What is the duty treatment and HMRC claim process for liqueurs made from duty-paid spirits at lower ABV?

The duty system for lower-ABV liqueurs made from duty-paid spirits is complex and involves understanding the differential duty rates by alcohol content.

**Key points from member experience:**

- Members are using duty-paid NGS (neutral grain spirit) at 96% ABV and paying duty at that rate, then diluting to produce liqueurs at 20% ABV, which attracts a lower duty rate per litre of pure alcohol (£3.14 lower than spirits over 22%) - One member confirmed they do this but had not previously claimed back the duty difference—suggesting a potential avenue that may not be widely utilised - The mechanism is that duty is charged relative to the alcohol content in the final liquid; however, using pre-duty-paid spirit as the base complicates the claim process - Circumstance matters: one member explained they are forced to use duty-paid spirit because their premises sits within another producer's site, which affects their sourcing options

**Caveat:** The discussion did not contain detailed step-by-step HMRC claim procedures or confirmation of eligibility criteria. Members appear to understand the duty rate differential but actual claim experience was minimal in this exchange. Recommend seeking specialist HMRC guidance or duty consultant confirmation before implementing a claim strategy.