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This publication is available at https://www.gov.uk/government/publications/excise-notice-47-duty-free-spirits-use-in-manufacture-or-for-medical-or-scientific-purposes/excise-notice-47-duty-free-spirits-use-in-manufacture-or-for-medical-or-scientific-purposes

It tells you how to:

receive spirits for use in manufacture or for medical or scientific purposes, to be used without payment of Excise Duty

apply to receive these spirits

This notice has been updated to tell you about the changes which have resulted from the UK leaving the European Union.

We explain most of the terms used in this notice either in the Glossary (please read Section 13) or in the main body of the notice itself.

The main laws are the:

Alcoholic Liquor Duties Act 1979 (ALDA), sections 7, 8 and 10, and

Revenue Traders (Accounts and Records) Regulations 1992

Under the provisions of sections 8 and 10 of ALDA, the Commissioners of HMRC may remit the Excise Duty on spirits used either for medical or scientific purposes, or in certain manufacturing processes. This duty relief is subject to conditions, which are set out in this notice. Section 7 of ALDA allows medicinal products which contain spirits to be imported, from warehouse, without a duty charge.

This relief is for Excise duty on spirits only.

There is no exhaustive list of allowable processes. But, no spirits may remain in the final product unless it is:

an ethyl ester or ether (and less than 1.2% abv)

Scientists may receive duty-free spirits for research, teaching or other laboratory use, but use for heating or lighting is not allowable. The use of duty-free spirits in scientific research is restricted to those products which do not contain spirits in the final saleable form, apart from the two exceptions above.

However, duty-free spirits can be used for specialised cleaning purposes if you can prove that denatured alcohol would be detrimental to the process or the presence of a denaturant would affect an end product. You must provide proof of the detrimental effects which using denatured alcohol would cause. Each case will be looked at individually and on its merits. Where necessary, consultation with the HMRC appointed analyst will be undertaken.

Authority to receive duty free spirits is not allowed for the making for sale:

of any product which contains spirit in the final product, except as detailed above

or use any beverage, foodstuff (except vinegar), flavouring essence, perfumery or toilet preparation

There is no definitive list of allowable uses and we consider each case on its merits. General medical applications and uses for which duty-free spirits will be allowed are:

for the production of recognised medical products, drugs and pharmaceuticals (whether or not the final product contains spirits) including veterinary products — we’ll permit duty-free spirits to be used in the manufacture of any product (including herbal or homeopathic) which has a Medical Control Agency (MCA) product licence

herbal or homeopathic remedies which do not have an MCA licence, but, they must be recognised by HMRC as having medicinal properties

the manufacture of intermediate products used exclusively for the production of medical products

for use in equipment or apparatus (for example, lasers) used for medical purposes by surgeons or other recognised medical practitioners

for the production of hand sanitiser for use only in hospitals or care homes

for use in hospitals and, where applicable, dental and veterinary surgeries for:

We also permit duty-free spirits to be used in the manufacture of any product prescribed by a doctor to be made up by a pharmacist. This includes ‘specials’ which may be made up on behalf of a pharmacist and which may not have an MCA product licence.

Mouthwashes and oral hygiene products (including breath freshener sprays) are only eligible for duty-free spirits authorisation if they contain proven medicinal ingredients at effective levels. Such ingredients include:

cetyl piridinium fluoride at 0.05% minimum

The above list is not exhaustive. For further advice, you should contact the Excise and Customs helpline on Telephone: 0300 200 3700.

You should label the finished product with reference to its antiseptic or prophylactic qualities.

Only remedies which have been recognised by HMRC as having medicinal properties are eligible to be manufactured using duty-free spirits. A list of approved remedies is available on request from your local office. If any of your tinctures or remedies are not on the list, then contact your local office. You’ll need to provide proof of each product’s medicinal properties. Please quote any reference manual or publication which shows your proposed tincture or remedy as having medical properties. If your remedy is not approved then you can appeal by writing to your local office giving details of your case.

You may prepare tinctures to any dilution, as directed by the reference work.

In their bulk form, herbal and homeopathic medicines are not eligible for duty relief unless they are recognised by HMRC as having medicinal properties. (Please read paragraph 2.3).

If you wish to import, or move your products within the UK, in bulk, that is not in their final packaged form, then please contact the Excise and Customs helpline on Telephone: 0300 200 3700 with details of each product you intend to move. They will advise you as to whether they can be moved without the spirits element of your product becoming liable to duty, or if a warehouse approval will be required to allow the receipt of duty suspended goods.

Provided that the medically effective element of the product is not diminished (for example, as specified in a pharmacopoeia), you do not need to seek any approval from HMRC before reformulating existing approved products.

