New drink quotas to curb tax fraud

Reduced allowances for duty-free alcohol came into effect in October as part of measures to clamp down on diplomatic missions abusing their tax-free privileges.

The new quotas were put in place by the FCO after concerns were raised about high volumes of duty-free goods being purchased by some diplomatic missions.

Customs officers are investigating two former local staff members at the Uganda High Commission for tax fraud amounting to £2 million. The staff members allegedly resold duty-free goods intended for personal use.

It is thought other diplomatic missions may be involved in similar scams but HMRC was unable to comment further as the investigations are still ongoing.

In a statement, the FCO confirmed to Embassy that the new quotas were designed to prevent abuse but added that “the vast majority” of missions respected their privileges. Those flouting the rules were warned: “We take any abuse of the duty-free quota system very seriously and will take appropriate action against any mission and its staff found to have taken advantage of such privileges.”

The new quotas are unlikely to have a big impact on missions but some diplomatic associations are having to review their policy for supplying alcohol at networking events.

Alcohol is normally assigned to the mission hosting the chairmanship of the association but small missions may no longer be able to accommodate this. The YDL is considering applying for special dispensation from the FCO or the pooling of quotas among other committee members.

The restricted quotas would have a “very negative” impact on diplomatic suppliers, warned Patrick Doyle, Director of IDS, whose company is having to expand into new markets.

But he said he understood the reasoning behind the decision and would operate within the new constraints set by the FCO.

“The quotas are still quite generous and in keeping with those in other countries. We simply have to adjust to the new situation and maintain the highest levels of customer service,” he said.