Ann L Humphrey

Taxidermy: getting under the skin of tax law

A little whine
14.11.09

A couple of weeks ago, I was at the Wine & Spirit Education Trust (where I’m studying for a Diploma in Wine and Spirits) listening to Sally Easton MW lecturing on the global business of alcoholic beverages. This is the sort of thing tax lawyers do on their day off (after they’ve finished ironing the pages of their tax handbooks and re-proofed their anoraks). Nothing like a nice few statistics to set you up for the day. 

During the lecture Sally asked the question, ‘Which European country has the highest per capita alcohol consumption?’ As my fellow diploma students are all in the wine trade I rarely find myself in possession of superior knowledge to theirs on any wine-related issue. Not so today. With the rest of the group seemingly stumped, I confidently stuck up my hand and answered ‘Luxembourg’. 

‘Correct’ Sally said, seeming a little crestfallen. ‘Does anyone know why?’ A man at the back who worked for an off-licence chain thought it might be that the landlocked Luxembourgers were simply a nation of p***-heads. Although I don’t know anyone from Luxembourg and so can’t say for certain if he was right, I was of a different opinion. ‘Cross-border shopping?’ I asked.

‘Right again’ Sally said, somewhat begrudgingly. ‘But’ I went on (there was no stopping me now) ‘the figures are not consumption per head, they’re purchases, so it could be misleading’. Was that her point? I’m still not sure but, for what it’s worth, the figures for 2008, according to the World Health Organisation, were around 15 litres per person for Luxembourg. The UK was in thirteenth place with around 9 litres. 

All this got me to thinking (once Sally had recovered her composure and moved on) that the UK tax authorities are absolutely obsessed with excise duty. Is it their long history as duty men? Or are they just getting desperate to fill the hole in the nation’s finances? They’ve even started trying to tax cooking wine as if it were Château Petrus.

Repertoire Culinaire Ltd v HMRC [2009] concerned an appeal against the seizure of cooking wine, port and cognac. HMRC refused to restore the goods (which had been purchased in France) on the basis they were subject to excise duty and the relief for alcohol used in flavourings did not apply. This was despite the fact that they admitted that because ‘the wine, port and cognac had salt and pepper added to them, the goods were ‘undrinkable’ and intended for culinary purposes’. 

The UK First-tier Tribunal, after hearing evidence from the delightfully named Monsieur Albert Allo of the French Ministry of the Economy, decided it needed help and referred the matter to the European Court of Justice in Luxembourg. We’d all better listen very carefully, as they’ll give judgement only once.

By the way, the excise duty on a bottle of still wine in the UK is £1.50, in Luxembourg it’s nil. Douze points pour le Luxembourg.