Similarly, if you vary levels of inactive ingredients (for example, colours or sugar levels), you do not need to seek prior approval.

If you are in any doubt, contact your local office.

We do not allow duty-free spirits to be authorised for the manufacture of products such as an energy drink or food supplement. No product can be approved for manufacture using duty-free spirits if it is, or is implied to be, a beverage, alcoholic or otherwise,

However, if you want to manufacture food supplements or non-alcoholic beverages using alcohol as an ingredient, then you may be able to claim Alcoholic Ingredients Relief. Please contact the Excise and Customs helpline on Telephone: 0300 200 3700 for more details.

Included in the scientific uses of duty-free spirits are:

analytical research or other laboratory purposes, or physical testing, please note: this does not include routine cleaning of work areas etc, you should apply to receive one of the denatured alcohol grades

commercial project research and development where small quantities of spirits only are required, please note: that if a pilot development is subsequently scaled up to commercial manufacture, you are still required by law to demonstrate that denatured alcohol is unsuitable for use in the manufacturing process. We advise you to take this into consideration before commencing trial work (please read Section 3)

You can, but you must be able to give an indication of how long the trial will last and the amount of spirits you’ll want to use.

If, at the end of the trial period you wish to continue the manufacture for sale, you must provide your local office with details of the trial results proving the product’s medicinal properties. Obviously, an MCA licence will suffice. However, if the new product does not have an MCA licence, for instance if it is a herbal or homeopathic medicine, you must provide proof of its medicinal properties. Prior to authorisation we may need to contact the HMRC appointed analyst for clarification.

There is no definitive list of allowable uses, and we consider each case on its merits.

Broadly speaking, however, we allow duty-free spirits for:

manufacturing and related processes in which the spirits act as a catalyst, or where they are converted into another substance

the manufacture of ethyl esters and ethyl ether

a manufacturing process involving spirits where denatured alcohol is demonstrated to be unsuitable or detrimental to that process

If you can prove that the use of denatured alcohol in a manufacturing process is not suitable to that process, then an authorisation to use duty free spirits in that process may be granted. But, you must supply us with proof of the detrimental effects of using denatured alcohol in the specific process. Please attach your evidence to your application when you submit it to your local office. This will ensure a timely decision.

Each case is taken on its merits and, if authorisation is granted, strict controls on the storage of the duty free spirits and record keeping requirements are imposed.

There is no automatic requirement for the duty-free spirits to be denatured. However, in certain circumstances you may be required to ‘partially’ denature the duty-free spirits as a condition of your authorisation. For instance:

if your record of compliance is not good

there is a risk of the spirits being diverted for other purposes during the actual process in which the duty-free spirits will be used

However, the process of ‘partially’ denaturing the duty-free spirits which you receive can be a very effective means of safeguarding stocks against pilfering. Therefore, if you wish to use a denaturant for security purposes, or to meet certain product specifications, then you can do so. Please provide details of the denaturant you wish to use. We’ll view this as part of your normal manufacturing process.

We use the term denaturing to describe the addition of a substance(s) to alcohol which will make it unpalatable.

Section 11 provides a list of acceptable ‘partial’ denaturants. However, this is not exhaustive and if you wish to use a denaturant which is not on the list, then please contact the Excise and Customs Helpline on Telephone: 0300 200 3700 with the details. They will advise whether your proposed denaturant meets our requirements.

Duty-free spirits cannot be used for general cleaning or other purposes.

As explained in paragraph 1.6 above, if you can prove that the use of denatured alcohol is unsuitable for the specialised cleaning operations you need to perform, then duty-free spirits may be used to carry out those specific cleaning operations. For example, duty-free spirits may be used to flush out pipework and other apparatus as an integral part of a manufacturing process, such as the manufacture of pharmaceuticals or fine chemicals.

We’ll also consider applications to use duty-free spirits for operations such as cleaning highly sensitive computer parts in the manufacture of integrated circuit chips for microelectronic technology. However, detailed proof must be supplied with your application for us to make a definitive decision.

Each case is taken on its merits and, if authorisation is granted, strict controls on the storage of the duty free spirits and record keeping requirements are imposed.

We do not permit duty-free spirits to be used for making for sale:

any product which contains spirits (other than, subject to special conditions, ethyl esters and ethyl ethers)

or use any beverage, foodstuff, flavouring essence, perfumery or cosmetic preparation

Different laws apply to duty relief on spirits used for such purposes. If you need further information, please read Notice 41: Alcoholic Ingredients Relief or Notice 473: Production, Distribution and Use of Denatured Alcohol. You can get copies from our website or the Excise and Customs Helpline on Telephone: 0300 200 3700.

