Wholesalers welcome action on illicit trade

Government Budget commitment to tackling tax and duty fraud in wholesale applauded by FWD

The government’s commitment to tackling tax and duty fraud in wholesale through the creation of a UK-wide Anti-Illicit Trade Group, announced in the Budget, has been applauded by FWD. The setting up of the group was a key recommendation of the All Party Parliamentary Group on Illicit Trade, which heard extensive evidence from FWD as part of its inquiry into fraud. FWD will be meeting Exchequer Secretary Robert Jenrick in  the coming weeks to discuss the next steps in tackling the illicit trade.

FWD Chief Executive James Bielby said: “With duty rates on wine and white ciders rising next year, and uncertainty over post-Brexit border controls, the opportunity for widespread fraud will increase. Focusing resources on enforcement activity to remove criminals from trading in illicit and non-duty paid goods is something we have long campaigned for and is great to see the government listening. We look forward to working with the task force to ensure that both public finances and distributors do not lose out to fraudulent traders.”

Duty and tax fraud on alcohol cost the Exchequer £1.2bn in 2016/17, with FWD wholesale members losing sales to criminal operations. The introduction of the Alcohol Wholesaler Registration Scheme in April 2017, which FWD pioneered, has gone a long way to returning sales to legitimate channels, but the problem persists in other commodities such as tobacco. The soft drinks industry levy, introduced this year, has also created an opportunity for fraud in the soft drinks market.

While welcoming the Low Pay Commission’s recommendations for an increase in the National Living Wage, FWD says that with around 20,000 employees earning the NLW for over-25s, its members face a £15.8m direct increases in their annual wage bills from April next year, even before factoring in maintaining pay differentials. “For low-margin businesses, above-inflation rises in wage costs are very hard to absorb, especially at a time when prices are expected to rise in the immediate aftermath of Brexit,” Bielby said. “We welcome the review of the Low Pay Commission’s remit, and believe the NLW rates should be set independently of government, and be based on a proper assessment of their impacts on business and the economy.

FWD also welcomed the clarity around the introduction of new duty rates for white cider, which was announced last year. The new rates will apply from February 2019, giving wholesalers time to sell through current stock. 

There was also welcome news with the confirmation that fuel duties will continue to be frozen. “At a time when operational costs will inevitably increase post-Brexit, this announcement is positive for the wholesale distributors who play such a valuable role in society, delivering food to all aspects of life, in every postcode very day,” said Bielby.

The Chancellor resisted calls to introduce a coffee cup levy, instead preferring to address issues through reforms of the Packaging Producer Responsibility scheme. “It is important that PRN reform does not disadvantage wholesalers serving small businesses as any increases in cost will be passed on down the supply chain,” said Bielby. “We believe Defra, not the Treasury, is best placed to make policy decisions on packaging issues and will work with them over the coming months to ensure PRN reform meets its important environmental objectives.” 

budget duty Federation of Wholesale Distributors fraud FWD Government Illicit trade James Bielby National Living Wage wholesale