New registration scheme set to clamp down on alcohol fraud

Alcohol duty fraud is about to get a lot harder thanks to a new registration scheme, writes Tan Parsons.

Illegal sales of alcohol cost the Treasury £1.3bn a year and leave a giant dent in legitimate wholesalers’ profits. But the criminals behind duty fraud face a clampdown later this year, thanks to the introduction of the Alcohol Wholesaler Registration Scheme.

From October 1, all wholesalers selling booze will have three months to register for the scheme. This will be a crucial period because HMRC will spend the following 15 months checking their credentials. From April 2017, retailers will be obliged to make sure that anyone from whom they buy alcohol is on the register.

The Federation of Wholesale Distributors (FWD) successfully campaigned for the government to adopt the scheme. It is now working with HMRC to ensure the scheme prevents duty evasion effectively without placing too much of a burden on law-abiding wholesalers.

FWD chief executive James Bielby said: “For years our members have said that the illegal trade in alcohol is the biggest threat to their business, and it’s not hard to see why – we regularly receive examples of suspiciously-low prices being offered by suspect operators, some of whom have been trading for several years.

“HMRC is clamping down on these through its enforcement work, but registration is a much more efficient and cost-effective way to drive out the criminals. It’s a huge boost to the profitability of law-abiding wholesalers and we are very pleased that the government has listened to us and introduced this scheme.”

Over the next nine months, it will be crucial that alcohol wholesalers become familiar with the government’s ‘fit and proper’ test requirements to join the register, and that they are ready to apply between October 1 and December 31.

“Beyond that lies the bigger task of making retailers aware that they must check that the wholesalers they buy from are registered, and be able to demonstrate that they have done so, from April 2017,” Bielby adds.

Bestway Wholesale’s trading director Martin Race says the register could not come into effect soon enough and that anything tackling black market booze is a positive step.

“Duty fraud is still big in certain areas,” he says. “It started off with super strength lagers, then standard lagers and now it’s in wine.”

He warns that some unscrupulous operators may still take the risk of going around the register, and that efforts to stamp out fraud must continue after the register begins. Duty stamps like those on spirits labels would be a great way to rein in the illicit trade, he believes.

“It’s had great success with spirits,” he says. 

Click next for the full timeline for the registrations of alcohol wholesalers.