You must apply on form EX240: Application for authority to receive duty free spirits (for an example, please read Section 10). The form must be signed by a proprietor, partner, director or company secretary, or (for an institution) by the secretary of the governing body.

Or you can get form EX240: Application for authority to receive duty free spirits from the Excise and Customs Helpline on Telephone: 0300 200 3700 and you should return it to:

HM Revenue and Customs Excise Processing Teams BX9 1GL

Where you wish to use spirits in a manufacturing process, you must satisfy us that using denatured alcohol would be unsuitable or detrimental except where you wish to manufacture medical articles or use the spirits for a recognised medical purpose (please read paragraphs 2.1 to 2.5) or use the spirits for scientific purposes (please read paragraph 2.7). Details of the various grades of denatured alcohol and what they may be used for are contained in Notice 473: Production, Distribution and Use of Denatured Alcohol.

If we approve your application we’ll state the conditions you must meet (in addition to the requirements set out in this notice). We may vary or add to these conditions at any time.

You can avoid a financial penalty by applying for the appropriate authorisation at the correct time

You have the right to appeal if we impose such a penalty.

If you are aware you have made a mistake, or have not applied for an approval please tell us as soon as possible. We’ll be able to reduce the penalty, in many cases to zero.

If you fail to comply with any conditions imposed as part of your approval, you’ll be liable to a penalty, please read Notice 209 Civil Penalties: Fixed geared and daily and any denatured alcohol you produce may be liable to forfeiture.

Find out more about Compliance checks and penalties for inaccuracies.

Authorisation to receive duty-free spirits for the manufacture of recognised medical products (please read paragraph 2.1) provides a general authority to produce any article holding an MCA product licence. You do not need to refer to HMRC if you intend to produce additional MCA licensed products (though you must seek our prior approval to increase your annual receipt of duty-free spirits).

If you wish to be authorised for duty –free spirits to manufacture herbal or homeopathic remedies, contact your local office with the list of remedies you propose to manufacture. They will inform you of the eligibility of your remedies, if necessary after consultation with the HMRC appointed analyst.

If you wish to manufacture other products you must apply for additional approval. It is an offence to use duty-free spirits for an unauthorised purpose, and you may have to pay duty on any spirits so used.

You are not usually required to provide any form of security (for example, financial guarantee). However, we reserve the right to require such security from newly authorised users or users whose activities give cause for concern. If we exercise this right, your local office will tell you what you must do.

You have the right of appeal against a decision to require financial security. For further details, read Section 12.

see that you hold proper authority to receive and use duty-free spirits

ensure that duty-free spirits on your premises are kept securely

control, by systematic checks, the ordering, receipt, storage, and use of duty-free spirits and ensure they are used only for authorised purposes

keep accurate records, especially those on receipts, stocks and use

investigate critically any losses or discrepancies

write to the Excise Processing Teams (address in paragraph 4.1) giving details of any changes that affect your authorisation — for example:

change of address of your registered premises

change of legal entity, for example, formation of a limited company

change of name of the registered person, for example, change of company name

you cease to require your authorisation

If you delegate control, it must be to a person who has clear responsibility for the particular area of work. That person must not be below supervisor or lower management level.

You must complete form C and E 2 naming the responsible persons (the Excise and Customs Helpline will provide a copy, Telephone: 0300 200 3700).

You must let any of our officers enter your premises at any reasonable time to inspect, examine and take samples of spirits or of any article manufactured with duty-free spirits.

You must give our officer all necessary help, and provide any measuring and testing equipment needed for taking account of duty-free spirits, spirits recovered, etc.

Please read Section 9 for details of the records you must keep.

You must comply with all health and safety requirements laid down by a competent authority. There must be no risk to the health and safety of any officer visiting the premises.

You may only receive spirits duty-free from an approved Excise warehouse.

This paragraph only applies in respect of Northern Ireland

Can I receive duty-free spirits direct from the EU.

Only an authorised excise warehouse keeper with premises approved to receive spirits in duty suspense may receive DFS from EU member state suppliers. For details on how to apply for approval as an authorised warehouse keeper or for premises approval as an excise warehouse, please read Notice 196: Excise goods: Authorisation of warehouse keepers, approval of premises and registration of owners.

Alternatively, you could arrange for a third party excise warehouse keeper to receive the DFS on your behalf. If you choose this option, you’ll have to be approved as a ‘registered owner’ under the Warehouse keepers and Owners of Warehoused Goods Regulations 1999. Please read Notice 196: Excise goods: Authorisation of warehouse keepers, approval of premises and registration of owners for further details.

