Act now to stop beer fraud – and leave wines out of it

The Government must immediately tackle the growth of beer duty fraud and treat wine as a separate issue, or legitimate wholesalers and retailers will be forced out of business by illegal beer distributors, the FWD said yesterday (29 August).

While the Federation welcomed this week’s results of the Public Account Committee’s (PAC) inquiry into HMRC’s alcohol strategy, which seeks to prevent a £1.2bn annual tax loss to duty fraudsters, it stressed any delay could be disastrous.

The PAC inquiry noted that the drive to tackle alcohol duty evasion was being seriously hampered by a lack of information, particularly on the scale of the fraudulent trade in wine.

FWD believes while this data is needed to form a cohesive strategy, delaying action on beer fraud will cost the Treasury millions in lost duty and FWD member wholesalers millions more in business lost to criminals.

FWD chief executive James Bielby said: “Our members have submitted figures, both to the PAC and the concurrent HMRC consultation, which reveal the huge impact of illicit beer on their profitability. In the first five months of this year, members’ sales fell by 12%, at a time when consumers are buying more from their local shops. There is a clear need for prompt action to prevent this enormous growth in illicit supply.

“The beer and wine supply chains are very different and should be considered separately. The eight beer brands which account for most of the £500m-a-year duty loss are brewed in the UK, by a handful of large suppliers.

“With wine, only 1% is produced domestically, and the number of producers worldwide is enormous. The case for action on beer is proven and the measures to prevent fraud are being explored. Six years ago fiscal marks were introduced on spirits, a measure which has helped prevent duty fraud, and we have urged HMRC to push forward with similar controls on beer, along with supply chain legislation and a registration scheme for wholesalers.”

PAC criticised the lack of prosecutions for alcohol fraud which it said would act as a deterrent to fraudsters.

Bielby said: “Criminals are trading non-duty-paid beer with little fear of being caught. However, pursuing them through the courts is a long, expensive and resource-heavy process, and we believe that measures to prevent the fraud before it occurs – such as fiscal marks – represent an effective alternative to prosecution.”

PAC questioned brewers’ claims that fiscal marks would cost “a penny a pint” and recognised that beer suppliers already manufacturer, store and distribute a multitude of bottle and can variants for different routes to market and promotions. FWD called for further investigation of the true cost of compliance.

**What’s your view?

Wholesale News would like to hear from any cash and carry operators who believe either that the government must press ahead now to prevent duty fraud on beer, and those who think wine duty fraud should be tackled at the same time.

What will be the impact on your business if the government decides to delay action until it has collected wine duty fraud data?  

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