The Government should freeze beer duty if it is to press ahead with tax stamps on beer to tackle alcohol fraud, the inquiry into beer duty stamps has heard, writes Gurjit Degun.
Kate Nicholls, strategic affairs director at the Association of Licensed Multiple Retailers, told the inquiry in Parliament: “When the last Government introduced spirits tax stamps in 2005/2006, they acknowledged the costs this would cause to the valuable exports industry and pledged to freeze spirits duty in order to compensate for those costs.
“We’ve not had a similar pledge about the costs that are going to come down the beer supply chain and to community pubs.”
Nicholls suggested that HM Revenue & Customs (HMRC) should issue a list of the products that should and should not have
She said: “It’s the fact that you’ve got confusion because you’ve got exceptions — not just because it might be a small producer, but there is talk in the consultation about only applying it to the most popular brands that have the biggest market share and feature heavily in the market.
“The barstaff [would] not only have to know the ones that are below 200,000 hectolitres, but they [would] also have to have a view on whether those beers are high market share.
“It seems easier to us if HMRC put out a list of those products that they think should carry a tax stamp — then every pub in the land could just have a check.”
British Beer & Pub Association chief executive Brigid Simmonds also highlighted issues of competition law.
She said: “We have approached the European Commission about this… the Commission makes clear that the 200,000hl limit was set for a specific purpose, which is to do with taxation, and, therefore, it wasn’t at all convinced that the specific purpose would be used for something else, which is not about taxation, but is about duty fraud.
“[This issue] would require more discussions.”
Costs for brewers
Small brewers transporting beer under duty-suspense in the UK will have to pay in excess of £14m per year if the Government does not go ahead with excluding those producing fewer than 200,000 hectolitres (hl), the inquiry heard.
Keith Bott, chairman of the Society of Independent Brewers (SIBA), explained that because bottled beer lasts for 12 to 15 months, brewers will often package beer nine months ahead. This means that they will have to pay the duty nine months up-front.
“That would cause a major cash-flow issue,” said Bott. “It would cost in excess of £14m.”
The Government consultation proposes that all goods with a fiscal mark would be “prohibited from moving under duty suspension arrangements within the UK”. The product would have to be duty-paid at the point of shipping from the packaging company. Brewers that produce less than 200,000hl will not be required to have a stamp.
Bott added: “Most of our members carry out packaging off-site, so if they were unable to move the product under duty-suspense to those packaging facilities and back, it would pretty much wipe out small-pack for the majority of small brewers in the UK, as well as a significant number of those packaging businesses.
“If it (duty suspension) is reliant on fiscal marks, then SIBA members would be excluded.”
Bott also suggested that those beers not requiring a fiscal mark should have some sort of mark that shows they are duty-exempt.
He said: “There’s an obvious concern that retail outlets will understand what they should be looking for and expecting from their suppliers, and how that is dealt with, because it could mean that retailers choose only to buy products with fiscal marks.
“There is a relatively simple solution: that all those beers not requiring fiscal marks carry a mark saying ‘This bottle is from a brewer producing less than 200,000hl’. That would replace the fiscal mark.”
Small brewers exporting from the UK do it directly, he said, knowing who the customer is abroad. “There’s no real opportunity for a chain to exist for any of that product to return to the UK under duty suspense.”