The authorization issued to you by HMRC to receive DFS does not override the requirement to comply with the provisions for inter Community movement of duty suspended alcohol.

Notice 197: Excise goods: receipt into and removal from an excise warehouse of excise goods sets out the action to take on discharging movement documentation.

From 1 January 2011, all EU movements of excise goods are sent via the Excise Movement Control System (EMCS). For further information on EMCS, please read Notice 197: Excise goods: receipt into and removal from an excise warehouse of excise goods.

Normally you must receive spirits of a strength not less than 85.5% abv. However, you may receive spirits at other strengths if you demonstrate a specific need in your application. For instance, lower strength alcohol for the manufacture of herbal/homeopathic remedies.

You must receive spirits for at least one month’s use at a time.

You must order duty-free spirits in writing, for delivery from an Excise warehouse. You must state on the order:

I am/we are authorised by the Commissioners of HM Revenue and Customs to receive duty-free spirits for use in …………………………………………………..

(manufacture/scientific/medical purposes — whichever is appropriate).

The letter of authority was issued by HM Revenue and Customs office

number issued by that office is …………………………………………………….

Your local office will agree with you how to notify receipts of duty-free spirits

When you receive a consignment you must:

examine externally all bulk containers, drums, and so on

check that advised seals are intact

check dip all bulk containers

test for strength, unless your local office has relaxed this requirement

record in your stock account the bulk litres, strength and litres of alcohol received

investigate any discrepancy between advised and delivered quantity, and inform your local office immediately

note the receipt details on both copies of your supplier’s dispatch document, sign one copy as a receipt and return it to your supplier, place the other copy in your records, for production when our officer next visits your premises

You must keep your stocks:

in a place approved by us

under lock, and controlled by you or a responsible employee, and

kept apart from any duty-paid spirits, methylated spirits or any other industrial alcohols you may have on your premises

You may withdraw duty-free spirits from stock only in the quantities you need for immediate use for an approved purpose. You, or a responsible employee, must supervise all withdrawals.

You may use duty-free spirits only in the places we have authorised.

Unless we have given you special permission, you may not use duty-free spirits in a room in which duty-paid spirits, methylated spirits or other industrial alcohols are used.

You may use duty-free spirits only for the purposes, and under the conditions, specified in your letter of authority.

You must not remove duty-free spirits from your authorised premises.

Unless we specially authorise you to do so, you must not try to recover or regenerate spirits from the products of operations.

If, with our permission, you recover any spirits by distillation or any other means, you must control them in the same way as other stocks of duty-free spirits.

You are permitted only to receive duty-free spirits from an Excise warehouse for the purposes specifically set out in your letter of authority. The law does not allow for any other operation or transaction to be carried out. However, if you wish to carry out a process and are unsure if you are allowed to do it, please contact the Helpline.

As explained in paragraph 7.1 above, you can only receive and use duty-free spirits at your authorised premises. If you wish to export spirits, you must arrange for them to be exported from an Excise warehouse (please read Notice 197: Excise goods — Receipt into and removal from an excise warehouse of excise goods).

accidental losses in processes, for example due to operational faults

investigations into the losses, including any management decisions take, and

report more serious losses or deficiencies in line with arrangements agreed with your local office

You should record any losses immediately in your business records. You should date, time and sign this record.

You’ll have to pay an amount equivalent to Excise duty (and VAT, if applicable) on any spirits which you cannot account for satisfactorily.

If you cease to trade, you must either:

return spirits to an Excise warehouse (either to your original supplier or to any other warehouse approved to receive spirits)

if you only have a small quantity of duty-free spirits, destroy the spirits subject to conditions set out by our Helpline

If you move premises, or wish to transfer spirits to another operation within your company, you may remove the spirits to those premises but must notify your local office and comply with any conditions imposed.

Unused spirits may be returned to an Excise warehouse. If you or the warehouse keeper are uncertain about how to arrange the transaction, you should contact the Helpline.

Used spirits may be removed for destruction. But, when spirits have been used and are contaminated (even very heavily), they legally remain liable to the spirits duty charge.

If you wish to remove used, contaminated duty-free spirits for destruction (for example, to an incinerator’s premises) you should notify your local office. Our basic requirements are that:

you record the strength and volume of the contaminated duty-free spirits intended for removal/destruction, and

all records associated with the transaction, including commercial documentation, are readily available for our inspection

You may also be required to provide financial security for the transaction, up to and including destruction of the spirits.

You’ll be required to provide proof that the spirits are unpotable.

