> For the complete documentation index, see [llms.txt](https://kb.bevica.com/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://kb.bevica.com/documentation/guides/duty-compliance-and-tax/hmrc-duty-relief.md).

# HMRC Duty Relief

Manage duty paid spoilt product relief by reclaiming duty on damaged, contaminated, or unsaleable alcoholic products.

### <mark style="color:$danger;">COMING SOON</mark>

### HMRC Duty Relief on Spoilt or Destroyed Beer

HMRC allows breweries to **reclaim Alcohol Duty** where beer or other alcoholic products become **spoilt, damaged, contaminated, or otherwise unfit for consumption after duty has been paid**. This is known as duty-paid spoilt product relief.

HMRC expects breweries to keep evidence supporting the claim, including:

* Details of the returned or destroyed stock.
* Volume and ABV.
* Original duty paid.
* Records showing the product was destroyed or appropriately reprocessed.
* Documentation linking the claim back to the original sale and duty payment.

Duty Reclaims on Duty Paid spoiled or damaged inventory that is set to be destroyed can be managed in Bevica using a Return Reason Code.

#### Return Reason Code

To set this up, navigate to Return Reasons. From here you can create the Return Reason code, give it a short description and apply the following fields:

<figure><img src="https://2932934759-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FfUgpGDVvyqBWVvwVIy9a%2Fuploads%2FwaaQtCtOPDb9SRB6dhzF%2Fimage.png?alt=media&amp;token=3e37e0f7-9827-4c24-abb4-fa4148cdd89c" alt=""><figcaption></figcaption></figure>

* **Automatic Negative Adjustment** - Where this is set against a Sales Return order line, stock will be returned normally then automatically adjusted out. This ensures Inventory is not impacted.
* **Duty Reclaim** - When enabled, posting a Sales Return Order line with this reason code will post a negative duty reclaim entry and create an audit record in the Duty Ledger. Requires Automatic Neg. Adjustment to be enabled.

A Duty Reclaim reason code must have `Automatic Negative Adjustment` and `Duty Reclaim` selected.&#x20;

#### General Ledger Setup

For Duty Reclaims, financial entries will post to the Sales Duty Account and COGS Duty Account. These accounts can be populated in the General Posting Setup.

#### Duty Reclaims in a Bin Mandatory Location

Inventory cannot be automatically negatively adjusted in a Bin Mandatory location, therefore when working in a Bin Mandatory location, a default location code should be set against the Return Reason.  This is to allow for an automatic negative adjustment of inventory without impacting warehouse operations.&#x20;

The default location used should be a location that does not have Bin Mandatory set.

#### Creating the Sales Return Order

When inventory has been identified as suitable for a Duty Reclaim, a Duty Paid [Sales Return Order](/documentation/guides/sales/working_with_sales_orders-2.md) should be created for the customer. On the Sales Return Line, the Return Reason Code for the Duty Reclaim should be assigned. Where applicable, this will update the location code on the line. Once the Return Reason is populated, the Applies-to Duty Ledger Entry should then be selected to ensure the correct duty entry is reversed.

<figure><img src="https://2932934759-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FfUgpGDVvyqBWVvwVIy9a%2Fuploads%2FeubRrCFBLLa1sPVwzcsU%2Fimage.png?alt=media&amp;token=09c6b0d6-703b-4a62-b24a-ef8f9248895b" alt=""><figcaption></figcaption></figure>

{% hint style="info" %}
If using Item Tracking, updating the Location on the line will clear the tracking lines. These must be re-applied prior to posting.
{% endhint %}

### Posted Entries

Posting a Duty Reclaim will create the following entries in Bevica.

#### Duty Ledger Entry

On posting the Sales Return Order, a negative Duty Ledger Entry will be created. This entry will be flagged as a Spoilt Beer Return in the Duty Ledger Entries table. To navigate to the Spoilt Beer Returns efficiently, there is a button at the top of the page allowing quick filtering.

<figure><img src="https://2932934759-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FfUgpGDVvyqBWVvwVIy9a%2Fuploads%2F0omlrI9WY2pSQmJSd4a7%2Fimage.png?alt=media&amp;token=345ffbf6-576d-4e5d-8108-4da31099bfa3" alt=""><figcaption></figcaption></figure>

The Duty Ledger Entry can be used to report on Duty Reclaims that are due. The Duty Ledger Entries table contains the following fields which can be used for reporting.&#x20;

* Duty Code
* Item No and Description&#x20;
* Production Date
* Spoilt Beer Return (Y/N)
* ABV %
* Duty Rate
* Quantity and UoM
* Duty Status from and to&#x20;
* Amount (LCY)
* Total Volume&#x20;
* Location&#x20;
* Original and Posted Document Nos.
* Item Tracking fields (LOT, Package and Rotation No.)

#### Item Ledger Entry

Two Item Ledger Entries will be created, the first entry will have an Entry Type as Sale and a document type of Sales Return Receipt and will be a positive adjustment to the return location.&#x20;

The second entry will have an Entry Type as Negative Adjustment and the document type will also be Sales Return Receipt. This entry will be a negative adjustment out of the return location, removing the item from inventory.&#x20;

#### General Ledger Entry

Two General Ledger Entries will be created, the first entry will debit the Sales Duty account, the second will credit the COGS Duty account.&#x20;


---

# Agent Instructions
This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com.

## Querying This Documentation
If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question.

Perform an HTTP GET request on the current page URL with the `ask` query parameter, and the optional `goal` query parameter:

```
GET https://kb.bevica.com/documentation/guides/duty-compliance-and-tax/hmrc-duty-relief.md?ask=<question>&goal=<endgoal>
```

`ask` is the immediate question: it should be specific, self-contained, and written in natural language.
`goal` is optional and describes the broader end goal you are ultimately trying to accomplish on behalf of the user. GitBook uses it to tailor the answer towards what is most useful for that goal.

The response will contain a direct answer to the question and relevant excerpts and sources from the documentation.

Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.