UK Vaping Products Duty 2026: Key Timeline and Compliance Framework for Brands — Part 2

Following on from the policy framework covered in Part 1, this article focuses on practical implementation: what brands need to prepare, where the key risks lie and how to reduce compliance exposure.

Applying for VPD and VDS Approval

Who Can Apply

Overseas Manufacturers

Overseas manufacturers cannot apply directly. They must appoint a UK representative with a fixed place of business in the UK to act as the statutory applicant.

The UK representative will be responsible for account management, duty stamp administration, regulatory notifications and related compliance matters. The representative will also assume the relevant legal and financial liabilities.

Where No UK Representative Is Appointed

If no UK representative is appointed, the importer must handle the required approval application, duty payment and stamp application.

All compliance steps must be completed before the goods leave customs control, a bonded warehouse or any applicable duty-suspension arrangement.

UK-Based Businesses

UK-based manufacturers, importers and bonded warehouse operators may apply for approval in their own name.

Account access and duty stamp permissions are registered under the applicant’s name. The account holder will act as HMRC’s official point of contact and will be held accountable for any non-compliance.

What to Prepare Before Applying

Applicants should register for a Government Gateway account in advance for identity verification and online filing.

UK-based applicants must ensure that company registration, tax, address and contact details are fully aligned and kept up to date.

A UTR — Unique Taxpayer Reference should be provided where required.

Any changes to the company address, responsible persons or business model must be notified to HMRC in advance or without delay where required. Failure to report changes in a timely manner may result in suspension or revocation of the relevant approval.

HMRC’s Fit and Proper Test

The fit and proper test covers the company, directors, beneficial owners and key personnel.

HMRC will focus on:

-previous breaches or non-compliance;

-associated-party risks;

-record-keeping standards;

-financial standing;

-internal control systems.

The assessment mainly covers three areas:

-financial stability;

-the compliance background of key personnel;

-supply chain and duty stamp control capabilities.

HMRC may look through the ownership and operating structure to assess connected entities. If a related party is found to have breached relevant requirements, the application may be rejected.

Holding a UK VAT registration number does not mean that a VPD application will be approved.

VAT is a general business tax registration, whereas VPD is a licensed excise duty regime. The assessment criteria are significantly different, and VAT application experience should not be applied directly to VPD submissions.

Business Plan: Proving Risk Control Capability

The business plan is critical to the outcome of the application.

Its purpose is to demonstrate to HMRC that the applicant has robust risk control capabilities. It should not be written as a general product introduction.

Basic Requirements

The business plan should clearly set out:

-the business strategy and operating model;

-record-keeping arrangements;

-duty stamp management procedures;

-measures to prevent illicit supply chain activity.

Specific Requirements for Overseas Stamp Application

Where duty stamps will be applied outside the UK, the business plan should include a dedicated section covering the full process for:

-cross-border transport of duty stamps;

-secure storage;

-damage handling;

-returns;

-incident reporting.

Common Reasons for Rejection

Applications are commonly rejected where the business plan:

-focuses too heavily on product descriptions;

-lacks adequate risk control measures;

-fails to set out clear operating procedures;

-does not present a closed-loop compliance framework.

Financial Security Requirements

Financial security, also referred to as a duty deposit or duty guarantee, is mainly required for new businesses or applicants with previous tax compliance issues.

Applicants with stable finances, sound internal controls and reputable commercial partners may be able to reduce the required security amount.

Application Review, Rejection and Appeals

The approval process normally takes around 45 working days.

If an application is rejected, the applicant may request an administrative review or lodge an appeal.

However, once a rejection is recorded, the business may be treated as a higher-risk entity, and future applications are likely to be subject to stricter scrutiny.

For this reason, brands are strongly advised not to proceed with self-submission without proper specialist preparation.

HMRC Approval Documentation

Once approved, the applicant will receive an official approval letter from HMRC.

The approval letter sets out:

-the scope of approval;

-operating requirements;

-duty payment obligations;

-duty stamp-related requirements.

Company-specific references and business permissions are governed by the approval letter.

UK Representative Responsibilities and Brand Protection

Statutory Responsibilities of the UK Representative

The UK representative is responsible for:

-approval applications;

-duty stamp management;

-incident reporting;

-tax liaison;

-cooperation with regulatory inspections.

If other brands represented by the same UK representative commit compliance breaches, your brand may also be subject to associated checks or linked investigations.

Key Risks for Brand Owners

Key approvals, duty stamp access, import data and official communication rights are concentrated with the UK representative.

This can restrict the brand’s control over its UK market operations and place the brand in a weaker position when changing partners.

Protecting Brand Rights, Data and Operational Control

Brands should enter into formal written agreements with their UK representative.

The agreement should clearly define the responsibilities of the brand, UK representative, importer and warehouse operator, including liability allocation for:

-duty stamps;

-product returns;

-duty rebates or credits;

-regulatory reporting;

-data management.

The contract should also specify data ownership. Brands should require full sharing of all ledgers and supporting documents, and retain complete backups.

