22 MARCH 2000 TOBACCO DUTY – FISCAL MARK

The Paymaster General, Dawn Primarolo, confirmed today that a scheme of compulsory marking for tobacco products will be introduced from 1 April 2001. Marks will be used to indicate that UK duty had been paid on cigarettes and hand-rolling tobacco. This Business Brief explains the scope of the scheme.

Manufacturers, importers, wholesalers and retailers of cigarettes and hand-rolling tobacco are affected by the change, as are; owners, proprietors and managers of premises where contraband cigarettes and hand-rolling tobacco are sold.

Tobacco products covered by the scheme

All cigarettes and hand-rolling tobacco manufactured, or imported, for sale in the UK must carry a duty-paid fiscal mark unless specific exclusions from the scheme apply. Products excluded from the scheme are cigarettes and hand-rolling tobacco which are:
imported for personal use;
for export;
for sale in export shops for travellers to third countries;
for ships and aircraft stores;
for sale to visitors having diplomatic privilege;
for sale to visiting forces;
hand-rolling tobacco sold loose from containers which hold at least 500g of tobacco.

The Duty-Paid Fiscal Mark

From 1 April 2001, the duty-paid fiscal mark must be carried on all packs of cigarettes and hand-rolling tobacco which are cleared for home use. For an interim period from 1 April 2001 to 30 September 2001, the duty-paid fiscal mark may be carried on the tear-strip of packets. The technical specification of the full printed mark and the interim mark are contained in the attached technical note.

All cigarettes that are on sale legitimately in the UK must carry the duty-paid fiscal mark unless specifically excluded from the scheme (see above). The mark must be applied before the product has been cleared for home use from duty-suspended premises, or before importation.

Key Dates

From 1 April 2001 all cigarettes and hand-rolling tobacco cleared for home use must carry a duty-paid fiscal mark consistent with the specification attached.

For an interim period ending 30 September 2001, the mark may be carried on the tear-strip of the pack.

From 1 October 2001 all packs of cigarettes and hand-rolling tobacco cleared for home use must carry the mark printed onto the packs.

From 1 April 2001 cigarettes and hand-rolling tobacco cleared for home use that fail to carry a compliant duty-paid fiscal mark will be subject to forfeiture and the person responsible for failing properly to mark the product will be liable to a civil penalty of #250.

New Offences

From 1 July 2001 new criminal offences will be introduced for dealing in unmarked products, i.e. cigarettes and hand-rolling tobacco that do not carry a duty-paid fiscal mark. Other new offences and penalties will become effective from 1 July 2001.

It will be a criminal offence to possess, transport, display, sell, offer for sale or otherwise deal in products that do not carry a duty-paid fiscal mark. The penalty for such an offence is a fine of up to 5000 pounds.

It will be a criminal offence for a manager or owner of premises to sell, or allow the sale on his premises of, unmarked cigarettes and hand-rolling tobacco. The penalty for such an offence is a fine of up to 5000 pounds.

Where a manager is convicted of such an offence, the Court may impose a prohibition on the sale of legitimate tobacco from the premises concerned for a period of up to six months.

An amendment to section 8 of the Tobacco Products Duty Act 1979 will be made in Finance Bill 2000. New regulations will be laid in late July.

Forestalling – The “Sell by Date”

The marking scheme originally proposed in the Chancellor’s Pre-Budget Report in November 1999 included proposals for a “sell-by date” to be incorporated into the pack mark. This would have restricted the sale of tobacco products to the fiscal year indicated on the mark. This was intended to tackle a tax avoidance device known as forestalling – where tobacco goods are removed from bond just prior to a budget at the then lower rate of duty. Effectively this postpones the date of the budget increase to such time as these stocks have been exhausted.

Following consultation, an alternative scheme to prevent forestalling has been agreed. Restrictions on the volume of removals of cigarettes and hand-rolling tobacco from all duty-suspended storage will be introduced in the run up to future Budgets. Further details of how these restrictions will operate will be announced later in the year.

For further information traders and their advisers should contact Andrew Leggett, HM Customs and Excise, Ralli Quays, 3 Stanley Street, Salford M60 9LA.

This news release and other information about HM Customs & Excise can be found at our website: http://www.hmce.gov.uk.

