More prosecutions needed to cut £1.2bn alcohol fraud

By Mike Stones

- Last updated on GMT

Related tags Hmrc

Tasty but is it legal? Alcohol fraud is estimated to cost the economy £1.2bn a year
Tasty but is it legal? Alcohol fraud is estimated to cost the economy £1.2bn a year
The government should step up prosecutions of alcohol smugglers who cost the Treasury £1.2bn/year, according to an influential committee of MPs.

The Commons Public Accounts Committee (PAC) warned today (August 29) that no duty is paid on up to one-in-10 cans of beer consumed in Britain. But there are only about six successful prosecutions for non payment of duty each year.

Richard Bacon, Conservative MP for South Norfolk and a PAC member, said: “Alcohol fraud is big business. The department​ [HM Revenue and Customs] estimates that the gap between taxes due on alcohol and the amount actually collected might be as large as £1.2bn.

Duty evasion

“HMRC's drive to tackle alcohol duty evasion is being seriously hampered by a lack of information.”

Bacon said it was “unacceptable”​ that HMRC has still to produce an estimate of the tax gap for wine, despite a commitment to this committee’s predecessors to do so.

Without reliable information about the scale of duty evasion for each category of alcohol (beer, wine and spirits), the HMRC “cannot tailor its approach to target its efforts to tackle evasion to maximise value for money”,​ said Bacon.

“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,”​ he added.

Reluctant to prosecute

But the MPs claimed the HMRC “seems to be reluctant to prosecute offenders”.​ Achieving only six successful convictions a year over a recent four-year period “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,"​ said Bacon.

Also, HMRC does not make best use of intelligence and technology to detect and prevent alcohol duty evasion, he added.

But HMRC said its anti-fraud strategy was leading to more prosecutions. Its chief executive, Lin Homer said: “HMRC's performance in tackling alcohol fraud is measured by the combined impact of both civil and criminal proceedings on alcohol duty evasion – which increased significantly when the strategy was introduced."

It is currently consulting on a range of measures to reduce alcohol duty fraud, including a proposal to introduce fiscal stamps for beer. Bacon said this approach appeared to have been successful in reducing duty evasion on spirits.

The committee explained its views in its latest report on HMRC’s progress in implementing the revised Renewed Alcohol Strategy.


Alcohol fraud in numbers

  • 28,000 – number of truckloads of illicit beer estimated to travel UK motorways each year.
  • £100M – value of lost tax on spirits
  • £600M – value of lost tax on beer
  • 450M –  litres of beer exported to the continent each year
  • 180M litres – beer illegally reimported.


Source: HMRC

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