Laws brought in this summer to crack down on duty-avoided alcohol have failed to deter fraudsters, with some wholesalers reporting that the problem is "worse than ever".
Some smaller retailers continued to source big beer and wine brands from criminals who had swerved duty and were selling them at prices honest wholesalers could not compete with, said wholesalers.
From the start of June HMRC withdrew the warehousing for export scheme, which allowed traders to avoid paying duty on alcohol on the condition that it was being exported.
The scheme was being abused by criminals who were claiming that goods were being exported when actually they were being sold in the UK with no duty having been paid, warned wholesalers.
Fraudsters had moved to another method of defrauding the government, they said, highlighting the growing incidence of 'direct diversion fraud', in which traders claimed booze sold in the UK had been exported and falsely claimed back the duty from HMRC.
"Duty fraud has come back with a vengeance," said Steve Parfett, MD of Parfetts. "If anything it's worse than before."
The FWD called on HMRC to take tougher action and to use its powers of seizure to crack down on the fraudsters. An HMRC spokesman said it "takes the matter very seriously indeed" and that it was carrying out a review of how it tackled duty fraud and taking advice from the FWD.
Alcohol typically accounts for about a quarter of a wholesaler's turnover. At Christmas some wholesalers such as Bestway and Parfetts said sales of some beer brands were 25% lower than they should have been as a result of fraud.
"Alcohol is absolutely key to our members and fraud in this sector causes severe damage," said FWD CEO James Bielby. "Some members are reporting that the problem is worse than ever. We will continue to press HMRC to find a robust solution. "
The FWD was meeting the HMRC next week to discuss the problem, he said.
Some smaller retailers continued to source big beer and wine brands from criminals who had swerved duty and were selling them at prices honest wholesalers could not compete with, said wholesalers.
From the start of June HMRC withdrew the warehousing for export scheme, which allowed traders to avoid paying duty on alcohol on the condition that it was being exported.
The scheme was being abused by criminals who were claiming that goods were being exported when actually they were being sold in the UK with no duty having been paid, warned wholesalers.
Fraudsters had moved to another method of defrauding the government, they said, highlighting the growing incidence of 'direct diversion fraud', in which traders claimed booze sold in the UK had been exported and falsely claimed back the duty from HMRC.
"Duty fraud has come back with a vengeance," said Steve Parfett, MD of Parfetts. "If anything it's worse than before."
The FWD called on HMRC to take tougher action and to use its powers of seizure to crack down on the fraudsters. An HMRC spokesman said it "takes the matter very seriously indeed" and that it was carrying out a review of how it tackled duty fraud and taking advice from the FWD.
Alcohol typically accounts for about a quarter of a wholesaler's turnover. At Christmas some wholesalers such as Bestway and Parfetts said sales of some beer brands were 25% lower than they should have been as a result of fraud.
"Alcohol is absolutely key to our members and fraud in this sector causes severe damage," said FWD CEO James Bielby. "Some members are reporting that the problem is worse than ever. We will continue to press HMRC to find a robust solution. "
The FWD was meeting the HMRC next week to discuss the problem, he said.
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