Retailers warned over duty fraud

12 November, 2010

Retailers are being warned not to take a punt on dodgy-looking stock after the government pledged more cash to tackle alcohol duty fraud.

An extra £900 million and 200 additional investigators have been earmarked to tackle tax avoidance and evasion with alcohol duty fraud as a prime target.

In addition, new penalties introduced in April this year mean retailers caught with stock on their shelves on which UK duty hasn’t been paid could face the triple whammy of a fine, confiscation of the stock and a bill for the missing duty.

The new rules allow HM Revenue & Customs to pursue a civil case against those suspected of avoiding duty, instead of a more expensive and time-consuming criminal prosecution.

HMRC hopes the new rules and resources will allow it to pursue more cases more vigorously.

A civil action will also make it harder for retailers to put up a defence on the grounds that they were unaware a scam was taking place.

Alan Powell, a consultant and former policy worker at HMRC who advises the Federation of Wholesale Distributors on duty matters, said: “Reasonable excuses will be the only defence, which HMRC will be interpreting as an exceptional event outside your control.

“This can’t just be ignorance [of duty fraud being perpetrated by others]. We’re into brand new territory here.” HMRC spokesman Jonathan Powell added: “Our message would be that if something is too good to be true it probably is.

“It may seem draconian but if you’re getting unsolicited emails about ridiculous deals that aren’t from credible suppliers then you need to examine them very closely. There’s a lot of common sense involved in this.”?High volume products such as canned beer and New World wines are prime targets for fraudsters, and are among the super-cheap deals to be wary of.

FWD chief executive James Bielby said: “A company like Booker can get deals on leading brands because it’s got enormous buying power.

“How would a sole trader with only an email address get those sorts of prices? The answer is they can’t, unless they’re doing it fraudulently.”?HMRC estimates the total amount of duty fraud on alcohol costs the Treasury £1 billion a year.

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