Customs slammed over failure to tackle £1bn alcohol tax evasion

Yesterday MPs claimed HM Revenue and Customs appeared to be reluctant to prosecute offenders after they found only 20 successful cases had been brought over the four years to 2009/10.

Although HMRC has put the gap between the amount of alcohol duty due and the amount collected at around £1.2bn, the Public Accounts Committee criticised it for failing to assess the tax gap for wine despite previously pledging it would.

The cross-party spending watchdog also found the department did not have good enough information about how effective it was at tackling the problem and failed to make the best use of intelligence and technology to detect and prevent evasion.

MPs were told that criminals often export duty unpaid alcohol then redirect it back to the UK to sell.

Committee member Richard Bacon said: “HMRC’s drive to tackle alcohol duty evasion is being seriously hampered by a lack of information.

“Alcohol fraud is big business. The department estimates that the gap between taxes due on alcohol and the amount actually collected might be as large as £1.2bn.

“The department does not, however, have enough reliable information on the returns from tackling different types of alcohol duty evasion.

“It cannot say, therefore, whether a more effective targeting of its resources might not secure a better return on its investment.”

Mr Bacon said it was “unacceptable” that the department had yet to produce an estimate of the tax gap for wine.

“The absence of information on the scale and nature of wine duty fraud undermines the basis on which the department directs its resources to tackling the problem,” he said.

“Since the criminal gangs who perpetrate major alcohol duty fraud operate across national boundaries, the department needs to strengthen its intelligence by developing better links with the industry, the UK Border Force and other EU member states.

“The department seems to be reluctant to prosecute offenders. Over a recent four year period, there were successful prosecutions in no more than six cases a year.

“This sends the wrong message to perpetrators and the wider public about the department’s commitment to reducing alcohol duty evasion.

“It should give more weight to the deterrent impact of pursuing perpetrators through the courts.”

Retailers and consumers in Yorkshire have been warned to be on their guard against illegally imported alcohol.

Spirits in bottles 35cl or larger and of 30 per cent alcohol by volume or higher are required to have a UK duty stamp, indicating tax has been paid or is due to be paid on its contents. Stamps are not used on wine, beer or cider.

Graham Hebblethwaite, chief officer of West Yorkshire Trading Standards, urged retailers to stick to trusted suppliers and said customers should avoid suspiciously cheap products.

“It’s not rocket science – generally speaking if someone is offering you something at a price that’s too good to be true, without it being from an accredited source, it’s iffy and you should steer clear of it,” he said.