High duty rates foster alcohol fraud in UK
country an attractive den for fraudsters as the industry and
government prepare to up their battle against bootleg booze.
Britain's higher import tax on alcohol compared to other European Union (EU) countries offers more incentive for fraudsters to try and get their products into the country unregistered, said Edwin Atkinson, director general of the Gin and Vodka Association to www.BeverageDaily.com.
"In general terms the difference between France and Belgium is relatively small compared to France and the UK," said Atkinson.
He said the UK's import taxes for alcoholic drinks were around twice as big as those in France, meaning "it is in the fraudster's interest to attack high duty rates in the UK".
The EU Council of Ministers agreed in April this year to raise the minimum alcohol duty rates set back in 1992, and work towards greater harmonisation of rates between members to avoid fraud and smuggling on the market.
But, a Commission spokesperson said these were unlikely to come in until next year and complaints from 12 countries, led by France and Italy, meant wine was not included.
Atkinson's comments on UK import duty come only a short time after police detected an illegal spirits distillery in Oldham, near Manchester.
Officers involved in the raid said it was "one of the biggest they have ever discovered during their time in the force". A large bottling plant was also found as part of an "ongoing investigation", according to the UK customs office, HMRC.
Helen Danson, regional spokesperson for HMRC, said the estimated tax loss on the seized products was £690,000, though total losses may be millions of pounds because police suspected the distillery had been operating for up to 18 months.
Food Standards Agency samples found no methanol contamination in products seized, which included Tamova, Kommissar and Hanacka vodka brands, but that stated alcohol levels were wrong and differed from those stated on genuine versions.
"The seizure in the north of England is one example of what's going on," said Atkinson, who added that the find was more disturbing because it was a production facility and not just people trying to avoid import tax with ready-made products.
Yet, he said while it was "very foolish to say that there's no fraud", the industry and government has increased the fight against it in recent years. "There's much less evidence of methanol contamination this year than two years ago."
Now, drinks makers and customs officials are preparing to go even further by introducing a duty stamp system early next year. A stamp system is already used by a number of other EU countries.
The stamp, which must be fixed to a product before it can be sold in Britain, will indicate whether or not the producer or importer has paid tax on the product. The scheme applies to wine, spirits and made wine that contains more than 30 per cent alcohol by volume.
Atkinson welcomed the move, but said a reform of duty rates was the main way to cut the incentive for alcohol fraud in the UK.
He said he had helped to negotiate a deal with the government to keep industry costs down on duty stamps, which should cost the industry £6-7m next year and then £4m in following years.
Initial plans would have forced drinks makers to make a duty payment to get the stamps, costing them up to a combined £75m in the first year and then £54m every year after that.
The UK customs office is expected to produce alcohol fraud figures for the past year in the next couple of months.
