E-Malt.com News article: UK: Government considering introduction of duty tax stamps for beer

The UK Government is considering introducing duty tax stamps for beer, as the country's National Audit Office urges HM Revenue & Customs to do more to tackle duty fraud, British media reported earlier this week.

HM Revenue & Customs is in favour of applying a duty stamp system to beer, similar to the one that already exists on spirits. However, a spokesperson for the customs body confirmed on January, 25 that expanding the scheme to beer remains "subject to ministerial approval".

Over the past 12 months, HMRC has contacted various beer and distribution industry stakeholders to discuss a stamp system to reduce levels of duty fraud on beer. It estimates that duty may be unpaid on up to 14% of beer sold in the UK - a figure that is disputed by the British Beer & Pub Association. Within the coming months, HMRC is set to publish a full assessment of the cost of beer duty fraud.

News that a duty stamp system for beer is moving closer to reality comes as the National Audit Office (NAO) has accused HMRC of failing to make enough inroads into the problem of alcohol duty fraud. While duty tax has risen steadily on beer, wines and spirits in the past few years, GBP1.2 bln (US$1.87 bln) of alcohol duty revenue was lost in the UK's 2009-10 fiscal year, according to the latest figures.

Commenting on beer, a spokesperson for the British Beer & Pub Association (BBPA) said: "For beer, we don’t believe the problem of duty fraud is on the scale suggested by HMRC, and we are keen to work with them on establishing estimates that are credible."

Instead of duty stamps, the BBPA wants HMRC to make better use of an existing European Union database, designed to track movements of alcoholic drinks and protect against duty fraud. "We don’t support duty stamps, which are totally at odds with the Government’s objectives of reducing regulatory burdens on business," said the spokesperson.

"Spirits and beer cannot be treated the same - in terms of duty, a single bottle of spirits equates to 20 cans of beer, which comes in a vast range of products and package types. We are also opposed to supply chain legislation on breweries, which could also be very costly."

The NAO, which reviewed the first year of HMRC's new strategy on alcohol fraud, acknowledged that HMRC has achieved several of its objectives. But, it also criticised the customs body for failing to stem a supply of tax-free beer into the UK. HMRC has also failed to properly value the cost of duty fraud on wine, the NAO alleged.

In addition, the NAO highlighted a lack of criminal convictions achieved by HMRC, and a lack of communication with the drinks industry.

In response, an HMRC spokesperson said: "It is the impact of the criminal investigations on the organised criminality driving the fraudulent market that is important, not any specific number of cases." He said that HMRC continues to work on "an accurate estimate of losses from wine". In the 2010-11 UK fiscal year, HMRC seized 2.3 mln litres of illicit wine.

A spokesperson for the Wine & Spirit Trade Association argued that the duty fraud problem may "have been exacerbated by increases in tax in recent years". The Government's duty tax escalator provides for annual 2% above inflation rises on beer, wine and spirits up to 2014.


27 January, 2012