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Tackling excise fraud...a big issue


On 19/09/13 by Andy Tighe (Policy Director)


Ever wondered how much illicit alcohol and tobacco is seized by the authorities and what they are doing about it? Well the answer is a lot on both counts as highlighted by the first quarterly bulletins on tobacco and alcohol smuggling being published by HMRC as part of a new communications exercise on the issue.


Between April and June, 1.8 million litres of beer, 0.5 million litres of wine and over 90,000 litres of spirits were seized with a combined revenue value of £4.6 million (£1.8million for beer, £1.6million for wine and £1.1million for spirits). These are big numbers and clearly the legitimate industry has a key role to play in helping HMRC reduce the level of fraud and the opportunities for fraud. Indeed the current Government consultation on the next steps to tackle fraud includes a number of actions proposed by the BBPA alongside proposals for a registration scheme for wholesalers and a new due-diligence requirement for producers and traders in duty-unpaid goods.


However it is the figures for tobacco that are truly astounding. In the last quarter alone, over 400 million cigarettes and 103 tonnes of hand-rolling tobacco were seized with a revenue value of £137 million. This is despite a huge focus on this area for a number of years and measures such as fiscal marks and supply-chain legislation being in place for a number of years.


For both alcohol and tobacco a major incentive for fraud is the very high excise duty rates in the UK, particularly within a single European market with little by way of border controls. Tax harmonisation has not happened, the EU has expanded and disparities with our nearest European neighbours remain very significant and in many instances have grown.


Clearly HMRC has a hugely difficult job and, like us, I am sure many officers would have been happy with the Chancellor’s decision to cut beer duty in March and finally start to erode fraudsters’ profit margins.



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