Beer Tax Fraud Inquiry: MPs tell Government the case for beer tax stamps is 'extremely problematic' and 'premature'

16-Jul-2012 - Last updated on 26-Apr-2021 at 18:57 GMT

Beer Tax Fraud Inquiry: During a consultation on the proposed policy of beer tax stamps, Peroni brewer SABMiller told MPs the process would significantly impact production and distribution in the UK

Tax stamps on every bottle or can of beer would be 'extremely problematic' and the case for it is 'premature' when tax fraud enforcement options remain open to HMRC, according to a panel of MPs who reported to the Government yesterday.

The All-Party Parliamentary Beer Group (APPBG) formed an inquiry to investigate the issue of beer tax fraud in the UK. Her Majesty's Revenue and Customs (HMRC) claims the issue costs the UK nearly £1.2bn a year in lost taxes as a result of illegal production, counterfeiting and smuggling.

Reduced tax

MPs told ministers if beer tax was less and was closer aligned to neighbouring European states the financial incentive of those engaged in the illicit production of alcohol would be 'significantly reduced'.

However the inquiry argued a 'step change' was needed in relations between HMRC and the beer industry to better measure the scale of the problem in the UK. The British Beer and Pub Association (BBPA), which recently submitted a ten-point plan to tackle beer fraud, disputes Government estimates on the amount of beer consumption that is illegal.

Ineffective

The inquiry, which began in May, was designed to measure the nature and scale of the problem and the current strategies of enforcement and proposed policies to tackle the issue.

Following an HMRC report in February, the organisation declared it was renewing its Alcohol Fraud Strategy and was now unable to tackle the level of illegal activity through enforcement alone and would instead turn to legislation.

The panel of MPs, which visited Dover to see the policies in action, described the current strategy as correct but 'ineffective' and said there was 'little point' in introducing new measures without better enforcement.

Extremely problematic

The APPG findings will now be fed into a wider Government consultation, announced in the Budget earlier this year, on its plan to introduce fiscal stamps on all beer containers below 10 litres.

MPs described the policy of fiscal marks on beer as 'superficially simple' but 'extremely problematic'. They called on Ministers to keep the strategy as a backup but only if other measures fail.

SABMiller, the brewer of beers such as Peroni and Miller Draft distributed under Miller Brands in the UK, had been among businesses invited to the inquiry. The company had presented a video of its beer bottling plant which it said runs six times faster than the comparative spirit process where tax stamps need to be added.

Gauging opinion from across the industry, the APPG appears to have been won over by arguments on the negative impact beer tax stamps would have on the beer industry and the knock-on impact on pubs, restaurants and other hospitality businesses.

The wider Government consultation ended on 25 June but is yet to report as the APPG was given more time to conclude its inquiry.