Budget breakthrough on duty fraud

The Federation of Wholesale Distributors has given a warm welcome to an announcement in the Budget that new measures are being put in place to stem one aspect of duty fraud in the UK alcohol market – particularly as it concerns the beer market.
HM Revenue Customs announced today that it is clarifying its guidance to tighten up the verification of claims for drawback of excise duty.
“This is a positive step forward in our long fight to protect wholesalers’ legitimate beer sales,” said FWD director general John Murphy. The beefed up requirements come into effect on April 1 and demand more information from traders using the drawback system. In particular they must provide the clearest possible evidence that the goods are UK duty paid.
“We have long held the view that fraudulent use of the drawback systems is a key element that is fuelling illicit beer sales in our market,” said Murphy. “Until now it has provided a fast-track repayment of the UK duty on consignments of beer placed in bonded warehouses that are notionally destined for export. Much of this beer is then diverted back into the UK and sold at unrealistic prices that are underpinned by the duty fraud.
“Although there is modest legitimate use of the system, volumes have burgeoned inexplicably over the past year or two. This has caused HMRC concerns that the existing procedures were vulnerable to systematic abuse.
“FWD has been co-operating intensely with HMRC over past months to tackle this particular element of duty fraud.
“We therefore hope that this latest move will stem the flood of illegal beer into the marketplace, as well as protecting the tax revenue to the Exchequer.
“However, while the drawback facility will not be withdrawn at this stage, HMRC says it will be kept under careful review – holding out an implicit threat that it could be abolished if the situation does not improve,” Murphy concluded.

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