officially sealed. The tobacco products may be taken into your registered store but you must tell us immediately if there’s any discrepancy between the goods actually received and what is shown on the import declaration.

8.11.4 Goods moved from the point of importation to the Registered Store

When goods are moved from the point of importation to the registered store the movement must be supported by a transaction on the Electronic Movement and Control System (EMCS). Receipt of the goods will need to be acknowledged on the system to clear the movement. For further details of the EMCS procedures, see Excise Notice 197: receipt into and removal from an excise warehouse of excise goods.

9. Electronic removal in registered stores: information for manufacturers

9.1 Electronic removal

This is an optional and additional facility to:

• allow, in suitably approved registered stores, tobacco products to be ‘removed’ to home use on payment of tobacco products duty without physically leaving the registered store
• permit the continued storage of such duty-paid tobacco products within the registered store

Electronic removal amounts to a change from duty-suspended to duty-paid status in the records kept on a computer or other electronic system and is an irreversible transaction. Your computer or electronic system must preclude the possibility of any deliberate or accidental reversal from duty-paid to duty-suspended status.

You should note that any specific requirements concerning electronic removal are in addition to the other conditions applying to registered stores.

9.2 Applying for approval to operate electronic removal in your registered store

You must apply to us for approval to operate electronic removal in a particular store. Before we grant approval, we’ll examine the computer system that you propose to use, and will advise you of any modifications which are necessary. You should, therefore, approach us as early as possible in the planning stage.

9.3 Capabilities of your computer system

We’ll advise you of all the requirements for the system, but these will include the following:

• tracing and recording all movements of tobacco products, as well as any changes in duty status, within the registered store (this includes freezing of stock, changes of location, sampling and stock adjustments)
• uniquely identifying stocks, in order to facilitate physical stock checking
• preventing unauthorised access to, and changes to, file data
• an internal clock showing the correct date and time
• accurate calculation of any duty due
• allowing, at any time, authorised alterations to:
  • the current duty rate held on file
  • the recommended retail prices of all brands of cigarettes stored
  • production of reports of amendments and cancellations, so that these can be investigated

Failure to comply with these requirements may result in a refusal to register, or lead to the revocation of the registration concerned.

9.4 Physical removal and electronic removal in the same registered store

Only one type of removal may be used for determining the change of status of tobacco products from duty-suspended to duty-paid, within the physical area designated as the registered store. The registration may be altered to allow physical removal in exceptional circumstances and for the period of time that the electronic removal system is inoperable. You should contact us for advice in such circumstances.

9.5 The rules on ‘breaking bulk’ in a store where you operate electronic removal

In order to operate a break bulk or mixed picking area, the bulk units must first be electronically removed then physically transported to a physically demarcated duty paid location. You should discuss your proposals and our detailed requirements with us.

Should you wish to break down bulk units that have been electronically removed but which are still located within the mixed storage area, you should contact us immediately for advice.

9.6 Storage of records of electronic removals

The records required must be preserved for a period of 6 years, or such lesser period as we may allow.

If you want to keep records on a medium other than paper (for instance, microfilm or microfiche), you also need our approval. See Excise Notice 206: revenue traders’ records for further details.

9.7 Action to take in the event of a computer breakdown

You should follow the procedures as set out in your registration letter and any instruction or advice that you subsequently receive from us.

9.8 Special conditions that apply on Budget Day

Regulation 9(6) of the Tobacco Products Regulations 2001 also applies in the case of electronic removal. This means that any electronic removal of tobacco product after 11.59am on a day upon which the duty rate is increased, will be deemed to have been removed after the increase took effect. (See also paragraph 2.17.)

10. Duty payment and duty deferment: information for manufacturers

10.1 How to pay the duty

Unless you’re approved to pay duty under duty deferment arrangements, payment is required on a daily basis before the tobacco products are removed to home use. You should contact us to make the necessary arrangements.

10.2 Duty deferment

Duty deferment is a system whereby the duty liability on goods removed to home use is accumulated during an accounting period and payment is made usually about 2 weeks after the end of the accounting period. Full details can be found in Notice 101: deferring duty, VAT and other charges.

10.3 Duty deferment period

The deferment accounting period for tobacco products duty, on removals to home use from registered premises, is the calendar month. Payment day is the 15th day of the month following the accounting period. If the 15th falls on a non-business day, payment must be made on the next business day.

10.4 How to pay

Under the deferment system, payment is made by direct debit. If an emergency affects the direct debit method of payment in any period you’ll have to pay by some other means. We’ll contact you if this happens.

Following the introduction of a cap on 31 May 2012 by the Board of Bacs Payments Schemes Ltd (Bacs) which limits the maximum value of any single Bacs transaction, HMRC are no longer able to collect Direct Debits in excess of £20 million. If you regularly have a payment to make which exceeds £20 million, you need to make arrangements with your own bank to ensure payment reaches HMRC on the due date, by an alternative payment method such as CHAPS.

10.5 Applying for duty deferment

If you want to apply to defer excise duty (Tobacco Products Duty), you should follow the procedures set out in Notice 101: deferring duty, VAT and other charges. Imports (VAT Notice 702) has additional information about deferral of VAT.

When you return the completed forms, make it clear that you’re seeking approval for deferment of tobacco products duty on tobacco products removed from registered premises and quote ‘Notice 476’.

