Ban on the sale of alcohol below the cost of duty plus VAT

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Ban on the sale of alcohol below the cost of duty plus VAT

28 May 2014

On 28th May 2014, a government ban on the sale of alcohol below the cost of duty plus VAT came into force throughout England and Wales as part of the government’s Alcohol Strategy, which is targeted at harmful and hazardous consumers of alcohol and aims to reduce the number of people drinking to excess while limiting the impact on responsible consumers. The intention of the ban is to address the worst examples of sales of cheap alcohol.

The calculation for the “cost” for the purpose of the ban is the amount of alcohol duty for a product, plus the VAT payable on the duty elements of that product price. The duty rate will differ according to the type of alcohol (and often the strength) and are split into three categories as follows:

  1. Beer;
  2. Spirits, spirit-based ready-to-drinks, wine and made-wine (exceeding 22% ABV);
  3. Wine, made-wine and cider (not exceeding 22% ABV).

It is important that you ensure your business complies with the ban, and responsibility for ensuring compliance rests with the Premises Licence Holder, Designated Premises Supervisor and any Personal Licence Holder supplying alcohol.

The ban does not prevent multi-buy promotions, multi-pack products or inclusive or complimentary drinks (or similar promotions), provided that where a charge is made for the alcohol such cost is above the aggregate of the cost of duty plus VAT of each product.

The ban will be enforced by Local Authorities, including Licensing Authorities, Trading Standards and the police, and businesses who fail to comply may commit an offence under section 136 of the Licensing Act 2003, which may also result in a review of the Premises Licence or a Closure Notice under Section 19 of the Criminal Justice and Police Act 2001.  Therefore, it is important to ensure that you are complying with the Government Guidance provided at https://www.gov.uk/government/publications/banning-the-sale-of-alcohol-below-the-cost-of-duty-plus-vat, where you can also use the duty plus VAT permitted price calculator to check compliance.

If you have any questions in respect of compliance with the ban or would like to discuss this further, please contact us.

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