Carlsberg UK Ltd & Anor v HM Revenue and Customs

Beer duty is charged on the beer identified at the applicable duty point, not necessarily on each container and not necessarily on the total beer assessed during a month. The statutory provisions permit the chargeable item to vary according to the applicable duty point. For suspension brewers, the relevant item will ordinarily be the beer leaving the brewery, such as a lorry-load.

Where duty is calculated in separate chargeable amounts but becomes payable as an aggregated sum on a later payment date, the expression amount due in section 137(4) of the Customs and Excise Management Act 1979 refers to the total sum payable. Fractions of a penny are therefore disregarded when that payable sum is calculated, rather than separately for each chargeable item.

Two brewers brought second appeals against decisions of the Upper Tribunal (Tax and Chancery Chamber), which had upheld the First-tier Tribunal’s decisions in favour of HMRC. The appeals concerned beer duty under the Alcoholic Liquor Duties Act 1979, the Beer Regulations 1993 and the Customs and Excise Management Act 1979.

The first issue was whether duty had to be calculated by reference to the volume of beer in each container. The second, arising if that issue were answered in the brewers’ favour, was whether fractions of a penny could be disregarded separately for each container under section 137(4) of the Customs and Excise Management Act 1979. The First-tier Tribunal rejected the container-by-container approach: [2009] UKFTT 375 (TC). The Upper Tribunal agreed and additionally rejected the brewers’ approach to rounding: [2011] UKUT 195 (TCC).

1. Appeals dismissed. The court rejected the contention that section 2(3A) of the Alcoholic Liquor Duties Act 1979 and regulation 17 of the Beer Regulations 1993 required beer duty to be assessed separately for each container. Those provisions permit the volume or strength of beer to be ascertained by reference to container information, but do not require each container to be treated as a separate chargeable item. A single assessment may cover beer in multiple containers. [27]-[30]
2. The chargeable item is the beer which the Regulations provide is charged with duty at the applicable duty point. Regulation 15 identifies the duty point, and regulation 16 supports fixing the applicable rate at that point. The Regulations do not establish an absolute container-based rule. Beer may become chargeable before being placed in a container, including when it is consumed or lost. [31]-[33]
3. For suspension brewers, the likely duty point is when the beer leaves the premises in which it was brewed under regulation 15(3)(d). The chargeable item will ordinarily be the beer leaving the brewery, potentially a lorry-load, rather than the monthly total. HMRC’s submission that the chargeable item was the totality of beer chargeable in a month confused charging with payment and was inconsistent with the Regulations. [34]-[35]
4. Section 137(4) of the Customs and Excise Management Act 1979 applies to the amount due, meaning the total sum to be paid by way of duty. That construction is supported by the use of due in section 36(2) of the Alcoholic Liquor Duties Act 1979, by section 137(1), and by the practical purpose of avoiding fractions of a penny in sums that must actually be paid. Rounding occurs on the monthly sum payable under regulation 20(2), not separately on each chargeable item. [39]-[44]
5. Lord Justice Pitchford and Lady Justice Rafferty agreed with the Master of the Rolls. [45]-[47]

• Court of Appeal (Civil Division): dismissed the second appeals.
• Upper Tribunal (Tax and Chancery Chamber): upheld the First-tier Tribunal’s decisions and granted permission to appeal on an important point of principle or practice: [2011] UKUT 195 (TCC).
• First-tier Tribunal: rejected the container-by-container basis for calculating beer duty and did not determine the rounding issue because it was unnecessary: [2009] UKFTT 375 (TC).