Controversial plans for the introduction of tax stamps on every bottle and can of British beer would land Britain’s brewing industry with a £100 million annual bill, and shut hundreds of beer brands out of the UK beer market. This is the blunt message from UK brewers that is being delivered by the British Beer & Pub Association (BBPA) in its submission to the current HMRC consultation on the issue.
The BBPA submission says that the proposals “fail in terms of proportionality, effectiveness, fairness and almost certainly legality and therefore should not be taken forward.” Instead, HMRC should step up its enforcement and apprehend the criminal gangs responsible for duty fraud, with intelligence and support from the industry, says the submission.
The BBPA has also presented a legal opinion from global lawyer DLA Piper, which concludes that the Government’s current plans would be inconsistent with EU law, putting Whitehall on a collision course with Brussels over the issue. DLA Piper describes the current plans as “fundamentally flawed” and “wholly disproportionate,” saying that fiscal marks could be “replicated by fraudsters with great ease”.
Key concerns make the plans unworkable for brewers, pubs and customers alike:
•The cost of stamping every bottle or can would be around £32 million per year, placing a huge new cost burden on an already overtaxed British industry. Total costs could be as much as £100 million per year.
•Many smaller and specialist beer brands would vanish from import and export markets, reducing choice for consumers.
•British pub businesses will be damaged, as beer costs rise and choice is reduced.
The British beer & Pub Association also says the plans will not work when it comes to deterring fraud:
•Criminals and counterfeiters will find ‘fiscal marks’ easy to fake, and there would be a boost to ‘bootleg’ sales direct to consumers, from the back of white vans and garages.
•The Government doesn’t know the size of the problem. HMRC estimates imply a mid-point of £500 million in lost tax revenues, per year. The BBPA believes this is exaggerated and not credible. An independent report by KPMG has confirmed that current data is too weak a basis for such a costly policy, and that further work is needed.
•The proposals would be open to challenge under EU Law, as they are inconsistent with Articles 34 and 35 of the EU Treaty, as a new legal opinion from DLA Piper for the BBPA concludes.
•Supply chain legislation is unlikely to be effective, as individual products can’t currently be ‘tracked and traced’ through the system.
Brigid Simmonds, BBPA Chief Executive, comments:
“These proposals are bad for brewers, bad for customer choice and almost certainly in breach of EU law. And in terms of tackling fraud, they would simply not work.
“There is much that can be done to tackle fraud, and the industry is fully committed to working with HMRC on this. HMRC now has additional resources. What is needed is the stepping up of enforcement, using intelligence and data that the industry is very willing to provide, and is already providing. Measures that impose crippling new costs are not the answer.”
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