Duty Free


http://www.parliament.the-stationery-office.co.uk/pa/cm200405/cmselect/cmtreasy/126/4120803.htm

The above Government website contains the following statement…

… think the picture is very much as described by The Scotch Whisky Association, … ask the Chancellor why 74% off every bottle of whisky is duty and VAT. …

Niw I am not sure where this politician got his figures from, but on further investigation at the offices of the Wine & Spirits federation, I obtained the following facts which I think I will put more credance upon!

Any bottle of whisky from Scotland, 75ml in volumn at 40% alcohol per volume will attract a fixed rate of £5.48 excise duty and the total cost then would attract 17.5 VAT duty.

If you are travelling to Australia or America or South Africa, or anywhere outside of the European Union, then the following should apply to a litre of Scotch.

But for this exercise we will take a price of £17.99 for our bottle.

In the UK the cost £17.99 for a 75 cl bottle including duty, VAT and the traders profit.

A litre (100 cl) of the above, within the UK, would cost £23.99.

But at the Duty Free shop at an airport, you should…

Deduct £5.48 duty andthen the VAT which leaves… £14.94 including the traders profit. That is, if it was labelled “Duty Free”.

I emphasise, this would include the traders normal shop markup for profit.

Actual duty free price at Heathrow Terminal 3 At the World of Wine would be around £17.99

The difference is £3.05 This is profit over and above the normal traders markup that every shop makes within the UK.

In percentage terms this is approximately £17% more. Doesn’t seem right to me.

Still can’t understand how parliament got the figures so wrong as my original article made my figures so much better!

Andrew

Advertisements
  1. #1 by Andrew on Thursday, 24 March 2005 - 4:00 pm

    Just had an e-mail from a colleague who points out that my figures could be wrong, but only slightly.It seems Duty is put on immediately the product leaves the bonded warehouse so the distilleries profit goes on first, then the duty, then the wholesalers markup, then the duty free shops markup. Vat of course being added and subtracted all the way down the line.Extra profits could, in fact, be much higher than the 17% I claimed.

%d bloggers like this: