My Draft Syndicate Brochure - Comments Please

[Druncan]

Nice flyer! but it does seem quite a big investment/risk.
I have brewery insurance for 3rd party liability. It took me ages to get a reasonable quote, just to cover the "what if I poison someone?"

So, doing a dynamic risk assessment ( Firebrigade,,, ) what if you poison each other? Do you need to have a waiver to limit the syndicates liability? Will you be exempt from Health & Safety as well?

 

[simon12]

Not sure its something that will work or not but a few things to consider are:
These guys do a decent 200l setup for around £6000 http://esfabrications.co.uk/
You could try crowd funding so people who would spend less can get a brew day or something
It could make more sense to offer a price for people to book a brewday all for themselves as either a 1 off or 1 per 2 months or something
A few years ago bulk grain was about £14 per 25Kg sack and hops ranged from £6-£30 per Kg with most being in the £10-£18 when bought in 5kg packs.
You could start smaller with a brew builder or similar setup costing maybe £2000 and later see if people want to upgrade or produce a pdf for both to see what people want
Keep an eye on SIBA classifieds for a setup though many seem overpriced.

 

[Pavros]

You say you have had it confirmed by HMRC that this is exempt.

Unless you have outlined this EXACT idea to HMRC (which is different to the idea outlined in your other thread) AND have their opinion in writing, be prepared for them to challenge something of this scale further down the line.

You may also want to check again with the local council etc because the advice given on the other thread about waste volumes etc will not be valid now.

On your poll, you also missed off the option 'I wouldn't touch this with a bargepole'

 

[-Bezza-]

I haven’t had this reaction at all in my local conversations, but that is probably because I am speaking to people who know me so trust isn’t an issue. I can see that asking the forum for views when I am a stranger to them is giving me a very different set of feedback points and questions.

But don't let these replies dishearten you too much as if your friends are all massively supportive, the people on this forum are likely to be the other extreme. Most of us will have our own equipment already (that cost us less), broadly know what we're doing and can make beer cheaper, and don't like people interfering with their brewing! It sounds like you're targeting the middle ground - those who have more than a casual interest in brewing and want to do so socially. But that's the crux of the issue - I can't see a casual brewer wanting to drop a grand into the project, with no obvious security or liquidity. But at the end of the day, you need to gauge reaction from your target audience, which isn't likely to be people on this forum.

Have you thought about syndicating with some local pubs and them having use of the full 200l batch?

 

[Pavros]

Have you thought about syndicating with some local pubs and them having use of the full 200l batch?

And that's exactly when HMRC will come knocking on someone's door...

 

[kelper]

You need a brewery to sponsor you! Or make it a community project. I'm sorry that our posts are negative but I see pitfalls and I think others do too. But all prophets face naysayers.

 

[-Bezza-]

And that's exactly when HMRC will come knocking on someone's door...

I was going to say something about the tax in that situation but then wasn't sure if there was something about whether the pubs can account for the duty as part of their existing HMRC agreements, so didn't bother because it seemed too much effort. No point worrying about the tax until the commercial proposition is sorted.

 

[Pavros]

I would have thought that as soon as the word 'commercial' is bandied about, someone is going to have to register as a brewery.

There is also the very grey area of when does a hobby become more than that and is viewed as a 'business/commercial enterprise' regardless of whether it is operated on a 'not for profit' basis.
If a registered brewery decided to deregister as a brewery and sell all it's product at cost (ie not making a profit), would this still be considered a commercial enterprise by HMRC or a very, very large hobby? (That's a rhetorical question, by the way. I know which way HMRC would view it).

 

[-Bezza-]

I would have thought that as soon as the word 'commercial' is bandied about, someone is going to have to register as a brewery.

There is also the very grey area of when does a hobby become more than that and is viewed as a 'business/commercial enterprise' regardless of whether it is operated on a 'not for profit' basis.
If a registered brewery decided to deregister as a brewery and sell all it's product at cost (ie not making a profit), would this still be considered a commercial enterprise by HMRC or a very, very large hobby? (That's a rhetorical question, by the way. I know which way HMRC would view it).

I say commercial in the broadest sense.

