Preparing for my final board meeting as chairman of Landmark Wholesale, I looked back on the topics covered in my first one in November 1995.
High on the agenda at the time was the effect of duty fraud on legitimate wholesalers. One of my major regrets will always be that, despite a huge effort, the industry has not managed to solve, or even make any significant inroads into, this huge problem. Indeed, given the sums involved, the other interested party due to the loss of massive tax revenue should be the government.
“The problem of duty fraud is as bad as it has ever been”
Over the years, there have been several occasions where we appeared to see encouraging signs of either a solution or at least a willingness to address the problem, but it is as bad as it has ever been.
I recently attended a meeting with HMRC, the FWD and the ACS, to discuss the most recent proposals to address the issue and was genuinely impressed with the commitment of senior HMRC personnel to address the issue. Duty stamps on beer have not been rejected but remain under review, albeit with no prospect of introduction in the short term. One potentially significant development is the consultation on registration of wholesalers, originally raised by the FWD.
This issue is clearly being closely examined by HMRC and our discussions with them have been about how it can be made rigorous and meaningful - there is no point in additional red tape and cost for legitimate businesses if all it does is legitimise criminal organisations. I was therefore more than a little surprised, although not for the first time, at the BBPA’s reported comments on the need for “light touch” regulation - the last thing we need if we are to succeed in differentiating legitimate wholesalers from criminals. The brewers protest that they abhor duty fraud, but there is a real danger that such comments suggest that these protests are hollow, and that unrestricted sales help to keep their production lines running.
I hope that either their comments have been misquoted or they have misunderstood the implications, as in the long term, duty fraud (a problem they currently condemn from an abstract and theoretical standpoint) will badly damage them. Unfortunately, by that time real significant and substantial damage will have already been done to legitimate wholesalers.
Already, and while proposals are still under consultation, Parfetts has received communications from what I describe as an ambulance-chasing specialist, offering to help us massage our systems to ensure we comply with the new registration requirements. I have no idea why they think legitimate businesses should need such attention.
It is now essential that HMRC’s consultation establishes whether an effective system to distinguish the lawful business from the criminal can be devised which can robustly deal with attempts to hoodwink it. If so, proper robust controls should be introduced. If not, we need further measures - duty stamps, anyone?
Steve Parfett is chairman of AG Parfett & Sons
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