Duty calls

Paddy Whur examines MPs’ criticism of customs officials for failing to crack down on criminal gangs who dodge alcohol tax. He also highlights cases where one licensing authority has had success in prosecuting licensees for breaking the law in this regard.

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

MPs have undertaken research and feel that HM Revenue and Customs appear to be reluctant to prosecute offenders after they found just 20 successful cases had been brought over the four-year period to 2009/10.

The Cross Party Spending Watchdog also found that the HMRC 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. 

Richard Bacon of the Public Accounts Committee said: “HMRC’s drive to tackle alcohol duty evasion is being seriously hampered by a lack of information. Alcohol fraud is a big business. The department estimates 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. 

"It is unacceptable that the department is still to produce an estimate of the tax gap for wine, despite a commitment to this Committee’s predecessors to do so. The absence of information on this scale and nature of wine duty fraud undermines the basis on which the department directs its resources to tackling the problem.

"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”. 

We have been involved in a number of cases in Newham where both non duty paid and counterfeit alcohol has been seized by Trading Standards and Customs and Excise during raids of problem off-licensed premises.

As a result, Newham have been successful in prosecutions against operators who have been breaking the law in this regard. 

In addition we have been involved in two premises which have had their premises licences revoked as a result of repeated infringement of non-payment of duty.

Both of these cases went on appeal to the Magistrates’ Court where we represented the authority and in both cases, district judges agreed with the decision of Newham Council to revoke the premises licences. The appeals were dismissed and on both occasions the premises licence holder was forced to pay the costs of Newham in defending these Appeals.

It may well be that there is a lack of joined up working practices with Trading Standards and Customs and Excise in other areas, but it can be seen that Newham have had particular success this year through prosecutions and review/revocation of the licences of problem premises. 

Paddy Whur is a partner at Woods Whur. He can be contacted on 0113 234 3055 or by This email address is being protected from spambots. You need JavaScript enabled to view it..