‘Controversial’ alcohol duty stamp scheme axed

Following the spring budget last week (6 March), the UK’s alcohol duty stamp scheme has been scrapped – much to the relief of the drinks industry.

The scheme was implemented in 2006 to combat duty fraud and required businesses to fill paperwork on bottles sized above 350ml and with an ABV above 30% before releasing them onto the UK market – with bottles then needing to bear the duty stamp, seen as a pink sticker, to pass a UK excise duty point.

Since its inception, the scheme has come under criticism from the industry for creating a barrier between sustainable production processes and adding unnecessary extra costs, especially for small businesses.

Alan Powell for one, founder and co-ordinator of the British Distillers Alliance (BDA), has campaigned tirelessly on the issue and said the scheme “never had any legitimacy from the outset” and that the “lack of clarity in law about duty-stamped empty bottles being refilled” was a concern for the Alliance’s members.

Of the news to get rid of the scheme, he said: “As we have emphasised to HMRC policy officials and to ministers, the duty stamps regime introduced in 2006 was always controversial because there had been no fraud in spirits of any significance for almost 10 years prior to the law being passed.

“Astonishingly, senior civil servants had totally miscalculated spirits duty losses by £600 million [US$771m] per annum but instead of halting the planned law, HMRC ploughed on with dystopian measures to combat a fraud that did not exist simply to save losing face with their political masters who had been sold the scheme.”

The budget statement confirmed the closure of the scheme ‘following a review by HMRC’, which noted that its abolishment represented a ‘simplification for the spirits industry which has faced associated cost burdens and complexity.’

On the whole, the budget has received mixed reviews from the spirits industry, with the news that the impending tax hike (due to increase by 3% in August 2024) would be further frozen until February 2025, welcomed by many. However at the same time, many also believe that more should have been done to support the spirits and hospitality industries.

Industry reaction

Along with Powell, a host of other prominent figures in the UK spirits scene commented on the news.

Pal Gleed, director general of The Gin Guild, said: “I’d like to thank Alan Powell for his tireless campaigning on behalf of distillers on this thorny issue – this marks one of the few positives for the distilling industry in recent times.”

Andrew Nelstrop, CEO of the English Whisky Company, praised Powell’s “relentless” efforts in helping to “tidy up and modernise HMRC rules”.

Kathy Caton, managing director of Brighton Gin, said the move would improve the company’s “productivity and simplify our operations.”

Andrew Parson, co-founder of Sky Wave Distilling Company, also welcomed the removal of the “totally unnecessary scheme” which added “nothing but cost and complexity to an already besieged industry. Its abolition is entirely appropriate.”

And finally, Zane Chiswell-Rivas, founder of Essex Spirits Company, called the abolishment a “double win” for small producers and sustainability, as the stamp duty regime had “hampered innovation within packaging and sustainability”.