Vape-duty waiver debt test moves to the point of consideration

A trader seeking a Vaping Products Duty financial-guarantee waiver will fail the debt test if it owes HMRC money when the waiver is considered.GOV HMRC's adverse-compliance guidance previously placed that test at the time the trader applied.GOV The revised wording makes the position at consideration the relevant snapshot for this particular exclusion.GOV

For advisers handling a pending application, the practical implication is to reassess the trader's HMRC debt position as the application progresses. A debt-free position on the application date alone does not establish that the trader meets the revised test.GOV The wider criteria also require the business to have no adverse compliance history with HMRC.GOV

A current time-to-pay agreement disqualifies the trader, as does failure to comply with the conditions of any such agreement. Other exclusions include a debt not currently under appeal, a Field Force or bailiff visit within the last two years, and two or more Debt Management actions within the last three years, which can include debt-chasing letters. A continuing trader with a write-off amount outstanding also fails to qualify.

The wider waiver criteria require no adverse compliance history with HMRC. They also distinguish the business's role and operating history. Warehousekeeper and duty-deferment applicants must have operated at least at the VAT threshold for three years; UK manufacturers must have done so for two years. UK duty stamp representatives need two years if already approved as excise traders, or four years if they are not.

The adverse-compliance assessment extends beyond debt. Serious civil or criminal offences, whether proven or charged, can make a trader ineligible. Large or frequent VAT under-declarations within the last three years, or default surcharges within the previous 12 months, are also disqualifying. The guidance additionally excludes businesses in administration or liquidation. Insolvency, bankruptcy and receivership also prevent eligibility, as do financial difficulties, including time-to-pay arrangements.

The caseworker decides whether a guarantee can be waived where the criteria are met, and a trader can appeal a refusal. Advisers should therefore assess the timing change alongside the remaining eligibility tests when supporting a waiver request.

These tests are set out in HMRC's Vaping Products Duty and Vaping Duty Stamps guidance on financial-guarantee waiver criteria and the meaning of adverse compliance history.