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Duty-free in UK?

Published:  23 July, 2008

By Christian Davis
Producers and importers may be able to sell their goods to UK consumers ex-cellar door after a landmark decision by the European Court of Justice.

Retailers and mail-order companies with a base in continental Europe also look set to capitalise on the decision, which is expected to allow people to buy alcohol and cigarettes at the duty levied in the member state, but without having to visit that state.

News of the European Court's decision, which is scheduled for 23 November, broke at the weekend, and the Wine & SpiritTrade Association chief executive Jeremy Beadles was fielding questions and doing interviews from 9am on Sunday morning well into the evening.

Beadles told Harpers: The impact is very positive for the consumer and negative for the Treasury, particularly on cigarettes, where it is much cheaper to buy them from Latvia. For the trade, it is mixed. There will be incentives for mail-order and internet companies to rebuild their business models, and it is good for retailers such as Tesco and Majestic, which are already in France. They would also be looking at a different model, more fulfilment.

For consumers buying a couple of bottles, those retailers will not be affected. It is an incentive to bulk up. It will lead to a completely unlevel playing field. No one really knows what the implications are for the trade,' said Beadles.

At the moment, around 7.1% of total wine sales comes in through the cross-Channel route, along with 11.8% of sparkling wine and 2.7% of spirits. The Treasury earns 15 billion from excise duty on alcohol and cigarettes. If it increases duty to make up for the loss of revenue, that may only further drive consumers to look beyond these shores for their drink and cigarettes.

The ruling came about as a result of a Dutchman who disputed paying Dutch tax on drinks he had bought from southern France. The European Court found in his favour, and while the British government is one of a number that has urged the court to reject the adjudication, about 80% of previous cases are upheld.