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By Paul Rowen MP - 9th February 2010
Paul Rowen MP writes for ePolitix.com ahead of his Westminster Hall debate on alcohol fraud.
Alcohol fraud is a significant and growing problem in the UK. The Treasury has recently stated that over £700m (around 7 to 12 per cent of the total UK market) is lost in excise and VAT. This is just for beer; losses for all types of alcohol are likely to be well over £1bn.
In April 2009 the government published its Alcohol Fraud Strategy, but the impact has, to date, been limited. Fraud is continuing to grow; the Federation of Wholesale Distributors are reporting losses on sales of beer of up to 40 per cent because of the illicit trade in alcohol.
The problem is most significant at the wholesale point of the supply chain. The majority of wholesalers are legitimate traders who are paying duties and taxes correctly. However illicit traders are selling alcohol straight from the manufacturers for cut price or full price without paying for duty or tax.
Often, goods are exported abroad, for example to France where there is a much lower rate of duty, but the products are then immediately diverted onto the UK market without payment of the higher UK duty.
There are a number of actions that can be taken to tackle this fraud at various points during the supply chain. Only seven people in 2008/09 were prosecuted for crimes relating to alcohol fraud and the number of prosecutions has fallen by almost 50 per cent since 2006. More must be done to prosecute when there is evidence of fraud.
Currently wholesalers are the only unregulated part of the alcohol supply chain. A registration of wholesalers would ensure only legitimate traders are able to supply alcohol.
HM Revenue and Customs should monitor where and to whom the brewers supply to in the EU as well as monitor UK supplies of duty-suspended goods. In addition, due to the international scale of the fraud, more should be done to work with our European counterparts to tackle this issue and share intelligence.
The government should introduce robust controls to make sure that goods are not exported abroad to avoid paying duties and check that documentation has not been produced fraudulently.
I have chosen to raise these issues through an adjournment debate because it is clear that the government's alcohol fraud strategy is failing. Given the state of public finances, the government can ill afford such revenue losses. More should be done to protect legitimate traders who are being harmed by this illegal trade. It is also a good place to start tackling the wider impact on public health caused by the availability of cheap alcohol.
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