10.6 Financial security

In certain circumstances you may be required to provide financial security in the form of a guarantee given by a financial institution approved by us for that purpose. This deferment guarantee is additional to and separate from any other security we require.

The guarantee must fully cover the first £5 million of your monthly duty liability. Any additional monthly duty liability of between £5 million and £50 million need be only partly secured. This means that you’ll have to provide security for the first £5 million plus 10% of your duty liability between £5 million and £50 million.

If, for example, your monthly duty liability were £50 million, your guarantee would be £9.5 million that is, £5 million (for the first £5 million of the total liability) + £4.5 million (that is, 10% of the remaining £45 million of the total liability).

The maximum guarantee that you may be required to provide is £9.5 million. This is because no extra guarantee is required for monthly liabilities above £50 million. Your guarantor can be liable for up to twice the amount shown on the guarantee. This is because you can defer up to your guarantee limit in one month and then again in the next month before you have paid for the first month.

If your extra liabilities in peak periods exceed your existing guarantee you must provide supplementary guarantees. Notice 101: deferring duty, VAT and other charges provides further details.

10.7 Deferring payments of excise duty without a guarantee

Under the Excise Payment Security System (EPSS) you can apply for authorisation to defer payments of excise duty without providing a guarantee. If you’re authorised you can benefit from a reduction in your deferment guarantee by not providing security for your deferred payments of excise duty. If you want to apply for authorisation you should follow the action set out in Notice 101: deferring duty, VAT and other charges.

10.8 The duty deferment procedure each month

You request deferment on the duty return form TP7. You should complete 2 copies of the return with details of the duty liability in the agreed accounting period.

You should present the returns to us within the agreed time limit. This will normally be within 4 working days of the end of the calendar month. Before each payment day you’ll receive from our Central Deferment Office an advice of the amount that will be debited on payment day.

10.9 If you exceed your deferment limit

You must pay cash using form TP7. As soon as you exceed or think that you may exceed your deferment limit, you should contact us. If you’re refused deferment facilities, either permanently or for the remainder of a month in which you exceed your guarantee limit, you’ll be allowed to remove tobacco products only against pre-payment of the duty in cash or by guaranteed cheque on a daily basis. That’s why it’s important for you to get your guarantee level right and operate the approved arrangements properly. You should therefore:

• keep a separate running total of each day’s duty liability
• monitor the running total against your deferment guarantee limit
• tell us when 90% of the guarantee limit for the calendar month has been exhausted

10.10 Giving notice of any changed circumstances

Notify our Central Deferment Office (see Notice 101: deferring duty, VAT and other charges) immediately if:

• you cease trading
• your business name or address is changed
• you wish to make any other change in the details declared in your application for deferment approval

11. Repayment or offsetting of duty on customer returns

11.1 Manufacturers and reclaiming duty on tobacco products returned to registered premises

You should claim a repayment of duty under the terms of Regulation 26 of the Tobacco Products Regulations 2001. Subject to certain conditions we’ll allow a credit for the duty paid on products returned from customers to registered premises, and on products previously removed to your own duty paid storage but not delivered to customers and returned to registered premises. The tobacco products must, with our agreement, have been:

• recycled
• repackaged
• destroyed by a method acceptable to us
• any fiscal marks must have been obliterated or destroyed

‘Recycling’ and ‘repackaging’ have special meanings for duty credit purposes. Credit will be allowed only if the recycling or repackaging of the returned products is within the meaning of either word as given in the Regulation 3 of the Tobacco Products Regulations 2001.

Credit of duty will not be permitted on tobacco products that were removed to home use more than 3 years before the date of the claim.

11.2 Importers and reclaiming the duty on imported tobacco products returned by customers

You can claim a repayment of duty under the terms of the Excise Goods (Drawback) Regulations 1995. You can find further information in Excise Notice 207: excise duty drawback or from the helpline. It is a condition of drawback that any fiscal marks carried by the tobacco products are obliterated or destroyed before a claim is made. (See section 12, Annex 1 and Annex 2 for more information.)

11.3 Circumstances under which you cannot reclaim duty on tobacco products returned to registered premises

Duty credit will not be given on returned products which are in saleable condition and which are intended for re-issue without undergoing recycling or repackaging. Such products cannot be returned to duty suspended stock in registered premises. This applies also to products that are returned for repair or replacement of external packaging (the ‘stock-case’, for example). Minor re-packing operations like this do not attract duty credit.

11.4 The records that you must keep of returned products

The following sentence and 5 bullets have the force of law

You must keep a full record of returned products showing for each brand:

• the quantity (number) of cigarettes
• the weight of other products
• the date when duty was originally paid
• the amount of duty paid
• the method of disposal

These records must be preserved for a period of 6 years, or such lesser period as we may allow.

11.5 Special conditions that apply to the disposal of the returned product

Any fiscal marks carried by the products must be destroyed or permanently obliterated.

Responsibility for destruction of the goods remains with the manufacturer or importer. Methods of destruction include incineration, grinding or denaturing. It’s essential that all the product is destroyed or rendered unsmokeable. You should agree the particular destruction methods to be used and the notification procedure with us.

Destructions are subject to the same official controls and audits as the rest of the manufacturing and storage process. In addition to meeting our requirements for any authorised destruction, you must also be aware of your legal responsibilities under legislation dealing with the control of pollution and protection of the environment. Any such or similar concerns should be resolved with the appropriate authorities before you submit your proposed method of destruction for our approval.

