The Federation of Wholesale Distributors has urged brewers to join an industry-wide effort to tackle alcohol duty fraud by introducing integral fiscal marks to cans and bottles of beer.
Giving evidence at the House of Commons Public Accounts Committee meeting to discuss HMRC’s alcohol strategy last month, FWD chief executive James Bielby made the case for producers, wholesalers and retailers taking joint responsibility for the illegal sale of beer, by adding duty-paid marks to all products intended for sale in the UK.
He told the Committee that the most efficient way for HMRC to prevent the illegal alcohol trade was to prevent the product reaching the market in the first place, rather than trying to identify it later on. “If you look at the figures,” he said, “There’s about 500m litres of beer exported to the EU each year from the UK, yet the legitimate market for that product is probably about 150m litres. So the rest of that product is diverted back into the UK market without the duty being paid.” He stressed that duty-paid stamps at the point of manufacture would be no more onerous for brewers than any other date or price marks they already put on product during the canning and bottling process.
However, Brigid Simmonds, chief executive of the British Beer amp; Pub Association (BBPA) that represents the UK’s brewing industry, not only refuted the claims that only a small proportion of the beer exported to the Continent actually stayed there, but warned that fiscal marks would add a huge financial burden to the industry.She said KPMG were preparing a report on the extent of export sales and added: “Beer consumption is down by 25% in the last six years and seen a 42% increase in tax. Brewers only make 1p per pint profit in this country. Fiscal marks would wipe out that profit.”
HMRC’s consultation process will end in June. However the earliest duty marks could be introduced is likely to be as part of the Finance Bill that is not due to be tabled until 2014.
And in another meeting MPs and peers learned of the dangers of allowing alcohol fraud to continue unchecked. Attendees at a meeting of the All Party Parliamentary Wholesale Group in Westminster heard about the scale of duty fraud and the effect it is having on legitimate wholesale businesses, and discussed the recommendations put forward to prevent a revenue loss measured at £500m a year on beer alone.
Peter Latham, representing HMRC, told the group that best estimates pointed to one in 10 cans and bottles likely to have avoided duty. Latham said that the criminals involved in duty fraud used complex supply chains to avoid duty on large amounts of alcohol. Whilst HMRC has taken robust action to tackle the problem, he said their ability to tackle widespread criminal activity was limited. The Government has recognised that radical change is needed, he said.