Alan Powell, consultant to the UK Warehousing Association, said goods could be taxed in both Scotland and Britain if they were counted as separate EU member states.
He added that, to prevent this double taxation, “onerous” costs would be necessary to create an administrative system for duty to be reimbursed.
Powell said: “It’s imperative to consider the implications for control of the movement of excise goods – alcohol, tobacco and energy products, which bring in well over £40 billion to the public purse in so-called sin taxes – between Scotland and the remainder of the UK should the Scots vote yes.
“If Scotland were to become a separate EU member state, the excise duty paid in England or elsewhere in the UK would not count in Scotland. Instead, the goods would continue to bear UK duty while also having to have Scottish duty pre-paid prior to movement across the border.
“To prevent double taxation, there is an onerous administrative system for duty to be reimbursed. The system would apply in reverse for goods sent from an independent Scotland to the rest of the UK.”
He added: “Such a system would also be heavily resource- intensive for the revenue authorities of both member states, which in turn would lead to real risk of business snarl-ups and cash-flow jeopardy for cross- border business. Believe me, you really do not want to be involved in this administrative and fiscal nightmare.”
Members of the drinks industry have opposed Scottish independence, with distiller William Grant donating a “substantial” six-figure sum to the Better Together campaign this summer. The odds on Scotland choosing to go it alone are as long as 5/1 with many bookmakers.
But if Scotland does become independent, Powell believes the best solution would be a “total duty suspension” scenario, whereby drinks and cigarettes are temporarily exempt from duty if they are intended to move between the two countries.
Powell added that another consequence could be Scots crossing the border to buy cigarettes and alcohol.
He said: “Under EU law excise duties have to be levied at a minimum rate by the member states but there is no maximum rate. The rates would to have to differ significantly to encourage Scottish/UK cross-border booze and ciggie jaunts but it’s a possible scenario given the soundings on health from Scotland.”
Weighing up the costs
Retailers may lose out due to warehousing issues if Scotland becomes independent, but a duty suspension could help with cash flow, said Powell.
“It’s difficult to judge whether there would be any additional cost to the retailer,” he said. “There are so many possible scenarios and there are swings and roundabouts.
“For example, it would be a cost administratively and logistically to set up new tax warehouses or become approved to own goods within a third-party tax warehouse, but there could be slight cash flow benefits of keeping the goods in duty suspension nearer the time they are required to be released for consumption, which is an issue for tobacco under current UK restrictions. One problem is getting an approval in the first place.”