The Alcohol Duties legislation doesn't talk about "commercial" or "not for profit" (for the record, it's well established that being not-for-profit doesn't stop you being commercial / a business - charities are a business). The legislation effectively says everything is subject to duty unless it's exempt and an exemption is given for beer produced for someones own domestic consumption.

http://www.legislation.gov.uk/ukpga/1979/4/contents

http://www.legislation.gov.uk/ukpga/1979/4/section/41 : "The duty on beer produced in the United Kingdom shall not be chargeable on beer produced by a person who produces beer only for his own domestic use"

I've not read that other thread on whether this exemption applies to syndication. However, generally in law the singular is taken to mean the plural and vice-versa unless specifically stated otherwise. Therefore a group of people working together to produce beer shouldn't be caught. I would have a question as to whether that implied everyone had to be present at the brewday, otherwise you have people producing beer that is for someone else's consumption. I can't see that HMRC would struggle with that too much though based on what the legislation is trying to achieve here.

 

[jceg316]

Good points about maybe having two kits half the size, or even just 1/2 the size and half the number of members.

To be clear though, I never imagined all members would be present at all brew days. I suspect a rota would be formed and somewhere around four or five people would turn up on each day. Maybe even take shifts?

I think you are right to point out that for many people space is definitely an issue. I only survived two brews in the kitchen before I was expelled! I’ve now set up happily in the garage, but not everyone has the space.

Something to consider, if you haven't already, is if not everyone is present at brewday, do the ones not present still contribute ££ and get a share? If so it might be annoying trying to get money from those people. On the other hand if it's "pay for your brew" then the brew price is >£15.

If you don't fancy doing a brew but the equipment is in your garage, how will you get round that?

I'm currently planning setting up a community fermentation room at my wife's farm which of course includes a home brewery. I was gonna crowd fund it and had a few ideas on what to offer without selling beers outright, and have ideas on programmes to run in terms of brewdays and ways to build community around beer. I won't be crowd funding anymore due to finding another funding method, but happy to PM my ideas and if you will find it helpful moving forward?

 

[Pavros]

I say commercial in the broadest sense.

The Alcohol Duties legislation doesn't talk about "commercial" or "not for profit" (for the record, it's well established that being not-for-profit doesn't stop you being commercial / a business - charities are a business). The legislation effectively says everything is subject to duty unless it's exempt and an exemption is given for beer produced for someones own domestic consumption.

http://www.legislation.gov.uk/ukpga/1979/4/contents

http://www.legislation.gov.uk/ukpga/1979/4/section/41 : "The duty on beer produced in the United Kingdom shall not be chargeable on beer produced by a person who produces beer only for his own domestic use"

I've not read that other thread on whether this exemption applies to syndication. However, generally in law the singular is taken to mean the plural and vice-versa unless specifically stated otherwise. Therefore a group of people working together to produce beer shouldn't be caught. I would have a question as to whether that implied everyone had to be present at the brewday, otherwise you have people producing beer that is for someone else's consumption. I can't see that HMRC would struggle with that too much though based on what the legislation is trying to achieve here.

OK - following on from this, you're saying that, if 1000 people bought some commercial brewery equipment the size of a commercial brewery (emphasis being on 'commercial' and 'brewery' not being 'domestic' and 'homebrew equipment') but did not sell any of their product, instead gave it away at cost to all 1000 'members' (or shareholders), then it would not have to register as a brewery or pay duty as all it's output would be for the domestic use of the 1000?

And I can't be bothered to go back to the actual legislation to read if the singular should be read to mean plural in this case as I don't have a vested interest in the outcome but common sense (or the man on the Clapham Omnibus or whatever the Law usually refers to) says that the situation I have just outlined is no longer a hobby or 'for domestic purposes'.

You will probably find that the intention of the exemption was to stop a small group of homebrewers using plastic equipment (probably all that was available when the legislation was drafted) having to register and complete the paperwork as their output was so small. HMRC wouldn't want to deal with the paperwork and then chase them when they gave up the hobby after a couple of years. It was probably never envisaged that people would be able to buy commercial grade equipment with larger scale output without having to sell their product and therefore would need to register as a brewery.

 

[Chippy_Tea]

On the original question - My Draft Syndicate Brochure - Comments Please - i would change the red/pink colour to something darker to make it stand out it doesn't look good on my screen.

 

[-Bezza-]

OK - following on from this, you're saying that, if 1000 people bought some commercial brewery equipment the size of a commercial brewery (emphasis being on 'commercial' and 'brewery' not being 'domestic' and 'homebrew equipment') but did not sell any of their product, instead gave it away at cost to all 1000 'members' (or shareholders), then it would not have to register as a brewery or pay duty as all it's output would be for the domestic use of the 1000?

