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Tackling Excise Duty Fraud: next steps


On 14/03/14 by Andy Tighe (Policy Director)


Despite the very welcome decision by Government not to proceed with tax stamps for beer, expectations remain high that the legitimate industry has a greater role to play in achieving a significant reduction in duty fraud and associated revenue losses.


Following a kick-off meeting of a new Government and Industry joint anti-fraud task force in January, six work streams have been identified to progress specific areas identified to better understand, communicate and ultimately reduce alcohol duty fraud. These are: The nature and scale of fraud; information and intelligence sharing; collaboration; technology; communication; and, retail practices.


The first meetings will take place at the beginning of April to agree the terms of reference and identify high priority activity and outputs for the next 12 months. Brewers are to be represented on the groups either directly or via BBPA. The groups will report back to the main taskforce which will, in turn, report back to the Minister (Nicky Morgan MP, Economic Secretary to the Treasury) on the progress made. It is also envisaged that there will be a formal report published at the end of the year.


This week, BBPA Council also endorsed the Best Practice due-diligence/know-your-customer template developed by BBPA through the Beer Duty Operations Panel with input from HMRC and agreed to implement this across the membership. This is a vital step in helping to secure supply chains although will only be truly effective if similar actions are also implemented both down and across alcohol supply chains. The BBPA will therefore be pursuing wider sign-up of this via the joint anti-fraud taskforce. This will be even more pertinent as HMRC has announced that due-diligence activity will become a condition of approval for alcohol producers and traders in duty-in-suspended products.


It is also worth highlighting that duty fraud has knock-on implications on other policy areas and particularly the proliferation of ‘voluntary’ local schemes to remove what are described as “cheap super-strength” beers and ciders, which risk stigmatising the beer category as a whole. From a beer perspective the duty alone (plus the VAT on the duty) on a 4-pack of 500ml cans of 9% abv beer comes to £5.23 on a ‘duty paid’ basis. Therefore, these are not particularly cheap alcoholic drinks to produce and retail, particularly compared to a 2-litre bottle of 7.5% abv cider which would pay 95p in duty/VAT.


In the final quarter of 2013, HMRC and Border Force seized 2.4 million litres of illicit alcohol, including 1.8 million litres of illicit beer, plus 58 HGVs following over 1000 interceptions.



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