A formal exit and handover mechanism should be established to ensure that, when changing partners, all records are transferred in full and regulatory updates are completed properly.

Emergency Response and Handover Arrangements

If the UK representative resigns, becomes uncontactable or ceases communication, the brand may lose access to critical operational functions.

Replacement and handover clauses should therefore be included in the cooperation agreement from the outset.

If any irregularity occurs, HMRC should be notified promptly and the relevant registration updates should be completed without delay.

End-to-End VDS Duty Stamp Operations

Liaising with HMRC’s Appointed Stamp Supplier

Cartor Security Printers Limited is HMRC’s appointed duty stamp supplier.

After obtaining the VPD and VDS approval letter, the applicant should follow the official guidance to complete platform registration, account activation and data integration.

Returns, Replacements and Duty Credits

Transitional duty stamps are non-refundable and non-exchangeable once purchased.

For duty-paid products that are damaged, destroyed or re-exported, eligible parties may apply for a duty rebate or credit in accordance with the applicable rules, provided that complete supporting documentation is submitted.

Duty Stamp Authentication and Traceability

Duty stamps use both physical and digital anti-counterfeiting features.

Digital stamps incorporate a 2D Data Matrix code, enabling traceability and scan-based verification.

Specific functions and technical requirements are subject to official announcements.

Warehouse, System and Inventory Compliance

Warehouse Management System Requirements

The warehouse management system must be capable of linking:

-product batches;

-SKUs;

-duty stamp URNs or serial numbers;

-carton codes;

-inbound and outbound records;

-damage records;

-returns;

-export data.

HMRC may request data for reconciliation at any time.

Businesses that have not completed digital system upgrades are unlikely to pass HMRC audit requirements.

Full Lifecycle Management of Duty Stamps

Businesses must follow the principle that physical stock and accounting records remain consistent.

A closed-loop duty stamp management system should cover the full lifecycle of each stamp, including:

-procurement;

-warehousing;

-issuance;

-stamp application;

-damage;

-loss;

-returns;

-write-off.

Complete paper and electronic records must be retained throughout the process.

Using Bonded Warehouses to Manage Duty and Cash Flow

Goods may be stored in HMRC-approved bonded warehouses.

Duty is calculated and paid based on the actual quantity released each time. This lawfully defers duty payment and helps ease cash-flow pressure.

Stamp application and duty payment must be completed before the goods are released from the warehouse.

Financial, Tax and Logistics Strategies

Samples and Exhibition Products

Commercial samples and trial products are not exempt from duty payment or stamp requirements.

Any goods with the potential to enter circulation must comply with the applicable duty payment and stamp rules.

Duty relief generally applies only to small quantities imported for personal use, subject to the relevant conditions.

Re-Export Duty Rebates

Duty-paid goods that are re-exported to Ireland or EU markets may be eligible for export duty rebates.

The review process is strict. Applicants must provide valid export evidence and duty stamp disposal records.

Duty Credits and Stock Write-Offs for Bulk Returns

Returned goods must be transported to HMRC-approved compliant premises for supervised destruction or re-export.

Full records must be retained throughout the process.

Eligible parties may apply for duty credits by submitting the relevant supporting evidence.

Brands are advised to establish a dedicated RMA — Return Merchandise Authorisation system to manage returns and tax write-offs separately.

Import Declaration Risks

Under the new regime, customs declaration checks are expected to become more stringent.

Declaration data must be consistent with:

-duty payment records;

-import volumes;

-sales data;

-warehouse records.

Under-declaring the value of goods can create data inconsistencies and significantly increase the risk of inspections and audits.

Regulatory Penalties and Tax Audits

Offline Spot Checks by Trading Standards

Trading Standards authorities conduct frequent random checks at physical retail stores.

During the initial implementation period of the new regime, targeted enforcement campaigns are expected to focus on:

-duty stamp authenticity;

-matching between goods and duty stamps;

-purchase invoices;

-supply chain ledgers.

Penalties for Non-Compliance

Missing or incorrectly applied duty stamps may result in full back-payment of duty and punitive penalties.

In serious cases, goods may be seized and destroyed, and the responsible individuals may face criminal liability.

HMRC Tax Audits

HMRC compliance checks follow a risk-based audit approach.

Audits may involve four-way cross-checking of:

-VPD declarations;

-duty stamp purchases;

-customs declarations;

-factory wastage records.

Newly approved businesses are expected to undergo in-depth audits within 12 months of approval.

Existing operators may also be subject to unannounced spot checks from time to time.

The compliance window for the UK vaping sector is closing fast.

Drawing on extensive experience in overseas markets, Zinwi Bio provides professional policy interpretation and compliance consulting support for brand partners.

At the same time, Zinwi Bio operates mature automated production lines and has built hands-on experience in implementing duty stamp solutions for vaping products across multiple countries.

We are well positioned to meet customers’ cross-border stamp application requirements and support brands in implementing compliance efficiently, building a stable and sustainable presence in the UK market.