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Producers and packagers of soft drinks subject to the Soft Drinks Industry Levy (SDIL), as well as businesses reporting imported liable drinks into the UK, must submit quarterly returns to HM Revenue & Customs (HMRC). These returns correspond to fixed reporting periods ending in June, September, December, and March. It is mandatory to file returns and settle any levy due within 30 days following the end of each period.
Failure to submit returns on time allows HMRC to estimate and charge the levy owed. Registered levy payers with no reportable activity during a period are generally required to submit a nil return, except for those registered solely as small producers.
How to Submit Your Return
Under Regulation 22 of the Soft Drinks Industry Levy Regulations 2018, submission of returns is only permissible once the relevant accounting period concludes and must be completed through HMRC’s online service. Registration for the levy is a prerequisite for submitting a return.
Note that for returns ending on or before 31 March 2025, credit claims cannot be made via the online service. Instead, credit claims for this period must be emailed to HMRC (enquiries.sdil@hmrc.gov.uk) following specific instructions outlined below.
Key Reporting Requirements on Your Return
Per the legal provisions of Regulation 22, returns must specify the volume (in litres) of liable drinks across the applicable levy bands separately. The return must include:
- Litres of drinks packaged for yourself or another party (excluding amounts packaged for small producers)
- Litres packaged on behalf of small producers, including their SDIL registration number
- Litres of liable drinks imported into the UK (excluding small producer products)
- Litres imported from small producers
For diluted soft drinks, report the ready-to-drink volume calculated according to the packaging’s specified dilution ratio.
Additionally, the return must include litres of liable drinks for which the levy has been paid or is being reported for credit claims due to exportation, expected exportation, loss, or destruction.
Claiming Credits
For Returns Ending on or Before 31 March 2025:
Do not include credit claims in the online return. Instead, submit credit claims via email to enquiries.sdil@hmrc.gov.uk with the subject line ‘SDIL pre-April 2025 credits claim’. The email must detail:
- Reported amounts for packaging and imports in both high and low levy bands
- Credit amounts claimed for exported, lost, or destroyed drinks in both bands
HMRC will adjust your online return balance upon verification.
For Returns Ending on or After 1 April 2025:
Credit claims should be submitted directly through the online service as part of your return.
Correcting Errors in Previous Returns
If a submitted return contains errors, corrections must be made via the online service by selecting ‘Make a change’ in the ‘Manage your account’ section. If you did not file online, contact HMRC directly.
You are not required to submit supporting documents initially; HMRC will request them if necessary. However, maintain detailed records of:
- Date the error was identified
- Affected reporting period
- Cause and nature of the error
- Supporting documents
- Whether the error relates to export credits, lost/destroyed goods, or other categories (with explanation if other)
Payment of Additional Amounts and Penalties
If corrections reveal underpayment, the outstanding levy must be paid upon receiving HMRC’s notice. Interest accrues on unpaid amounts until fully settled, and late payment penalties may apply.
HMRC may impose penalties for inaccuracies if returns are found to be careless, deliberate, or deliberately concealed, leading to unpaid or understated tax. Penalties are based on the potential lost revenue and consider whether the taxpayer disclosed the error voluntarily. Reasonable care in return preparation generally avoids penalties.
More details on penalties can be found in HMRC’s factsheet Compliance checks for penalties of inaccuracies in returns or documents (CC/FS7a).
Overpayments and Refunds
If corrections show overpayment of levy, you may:
- Carry the excess as a credit towards future liabilities, or
- Apply for a repayment (except for credits related to exported, lost, or destroyed drinks)
Repayments cannot exceed the net levy paid in the quarter of the correction. Credits related to exports or losses are held on account and offset against future liabilities.
HMRC may withhold repayments if you have outstanding tax liabilities or if the refund relates to amounts already reimbursed by your customers, potentially requiring an undertaking to repay customers.
Record-Keeping Obligations
All levy payers must retain records for six years from the end of the relevant reporting period, including:
- Volumes of liable drinks per levy band
- Levy amounts payable
- Details and calculations of any credits claimed
- Adjustments or corrections made to previous returns with relevant periods and amounts
For each delivery of liable drinks to storage premises (including registered warehouses), keep records documenting:
- Warehouse registration status
- Delivered volumes and dates
- Date of removal from premises
- Details of parties involved in delivery and transportation
Packagers must also track volumes produced by small producers and quantities first packaged, removed, or made available for sale.
The Soft Drinks Industry Levy demands diligent quarterly reporting and compliance. Understanding return submission rules, credit claims, error correction procedures, and record-keeping requirements is essential for levy payers to avoid penalties and ensure smooth tax administration. Businesses are advised to familiarize themselves with HMRC’s official guidance and seek professional advice where necessary.
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