Speaking at the Beer Tax Fraud Inquiry in Parliament, panel member John Healy MP suggested to Graeme Colquhoun, Heineken’s UK’s head of legal, that it was “not difficult to see the potential legal challenges” to the controversial proposal.
“Yes, personally I think it’s very likely,” Colquhoun said.
A legal challenge could be based on a number of factors, the inquiry heard, including being a disproportionate measure against the scale of the problem, and restricting trade within the EU.
Colquhoun said a premium beer from Spain would be subject to a charge of 15p per unit as a result of the stamp. “That is a barrier to trade. That would make it unlawful.
“It’s incredibly hard to see you could have an effective duty stamp regime on beer that didn’t make it really difficult to import products into the UK, and that would be a breach of articles 34 and 35 of the [EU] treaty [relating to free movement of goods],” said Colquhoun.
Colquhoun also said a case could be made that duty stamps could require commercially sensitive information to be shared between suppliers and wholesalers, which may again be open to a legal challenge. Human rights legislation could also be used, he added.
Colquhoun said Heineken UK “absolutely does not turn a blind eye to duty fraud”. The company regularly shares information with HM Revenue & Customs, he said, and it even appoints its accountants KPMG to check the accounts of potential wholesale customers to ensure they are legitimate. He said the problem is a “criminal link” in the supply chain that allows beers to be smuggled back to the UK due to “weak enforcement”.
However, he was critical of HM Revenue & Customs’ assessment that beer duty fraud costs £500m, a figure he described as “crazily high”.
The Beer Tax Fraud Inquiry is headed by the All-Party Parliamentary Beer Group, and is set to report its findings to the Government this summer.