11.6 How the repayment is calculated

Duty will be credited or repaid at the rates of duty in force at the times when the products were originally removed to home use as shown on the TP7, commercial dispatch document, import entry, W6 or W6D.

For cigars, hand-rolling tobacco, pipe tobacco, chewing tobacco and tobacco for heating, duty will be repaid on the net weight of the products returned to the registered premises, provided that this does not exceed the weight on which duty was originally paid.

For cigarettes the amount of repayment will be determined by the actual number of cigarettes returned to the registered premises and the duty applicable as determined by the retail-selling price or the MET whichever is appropriate. For cigars, hand-rolling tobacco, pipe tobacco, chewing tobacco and tobacco for heating, duty will be repaid on the net weight of the tobacco product, provided that this does not exceed the weight on which duty was originally paid.

If you cannot determine the date that returned goods were removed to home use you should contact us for advice.

12. Fiscal marks: information for manufacturers, importers and anyone concerned with the distribution or sale of tobacco products

12.1 When the fiscal marking requirements apply

If you manufacture, import, hold, move, or sell cigarettes or hand-rolling tobacco you’ll need to be aware of and comply with the fiscal marking requirements. You can find more details in this section, Annex 1 and Annex 2 of this notice.

12.2 The legislation that governs fiscal marks

The Tobacco Products Duty Act 1979 sets out the framework for fiscal marks. The detailed requirements of the scheme are contained in the Tobacco Products Regulations 2001 and this notice.

12.3 A fiscal mark

A fiscal mark is a mark that must be carried on ‘specified tobacco products’ indicating that UK duty has been paid. The specification of the fiscal mark for specified tobacco products manufactured in or imported into the UK before 20 May 2019 is contained in Annex 1.

In accordance with the revised Tobacco Products Directive (Directive 2014/40/EU of 3 April 2014) all unit packs of cigarettes and hand-rolling tobacco must carry unique identifier traceability codes and new security features from 20 May 2019. To accommodate these requirements, changes have been made to the position of the fiscal mark on specified tobacco products.

The specification of the fiscal mark for specified tobacco products, manufactured in or imported into the UK from 20 May 2019 is contained in Annex 2.

Specified tobacco products manufactured in or imported into the UK must carry a fiscal mark unless specifically excluded from the scheme.

Specified tobacco products that are required to carry a fiscal mark, which are held by a person who is a revenue trader, must carry a compliant fiscal mark irrespective of the date they were manufactured, imported or removed to home use.

12.4 ‘Specified tobacco products’

Specified tobacco products are those tobacco products listed in Regulation 21(2) of the Tobacco Products Regulations 2001. Those products are:

• cigarettes
• hand-rolling tobacco (with the exception of hand-rolling tobacco which is intended for retail sale in loose form and is supplied by the manufacturer or importer in packets containing 500 grams or more)

12.5 Tobacco products that are not specified tobacco products

The following tobacco products are not specified tobacco products and are not required to carry a fiscal mark:

• cigars
• cigarillos
• hand-rolling tobacco which is intended for retail sale in loose form that is supplied by the manufacturer or importer in packets that each contain 500 grams or more
• other smoking tobacco
• chewing tobacco
• tobacco for heating
• herbal smoking products, for example, herbal cigarettes, herbal smoking mixtures for hand-rolling into cigarettes or any other tobacco products

12.6 Exceptions to the requirement that specified tobacco products must carry the fiscal mark

Under Regulation 23(3) of the Tobacco Products Regulations 2001, specified tobacco products that are not required to carry a fiscal mark must not carry a fiscal mark.

Specified tobacco products are not required to and must not carry a fiscal mark if they are for:

• ships and aircraft stores
• export
• sale in export shops to travellers to third countries

and they are not delivered to home use or otherwise made available for home use.

Specified tobacco products are also not required to and must not carry a fiscal mark if they are:

• imported for personal use and transported by them
• for supply to entitled international organisations and diplomatic missions
• for sale to visiting forces

and any conditions attaching to the relief from duty in those circumstances are complied with.

Specified tobacco products which have been removed to home use in the Isle of Man are not required to and must not carry a fiscal mark if:

• excise duty has been paid on removal to home use in the Isle of Man
• they carry a mark for fiscal purposes as required by the law in the Isle of Man
• the excise duty paid in the Isle of Man has not been and will not be repaid, remitted or drawn back

Further information concerning tobacco products removed to or consigned from the Isle of Man can be found in paragraphs 12.18 to 12.20.

12.7 When the fiscal mark must be applied

Packs of cigarettes and hand-rolling tobacco which are manufactured in the UK and which are required to carry a fiscal mark must be marked when they’re packaged. In practice this will be before they leave the registered factory.

Packs of cigarettes and hand-rolling tobacco which are imported into the UK and which are required to carry a fiscal mark must be marked before they enter the UK. This includes packs of cigarettes and hand-rolling tobacco sent through the postal system which are intended for personal use.

