Ask the Collective

Can a drinks producer qualify for Small Producers Relief on alcohol duty if their base alcohol is imported from a non-small producer?

The regulatory text suggests that imported base alcohol must also come from a qualifying small producer to access Small Producers Relief, which creates a challenge for RTD makers sourcing from large international suppliers. **Key findings from member experience:** - The official guidance (https://www.gov.uk/guidance/check-if-youre-eligible-for-small-producer-relief-on-alcohol-duty) appears to require the supplying producer to also be a small producer, which excludes most large US alcohol suppliers. - **HMRC's interpretation is unclear and inconsistent.** Members report that HMRC internally disagrees on what constitutes "alcohol production," suggesting the rules may be applied differently depending on who you speak to. - One member suggested a potential workaround: establishing a small UK SPV (special purpose vehicle) to purchase and re-supply the imported alcohol, creating a chain where the immediate supplier is a small UK entity. This is technically possible but members acknowledged it sits in ethically grey territory and its legitimacy is unverified. - No members confirmed successfully using this approach or obtained explicit HMRC clearance for it. **Recommendation:** Before committing to a restructuring, contact HMRC directly to confirm their current interpretation, as the scheme's definition of "production" appears to be under internal debate. Members suggest being cautious of workarounds without explicit written approval.