Explanatory note

The Regulations make provision in relation to soft drinks industry levy (“the levy”) introduced by the Finance Act 2017 (c. 10) (“the Act”).

Regulation 1 provides for commencement and regulation 2 lists definitions used in the Regulations.

Regulation 3 requires the Commissioners of Her Majesty’s Revenue and Customs (“the Commissioners”) to prescribe criteria for determining dilution ratios and for determining whether the main purpose of stating a dilution ratio is to avoid or reduce liability for the levy.

Regulation 4 requires the Commissioners to give notice of dilution ratios they determine for a soft drink to each person liable to pay the levy on that drink.

For the purposes of Part 2 of the Act, regulation 5 provides for what is to be treated as fruit juice, regulation 6 provides for what is to be treated as vegetable juice and regulation 7 provides for what is to be treated as milk.

Section 30 of the Act defines those drinks which are exempt soft drinks and regulation 8 states the specified quantity of calcium of an exempt soft drink which is a milk substitute drink and sets out the conditions which must be met for a drink to be a milk substitute drink.

Regulation 9 sets out the conditions which must be met for a drink to be an alcohol substitute drink, which is an exempt soft drink.

Regulation 10 describes other drinks which are exempt soft drinks, being drinks for medicinal purposes, for infants or young children and drinks used as diet replacement for weight control.

Regulation 11 designates certain nutrition declarations for the purposes of Part 2 of the Act, further to section 59(3) of the Act.

Regulation 12 specifies conditions and requirements in respect of compliant warehouses (see section 32(5) of the Act).

Regulation 13 requires the Commissioners to prescribe the form manner and content of a notification under section 44 of the Act (persons liable to be registered under sections 41, 42 or 43 of the Act) or an application under section 45 of the Act (small producers able to apply for voluntary registration). Persons to whom those sections apply must make the notification or application as prescribed. (Small producers are defined in section 38(1) of the Act).

Regulation 14 provides for making of corrections to the register required to be maintained by the Commissioners under section 40 of the Act.

Regulation 15 provides for the cases in which a person liable to pay the levy may claim a credit in respect of the levy (“a tax credit”). The cases are in respect of the export of drinks from the United Kingdom and in respect of drinks lost or destroyed. The procedure for claiming a tax credit is set out. Regulation 16 makes further provision for claiming a tax credit where it is expected that a person will export chargeable soft drinks.

Regulation 17 provides for what amounts to “sufficient evidence” in order to make a claim for a tax credit. Regulation 18 sets out records required to be kept in relation to claims for tax credits.

Regulation 19 provides that persons liable to pay the levy must do so in respect of the three-monthly accounting periods set out.

Regulation 20 requires payment of the levy within 30 days of the end of an accounting period.

Regulation 21 requires persons liable to pay the levy to make returns to the Commissioners for each accounting period and provides for the date by which returns must be made. Regulation 22 provides for the contents of returns.

Regulation 23 requires persons liable to pay the levy to keep accounts for each accounting period and provides for the contents of those accounts and the period for which accounts must be preserved.

Regulation 24 requires records to be kept in support of matters included in returns and accounts.

Regulation 25 requires persons liable to pay the levy in respect of soft drinks to keep records of the dilution ratios of the drinks.

Regulation 26 provides for the records to be kept in respect of lost or destroyed soft drinks.

Regulation 27 provides for the records to be kept in relation to warehousing.

Regulation 28 provides for the preservation period of records which a liable person is required to keep.

Regulation 29 provides for the records to be kept and preserved by small producers.

Regulation 30 provides for notification to the Commissioners in circumstances where a person liable to pay the levy has died, become bankrupt or incapacitated or is subject to a form of insolvency procedure. A person who is required to give a notification but who fails to do so is to be treated as a person who fails to comply with section 44(1) of the Act (obligation to notify of a liability to be registered) and commits an offence under section 51(1) of the Act.

A Tax Information and Impact Note has not been prepared for this Instrument as it contains no substantive changes to tax policy.