12.8 Removing unmarked specified tobacco products from registered premises

Unmarked specified tobacco products may only be removed from registered premises for approved purposes. In most cases these are uses which do not involve the payment of duty. They are listed in Regulation 9(4) of the Tobacco Products Regulations 2001. In summary the approved purposes are:

• removal to other registered premises
• warehousing in an excise warehouse for any purpose other than home use
• exportation, removal to the Isle of Man or shipment as stores
• destruction or other disposal to the satisfaction of the Commissioners
• removal to unregistered premises, after duty has been paid or accounted for, for the purpose of familiarisation, and demonstration to sales and other staff
• removal to unregistered premises, after duty has been paid or accounted for, for the purpose of testing quality or testing products that are being developed
• any other purpose (except home use) as we may permit

12.9 Removing imported marked specified tobacco products from registered premises without payment of duty

Specified tobacco products, which carry a fiscal mark and which are in registered premises, may be removed without payment of duty for the following purposes:

• transfer from a registered factory to a registered store
• transfer from a registered store to another registered store
• destruction or disposal to the satisfaction of the commissioners
• recycling or repackaging with the consent of the commissioners

You must also comply with any conditions attached to such duty free removals.

12.10 Removing marked product from an excise warehouse without payment of duty

Specified tobacco products, which carry a fiscal mark and are in an excise warehouse, may be removed without payment of duty for the following purposes:

• removal to a registered store under duty-suspension arrangements
• removal to another excise warehouse under duty-suspension arrangements
• destruction or exportation following the obliteration or destruction of the fiscal mark to the satisfaction of the commissioners

12.11 Claiming drawback on marked product

Provided that you obliterate the fiscal mark to our satisfaction and meet the requirements set out in Excise Notice 207: excise duty drawback. See section 11.2 of Excise Notice 207 for differences from a normal export in relation to Northern Ireland.

12.12 The penalty for not marking products

Manufacturers or importers who remove to home use specified tobacco products that do not carry a compliant fiscal mark will be liable to forfeiture of the products in question and to a civil penalty.

12.13 Action if your pack mark does not comply with the specification for the fiscal mark

Packaging that does not comply with the fiscal mark specification will be non-compliant. The manufacturer or importer responsible for the non-compliant product will be liable to a civil penalty and the product in question will be liable to forfeiture.

12.14 Is it an offence to supply or sell unmarked specified tobacco products

It’s a criminal offence to possess, transport, display, sell, offer for sale or otherwise deal in unmarked products (that is, specified tobacco products that are required to carry a fiscal mark, but do not).

12.15 Overprinting or altering the fiscal mark

If you alter or overprint, or cause a mark to be altered or overprinted, you’ll be liable to a civil penalty and the product in question will be liable to forfeiture.

12.16 Allowing your premises to be used for the sale of unmarked specified tobacco products

It’s a criminal offence for the manager of premises to suffer the premises to be used for the sale of unmarked specified tobacco products that are required to carry a mark.

The term ‘suffer’ requires actual or constructive knowledge that the activity is taking place but does not require active connivance. For example, if you manage premises such as a public house, club, shop and you turn a blind eye to the fact that unmarked specified tobacco product is being sold on those premises, you’ll be guilty of an offence.

In this context a person is a manager of premises if they are:

• entitled to control their use
• entrusted with their management
• in charge of them

This means that a person who merely lets premises on a commercial basis and does not exercise day-to-day control over those premises will not be guilty of an offence.

If convicted of the offence, you’ll be liable to a fine and the court may also make an order prohibiting the use of the premises in question for the sale of tobacco products for a period of up to 6 months. Failure to comply with such an order is a criminal offence.

12.17 Action for Registered Consignees or Temporary Registered Consignees (Northern Ireland only) to take if they discover that a consignment of cigarettes or hand-rolling tobacco is not fiscally marked or bears an incorrect fiscal mark

Imported specified tobacco products, intended for home use, which do not bear a fiscal mark applied before importation will be non-compliant with Regulation 22(3) of the Tobacco Products Regulations 2001. This contravention of the Regulations may attract civil penalties under sections 8E(1)-(3) of the Tobacco Products Duty Act 1979.

If you receive unmarked product, which should bear a fiscal mark you should keep the consignment on your premises and immediately notify us. Details of how to contact us are given in paragraph 1.5 of this notice.

It’s your responsibility to ensure that your supplier understands the significance of the fiscal mark and ensures that any specified tobacco products which are consigned to you bear a compliant fiscal mark. It’s a criminal offence to possess, transport, display, sell, offer for sale or otherwise deal in unmarked tobacco products, which are required to carry a fiscal mark. If you’re a Registered consignee or Temporary Registered Consignee (Northern Ireland only), importing unmarked tobacco products, you could be committing such an offence since neither are permitted to hold tobacco products in duty-suspension.

12.18 The fiscal marking requirements in the Isle of Man

The Isle of Man has introduced equivalent legislation to the UK on fiscal marking.

12.19 Fiscal marking requirements on tobacco products removed to the Isle of Man

Specified tobacco products moving in duty-suspension to the Isle of Man must not bear a compliant UK fiscal mark.

Specified tobacco products moving in duty-suspension to the Isle of Man must comply with the relevant legislation in the Isle of Man.

UK duty paid specified tobacco products transported to the Isle of Man will already have been removed to home use in the UK and must, therefore, bear a compliant UK fiscal mark.

12.20 Fiscal marking requirements on tobacco products consigned from the Isle of Man

Specified tobacco products consigned in duty-suspension from the Isle of Man, for home use in the UK, must bear a compliant UK fiscal mark. The mark must have been applied before the goods enter the UK.

