Excise case study – UK’s largest retailer
The UK’s largest retailer desired a robust and compliant excise Duty Management System to manage vast sums of duty-suspended alcohol products in its excise warehouses. Langdon was not only chosen for its long history in the industry, but also for its comprehensive system which turned the troublesome and lengthy requirement of generating HMRC warrants into a quick and easy task. The implementation in 2015 reviewed all aspects of the customer’s operation and tweaks to DMS Excise were made to enhance usability, enhance auditability and strengthen warehouse logistics controls.
DMS Excise was developed to incorporate high degrees of automation into its processing and validating of data, freeing up important time for its system users. Upon a successful Go-Live, DMS Excise is now used to track countless bonded stocks and millions of pounds in duty and VAT liabilities.
The UK’s largest retailer have become a long-standing and valued customer. The success of the DMS Excise implementation in the UK led the retailer to request that Langdon develop a system to manage its duty-suspended alcohol stocks in the Republic of Ireland. This was a significant project, as while there are similarities in excise warehouse requirements between the UK and the Republic of Ireland, there are also notable differences stemming from each country’s unique legal and regulatory frameworks.
In the early stages of the ROI project, Langdon undertook an extensive period of research into the Irish excise industry and Revenue’s national regulations. This involved close collaboration with Revenue and the retailer’s Irish arm to better understand their existing operation and the procedures they must adhere to. As a result, Langdon wrote a Research & Gap Analysis, stretching across nearly 200 pages, which received input and feedback from both Revenue and the retailer. Around this time, the Brexit negotiations were coming to a head, leading to a changing landscape in the relationship of ROI and UK trade, which we had to quickly adapt to.
A whole host of differences were identified between the UK and ROI DMS which led to considerable development. Some key examples consist of:
• ROI’s limited use of EMCS – At the time, ROI only used EMCS for internal EU movements whereas internal ROI movements and third country imports were still covered by paper-based documentation. This differed to the UK which used EMCS for most, if not all, movement types.
• Product classifications, duty bandings, and calculation methodologies – In ROI, each product description and its individual duty bandings consist of two Excise Reference Numbers (ERNs), one representing domestic products and the other representing imported products. Furthermore, the way in which ROI classifies product descriptions and require duty calculations differs from the UK’s approach.
• ROI’s different reporting requirements – In the UK, a daily or twice-monthly scheduled W5D form is required to report excise and VAT liabilities. At the end of each month, a W1 report contains all warehouse movements across all duty statuses. This differs to ROI whereby there are no daily reporting requirements. Instead, monthly reports in the form of a Stock Return (covering all duty statuses) and a C&E115 Home Consumption Warrant detailing the month’s duty liabilities are needed.
• Unable to store part cases in ROI – In the UK, traders can hold their stock as part cases (for example 3 individual bottles from a case of 6), which can be very beneficial in instances of accidental damages, where 3 can be written-off non-dutiable and 3 remain under bond. However, in ROI, Revenue stipulates that part cases are not allowed to be stored, meaning any accidental damages require the full case to be duty paid and a duty reclaim to be lodged for the individual broken bottles.
The project was successful, and the UK’s largest retailer went live in the Republic of Ireland in 2021.
Below are the top-level figures to date that Langdon have delivered for this client.
