Buying group Sugro is calling for stronger penalties against operators circumventing the sugar tax and flooding the market with cheap imported soft drinks.
The buying group told The Grocer this week that its members’ soft drinks sales were down 15% for the year to the end of June. Head of trading Yulia Goodwin said the group believed this was due to its members not being able to compete with importers who are avoiding the Soft Drinks Industry Levy (SDIL).
“Unfortunately there is still a lack of clear policy on compliance and little proof of sugar tax levy reinforcement on importers bringing stock from outside the UK,” said Goodwin. “We believe there needs to be a stronger compliance system with the imposition of high penalties on any non-legitimate importers trying to sell products without paying the full sugar levy. This would give legitimate wholesalers a level playing field.”
The FWD and the BSDA warned the introduction of a sugar levy would lead to a rise in illicit trade when it was introduced in April 2018.
“FWD is receiving regular reports of suspected SDIL fraud on imported product, with an increase in non-GB stock being sold in the fast food sector,” said FWD CEO James Bielby. “Price would indicate that much of this is non-levy paid.”
BSDA director general Gavin Partington added: “We said the levy was likely to lead to a rise of illicit trade. There is some anecdotal evidence of it taking place, but it is hard to assess the scale. There was a study that showed there was potential for up to 20% rise in illicit trade when the levy was introduced. We are working with the FWD and have argued for greater government investment in resources as well as more co-ordination and resources to support HMRC’s effort.”
HMRC confirmed there were currently 40 live investigations underway relating to this issue.
These have been based on specific intelligence as well as a risk-based approach. HMRC has also given mandatory SDIL training for excise compliance teams. “There are a range of penalties that HMRC could apply dependent on the circumstances and the enforcement and application of these provisions are covered in the Customs and Excise Management Act 1979,” said a spokesman. “HMRC has implemented a compliance strategy for the Soft Drinks Industry Levy consistent with our wider Promote, Prevent and Respond approach to compliance. We remain focused on helping businesses get it right”
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