CUSTOMS AND EXCISE TECHNICAL NOTE SPECIFICATION OF THE DUTY-PAID FISCAL MARK

Section 1. Interpretation
“The mark”, in relation to the fiscal mark for tobacco products, denotes the whole of the mark including the text and border of the rectangular box of the mark.
“Packet”, in relation to a tobacco product, means any box, package, container or other receptacle which contains the product, and in which the product is, or is intended to be, presented for retail supply, excluding any additional outer wrapping which may be discarded on opening.
“Rectangular packets”, in relation to cigarettes, denotes a packet having only rectangular surfaces.
“Back face”, in relation to packets of cigarettes and hand-rolling tobacco means the side opposite to the most visible face of the packet.
“Top third”, in relation to rectangular packets of cigarettes means the top third of the packet as viewed when the packet is stood vertically, with the opening of the packet at the top.
“Top third”, in relation to hand-rolling tobacco means the top third of the packet as viewed when the packet is laid flat with the front face of the packet facing upwards.
“Top third”, in relation to irregular shaped packets means the top third of the packet as viewed when the product is normally held out for sale.

Section 2. The Mark
Each packet of cigarettes and hand-rolling tobacco must carry the following mark specified below.
The words “UK DUTY PAID” on one line, in bold capital letters against a contrasting background centred within a rectangular, bordered box.
The rectangular box must be bordered with a line 0.5mm wide in the same colour as the text of the mark.
The mark must be printed indelibly onto the packet, clearly and legibly, and shall not be hidden, obscured or interrupted by other written or pictorial matter.

Section 3. Size and Position of the Mark

3.1 Standard Packets – Cigarettes
In the case of cigarette packets, the mark must be positioned wholly and centred in the top third of the back face of the packet and comply with the following specification.
For rectangular packets with a back face dimension of between 83-89 mm by 55-61 mm the text must be in font size 14 contained in a rectangular box not less than 40 mm wide and 10 mm deep.
For rectangular packets with a back face dimension of between 83-89 mm by 39-45 mm, the text must be in font size 11 contained in a rectangular box not less than 30 mm wide and 10 mm deep.
For rectangular packets whose size differs from those above, the mark must occupy an area not less than 7.5% of the total surface area of the back face of the packet.
The text of the mark must occupy not less than 50 % of the area of the rectangular box it is contained within. The area of the text to be defined by a right angled polygon drawn closely round the periphery of the printed letters.

3.2 Standard Packets – Hand Rolling Tobacco
In the case of hand-rolling tobacco, the mark must be positioned wholly and centred in the top third of the back face of the packet and comply with the following specification.
For packets with a back face dimension of between 128-136 mm by 76-84 mm the text of the mark must be in font size 14 contained in a rectangular box not less than 40 mm wide and 10 mm deep.
Where the back face dimensions of the packet differ from those above the mark must occupy an area not less than 3.75% of the total surface area of the back face of the packet. The text of the mark must occupy not less than 50% of the area of the rectangular box it is contained within. (The area of the text to be defined by a right angled polygon drawn closely round the periphery of the printed letters).

3.3 Non-Standard Packets – Cigarettes and Hand-Rolling Tobacco

In the case of cigarettes and hand-rolling tobacco, for non-rectangular packets the mark and the text contained within the mark must comply with the following specification.
Be in proportion to the overall surface area of the packet in line with the requirements for the packets laid down in paragraph 3.2 above,;
Must occupy an area not less than 3.75 % of the total surface area of the packet on which it is printed.
Must be positioned conspicuously in the top third of the packet.
The text of the mark must occupy not less than 50% of the area of the rectangular box it is contained within. The area of the text to be defined by a right angled polygon drawn closely round the periphery of the printed letters.

Section 4. Interim Mark
For an interim period defined below, in the case of packets of cigarettes and hand- rolling tobacco, the following alternative “interim mark” may be used on a tear-strip on the packet.
The mark must carry the statement “UK DUTY PAID”:
in bold, black capital letters;
in size 11 font;
be set against a white background;
be clear and legible;
the statement repeated along the full length of the tear-strip of the packet with a 3 character space between the last and first letters of the “statement”;
the tear-strip must be at least 8 mm in width; and,
the tear-strip must only carry the words “UK DUTY PAID”.
Tobacco products may be cleared for home use from UK duty-suspended storage, or imported into, the UK carrying the “interim mark” on the tear-strip of the packet until 30 September 2001. From 1 October 2001, any tobacco product cleared for home use from UK duty-suspended storage, or imported into the UK, must carry a mark printed onto the packet that complies with the specification laid down in section 3 above.

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