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Joanna Crellin, Her Majesty’s Trade Commissioner LATAC Region 7 May 2019, Santo Domingo, D.R.

The UK’s Alcohol Strategy: Our Experience in Tackling Illicit Trade. Joanna Crellin, Her Majesty’s Trade Commissioner LATAC Region 7 May 2019, Santo Domingo, D.R. Tackling Illicit Alcohol Trade - Introduction. FACTS

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Joanna Crellin, Her Majesty’s Trade Commissioner LATAC Region 7 May 2019, Santo Domingo, D.R.

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  1. The UK’s Alcohol Strategy: Our Experience in Tackling Illicit Trade Joanna Crellin, Her Majesty’s Trade Commissioner LATAC Region 7 May 2019, Santo Domingo, D.R.

  2. Tackling Illicit Alcohol Trade - Introduction • FACTS • In 2017-18, Alcohol consumption generated more than £11.5 billion in excise duty alone to fund vital public services (HMRC Measuring Tax gaps 2018). • UK is the fourth biggest exporter of beer in the European Union (EU). • Scotch whisky exports were worth £3.9 billion in 2014 (HMRC’s Alcohol Strategy). • ISSUES • Duty fraud deprives the public of those essential funds and undermines efforts to encourage responsible drinking. • Allows criminals to undercut legitimate businesses. • The problem of alcohol fraud has grown since the introduction of the single market in 1993 with the smuggling of small quantities of alcohol in private vehicles and vans from the near-continent. • Alcohol fraud costs the UK up to £1.2 billion per annum in lost tax revenues (HMRC 2011).

  3. 2005 and 2010 Strategies • Her Majesty’s Revenue and Customs (HMRC) first launched a “Tackling Alcohol Fraud” Strategy in 2005 focused on addressing spirits fraud and has been successful in halving the size of the illicit market in spirits since 2005/06. • In 2010, HMRC launched a renewed alcohol strategy aimed at tackling all forms of alcohol fraud. • The strategy increased the impact of HMRC’s enforcement activity on alcohol fraud by over 50 per cent. Achieved principally through disrupting and dismantling illicit supply chains, both in the UK and on the near-continent with the support of other tax authorities.

  4. Progress since 2010 - By working with Border Force, other enforcement agencies and the spirits industry, we have reduced the spirits illicit market from a height of 16% in 2000-01 to 4% in 2016-17.

  5. Progress Since 2010 cont.. • The2010 refreshed anti-fraud strategy included measures to: • Work with businesses to secure legitimate supply chains • Tighten the regulatory framework to prevent and reduce opportunities for fraud • Strengthen our operational response to alcohol fraud. • Also: • Paper-based systems for alcohol warehousing declarations with a system known as ATWD • - In 2011, the Excise Movement and Control System (EMCS) was launched making it easier for businesses to move alcoholic drinks within the single market, and for HMRC to identify fraud risks.

  6. A New Strategy I. Promoting good compliance — making it easier for businesses to pay the right duties II. Preventing tax losses — making it harder to make mistakes or to deliberately cheat III. Responding to those who cheat — increasing the impact of enforcement.

  7. Promoting good compliance • The Simplification of tax across disparate alcohol regimes • Digitising transactions in line with HMRC’s digital ambition for 2020 • Streamlining processes to support business growth — for instance, a quicker approval service for new and expanding businesses

  8. Preventing Losses • Under the 2010 strategy we are closing the gap between duty due and duty collected by: • Sharing more of what we know with legitimate business to help drive out fraud • Targeting communications and education to sectors impacted by particular risks • Supporting businesses to comply with their obligations through better guidance.

  9. Responding to Those Who Cheat • HMRC has set out to: • Continue to work with legitimate businesses to identify how criminals gain access to alcohol • Build a richer intelligence picture of the criminals targeting the UK alcohol regime • Invest in the skills and capability of our people.

  10. New Measures Taken After 2016 • I. Tackling alcohol fraud at source • II. Tackling smuggling and diversion of alcohol • III. Reducing demand for illicit alcohol • IV. Penalising fraud

  11. I. Tackling Alcohol Fraud at Source • In order to tackle fraud at the source HMRC: • Works with producers to prevent criminals from accessing their brands of alcohol • Works by improving their analysis of seizures and interceptions of alcohol so that they can provide businesses with more reliable evidence of fraud risks • Uses Excise Movement and Control System (EMCS) data to build a richer picture of how alcohol is moved within the single market

  12. II. Tackling Smuggling and Diversion Of Alcohol • There are an estimated 1,000,000 movements of alcohol each year between the UK and other EU Member States • UK ports of entry provide a ‘pinch-point’ for controlling the flow of alcohol illicitly into the UK • HMRC and Border Force have plans to continue increasing the volumes of risk-based interceptions and challenges.

  13. III. Reducing Demand for Illicit Alcohol • To reduce demand for illicit alcohol: • In 2016, HMRC introduced in 2016 the Alcohol Wholesaler Registration Scheme (AWRS) to tackle fraud. • From April 1 2017, companies whom buy alcohol to sell from a UK wholesaler, have to check that the wholesaler have been approved by HMRC and has an AWRS Unique Reference Number (URN).

  14. IV. Penalising Fraud • HMRC, Border Force and other agencies have an extensive range of sanctions available to penalise those involved in the fraud. • Current sanctions include: • Seizure of goods. • Assessment for the loss of duty. • Fines of up to £5,000 for selling illicit spirits not bearing the UK duty stamp. • Civil action, including winding up orders and bankruptcy. • Criminal prosecution with a custodial sentence of up to seven years. • And others.

  15. Working with Business to Deliver Our Ambition • The key to the UK’s success in tackling illicit trade will be to continue to work in partnership across government and with legitimate businesses trading in alcohol to help identify and tackle fraud. • The Joint Alcohol and Tobacco Consultative Group (JATCG) brings together representatives from across the alcohol industry, to work in partnership to improve the experience of businesses when they access our services. • The Joint Alcohol Anti-fraud Taskforce (JAAT) focuses on collaboration to tackle fraud, involving experts from across the alcohol industry and other UK enforcement agencies.

  16. THANK YOU! Joanna Crellin, Her Majesty’s Trade Commissioner LATAC Region 7 May 2019, Santo Domingo, D.R.

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