And I can't be bothered to go back to the actual legislation to read if the singular should be read to mean plural in this case as I don't have a vested interest in the outcome but common sense (or the man on the Clapham Omnibus or whatever the Law usually refers to) says that the situation I have just outlined is no longer a hobby or 'for domestic purposes'.

You will probably find that the intention of the exemption was to stop a small group of homebrewers using plastic equipment (probably all that was available when the legislation was drafted) having to register and complete the paperwork as their output was so small. HMRC wouldn't want to deal with the paperwork and then chase them when they gave up the hobby after a couple of years. It was probably never envisaged that people would be able to buy commercial grade equipment with larger scale output without having to sell their product and therefore would need to register as a brewery.

I think you've argued your own point there - the example you have given probably isn't what the legislation intended. The "reasonable man on the Clapham Omnibus" test is what course an educated but ordinary person would do. To conclude that the legislation intended to apply to 1,000 brewers without seeking further advice wouldn't be reasonable and HMRC would bend you over and spank you with the negligence stick.

At the other extreme, are you suggesting that giving a bottle of homebrew to a mate makes you liable for alcohol duty on your entire output? A strict reading of the law would say it's not exempt. What about if your mate helped you on brew day so there are now two of you producing beer for your own respective consumption? Assuming that's ok, where does the line get drawn? If you want to get legal-technical, you'd probably have to look at something like the Ramsay Principle on this one. Or read Hansard.

Anyway, the point we're both making is probably that the law isn't entirely clear on the exemption to alcohol duty so proceed with caution.

 

[phildo79]

Not sure this will get off the ground. How many people will want to spend a grand in return for a mini corny each month? And with no experience of brewing to this scale, what quality will the beer be?

 

[Chippy_Tea]

Not sure this will get off the ground. How many people will want to spend a grand in return for a mini corny each month?

If you have £1000 burning a hole in your pocket wouldn't you add a couple of hundred and buy a *Braumeister you then own the machine and brew when you want.

* Bearing in mind in a recent poll most members said if money was no object and they were given a choice between a Grainainfather and Braumeister they would choose the Braumeister

.

 

[Pavros]

Anyway, the point we're both making is probably that the law isn't entirely clear on the exemption to alcohol duty so proceed with caution.

I'm not saying 'proceed with caution'. I'm saying 'Don't go near this unless you have enough money to argue the t*ss with HMRC'

 

[Pavros]

If you have £1000 burning a hole in your pocket wouldn't you add a couple of hundred and buy a *Braumeister you then own the machine and brew when you want.

* Bearing in mind in a recent poll most members said if money was no object and they were given a choice between a Grainainfather and Braumeister they would choose the Braumeister

.

Exactly this!
And not even brew WHEN you want but also brew WHAT you want without having to wait for your turn in the selection rota.

 

[phildo79]

If you have £1000 burning a hole in your pocket wouldn't you add a couple of hundred and buy a *Braumeister you then own the machine and brew when you want.

Exactly. Or you could own 1/20 of a brewing system that gives you little control over how it is used. I wouldn't invest in this for many reasons but the primary factor is that I would lose control over what was brewed. I don't spend my precious time brewing for others, I brew for me, myself and I. Sorry if that makes me out to be a cnut.

 

[Pavros]

I think you've argued your own point there - the example you have given probably isn't what the legislation intended. The "reasonable man on the Clapham Omnibus" test is what course an educated but ordinary person would do. To conclude that the legislation intended to apply to 1,000 brewers without seeking further advice wouldn't be reasonable and HMRC would bend you over and spank you with the negligence stick.

I wasn't arguing my own point, I was extending your example and asking if you would consider that to be for domestic purposes as I certainly wouldn't. (I think we both agree here).

If 1000 people is too much, where would the line be drawn in considering whether something is considered to be no longer for domestic purposes? Does it depend on the number of people, litres of output, cost of equipment, footprint of equipment, premises used, individually or collectively? I certainly wouldn't want to be the test case brought by HMRC

 

[simon12]

Where I see the problem is if anyone gets beer they did not make themselves even if they put no money in even worse if they did then it has to be duty paid so the brewery would need to be registered plus alcohol licensing etc. If people only paid for equipment and ingredients and only drink beer they made communally or individually then I don't see an issue.