Suppliers of alcohol and tobacco are entitled to claim back duty if they are intending to export the goods overseas, but the system is regularly exploited by fraudsters who resell the products illegally in the UK market.
According to Treasury minister Justine Greening, £117.4 million was claimed in drawback in 2010 – a figure which also includes energy products. That compares with £116.8 million in 2009 and £130.8 million in 2008.
Although she admitted that £25 million was the government’s “best estimate” on drawback fraud, she said claimants had to meet a number of criteria before receiving repayment. These include making goods available for inspection, and evidence either of duty payment in another EU country or proof of export outside the union.