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The UK should consider adopting a similar structure to the US' three-tier alcohol system to tackle alcohol duty fraud, a trade group has recommended. 

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The Wine & Spirits Wholesalers of America (WSWA) has written to the UK's HM Revenue & Customs arguing that having an independent wholesale tier would be the “most effective solution” for dealing with crime around alcohol tax and counterfeiting. The group was responding to an HMRC consultation launched in August on UK alcohol fraud. 

The US' three-tier system, set up after Prohibition, keeps alcohol producers, distributors and retailers seperate. It means producers can only sell to wholesalers, who then sell to retailers. Some state governments also control the distribution tier, and some the retail tier. 

“We would encourage you to consider the implementation of just such a system in the United Kingdom, with a mandated independent wholesale tier, as the most effective solution for the varied and difficult problems your country is facing,” WSWA's president & CEO, Craig Wolf, writes in the submission, made public yesterday. 

Wolf also argues that the three-tier system has been “remarkably effective at preventing monopolisation in the marketplace” as well as protecting the public from illicit products and stopping under-age sales. 

HMRC estimates that alcohol duty fraud costs UK taxpayers GBP1.2bn (US$1.9bn) a year. Earlier this month, a report estimated the tax gap on alcohol in 2011/12 was around GBP700m, or 6.6% of the total sector

HMRC's consultation – Alcohol Fraud: next steps – closes on Monday (4 November).  


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