Paying your dues: closing the excise gap

Paul Keane, Director, National Audit Office
James Bielby, Chief Executive, Federation of Wholesale Distributors
Christine Macqueen, Director Corporate Affairs, SICPA UK
A representative from HMRC
Further speakers to be announced
Ian Mulheirn, Director, SMF

This is the second in a series of three breakfast rountable eventss on how best to shore up the UK’s tax base.

Excise duties on alcohol tend to be levied for two reasons: to raise revenue with minimal distortion to productive activity, and to reduce socially undesirable behaviour. But duties are avoided and evaded, by smuggling and mis-reporting. The resulting tax gap reduces revenues at a critical time for the public finances, as well as having wider social implications and diverting economic effort into illegal and unproductive activities.

The recent NAO report identified the alarming scale of alcohol duty evasion at £1.2bn in 2009-10, up by 50% on the previous year.  The level is likely to increase still further without more effective action on the part of HMRC.  A substantial part of the problem stems from the fraudulent practice of exporting UK alcohol to avoid duty, and subsequently smuggling it back into the country. More generally, indirect taxes face some of the highest evasion rates of all taxes.