Beer duty fraud continues to worsen and the government has missed a golden opportunity to put a halt to it by shelving plans for “duty stamps” the trade told Wholesale News this month.
Wholesalers were voicing their concerns on the back of the Government’s decision to shelve plans for duty-paid fiscal marks that would identify cans and bottles that were duty-paid.
The Federation of Wholesale Distributors (FWD) had put forward the case for fiscal marks as part of its submission to the HMRC’s consultation last year. It argued that the marks, along with a wholesaler registration scheme, would help slash the £550m in duty revenue lost each year to illegitimate trade. However, while the treasury has decided to consult further on a registration scheme, similar to alcohol licensing for shops, it has decided not to press ahead with duty stamps.
In a survey of the wholesale trade, 87.5% of respondents said they thought the Government had missed an opportunity to stamp out duty fraud; 75% said beer duty fraud had increased, while 25% said it was as bad as in previous months. Not one respondent claimed to have seen it fall.
And the jury is still out on whether a wholesaler registration scheme will help put a stop to the criminal gangs selling illicit beer: 60 of respondents said they were unsure if it would make a material difference, while 40% said they thought it would make no difference at all.
One survey respondent commented: “Duty stamps are proven to be very effective with spirits, so there is no reason that the same would not apply to beers.” Another made the plight of the industry clear: “Legitimate wholesalers are losing millions of pounds in turnover of beer sales because we cannot match the prices of duty fraud stocks.”
Younus Sheikh, managing director of Bestway Wholesale Group, the UK’s largest independent wholesaler, told Wholesale News he was disappointed and dismayed by the Government’s decision not to introduce duty stamps on beer.
“The Government’s stance on duty stamps on beer is baffling to say the least. Here the government had a chance to stamp out fraud in the same way as it did for the illicit tobacco trade by abolishing plans for plain packaging. However the government’s decision has just given the illicit trade a charter for growth to the detriment of the legitimate supply chain. “
He added that Bestway was committed to working with UK suppliers and was keen to work with all parties to ensure the illicit trade in alcohol was brought down with all guilty parties facing the heaviest sanctions possible.
Martin William, managing director of Landmark Wholesale, added: “Duty Fraud on beer alone loses the government over a £1b in revenue a year. Despite this we see little help and support from HMRC which allows criminals to operate by defrauding the duty. Therefore legitimate wholesalers cannot compete in the market.
The Brewers also do little to help and continue to allow their brands to be abused. The FWD has tried hard to find solutions like duty stamping, which is why we are disappointed with the decision.
It would be good to hear from the Brewers what they intend to do to protect their brands and their legitimate customers.”
One group who was happy with the government’s decision was the British Beer and Pub Association that represent the beer suppliers. Brigid Simmonds, BBPA chief executive said: “This is great news. In setting aside plans for tax stamps on every bottle and can of beer, the government has listened, and stepped back from a hugely costly and damaging policy that would have hit jobs and growth. It again shows that following the beer duty cut in the Budget, the Government recognises the importance of beer and pubs to the UK economy, and the potential for increased beer exports, which have grown substantially in recent years.”