HMRC Updates Excise Notice 47: Alcohol Duty Changes Impact Hand Sanitiser

• HMRC has updated Excise Notice 47, which governs duty-free spirits for manufacturing, medical, or scientific use.
• The 'registered owner' approval requirement for third-party excise warehouse keepers under the Warehouse keepers and Owners of Warehoused Goods Regulations 1999 is being formally removed, with the repeal effective March 3, 2025.
• The definition of medical use for duty-free spirits now explicitly includes the production of hand sanitiser for hospitals and care homes.
• These changes align with the new Alcohol Duty regime, effective August 1, 2023, and are legislated by the Finance (No. 2) Act 2023.
• All references to "excise duty" have been replaced with "Alcohol Duty" throughout the notice.

The updated guidance explicitly includes the production of hand sanitiser intended for distribution and use within hospitals or care homes.

HMRC has issued significant revisions to Excise Notice 47, which governs the use of duty-free spirits in manufacturing, medical, and scientific applications. These updates, aligning with broader Alcohol Duty changes that took effect on August 1, 2023, introduce several procedural and definitional modifications. A notable change involves the terminology used throughout the notice, with all references to "excise duty" now officially replaced by "Alcohol Duty" to reflect the current legislative landscape. This ensures consistency with the new tax regime for alcoholic products.

One of the most impactful adjustments for specific sectors is the expanded scope of what constitutes medical use for duty-free spirits. The updated guidance explicitly includes the production of hand sanitiser intended for distribution and use within hospitals or care homes. This clarification provides a clear pathway for manufacturers supplying these critical healthcare facilities to benefit from duty exemptions. Furthermore, the notice has undergone general administrative updates, including revised contact information for HMRC and updated links for relevant guidance.

The foundation for many of these adjustments lies within the Finance (No. 2) Act 2023, which underpins the Alcohol Duty changes implemented from August 1, 2023. This legislative update necessitated corresponding revisions to Excise Notice 47 to ensure full compliance and clarity for businesses operating with duty-free spirits. Beyond the overarching legislative alignment, a key procedural simplification has been introduced concerning the storage of duty-free spirits.

Previously, entities arranging for a third-party excise warehouse keeper to receive duty-free spirits on their behalf were required to obtain approval as a 'registered owner' under the 'Warehouse keepers and Owners of Warehoused Goods Regulations 1999'. This specific requirement is being formally removed from the guidance, with the repeal effective March 3, 2025. This change aims to streamline the process for businesses utilizing third-party storage solutions, potentially reducing administrative burdens associated with the movement and warehousing of duty-free spirits. Additionally, a specific link to temporary guidance related to the use and supply of denatured alcohol and duty-free spirits, which was no longer current, has been removed from the notice.

The recent Excise Notice 47 Alcohol Duty changes carry significant implications for businesses engaged in the manufacture, medical, and scientific sectors. For those producing hand sanitiser, the explicit inclusion of its production for hospitals and care homes within the definition of medical use for duty-free spirits offers a clear advantage, potentially reducing costs and simplifying compliance for a vital product. This update reflects a pragmatic approach to supporting healthcare infrastructure.

Moreover, the formal repeal of the 'registered owner' approval requirement for third-party excise warehouse keepers under the Warehouse keepers Regulations 1999, effective March 3, 2025, simplifies logistical arrangements for many companies. This administrative easing means that businesses can more readily engage external warehousing services without an additional layer of regulatory approval, fostering greater flexibility in their supply chains for GB excise duty spirits. Compliance officers and legal advisors should review their clients' procedures to ensure they leverage these updated provisions and understand the full scope of the Finance (No. 2) Act 2023's impact on their operations. The HMRC duty-free spirits update aims to clarify and modernize the regulatory environment.

While the primary focus of the recent updates to Excise Notice 47 centers on the August 2023 Alcohol Duty changes, the document has undergone several revisions over time. For instance, the page hosting the notice was previously updated following the conclusion of the Brexit transition period. Separately, information regarding temporary changes to the use and supply of denatured alcohol and duty-free spirits was added to the notice to address issues related to the spread of coronavirus (COVID-19).

Furthermore, specific paragraphs within the notice, including 1.2, 1.3, 1.4, 1.5, 1.6, 4.1, and 5.1, were updated in December 2016 to reflect earlier changes in regulations. These historical amendments underscore the dynamic nature of excise guidance and the ongoing need for businesses to stay abreast of the latest versions.

Lawyers and compliance officers advising clients in manufacturing, medical, or scientific sectors using duty-free spirits must review their compliance procedures to align with the updated Excise Notice 47. Specifically, they should note the removal of the 'registered owner' approval requirement for third-party excise warehouse keepers and the expanded definition of medical use to include hand sanitiser production for hospitals/care homes, ensuring clients leverage these changes where applicable and understand the legislative basis in the Finance (No. 2) Act 2023.

Source: Original reporting via GOV.UK