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Government plans announced in the Budget for tax stamps on every bottle of beer may be illegal – leading industry body

16/07/12


Controversial plans for the introduction of tax stamps on every bottle and can of British beer would land Britain’s brewing industry with a £100 million annual bill, and shut hundreds of beer brands out of the UK beer market. This is the blunt message from UK brewers that is being delivered by the British Beer & Pub Association (BBPA) in its submission to the current HMRC consultation on the issue.


The BBPA submission says that the proposals “fail in terms of proportionality, effectiveness, fairness and almost certainly legality and therefore should not be taken forward.” Instead, HMRC should step up its enforcement and apprehend the criminal gangs responsible for duty fraud, with intelligence and support from the industry, says the submission.


The BBPA has also presented a legal opinion from global lawyer DLA Piper, which concludes that the Government’s current plans would be inconsistent with EU law, putting Whitehall on a collision course with Brussels over the issue. DLA Piper describes the current plans as “fundamentally flawed” and “wholly disproportionate,” saying that fiscal marks could be “replicated by fraudsters with great ease”.


Key concerns make the plans unworkable for brewers, pubs and customers alike:


  • The cost of stamping every bottle or can would be around £32 million per year, placing a huge new cost burden on an already overtaxed British industry. Total costs could be as much as £100 million per year.
  • Many smaller and specialist beer brands would vanish from import and export markets, reducing choice for consumers.
  • British pub businesses will be damaged, as beer costs rise and choice is reduced.

The British beer & Pub Association also says the plans will not work when it comes to deterring fraud:


  • Criminals and counterfeiters will find ‘fiscal marks’ easy to fake, and there would be a boost to ‘bootleg’ sales direct to consumers, from the back of white vans and garages.
  • The Government doesn’t know the size of the problem. HMRC estimates imply a mid-point of £500 million in lost tax revenues, per year. The BBPA believes this is exaggerated and not credible. An independent report by KPMG has confirmed that current data is too weak a basis for such a costly policy, and that further work is needed.
  • The proposals would be open to challenge under EU Law, as they are inconsistent with Articles 34 and 35 of the EU Treaty, as a new legal opinion from DLA Piper for the BBPA concludes.
  • Supply chain legislation is unlikely to be effective, as individual products can’t currently be ‘tracked and traced’ through the system.

Brigid Simmonds, BBPA Chief Executive, comments:


“These proposals are bad for brewers, bad for customer choice and almost certainly in breach of EU law. And in terms of tackling fraud, they would simply not work.


“There is much that can be done to tackle fraud, and the industry is fully committed to working with HMRC on this. HMRC now has additional resources. What is needed is the stepping up of enforcement, using intelligence and data that the industry is very willing to provide, and is already providing. Measures that impose crippling new costs are not the answer.”


Notes to editors:

This story was trailed in this morning’s Financial Times, see the link below.


An inquiry by the All Party Parliamentary Beer Group into the issue is due to announce its findings and recommendations later today.


An HMRC consultation on tax stamps and supply chain legislation was announced as part of HMRC’s Alcohol Fraud Strategy in the Budget, on 26th March.


The Government estimates between 5 per cent and 14 per cent of total beer consumption is illicit, implying tax losses of approximately £500 million per year, but this is disputed by the industry. The proposals envisage a regime of fiscal marks (tax stamps) and/or supply chain legalisation, whereby suppliers would have to ‘track and trace’ their products.


Beer tax rates in the UK are considerably higher than in nearby states. Typical duty on a pint of beer in the UK is 55p, whereas in France it is just 7p.


The British Beer & Pub Association is the UK’s leading organisation representing the brewing and pub sector. Its members account for 96 per cent of the beer brewed in the UK and around half of Britain’s 51,000 pubs.


Resources

» Further information, including a BBPA Parliamentary Briefing, the full BBPA submission and legal opinion for DLA Piper is available on the BBPA website.
» Proposed tax might curb UK beer imports - Financial Times



Tags:

Supply Chain, Beer Duty, Duty Fraud


For further information contact:

Neil Williams
Head of Media
nwilliams@beerandpub.com
Tel: 020 7627 9156 / 07974 249 779


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