Interaction of VAT and Excise administration - TOGCs for excise warehouse keepers

The CIOT’s representative on HMRC’s Joint Alcohol & Tobacco Consultative Group has raised the question via that forum about the interaction of the VAT & excise rules when an excise warehouse business is being sold. Currently, if the owners of an existing excise warehouse wish to sell the business as a TOGC:

• HMRC’s published policy reads that it is impossible for the buyer to have all of the excise authorisations approved and in place for the date of completion of the sale
• There would no guarantee at the date of sale that HMRC will approve the excise authorisation applications
• This leaves the question of whether the sale of business can be VAT free as a TOGC (position wanted by seller/buyer) or is VAT due (if no excise authorisation granted cannot trade as an excise warehouse so not the same business and duty points may be created, or no business/no certainty at the time of sale)

HMRC has explained that, notwithstanding the concern caused by the published policy on TOGCs, a disposal of an excise warehouse business and revocation of its approvals can be synchronized by HMRC with the ‘new’ owner being immediately approved. HMRC’s statement on the TOGC position for excise warehousekeepers is per below:

Where there is a transfer of an existing business, particularly where the new business does not already hold the required excise approval, we appreciate that this can result in a potential delay between the new approval starting and the business being able to access EMCS to allow goods to continue to move in excise duty suspension. To address this delay, where there is a TOGC our Excise Processing Team are authorised to inform the business of their new excise ID before their approval start date. As long as applications are submitted in a timely manner and the TOGC is made clear as part of the application, we should be able to share the new excise ID early enough to allow sufficient time for the new business to register and enrol for EMCS (and other systems like ATWD) and be ready to operate fully from the date their approval officially starts.