HMRC “reluctant to prosecute” alcohol fraud

Members of Parliament have criticised the UK’s tax gatherers for failing to prosecute illegal alcohol smugglers who avoid paying duty.

The Public Accounts Committee of MPs found that only 20 successful cases had been pursued by HM Revenue and Customs (HMRC) in the four years until 2009/10.

It’s estimated that alcohol duty evasion is costing the government as much as £1.2 billion in lost revenue.

HMRC was also criticised by the committee for failing to understand adequately the scale of alcohol smuggling. The committee’s report said: “The department does not make best use of intelligence and technology to detect and prevent alcohol duty evasion.”

The committee continued: “The department needs to work more closely with the industry to improve its understanding of legitimate export markets, and improve how it works with the UK Border Force to gather intelligence on illegal alcohol imports.”

The MPs reported that three times the quantity of beer is exported to Europe than is sold there from UK sources. There are 450 million litres of beer exported free of duty each year to continental Europe, but 180m litres are then re-imported illegally, without any duty being paid.

Richard Bacon, one of the PAC members, said the reluctance of HMRC to prosecute “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.”