FWD claims duty fraud victory

The Federation of Wholesale Distributors has enthusiastically welcomed Government moves announced in the Budget to counter duty fraud on alcohol, after intensively lobbying for such action.

HM Revenue amp; Customs has revealed a raft of potent anti-fraud measures aimed at stemming huge losses suffered by both the Exchequer and the legitimate wholesale trade.

John Murphy, FWD director general, said: “This is really good news and fulfils our best hopes for strong HMRC action to crack down on duty fraud on alcohol. In fact, we could not have written the revised strategy better ourselves.

“We alerted the authorities to the escalating scale of the problem early last summer, and singled out abuse of the duty drawback facility as a prime mover of the fraud at that time.” Illegitimate claims for repayment of UK paid duty have been used to fuel the illicit trade in low-cost alcohol – mainly in beer and wine.

“We are delighted that HMRC has announced a withdrawal of the warehousing for export element of the excise drawback system from June 1 this year. Other strong action that should limit diversion fraud is also promised,” said Murphy.

The moves are part of a renewal of the Government’s strategy for protecting honest businesses and addressing tax losses through alcohol fraud. “Tackling Alcohol Fraud” will be implemented in stages through 2009-10, with the following key actions:
• withdrawal of the warehousing for export element of the excise drawback system on June 1, 2009, to guard against fraud and protect honest businesses;
• publication of a formal consultation on reform of the excise financial securities;
• introduction of a framework of allowable journey times for duty suspended movements to tighten up the system;
• the intention to bring forward regulations which will introduce a tighter system of regulation for Registered Excise Dealers and Shippers; and
• working with honest businesses to develop practical measures that will drive-out fraud and secure alcohol supply chains.

HMRC and the UK Border Agency are also renewing their operational response, and will focus their resources increasingly on tackling serious non-compliance and organized crime.

The full HMRC document “Renewal of the ‘Tackling Alcohol Fraud’ Strategy” can be found at:

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