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‘£500m tax fraud’ must be tackled say MPs, but tighter controls, not duty stamps, are the answer

A backbench group of MPs and Peers yesterday (16 July) reported that beer smuggling into the UK is having widespread ramifications on business and society, but they conclude that introducing duty stamps on UK beer would be premature and  could be a costly mistake.

The All-Party Parliamentary Beer Group’s two-month inquiry into beer tax fraud heard stirring evidence from representatives of brewers, wholesalers, off-licences, pubs and enforcement officers of the corrosive impact of the trade in illicit beer.

Co-chair of the inquiry, Andrew Griffiths MP, said “Smuggling beer into the UK from France has become a highly profitable business.  As our duty differentials have increased, so, it appears, has the scale of the trade in illicit beer.  We’re not talking about chancers on day trips in white vans, so much as organised criminal gangs shipping lorry loads of beer through Dover every night, and netting £18,000 in duty alone, each time. It’s hurting legitimate businesses, as it’s undercutting them on its way into the supply chain, and once it has permeated the UK market some retailers are stocking it unwittingly, and risking their licences and livelihoods in the process. We came to the conclusion that introducing duty stamps would limit choice, add complexity and confusion, and possibly face a challenge in the European Union”.

The inquiry scrutinised HMRC’s proposed remedies.  These include introducing fiscal marks for all beer sold in the UK market, tighter supply chain controls for brewers and closing a loophole in the supply chain for beer by registering all wholesalers of alcohol.

Rt Hon John Healey MP, Co-chair, said “With perhaps one in ten cans and bottles of beer on sale in the UK not tax paid, it’s clear that the current system is failing to keep beer smuggling in check. New measures are needed, but the evidence we heard points to the current proposals for tax stamps as being neither proportionate nor targeted, and not necessarily effective.”

He continued “There’s some dispute about the size of the problem to be tackled, and we hope our report will spur all authorities and all businesses with an interest in disrupting the fraud now to work together closely to develop an agreed methodology for assessing it, and to collaborate to defeat it.  We’re calling on all parties to up their game together”.

The inquiry found unanimous support for proposals to close a loophole in the supply chain in alcohol, by introducing compulsory registration of wholesalers, and considerable scope for improved voluntary measures.  It also found that existing enforcement was not as effective as it could be, that not all anti-fraud measures were being used to their full effect, and that better co-operation between HMRC and other authorities, and trade associations, could disrupt fraud significantly.

 

17th July 2012

 

 

 

 

 

For further information, please contact Robert Humphreys, as below

 

 

Notes of the evidence heard by the Panel and additional background information are available to download from www.beertaxinquiry.co.uk