The Federation of Wholesale Distributors has reiterated its calls for the introduction of duty marks across all UK alcohol products after the government released new figures showing the relatively insignificant role played by fraudulent duty drawback in the rise of duty-avoided alcohol.
Responding to a parliamentary question this week, treasury minister Sajid Javid announced that in 2011-12, £93m was paid out under the drawback system, which allows retailers to sell UK duty paid stock abroad and claim back the duty from the government. HMRC estimates that 21% of this was fraudulently claimed - equating to £19.5m.
FWD chief executive James Bielby said the relatively small figures involved showed that overhauling the drawback system would have little impact on duty fraud, which is estimated to cost the Exchequer up to £1.2bn a year in lost revenue.
“It’s purchases from UK brewers via bonded warehouses that account for the vast majority of the loss, and the government must address this as it looks at preventative measures,” he said. “We believe the only way to effectively do this is to mark products intended for the UK market as duty-paid at the point of production.”
As one of a number of measures aimed at tackling duty fraud, brewers have argued for an end to the duty drawback system. However, they oppose the idea of adding duty stamps, such as those currently used on spirits, claiming they are costly and ineffective.
The government is expected to reveal its plans for tackling duty fraud in the Budget in March. The FWD is also calling for a new register of wholesalers.