Duty paid specified tobacco products transported from the Isle of Man to the UK should bear a fiscal mark in conformity with Isle of Man legislation. Provided that they do bear such a fiscal mark and that the excise duty paid in the Isle of Man has not been and will not be repaid, remitted or drawn back the products may be transported and sold in the UK.

13. Reviews and appeals

13.1 If we refuse to register your premises or you disagree with the registration conditions

If you do not agree with the registration conditions set out in the registration letter, or any refusal to register premises, or the revocation of registration, you can ask for a review.

You have 3 options. Within 30 days you can:

• send new information or arguments to the officer you have been dealing with
• have your case reviewed by a different officer
• have your case heard by an independent tribunal

You can also have a review and then appeal to tribunal if you disagree with the outcome. If you want to appeal you must write directly to the tribunal.

13.2 Time limits to ask for a review

If you want us to review a decision, you must write to the person who issued the decision letter, within 30 days of the date of that letter.

13.3 What to include in your request for a review

Your request should set out clearly the full details of your case, the reasons why you disagree with us and provide any supporting documentation. You should also state what result you expect from our review.

13.4 What if I do not want a review

If you do not want a review you may appeal to the independent tribunal. You need to send your appeal to the tribunal within 30 days of the date on the decision letter.

13.5 Where to get more information

Get more information about reviews and appeals in:

• factsheet HMRC1 - copies available from the orderline on Telephone: 0300 200 3610
• what to do if you disagree with an HMRC decision

There’s also information about how to appeal on the Tribunals Service website or by Telephone: 0845 223 8080.

13.6 If you disagree with an assessment of Tobacco Products Duty

If you do not agree with an assessment of Tobacco Products Duty you have the same options as described in paragraph 13.1 and follow the sections through to 13.5.

