Cheap alcohol and tobacco

ECJ decision on duty fails to allay fears over UK’s uncompetitive tax rates The European Court of Justice today ruled that internet purchases of alcohol and tobacco from abroad can only qualify for duty where purchased when personally brought home by the buyer. Many had expected the decision to follow the Advocate-General’s recommendation to allow online purchases to be subject to local duty even if then brought across the border by a third party. This would have meant online shoppers in the UK could get their hands on cheap alcohol and cigarettes at much lower rates of duty, without setting foot on the Continent. In the wake of the Advocate General’s recommendation, many foresaw hard times for small retailers in the UK, with customers likely to buy from other EU countries online and circumvent the high duties imposed by HM Treasury on alcohol and cigarettes. 

Patrick King, Tax Principal at MacIntyre Hudson, comments: “Had the decision gone the other way, the Treasury would have faced a massive revenue loss as smokers and drinkers could easily get hold of cheaper foreign goods without paying UK duty. The danger may have passed for now, but this near miss highlights the uncompetitive nature of the UK tax regime when compared to the majority of our EU neighbours. Even without this, revenue from alcohol and tobacco duties is under increasing threat from both legitimate travellers and black market trade. As the world shrinks, it is not sustainable in the long term to impose high levels of tax on high value and easily transportable goods. “Today the Treasury can breathe a sigh of relief. Draft EU legislation, which could come in as early as next year, however, threatens to reverse this decision, meaning unhealthy influxes of cheap booze and cigarettes, as well as unhealthy haemorrhaging of the Treasury coffers.”