Used spirits may be removed for recovery/laundering or denaturing. But you can only send used (contaminated) duty-free spirits to an Excise warehouse approved for rectification (re-distillation to purify the spirits). The spirits may then be returned to you from the warehousekeeper as a normal delivery from warehouse (please read section 6). Alternatively, the spirits may be re-sold by the rectifier or warehousekeeper.

Generally, you must keep records as set out in Notice 206: Revenue traders records.

a stock account of all the spirits you receive and use, and

such other records as are either specified in your letter of authority, or are necessary to establish that the spirits have been put to the authorised use

You must also record all the checks you carry out on receipts, storage and use of the spirits. Your normal business records may be used for these purposes, provided there is a clear audit trail from receipt to final disposal. Otherwise, your local office will tell you what you must do.

You must keep your records up to date.

balance the stock account at the intervals required by your letter of authority, checking the physical stock and noting the result in your account, and

investigate promptly any apparent discrepancies, and immediately inform your local office of any you cannot resolve

You must keep your records for at least 6 years.

There is no requirement for you to fill in a return.

If you wish to send the spirits for re-cycling by a denaturer (formerly a methylator), you must ensure that the denaturer is properly authorised to receive such spirits.

For removals for destruction you must notify your local office and comply with the requirements of paragraph 8.3 above.

Form EX240 Application for authority to receive duty-free spirits

The following list shows the denaturants you can add to your duty-free spirits, in order to make them unpotable. This may be:

a requirement imposed by us if your operations or record-keeping give cause for concern

at your request to conform to a product’s specifications

at your request as a security measure to deter pilferage

The list shows allowable ‘partial’ denaturants which will make the alcohol unpotable. However, a marker must be added to each of these as well as the denaturant. Recognised markers are Methanol or isopropyl alcohol.

This list is not exhaustive and you can apply to use a marker or denaturant which is not on the list. Please contact the Helpline with details of any proposed denaturant or marker you wish to use, which is not on the list.

Isopropyl alcohol can be used on its own as a joint denaturant and marker, but the minimum level must be 5% v/v.

Partial denaturants for duty-free spirits — added to ethanol and marker

When we make a decision that you can appeal against, we’ll tell you and offer you a review. We’ll explain the decision and tell you what you need to do if you disagree.

the amount of an assessment

the issue of a civil penalty

a decision specifically connected to the relevant duty

You’ll usually have three options. Within 30 days you can:

send new information or arguments to the officer you have been dealing with

have your case reviewed by a different officer

have your case heard by an independent tribunal

A review will be handled by a different officer from the one who made the decision. If you prefer to have an independent tribunal hear your case, you must write directly to the Tribunals Service.

If you want us to review a decision, you must write to the person who issued the decision letter, within 30 days of the date of that letter. We’ll complete our review within 45 days, unless we agree another time with you.

You cannot ask the tribunal to hear your case until 45 days (or the time we agreed with you) has expired, or we have told you the outcome of the review.

If you are not satisfied with the review’s conclusion, you have 30 days within which to ask the tribunal to hear your case.

If we cannot complete our review within 45 days, or any time we agreed with you, we’ll ask you whether you are willing to agree to an extension so that we can complete the review. If you do not agree to an extension, the review is treated as concluding that the decision being reviewed is upheld.

We’ll write and tell you this: you then have 30 days from the date of that letter to ask the tribunal to hear your case.

Your request should set out clearly the full details of your case, the reasons why you disagree with us and provide any supporting documentation. You should also state what result you expect from our review.

If you do not want a review, you may appeal to the independent tribunal. You need to send your appeal to the Tribunals Service within 30 days of the date on the decision letter.

You can find further information about reviews and appeals in fact sheet HMRC1 HMRC Decisions — What to do if you disagree. You can get this fact sheet on our website or by phoning our Orderline on Telephone: 0845 900 0404.

You can also find more information about how to appeal on the Tribunals Service or by Telephone: 0845 223 8080.

Your Charter explains what you can expect from us and what we expect from you.

If you have any comments or suggestions to make about this notice, please write to:

HM Revenue and Customs Alcohol Team 3rd Floor West Ralli Quays 3 Stanley Street Salford M60 9LA

Please note this address is not for general enquiries.

For your general enquiries please phone our Helpline on Telephone: 0300 200 3700.

If you are unhappy with our service, please contact the person or office you have been dealing with. They will try to put things right. If you are still unhappy, they will tell you how to complain.

If you want to know more about making a complaint, please read Complain to HM Revenue and Customs.

Find out how HMRC uses the information we hold about you.

Don’t include personal or financial information like your National Insurance number or credit card details.

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