14. Glossary of terms

Term	Description
Ad valorem component of the duty on cigarettes	Duty element calculated as a percentage of the retail price of cigarettes. Cigarettes are the only tobacco product In the UK subject to an ad valorem duty.
Administrative Reference Code - (ARC)	A unique reference that identifies the movement of excise goods on EMCS
Beedies (bidis)	Beedies are manufactured in India and other predominantly Asian countries and consist of thin strands of tobacco wrapped up in the leaf of the tendu plant. They often have a home-made look, are sometimes tied up in bundles and can be mistaken for small, thin, herbal cigarettes. Beedies are classified as cigarettes and are subject to the same duty rates and other legislation affecting labelling, tar yield, and so on
Chewing tobacco	Any product that: - is not cigarettes, cigars, hand-rolling tobacco, or other smoking tobacco - consists of or includes tobacco, and - has been prepared so that it can be chewed. (See the Tobacco Products (Descriptions of Products) Order 2003) Chewing tobacco is liable to tobacco products duty.
Cigar	Any tobacco product, which can be smoked as it is and which is either: - a roll of tobacco with an outer wrapper of natural tobacco, or - a roll of tobacco containing predominantly broken or threshed leaf - with a binder of reconstituted tobacco, and – with an outer wrapper which is of reconstituted tobacco having the normal colour of a cigar and which is fitted spirally, or - a roll of tobacco containing predominantly broken or threshed leaf. - with an outer wrapper of reconstituted tobacco having the normal colour of a cigar and having a unit weight, exclusive of any detachable filter or mouthpiece, of not less than 2.3 grams and not more than 10 grams and - having a circumference over at least one-third of its length of not less than 34 millimetres (See the Tobacco Products (Descriptions of Products) Order 2003)
Cigarette	Any product that comprises: - rolls of tobacco capable of being smoked as they are and that are not cigars, or - rolls of tobacco that, by simple non-industrial handling, are - inserted into cigarette-paper tubes, or wrapped in cigarette paper For duty purposes, any cigarette more than 8cm long (excluding filter or mouthpiece) is treated as though the first 8cm of it, each 3cm portion of the remainder of it (if any) and the remaining portion of it (if any) were a separate cigarette. See section 4 of the Tobacco Products Duty Act 1979.
Cigarette rag	Tobacco which has been processed and cut ready for the manufacture of cigarettes. Also referred to as cut rag and CRT.
Cigarillo	A cigarillo is a cigar with a maximum weight of 3 grams. Cigarillos are subject to the same rate of duty as cigars. (See the Excise Duties (Personal Reliefs) Order 1992.) A product that is described as a cigarillo but falls within one of the descriptions of cigar is treated as a cigar.
Commercial premises	Any premises used to receive, store or supply tobacco. These may include a registered factory or registered store but will frequently be larger than the registered area.
Customer returns	Duty paid tobacco products returned from a customer and on which duty may be reclaimed under certain conditions.
Duty deferment	A means by which a trader can, on application, defer payment of duty on removals to home use.
Duty points (excise)	The excise duty point is the point at which excise duty becomes payable on excise goods. For tobacco products they are listed in the Excise Goods (Holding, Movement and Duty Point) Regulations 2010.
Electronic removal	The removal of goods from duty suspension by means of a transaction on an electronic record.
Excise Movement Control System - EMCS	Excise Movement and Control System (EMCS) is a computer system which captures and processes information in respect of all movements of excise goods in duty suspension within the UK (and EU for the purposes of businesses in Northern Ireland.
EU	The European Union. You can find a full list of the current member states in the Tariff Volume 1 part 2.
Expanded tobacco	Expanded tobacco is produced via a process in which tobacco leaf is expanded by being immersed in liquid CO2 at high pressures. The frozen tobacco is then passed through a stream of hot air and this causes the CO2 to turn instantly into gas expanding the tobacco cell structure. The resulting tobacco has a significantly greater volume than the same weight of unexpanded tobacco.
FAD	Fallback Accompanying Document, used when EMCS is not available.
Fiscal mark	In the context of this notice: a mark carried on packets of cigarettes and hand-rolling tobacco indicating that Tobacco Products Duty has been paid. (See section 12, Annex 1 and Annex 2.)
Free circulation	Once import procedures have been completed and any customs duties have been paid in the EU the goods are deemed to be in free circulation within the EU. For Great Britain imports only, free circulation occurs at the point the customs duties have been paid in Great Britain.
Hand-rolling tobacco	Any product: - in which more than 25 per cent by weight of the tobacco particles have a cut width of less than 1.5 millimetre - that is sold or intended to be sold for making into cigarettes by hand, or - that is of a kind used for making into cigarettes by hand. (See the Tobacco Products (Descriptions of Products) Order 2003.)
Herbal smoking products	These products include but are not limited to: - Herbal cigarettes, - Herbal pipe smoking mixtures - Herbal water pipe (Shisha), containing no tobacco - Herbal smoking mixtures for hand rolling into cigarettes These products do not contain tobacco but are specifically designed and sold as smoking products. For taxation purposes, they’ll be liable to Tobacco Products (Excise) Duty.
Home use removal or delivery	Removal from registered premises or excise warehouse for duty paid consumption in the UK (see ‘Removal’)
Innocent goods	For the purposes of this notice, innocent goods are goods which are not liable to excise duty.
Manufacturer	Any person who manufactures tobacco products in premises that may be registered as a registered factory under Regulation 4 of the Tobacco Products Regulations 2001. Two bodies corporate may be treated jointly as a manufacturer if: - one of them manufactures tobacco products in premises that may be registered as a registered factory - one of the other body corporate’s principal activities is the storage of tobacco products manufactured by the first mentioned body corporate, and one of them controls the other or, although neither controls the other, they are both controlled by the same body corporate.
Materials	For records, returns and control purposes, materials means: - unmanufactured tobacco - reconstituted tobacco sheet (RTS) - tobacco products intended for further manufacture - cigarette ‘rag’ - any form of ‘expanded’ tobacco, and - any other manufactured tobacco but not additives, paper, filters or packaging materials.
Material reconciliation account	A reconciliation of the products manufactured against the quantities of materials received.
Minimum Excise Tax	The Minimum Excise Tax (or MET) sets a minimum level of excise duty for all packets of cigarettes.
Occupier	The manufacturer who occupies a registered factory or store.
Oral snuff, snus	Oral snuff or snus is a tobacco product which consists of a small sachet containing ground tobacco and flavourings. Unlike chewing tobacco oral snuff sachets are placed in the mouth between the gum and the lip. The sale of oral snuff is prohibited in the UK.
Other Smoking Tobacco	Other smoking tobacco includes any product that is not cigarettes, cigars, or hand-rolling tobacco and comprises of tobacco that has been cut or otherwise split, twisted or pressed into blocks, and is capable of being smoked without further industrial processing. Or any tobacco refuse put up for retail sale that can be smoked.
Packet	Any box, package, container or other receptacle that contains the tobacco product in which that product is, or is intended to be, presented for retail supply. The term does not include any additional outer wrapping that may be discarded at the time the packet is opened.
Production account	Every manufacturer is required to keep a production account showing the quantity produced, the type, brand and size of retail pack and the date of production for each separate product.
Production account point (PAP)	This is the precise, clearly defined point through which all tobacco products are channelled and where the production account is raised.
Raw tobacco	Leaves or any other part of a plant of the genus Nicotiana but does not include any part of a living plant or a tobacco product
Retail price	The price, usually the recommended retail-selling price, on which the ad valorem element of the duty is calculated (see ‘ad valorem duty’)
Reconstituted Tobacco Sheet	Tobacco refuse which has been recycled and processed into sheets which are used in the manufacture of some tobacco products.
Recycling	Reworking the tobacco (or tobacco substitute) constituents of the tobacco products.
Registered Consignee – Northern Ireland only	Registered Consignees are revenue traders who are approved by and registered with us to receive and account for duty on duty-suspended excise goods from EU member states. (See Notice 203a: Registered Consignees)
Registered factory	Place at which tobacco products are manufactured. Factory premises must be registered under Regulation 4 of the Tobacco Products Regulations 2001.
Registered store	Premises registered under Regulation 5 of the Tobacco Products Regulations 2001 for the safe storage of tobacco products without payment of duty.
Registered tobacco premises (RTPs)	Any premises registered under Regulations 4 or 5 of the Tobacco Products Regulations 2001, that is, premises approved either for the manufacture of tobacco products or for the safe storage of tobacco products without payment of duty.
Removal	The physical or electronic removal of goods from duty suspension.
Repackaging	The replacement of any packaging or wrapping material that is customary, necessary or both customary and necessary to enclose and present tobacco products for retail sale purposes.
Research and development premises	Premises where the manufacturer can develop and test tobacco products and processes used for the manufacture of products.
Returned goods	See customer returns.
Revenue trader	In the context of this notice: anyone carrying on a trade or business concerned with the buying, selling, importation, exportation, dealing in, or handling, financing or facilitation of excise goods, and the financing or facilitation of any such transactions or activities. (For the full definition see the Customs and Excise Management Act 1979, section 1 Interpretation.)
Smokeable	Tobacco which can be smoked without further industrial processing is considered to be smokeable, even if it’s not considered suitable for retail sale. This includes cigarette rag and expanded tobacco.
Snuff	A form of ground tobacco. Snuff is not subject to Tobacco Products Duty.
Specified tobacco products	Cigarettes and hand-rolling tobacco.
Stores (ships or aircraft)	Goods supplied duty free on a vessel or aircraft, for use or sale on a voyage or flight leaving the UK.
Tariff	Integrated Tariff of the UK.
Temporary Registered Consignee (TRC) – Northern Ireland only	TRCs are excise traders that are registered and approved to import duty-suspended excise goods into the UK from EU member states on a consignment by consignment basis. (See Notice 204a: Temporary Registered Consignees)
Tobacco for heating	Tobacco processed to be heated without combustion to produce flavour or vapour
Tobacco products	These are cigarettes cigars hand-rolling tobacco other smoking tobacco and chewing tobacco, which are manufactured wholly or partly from tobacco or any substance used as a substitute for tobacco. From the 1 January 2014 tobacco products will also include herbal smoking products.
Tobacco Products Duty (TPD)	An excise duty chargeable on tobacco products.
Trade returns	See customer returns.

