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Whey forward? Milk fat tax, dodgy tests and EU bureaucratic blocks

By Nicola Cottam , 14-Apr-2014
Last updated on 15-Apr-2014 at 10:36 GMT2014-04-15T10:36:05Z

Friction around EU tax laws and faulty product tests that have affected the whey trade for three years looks set for closure
Friction around EU tax laws and faulty product tests that have affected the whey trade for three years looks set for closure

There is light at the end of the tunnel for a European whey wholesaler, as a long-running dispute over EU import duties on milk fat in whey protein is finally coming to an end.

CLF Distribution has been at loggerheads with EU officials for the past three years following a routine test by UK authorities which resulted in a demand for high back duties on imported whey protein stretching back to 2008.

However it soon became apparent the test was faulty and threw up incorrect results when applied to products containing whey protein.

At the time UK Customs services agreed the test was erroneous but were legally bound to enforce the higher tax duty despite the damning evidence.

Bog standard

Chris Whitehouse, chairman at the Whitehouse Consultancy which represents the European sports nutrition sector (ESSNA) among others, said whey powder was a, “bog standard food product”.

“…I find it strange and very unusual that both the proposed test and relevant legislation are flawed. It could have huge ramifications for all companies importing whey protein to the EU and I would urge food manufacturers to take a look at their import duties to be certain they are being properly charged.”

Resolving the problem should have been straightforward but changing the legislation involved time-consuming independent scientific analysis and subsequent approval by EU member states, some of which did not agree on the amendments suggested by the European Commission.

Whitehouse explained: “Officials at the European Commission have given us their keen and enthusiastic support and have been proactive in their attempts to resolve this issue. The problem was convincing EU states, many of whom didn’t believe the test was flawed in the first place.

“The fact is a lot of businesses could be paying the wrong import duty costing millions of pounds – not to mention the major potential revenue losses for import markets where miscalculations on other products may have resulted in lower duty payments.”

Tax tribunal

The indecisiveness of EU members sent the case to a tax tribunal and has only been resolved recently through a lobbying campaign to exonerate CLF Distribution, involving the EU Parliament, national parliamentarians and US officials.

“The EU is now only a few weeks away from a provisional short-term resolution,” said Whitehouse.

“Members are close to agreeing a proposal that accepts the test is faulty so those facing huge fines have some recourse; it will also ensure responsible businesses are not penalised until an alternative scientific test for milk fat is proposed and adopted at the EU level.

In the long-term it will be a matter of deciding which test is acceptable and on an agreement from European decision-makers on a proposed amendment.”

Whey protein is a by-product from cheese manufactured ffrom cow's milk and generally contains a low but significant level of fat (milk fat). The level of milk fat in whey is measured to ascertain the amount of import duty that needs to be paid - as for any milk product.

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