Decanter has established an important precedent relating to taxation of free wine samples.
A tribunal found that Decanter failed to follow a requirement to notify HM Customs and Excise of all importation of test samples, but – importantly – the tribunal confirmed Decanter should not have to pay excise duty on future samples.
The London VAT and Duties Tribunal released its decision on the case concerning Decanter and HM Customs and Excise last month.
HMCE had raised an assessment on Decanter for unpaid excise duty on samples sent to the magazine by wine producers in EU member states.
Decanter challenged the assessment, contending that an EU Directive exempted goods imported for 'the sole or main purpose of being examined, analysed or tested'.
The case was heard on 29 July this year. The court found that the legislation, although unclear and not fully coherent, requires that a strict procedure be adhered to in order to qualify for the relief. This includes a requirement for HMCE to be notified of all importation of test samples.
Decanter failed on the procedural requirements but the tribunal confirmed, 'excise duty should not be charged on the samples supplied for wine tasting', if Decanter notifies HMCE of all imports of samples.
The tribunal dismissed HMCE's arguments and agreed with Decanter that tastings carried out by the magazine do qualify as examination, analysis or test, and that they do not constitute a sales promotion, as the tasters 'do not know what they are tasting', and don't specify a preference for any brand 'except by reference to the results of the analysis.'
Decanter publishing director Sarah Kemp said, 'This is a terrific victory for common sense. I am delighted the judge has recognised that excise duty should not be charged on samples … if notice is given in writing to the Commissioners.'
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