Question to the HM Treasury:

To ask the Chancellor of the Exchequer, whether the EU has instigated infringement proceedings against the UK over its post production dilution duty regime; and if he will make a statement.

Budget 2018 announced the Government’s intention to introduce legislation prohibiting the practice of post duty point dilution (PDPD). This change is due to take legal effect from April 2020. The Government’s announcement followed a review by HM Revenue & Customs, which considered a wide range of information from businesses across the drinks industry and their representative bodies.

The review concluded that the practice, which is not adopted across the alcohol sector, leads to certain products enjoying an unjustifiable competitive advantage in the UK market place and that this advantage comes at a significant cost to the Exchequer.

The EU Commission has not instigated formal infringement proceedings against the UK on the matter of PDPD. However, under the EU’s pre-infringement process the Commission did request the UK’s observations regarding the PDPD and its compatibility with EU Law.