The Federation of Wholesale Distributors is calling for the withdrawal of duty drawback on at-risk alcohol products after the government admitted a fifth of the money paid out was fraudulently claimed.
The excise duty drawback system allows companies to claim back duty on goods destined for export and not consumed in the UK. The Treasury has revealed that about £25m a year is lost to false claims for drawback on alcohol, tobacco and energy products. This equates to 21% of the £117.4m paid out in 2010.
The level of fraud revealed by the figures was alarming, said FWD chief executive James Bielby. "More than 20% of drawback going into the hands of criminals is a staggering amount," he said. "We urge the government to immediately review the drawback regime and discontinue the scheme for those UK products for which the amount exported exceeds the estimated demand in other EU states."
Bielby claimed the criteria used to assess the validity of drawback claims was weak. "The level of fraud demonstrates how poorly the current drawback regime is operating, and the view of FWD members is that it should be discontinued, as it is clearly easily exploited by fraudsters."
Parfetts executive chairman Steve Parfett claimed that the Treasury had massively understated the problem and that the proportion of fraudulently claimed duty drawback was closer to 95%. "There's an argument that there's a special case for brewers and distillers to get duty back for spoiled goods," he added. "Other than that it should be withdrawn."
The excise duty drawback system allows companies to claim back duty on goods destined for export and not consumed in the UK. The Treasury has revealed that about £25m a year is lost to false claims for drawback on alcohol, tobacco and energy products. This equates to 21% of the £117.4m paid out in 2010.
The level of fraud revealed by the figures was alarming, said FWD chief executive James Bielby. "More than 20% of drawback going into the hands of criminals is a staggering amount," he said. "We urge the government to immediately review the drawback regime and discontinue the scheme for those UK products for which the amount exported exceeds the estimated demand in other EU states."
Bielby claimed the criteria used to assess the validity of drawback claims was weak. "The level of fraud demonstrates how poorly the current drawback regime is operating, and the view of FWD members is that it should be discontinued, as it is clearly easily exploited by fraudsters."
Parfetts executive chairman Steve Parfett claimed that the Treasury had massively understated the problem and that the proportion of fraudulently claimed duty drawback was closer to 95%. "There's an argument that there's a special case for brewers and distillers to get duty back for spoiled goods," he added. "Other than that it should be withdrawn."
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