Annex 1 – Specification of the fiscal mark to be used on specified tobacco products from 20 May 2016 to 19 May 2019

Annex 1 has the force of law

1. Important information

This section has the force of law under powers granted to the Commissioners by section 8D of the Tobacco Products Duty Act 1979.

2. Interpretation

‘The mark’ in relation to the fiscal mark for tobacco products, denotes the whole of the mark; including the text and border of the rectangular box of the mark.

‘Cuboid packets’, in relation to cigarettes, denotes a packet having front, back and side surfaces which, when viewed face on, appear rectangular although the side edges may be rounded. The area of the front and back surfaces shall be calculated as a rectangle the width of which is the maximum width of the packet and the length of which is the maximum length of the packet.

‘Back surface’, in relation to cuboid packets of cigarettes and packets of hand-rolling tobacco, means the side opposite to the most visible surface of the packet. The ‘most visible surface’, in relation to a cuboid cigarette packet, means that surface of the packet which is, or is equal to, the largest surface and either:

• faces a person opening that packet
• where no such surface faces a person opening the packet, carries most prominently the name, trademark or other distinguishing mark of the brand of cigarettes and in relation to other cigarette packets means the most conspicuous surface

‘External face’ in relation to packets of hand-rolling tobacco, means any surface of the packet which is visible without opening the packet.

‘Bottom third’, in relation to cuboid packets of cigarettes and packets of hand-rolling tobacco, means the bottom third of the packet, in relation to the orientation of any visible text or graphics, when the unopened packet is laid on its front or back surface and viewed from above.

3. The form the fiscal mark must take on packets of cigarettes and hand-rolling tobacco

Each cuboid packet of cigarettes or packets of hand-rolling tobacco must carry a mark in the following form:

• the words ‘UK DUTY PAID’ on one line, in capital letters printed in Helvetica bold black type against a white background, centred (horizontally and vertically) within a rectangular, black bordered box
• the rectangular box must be bordered with a black line 0.5mm wide and the mark must be printed indelibly onto the packet, clearly and legibly, and shall not be hidden, obscured or interrupted by other written or pictorial matter
• the mark must not obscure any health warning or other written or pictorial matter
• the mark must be positioned within the bottom third of the back surface area of each packet

4. Size and position requirements for rectangular packets of cigarettes

In the case of cigarette packets, the mark must be positioned wholly and centred (horizontally and vertically) in the bottom third of the back surface of the packet and comply with the following specification:

• for cuboid packets the mark (including the black border) must occupy an area not less than 7.5% of the total surface area of the back surface of the packet
• the text of the mark must occupy not less than 50% of the area of the rectangular box (including the black border) it’s contained within - the area occupied by the text is to be defined by a rectangle drawn closely round the periphery of the printed letters

5. Size and position requirements for packets of hand-rolling tobacco

For packets of hand-rolling tobacco the mark must comply with the following specification:

• the mark must be in proportion to the overall surface area of the packet in line with the requirements for the packets laid down in paragraphs 2 and 3 above
• the mark including the black border must occupy an area not less than 3.75% of the total surface area of the packet on which it is printed
• the mark must be positioned conspicuously in the bottom third of the front surface of the packet
• the text of the mark must occupy not less than 50% of the area of the rectangular box (including the black border) it’s contained within - the area occupied by the text is to be defined by a rectangle drawn closely round the periphery of the printed letters

6. Size and position requirements for packets of hand rolling tobacco which cannot comply with section 5 above

For packets of hand-rolling tobacco where the size and shape of the packet is such that the health warning on the packet is required to be placed where section 5 above requires the fiscal mark to be located, the mark must comply with the following alternative specification:

• the mark must be in proportion to the overall surface area of the packet in line with the requirements for the packets laid down in paragraphs 2 and 3 above
• the mark may be positioned wholly and centred (horizontally) on any single external face of the packet
• the mark (including the black border) must occupy an area equivalent to not less than 3.75% of the total surface area of the back surface of the packet, regardless of which face it’s positioned on, the text of the mark must occupy not less than 50% of the area of the rectangular box (including the black border) it’s contained within - the area of the text is to be defined by a rectangle drawn closely round the periphery of the printed letters

7. Colour of the fiscal mark

The colour of the text and border of the fiscal mark must be black and the background colour, within the border of the mark, must be white.

