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End Pubco Rip Off On Real ale

Thursday, January 21, 2016

GMB Call On Pubcos To Observe Law To Inform Tenants Of Undrinkable Real Ale Exempt From Duty Of 41p Per Pint  By HMRC

Pubcos must with immediate effect recalculate rents that tenants pay and no longer base them on selling 72 pints when there are only 68 available for sale say GMB.

GMB, the union for tied pub tenants, is calling on pubcos to observe the law and to end overcharging of consumers and pub tenants by invoicing for 72 pints from a typical 9-gallon cask of real ale instead of the 68 that are drinkable. See notes to editors for information on how sediment forms in real ale casks rendering 4 pints undrinkable and how HMRC exempt this undrinkable beer from beer duty and how tied tenants discovered the overcharging.

For over a decade Pubcos have been in breach of HMRC regulations that tenants are informed about the amount of real ale exempt from duty.

The overcharging comes in 3 separate ways:

· Tenants are charged 41p per pint beer duty for 4 pints in every cask when the beer is exempt from duty. This £1.64 per cask goes to the pubco not HMRC. This has to be paid for by consumers.

· Tenants are charged a wholesale price for 4 pints per cask which is not drinkable. This amounts to at least £4 per cask which has to be paid for by consumers.

· Pubco tenants rents are based on the profit potential of the pub. These have all been calculated on basis that tenant can sell 72 pints when only 68 can be sold. This typically inflates rents by £6,000 per year which reduces the income of tied tenants.

Steve Kemp, GMB lead officer for tied pub tenants “A duty of 41p is levied on a pint of standard ale which brewers pay to HMRC when the beer leaves the brewery. HMRC exempts the 4 pints of undrinkable beer per cask.

It is an absolute scandal pubcos did not tell their tied tenants about undrinkable beer exempt from duty as the law requires.

It is imperative that transparent prices are introduced with immediate effect across the industry. All brewers and pubcos must be held to account on this.

The pubcos must end the myth that a 9-gallon cask of ale means 72 pints can be sold while in reality only around 68 pints are drinkable.

Pubcos must with immediate effect recalculate rents that tenants pay and no longer base them on selling 72 pints when there are only 68 available. Pubcos not only need to reduce rents but to offer to repay overcharged rents to tenants.

Parliament passed legislation for pub tenants to be able to buy products in a free market and pay a fair rent for their pub building. The Act was given Royal Assent in early 2015. There are now consultations on the codes needed to implement the legislation. BIS need to get on with this as this overcharging shows that pubco can only by trusted to overcharge their customers and tenants.”


Contact: Chris Lindesay: 07768 146073 or British Pub Confederation  or Steve Kemp 07730 898 102 or Dave Mountford on 07792 198 954 or GMB press office 07921 289880 or 07974 251 823

Notes to editors

1 Real Ale and sediment and system for paying beer duty

British “Real Ale” is unique to Britain and our treasured British Pubs.  It is not “finished” in the brewery but has a “Secondary fermentation” in the pub, managed by the publican.  The process is called “conditioning” and results in undrinkable sediment which falls to the bottom of the cask.  Traditionally, this sediment was returned to the Brewery which reclaimed the beer duty paid and the pubs were credited.

Casks full of undrinkable slops returning to breweries might have worked when the breweries owned the pubs, but today, with beer more widely distributed, it would result in chaos.  The Brewers asked for the beer duty on the undrinkable sediment to be exempted “up front” so that the pubs could just throw it away.  HMRC, who must make sure all beer drunk in the UK is duty paid - agreed to the change on two conditions.  The first was that the publican must be made fully aware of the amount of beer that was duty paid and therefore would be drinkable, and second that the brewers had to check their brews regularly and report to HMRC the volume of beer that they were telling the Pubs would be drinkable, and be able to prove that no drinkable beer was being shipped to the Pubs without duty being paid.  The rules were revised again in 2001 to close off a tiny loophole that had worried HMRC that Brewers might be paying duty on a standard volume but overfilling the casks to the brim.

2 This scandal dubbed the “Schrodinger Project”, has been researched by the Punch Tenant Network coordinated by Chris Lindesay of the Sun Inn, Dunsfold, Surrey no longer a Punch Tenant as Punch sold his Pub in the summer.

Reference Materials:

Access to the full Schrodinger report: Click Here
HMRC EN 226:


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