Home Office Guidance... Sale of Alcohol Below Cost of Duty and VAT

The Home Office has issued Guidance on the interpretation on the mandatory condition prohibiting the sale of alcohol below cost of duty plus VAT.

The guidance contains a wealth of information and is designed to try to answer the many questions which have arisen as a result of the mandatory condition.

Worked examples of calculations are provided but there is also information as to the position on the following:

• Multi buy Promotions
• Multi Pack Products
• Offers when a drink is inclusive within the overall price such as a free bottle of champagne with a hotel room or a drink included within the price of a table meal.
• Complimentary drinks and in view of the recent surge in use of coupons and vouchers now the same would trigger the mandatory condition.

The Guidance confirms that retailers can still offer staff discounts so long as the price after all discounts is above the permitted price.  Free drinks offered as compensation do not constitute a sale and therefore can be distinguished from meal deals where the drink element must still be above the permitted price.

The final element of the Guidance is a Question and Answer session which provides an interesting explanation of why some vouchers are considered the equivalent to cash when used to purchase alcohol but others are not and it is worthy of consideration by anyone utilising vouchers as a marketing tool.

The full guidance can be viewed here: 'Banning the sale of alcohol below the cost of duty plus VAT: March 2015'