A fight between a brewer and the taxman over whether a brew made from stinging nettles is a beer or an alcopop could decide who has the right to set rules on alcoholic drinks – the British Government or the European Union.

Foodswild, which makes Cornish Stingers, had its entire stock seized by HM Revenue and Customs (HMRC) in January after it ruled than under EU law it was not a beer but a "made wine" and that he owned them £10,000 in unpaid taxes.

But Miles Lavers, who runs the company that produces the 4.5 per cent alcohol drink near Helston, has submitted new evidence that under British rules it is a beer and production should be allowed to continue.

And he believes it is British laws rather than EU regulations that should ultimately prevail and allow his drink to go back on sale.

After intensive media coverage and questions raised by MEPs, HMRC have now asked Mr Lavers for an extra month to review the case.

Mr Lavers said: "UK law gives a provision for what this drink is.

"It is just an old recipe and went out of fashion. I think because of the coverage they are scared to deal with it."

Mr Lavers' submission to HMRC states: "The product clearly falls within the UK definition of beer.

"Accordingly, the product is beer under domestic legislation and should be treated as such for duty purposes."

Under the heading "What Is Beer?" HMRC's own website gives the UK definition of beer from the Alcoholic Liquor Duties Act 1979 as "ale, porter, stout and any other description of beer, and any liquor which is made or sold as a description of beer or as a substitute for beer, whose alcoholic strength exceeds 0.5 per cent."

A spokesman for HMRC said he could not comment on Mr Lavers' case because of "taxpayer confidentiality". He added: "A drinks producer can request HMRC to review any decision made on the level of duty and VAT to be paid on their alcoholic product.

"The review officer is independent from the original decision and to make a fully informed decision needs to be aware of all the relevant facts."

In the meantime, Mr Lavers, whose entire stock of the drink has been impounded, is to restart production, but under a "made wine" licence, which also covers alcopops like WKD. He has also agreed with the Cornish Woodenhand Brewery to brew a nettle real ale called Foragers' Ale.

He said: "We really hope to be exempt from the retrospective tax bill.

"Will Cornish Stingers be able to be taxed as a beer in the future? Policy change, exemption, and provisions often take time, but we remain upbeat."