Nettle beer brewer stung in tax battle

13-Feb-2012 - Last updated on 13-Feb-2012 at 12:03 GMT

Cornish stinger producer Miles Lavers is battling tax inspectors in a David and Goliath struggle

A Cornish microbrewery is battling tax inspectors for survival as they try to recoup £10,000 of backdated revenue from it for allegedly wrongly selling one of its creations as a beer.

Foodswild Brewery, which is based in Helston, Cornwall, began selling its Cornish Stingers beer in 2009. But after visiting its premises, Her Majesty’s Revenue and Customs (HMRC) penalised it by impounding all its stocks of the product for examination in November 2010. “You can imagine how depressing that Christmas was,” Foodswild owner and founder Miles Lavers told Foodmanufacture.co.uk.

HMRC later returned the stocks in May 2011, just 10 days before their sell-by date. But it is demanding that Lavers pay for an excise licence and the backdated higher rate of tax. That represents an extra 10p per bottle sold, for what HMRC claims should have been clasified as wine.

Go bankrupt

After protracted legal wrangling, HMRC has only now issued its case notes and Lavers has less than 40 days to respond. “There’s no way I’m going to pay back £10,000,” he said. “I’d just go bankrupt.” Lavers has secured the services of lawyer Alan Powell Associates and local MP George Eustice to aid him in his David and Goliath struggle.

His opponents argue that EU law stipulates that beer must be brewed with malt. Lavers rejects this, citing products such as ginger beer as precedents. “All the [tax] officer had to do was look on Google to see it’s a beer. Other brewers make ginger beer and most just pay beer duty.” The beer is made according to an ancient UK recipe, he added.

Legal nightmare

Lavers said the legal nightmare has held him back from launching similar products such as dandelion beer and forced him to temporarily freeze operations. But he added: “I had to keep the business alive somehow to go to court.”

He has had to freeze development meetings with Business Link and a significant business opportunity with Glastonbury music festival. The furore has also put considerable strain on his personal life, he said.

His lawyer is demanding that the tax office foots the bill for their legal costs, said Lavers. “They must be dragged into the 21st Century.” He said he was optimistic he would win the case, but had “no idea” at this stage how long it could take to conclude. He will only recoup his costs if his challenge is successful.

HMRC declined to comment on the case.