Importing bulk rum, especially from the Caribbean, can seem like a daunting endeavour, fraught with regulations, documentation requirements, and logistical complexities that are not everyone’s cup of tea. However, overlooking these intricacies can lead to costly penalties and legal consequences for importers, explains Bert Albrecht – UK manager for spirits at Ethimex.
Sourcing Rum from the EU: Unwittingly Becoming an Importer
While sourcing rum from within the EU – be it the Netherlands, Spain, France, or even Ireland – may seem more straightforward, it’s essential to recognise that the receiver automatically assumes the role of an importer in this scenario. This comes with the responsibility of staying abreast of the evolving post-Brexit legislation, which is still in flux and may not be immediately apparent to those unfamiliar with the import process.
Trade Agreements and Third Country Classifications
Even with the existence of trade agreements, importers must exercise caution. One of our customers recently faced scrutiny from HMRC and was fined for failing to pay the required import duty on a rum shipment from the EU, despite the trade agreement in place. The reason? If the rum was imported and subsequently released for free circulation (T2 status) in the EU, it becomes classified as a “third country” product for export purposes, even if the rum originates from a country with a trade agreement with the UK. This classification can attract import duties, particularly for cheaper white rums.
Rum Definition and Commodity Codes
Another hurdle arises when dealing with the varying definitions of rum across different regions. Several Caribbean countries outside Caricom (The Caribbean Community and Common Market), such as Panama, the Dominican Republic, and Venezuela, do not recognise unaged rum as rum. To qualify as rum in these regions, the liquid must be aged for at least two years; otherwise, it is classified as a distillate or ethanol. This discrepancy will have implications for commodity codes and import regulations as the import is no longer for rum.
Distillation Regulations for Different Markets
Exporters intending to distribute rum in the United States must also navigate the distillation regulations set forth by the Alcohol and Tobacco Tax and Trade Bureau (TTB). According to these regulations, rum can only be distilled to below 190 proof (95% ABV), whereas most other countries permit distillation below 96% ABV. This means that if a rum is distilled to, say, 95.5% ABV, diluting it to 94.5% to comply with US regulations will not be accepted. In such cases, a “proof of distillation” declaration issues by the distillery is required.
Importer’s Responsibility and Delivered Prices
Regardless of whether rum suppliers are aware of these regulations or choose to share this information, the ultimate responsibility lies with the importer to understand and comply with the rules. Even if a non-UK supplier arranges freight and offers a delivered price, the receiver is still responsible for requesting the correct documentation and verifying compliance. It’s important to note that if an invoiced price includes freight charges, HMRC will not necessarily accept this invoiced price as the rum’s value for import duty calculations because freight charges are added to the rum price.
A Hassle-Free Solution: UK-Based Suppliers
To circumvent many of these complexities, buyers may opt to work with a UK-based rum supplier like Ethimex. As a domestic supplier, Ethimex stores and custom-clears all rums in the UK under the correct commodity codes, with all relevant import duties paid, ensuring compliance and peace of mind for UK buyers.
Navigating the intricate world of bulk rum importation requires diligence, attention to detail, and a thorough understanding of the various regulations and potential pitfalls. By staying informed, seeking guidance when needed, and partnering with reputable suppliers and importers, UK buyers can successfully navigate these hurdles and avoid costly mistakes.
