We used to have a few breweries making lots of beer; now we have lots of breweries each making a small amount. That’s great news for consumers but a nightmare for the taxman.
I’ve long been fascinated by this because, in a past life, I had dealings with the section of HMRC (Her Majesty’s Revenue & Customs) that manages duty returns on alcohol. Back then, c.2003, it was quite possible for them to carry out a hands-on assessment of something like 98% of all beer production by visiting a handful of large brewing plants.
As the number of breweries has grown (we’re at about 1,500 now, from around 400 in 2002) I’ve often found myself wondering whether they bother inspecting at all, especially given that small brewers pay relatively less tax anyway thanks to progressive beer duty (PBD).
My assumption has been that microbreweries operate more-or-less on an honesty box system but I never got round to investigating with brewers, firing off FOI requests, and so on.
Now, as part of a wider point about fair play, this fascinating, tax-geek friendly blogpost from Dave Bailey of Hardknott Brewery has gone some way to answering my question:
Then, all of a sudden, the banking crisis and subsequent deficit hit hard. One day we decided to throw a whole tank full of beer away. I tried to contact the officer in HMRC and was told he had been moved out of the beer duty department and in fact HMRC wasn’t chasing the likes of us anyway. Funding to the officers was slashed and there was no one left to help us. We were almost told that we could do what we liked.
I wouldn’t be surprised if Dave was right and that some people had decided to take advantage of that situation. Fortunately for the Government this will probably be, to a certain extent, self-policing – that is to say, brewers will dob each other in.
Main image: HMRC by Steven Vacher from Flickr under a Creative Commons licence.