Alcohol Tax Fraud 'Costing More Than £1b' - Sky News

Customs officials have been criticised for failing to crack down on criminal gangs who dodge alcohol tax at an estimated cost to the Treasury of more than £1bn.

But MPs claimed HM Revenue and Customs (HMRC) appeared reluctant to prosecute offenders after they found just 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 sum collected at around £1.2bn, the Public Accounts Committee (PAC) criticised it for failing to assess the tax gap for wine despite previously pledging it would.

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

The PAC's Richard Bacon said: "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.

"[But] 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."

Mr Bacon also said: "HMRC's drive to tackle alcohol duty evasion is being seriously hampered by a lack of information.

"The department does not... 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.

"It is unacceptable that the department has still to produce an estimate of the tax gap for wine, despite a commitment to this committee's predecessors to do so."

The cross-party spending watchdog also found the department failed to make the best use of intelligence and technology to detect and prevent evasion.

Mr Bacon 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."

Andy Tighe, director of brewing at the British Beer and Pub Association (BBPA), said: "The Public Accounts Committee is right to say that HMRC must do a great deal more enforcement, get tough in prosecuting criminal smugglers, and develop better links with industry, something the BBPA has offered, through the setting up of a new task force, in our recent response to the Government's consultation.

"We also agree with another key conclusion, that HMRC 'does not have accurate data on the size of the tax gap'.

"Without reliable data on the scale and nature of duty evasion for each category of alcohol (beer, wine and spirits), the Government must not move forward with hugely damaging and costly plans to put a tax stamp on every bottle and can of beer."

HMRC's chief executive Lin Homer said: "HMRC welcomes the PAC report on alcohol fraud and is considering the findings."