Alcohol suppliers have won significant concessions on plans to introduce tax duty stamps on bottles of spirits, which will reduce the cost of complying by millions of pounds.
The concessions come after new data released by Customs in last week’s pre-Budget report showed the level of spirits fraud is significantly lower than quoted by Chancellor Gordon Brown when he launched the scheme last year.
The government has agreed to adopt industry proposals to incorporate the stamp on the back bottle label rather than placing a strip on the closure, which would have forced
suppliers to buy and operate costly packaging machines.
In addition, spirits of less than 30% abv will be exempt and the government said it had accepted that there was a case for not attaching financial liability to duty stamps - lessening the administrative and cashflow burden on importers and traders.
The government claimed the concessions would reduce set-up costs from £23m to £7m and annual ongoing costs from £54m to £5m.
Brown announced plans for strip stamps in 2003, when the government claimed the level of revenue losses due to spirits fraud was 16%, or £600m a year, and rising. This was contested by the drinks industry and HM Customs and Excise has now revised the figures, showing that fraud peaked in 2000-01 at 13% rather than 16%, and was only 7% in 2002-03.
David Williamson, spokesman for the Scotch Whisky Association, said: “The industry has consistently argued that the level of fraud was lower than 16% and we welcome further work to get a reliable, evidence-based estimate.”
He said producers were still opposed to duty stamps, which are due to come into force in 2006, but would be involved in further discussions to minimise their cost.
Quentin Rappoport, director of the Wine and Spirit Association, said the association would prefer strip stamps to be dropped completely, especially after the government had acknowledged a decline in fraud. “However, we are very pleased the Chancellor has heeded our request that the anti-fraud effort should be targeted,” he said.
Claire Hu