Spike in applications for craft distillers' licences takes HMRC 'by surprise'

By Gemma McKenna

Published: 17 December, 2014

The number of applications for craft distiller licences in the UK has taken HMRC "by surprise", spiking from two last year, to 35 so far in 2014.

The sudden increase has put pressure on the body, and incomplete applications have caused delays to the system.

Durham's first craft spirits distillery Former NHS chief Jon Chadwick, this year started up the Durham Distillery specialising in craft ginThe Durham Distillery is the first of its kind in the north-east and has ambitions to grow locally, regionally and then nationally

A host of craft distilleries has been cropping up in the past year across the UK - from Durham to Brighton and everywhere in between. The movement follows a similar take-off in the US, and comes on the heels of the successful craft beer crusade, with many consumers seeking out products with local provenance.

The approvals process for a licence can be quite onerous, with applicants required "satisfy HMRC that they are a 'fit & proper' person to operate a distillery, have a credible business plan, and their distillery plant and processes (and any storage and warehousing) will meet certain standards, notably to safeguard public revenue". The application is supposed to be turned around within 45 days, but HMRC says "where further information is required to process an application it may take longer".

The change has also meant new training requirements for some HMRC staff, and it is also "reviewing its internal procedures to identify any further steps that can be taken to reduce the time it takes to process applications".

Alan Powell, an excise duties consultant and former HMCE official, helped liberalise the licensing of "under-sized" stills by HMCE Policy back in 1997. But he told Harpers.co.uk that the "industry has been slow to respond to opportunities as the general belief remained that HMRC would not issue a distiller's licence where the largest still would be less than 18 hectolitre capacity".

Given the sharp increase in the past two years, Powell has been assisting many craft distillers with their applications. He said: "HMRC has explained to alcohol industry representatives that the high number of applications has - understandably - taken the central excise approvals unit by surprise. This has led to delays in processing the applications, which are supposed to be carried out within 45 working days."

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