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Fraud: Excise Fraud

Answer

The Excise Movement and Control System (EMCS) is contributing to the revenue outputs set out in Her Majesty's Revenue and Customs' (HMRC) tackling alcohol fraud strategy. For the first time, HMRC and Border Force officials have access in real time to data on intra-EU movements of excise goods that help them better identify and target illicit movements of goods. Since the first phase of EMCS was implemented on 1 April 2010, there has been a significant increase in the revenue yield from registered consignees—businesses authorised to receive duty suspended goods. In their report on Progress with HMRC's renewed alcohol strategy, published in January this year, the NAO attributed this increase to the fact that some consignments of excise goods that would otherwise have been diverted and sold illicitly on the UK market are no longer able to escape detection.

The Warehousekeepers and Owners of Warehouse Goods Regulations 1999 (WOWGR) are making an effective contribution to reducing excise fraud as they guard against unsuitable persons gaining access to duty-suspended goods. Under the regulations warehouse keepers and owners of goods in warehouse are required to be approved by HMRC and are subject to rigorous scrutiny. Applications are rejected if the applicant

does not pass a fit and proper test. The current rejection rate is 40%. Once approved the approval may be revoked or varied at any time for reasonable cause, such as evidence of duty fraud. Where duty fraud is identified, the warehousekeeper/owner may be subject to criminal prosecution and/or heavy financial penalties. HMRC will seek to recover duty losses and may issue civil penalties.

The administrative reference code (ARC) is key to the effectiveness of the Excise Movement and Control System (EMCS) in helping to reduce excise fraud. Each movement of duty-suspended excise product can be identified by its own unique reference number on EMCS. This can be accessed 24/7 by HMRC and Border Agency staff at any time giving complete visibility to movements that was not available under the previous paper-based system. Any movement of duty-suspended excise goods that is not accompanied by a valid ARC is liable to seizure. Assessments for duty owing and penalties may also be raised.

Spirits duty stamps were introduced in 2006 as a key plank of HMRC’s original strategy to address alcohol duty fraud. Estimated revenue losses from spirits fraud were £320 million in that year. They reduced to £130 million by the end of 2009-10.

Secondary information

Type

Written question

Reference

738 cc206-7WA; HL1158

Session

2012-13

Subjects

Fraud Excise duties

Link

View this Written question on www.publications.parliament.uk