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Published:  23 July, 2008

By Jack Hibberd

In the run-up to Wednesday's Budget, significant' doubts were raised by the National Audit Office (NAO) over the estimates of the value of spirits fraud presented by both Customs and Excise and the Scotch Whisky Association (SWA). Although the details of the budget were not available as Harpers went to press, the SWA used the findings to call for a halt on the introduction of spirits tax stamps. The NAO says great care is needed in determining what reliance is to be placed on the existing figures. We agree and, given the difficulty for Government and industry of fixing a figure for fraud, it would be wrong to introduce tax stamps in the Budget,' said Gavin Hewitt, chief executive of the SWA The report states that although Customs and the SWA used similar methodology to come to their respective estimates - calculating the total level of spirits consumption and deducting from this the known level of legitimate duty-paid spirits - the differences arose mainly due to the different survey data used to estimate spirits consumption. A substantial degree of uncertainty attaches to any estimate based on surveys,' reported the NAO. Customs has presented the estimate as a single figure, whereas statistically it falls within a range of uncertainty.' The NAO calculated that the Customs figure of 600 million should properly be presented as a range between 330 million and 1,080 million. Likewise, the SWA figure of 100 million to 150 million should more properly be a range of 10 million to 260 million. This means the difference between the lower-end of the SWA estimate and the top-end of the Customs estimate is over one billion pounds. Edward Leigh MP, chairman of the committee of public accounts (the body responsible for asking the NAO to look into the matter), said: Current estimates are riddled with uncertainty. Clearly, it would be unwise for Customs to place too much reliance at present on their own figures. I urge them to develop a firmer estimate or at least one whose limitations are clearly recognised.' John Healey, economic secretary to the Treasury, seemed unbowed, however. Of course where there is fraud there is uncertainty about its scale...but this is not an argument for doing no analysis, still less an argument for taking no action to combat criminals,' he said. We are clamping down on criminal regimes in other regimes such as tobacco, oils and VAT, and must do so on spirits.' Hewitt called on Healey to accept the alternative proposals recently submitted by the SWA, The Wine and Spirit Association and other trade bodies. Scotch Whisky producers and others have put forward robust alternative anti-fraud packages without the heavy compliance burden of tax stamps,' he said.