Alcohol duty fraud costs British taxpayers £1.2 billion a year and HMRC is determined to toughen its stance.
It seized 127,000 hl of counterfeit alcohol in a large-scale clampdown on the problem in 2012-13 but admits it needs to do more as the level of alcohol fraud is “too high”.
To combat the illegal trade HMRC is considering a wholesaler registration scheme that would introduce a central register of all firms selling alcohol wholesale, including an online database.
HMRC said: “Honest businesses at wholesale and retail levels face unfair competition from others in the sector that source untaxed goods from organised criminal supply chains. It is evident that the wholesale sector has become a vital link for criminals to distribute their illicit products on to legitimate retailers.
“However, at present there is no register or any requirement to be approved by any UK authority in order to trade wholesale in alcohol products.
“This hampers effective risk assessment of the sector. It also weakens HMRC’s ability – relative to other parts of the alcohol supply chain – to remove a business’s approval to trade where that might be the most appropriate response to continued illicit trading.”
A wholesaler that dealt in alcohol without registration would be liable to “tough penalties and sanctions” and HMRC feels this would bring transparency to the whole process.
A registration of alcohol wholesalers, including new powers to remove or reject a business’s approval to trade in alcohol, was proposed by the Federation of Wholesale Distributors as a means to address high levels of illicit trading in alcohol evident particularly within the cash and carry and retail sectors.
FWD chief executive James Bielby said: “We are delighted our proposal has been taken forward, and we are working with HMRC to ensure that the new regime will do the job it is intended to do.
“Although it will place an administrative burden on members, it is one they are prepared to bear if it means that no one is able to purchase and sell duty-avoided stock.
“It is absolutely vital that the scheme does not legitimise operators who are currently trading illegally, and we will be pushing for strict criteria which ensure that only law-abiding wholesalers are approved for registration.”
HMRC said nearly all responses to a 2012 consultation on alcohol fraud were positive about the potential benefits of such a scheme, with many seeing the current lack of wholesaler registration as a blind spot for authorities in which criminals could more easily operate.
Businesses of all sizes have until October 28 to send responses to HMRC’s John Waller – firstname.lastname@example.org – giving their views on the potential effectiveness and feasibility of such a scheme.
The consultation document is here: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/230262/FinalAlcohol_Fraud_Next_Steps.pdf
The Government has also confirmed it will not proceed with beer fiscal marks or supply-chain legislation at this time. These were the other major proposals explored throughout the conversation.
Meanwhile HMRC will establish a joint alcohol anti-fraud task force comprising enforcement agencies and members of the alcohol industry to promote better understanding of the nature and scale of fraud and figure out how best to clamp down on it.