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PAC report on duty evasion - get tough on criminals and drop costly tax stamps for British business, says BBPA

29/08/12


Commenting on today’s Public Accounts Committee report on duty evasion, Andy Tighe, Director of Brewing at the British Beer & Pub Association, said:


“The Public Accounts Committee is right to say that HMRC must do a great deal more enforcement, get tough in prosecuting criminal smugglers, and develop better links with industry, something the BBPA has offered, though the setting up of a new task force, in our recent response to the Government’s consultation.


“We also agree with another key conclusion, that HMRC “does not have accurate data on the size of the tax gap.” Without reliable data on the scale and nature of duty evasion for each category of alcohol (beer, wine and spirits), the Government must not move forward with hugely damaging and costly plans to put a tax stamp on every bottle and can of beer. Tax stamps have been tried with spirits, and it is unclear how successful they have been – HMRC continues to seize more spirits than beer, in revenue terms.


“Overall, the PAC report supports the view that no one has a clear picture of the scale of the alcohol fraud problem - and HMRC can’t therefore judge the effectiveness of potential solutions. When it comes to policies that would damage British business and consumers, this is a worrying place to be. HMRC should drop its tax stamp plans, and work with everyone in the supply chain, through a new taskforce, to tackle the problem.”


Notes to editors:

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. Key concerns make HMRC’s tax stamp 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 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.


The BBPA also supports the view of the Committee that HMRC should look to use EMCS to its ‘full capability’ and measure the impact this has on duty fraud. EMCS (Excise Movement and Control System) has been developed at great expense, but is not being fully used. This EU-wide system records movements of duty-suspended beer on a central database. This system has resulted in significant costs for brewers, so it is disappointing that it has not been fully utilised by HMRC.


For more information on the issue of duty fraud visit www.beerandpub.com/dutyfraud.




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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