Annex 2 – Specification of the fiscal mark to be used on specified tobacco products from 20 May 2019

Annex 2 has the force of law

1. Important information

This section has the force of law under powers granted to the Commissioners by section 8D of the Tobacco Products Duty Act 1979.

2. Interpretation

‘The mark’ in relation to the fiscal mark for tobacco products, denotes the whole of the mark; including the text and border of the rectangular box of the mark.

‘Cuboid packets’, in relation to cigarettes, denotes a packet having front, back and side surfaces which, when viewed face on, appear rectangular although the side edges may be rounded. The area of the front and back surfaces shall be calculated as a rectangle the width of which is the maximum width of the packet and the length of which is the maximum length of the packet.

‘Cuboid slim packets’, definition as cuboid packets, but with a depth less than 20.5mm.

‘Back surface’, in relation to cuboid packets and cuboid slim packets of cigarettes means the side opposite to the most visible surface of the packet. The ‘most visible surface’, in relation to any cuboid cigarette packet, means that surface of the packet which is, or is equal to, the largest surface and either:

• faces a person opening that packet
• where no such surface faces a person opening the packet, carries most prominently the name, trademark or other distinguishing mark of the brand of cigarettes and in relation to other cigarette packets means the most conspicuous surface

‘Front surface’, in relation to HRT pouches this means the side were the flap is located when closed.

‘External face’ in relation to packets of hand-rolling tobacco, means any surface of the packet which is visible without opening the packet.

‘Bottom third’, in relation to cuboid packets of cigarettes and packets of hand-rolling tobacco, means the bottom third of the packet, in relation to the orientation of any visible text or graphics, when the unopened packet is laid on its front or back surface and viewed from above.

3. The form the fiscal mark must take on packets of cigarettes and hand-rolling tobacco.

Each cuboid and cuboid slim packet of cigarettes or packet of hand-rolling tobacco must carry a mark in the following form:

• the words ‘UK DUTY PAID’ on one line, in capital letters printed in Helvetica bold black type against a white background, centred (horizontally and vertically) within a rectangular, black bordered box
• the rectangular box must be bordered with a black line 0.5mm wide and the mark must be printed indelibly onto the packet, clearly and legibly, and shall not be hidden, obscured or interrupted by other written or pictorial matter
• the mark must not obscure any health warning or other written or pictorial matter
• the mark must be positioned within the bottom third of the back surface area of each packet

4. Size and position requirements for all cuboid packets and slim cuboid packets of cigarettes

In the case of cuboid cigarette packets, the mark must be positioned wholly and centred (horizontally and vertically) in the bottom third of the back surface of the packet.

For Cuboid slim packets the mark must be positioned conspicuously in the bottom third of the back face of the packet.

In both cases the mark must comply with the following specification:

• the mark (including the black border) must occupy an area not less than 7.5% of the total surface area of the back surface of the packet
• the text of the mark must occupy not less than 50% of the area of the rectangular box (including the black border) it’s contained within. The area occupied by the text is to be defined by a rectangle drawn closely round the periphery of the printed letters

5. Size and position requirements for packets of hand-rolling tobacco

For packets of hand-rolling tobacco the mark must comply with the following specification:

• the mark must be in proportion to the overall surface area of the packet in line with the requirements for the packets laid down in paragraphs 2 and 3 above
• the mark including the black border must occupy an area not less than 3.75% of the total surface area of the packet on which it’s printed
• the mark must be positioned conspicuously in the bottom third of the front surface of the packet on or below the flap and visible when the flap is closed
• the text of the mark must occupy not less than 50% of the area of the rectangular box (including the black border) it’s contained within - the area occupied by the text is to be defined by a rectangle drawn closely round the periphery of the printed letters

6. Size and position requirements for packets of hand rolling tobacco which cannot comply with section 5 above

For packets of hand-rolling tobacco where the size and shape of the packet is such that the health warning on the packet is required to be placed where section 5 above requires the fiscal mark to be located, the mark must comply with the following alternative specification:

• the mark must be in proportion to the overall surface area of the packet in line with the requirements for the packets laid down in paragraphs 2 and 3 above
• the mark may be positioned wholly and centred (horizontally) on any single external face of the packet
• the mark (including the black border) must occupy an area equivalent to not less than 3.75% of the total surface area of the back surface of the packet, regardless of which face it’s positioned on, the text of the mark must occupy not less than 50% of the area of the rectangular box (including the black border) it’s contained within - the area of the text is to be defined by a rectangle drawn closely round the periphery of the printed letters

7. Colour of the fiscal mark

The colour of the text and border of the fiscal mark must be black and the background colour, within the border of the mark, must be white.

Your rights and obligations

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