Revenue losses from illicit wine up to £700m, HMRC estimates

By Ellie Bothwell

- Last updated on GMT

Related tags: Hmrc, Tax

The size of the illicit spirits market is £120m
The size of the illicit spirits market is £120m
The revenue losses from the illicit wine market in 2011/12 were at least £350m and possibly as high as £700m, a new report from HM Revenue & Customs has estimated.

HMRC’s ‘measuring tax gaps 2013’ also estimated the size of the illicit spirits market to be £120m with an upper estimate of £490m in the same period, and the illict beer market share to be £550m.

Undermining

Chief executive of the Wine and Spirit Trade Association (WSTA) Miles Beale said: “For the first time, HMRC has published figures showing the size of the illegitimate trade in wine and its impact on the legitimate trade.

“Fraud is an area of great concern to our members. Not only does fraud undermine the competitiveness of legitimate businesses, it costs the Government and taxpayers’ vital revenue.  

“The WSTA will be raising the findings of the report with the Government to discuss their accuracy, to consider the reasons for fraud, including the impact of the alcohol duty escalator, and to look at solutions that support the legitimate trade.”

However, Brigid Simmonds, chief executive of the British Beer & Pub Association, said she was skeptical of the figures.

"While HMRC estimates for fraud are reducing, we have always had concerns that the figures tend to overestimate the scale of the problem for beer. We are working closer than ever with HMRC to tackle fraud, and there have been real improvements through tough enforcement, sharing information, and good detective work. There are some positive proposals in the HMRC’s latest consultation and we are committed to working even closer to ensure illicit sales are kept to a minimum."

Fraud

Fraud in the wine industry includes duty evasion and the supply of counterfeit alcohol.

Edward Troup, HMRC’s tax assurance commissioner and second permanent secretary, said: “The range of non-compliance behaviours revealed by these tax gap figures underline why it is so important for HMRC to step up our wide-ranging activities against the minority who aren’t paying what’s due, whether they are SMEs, individuals, big business or organised criminals.

“This isn’t just critical for the nation’s finances: it’s also important to protect the vast majority of honest businesses and individuals from being cheated by the unscrupulous few.”

Related topics: Wine

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