Government must tackle beer duty fraud and treat wine as a separate issue, claims wholesaler chief

It was responding to today’s results of the Public Account Committee’s (PAC) inquiry into HMRC’s alcohol strategy. The PAC  said that the drive to tackle alcohol duty evasion is being seriously hampered by a lack of information, particularly on the scale of the fraudulent trade in wine.

However, the FWD believes that delaying action on beer fraud will cost the Treasury millions in lost duty, and FWD member wholesalers millions more in business lost to criminals.

FWD chief executive James Bielby said: “Our members have submitted figures, both to the PAC and the concurrent HMRC consultation, which reveal the huge impact of illicit beer on their profitability. In the first five months of this year, members’ sales fell by 12%, at a time when consumers are buying more from their local shops. There is a clear need for prompt action to prevent this enormous growth in illicit supply.

“The beer and wine supply chains are very different and should be considered separately. The eight beer brands which account for most of the £500m-a-year duty loss are brewed in the UK, by a handful of large suppliers.

"With wine, only 1%  is produced domestically, and the number of producers worldwide is vast. The case for action on beer is proven and the measures to prevent fraud are being explored. Six years ago fiscal marks were introduced on spirits, a measure which has helped prevent duty fraud, and we have urged HMRC to push forward with similar controls on beer, along with supply chain legislation and a registration scheme for wholesalers.”

The committee criticised HMRC for the lack of prosecutions for alcohol fraud which it said would act as a deterrent to fraudsters. However the FWD said that pursuing criminals them through the courts is an  expensive process, and believes tfiscal marks represent an effective alternative to prosecution.