This week new penalties come into force to fine businesses found selling duty-evaded alcohol or tobacco.
The “wrongdoing” penalties will be calculated based on the amount of revenue the Treasury lost because of each evasion. Fines will range from between 10%-100% of the estimated revenue loss.
Operators suspected of handling fraudulent stock will have to prove checks were in place to ensure they didn’t knowingly abuse the VAT and duty system.
The introduction of the measure coincides with the launch of an inquiry by the National Audit Office, to investigate the amount of unpaid duty in the UK and assess the government’s response to tackling the issue.
The findings of its report are expected to be published this summer.
The Treasury estimates that on beer alone it lost up to £490 million in unpaid duty and £220 million in VAT between 2006 and 2007, which is 12% of the market.
The Federation of Wholesale Distrib-utors believes that a similar amount is lost due to fraudulent wine in the supply chain.
To highlight the scale of the problem, the Treasury hopes to launch a campaign after the General Election to coincide with the anticipated surge in demand for alcohol around the World Cup.
FWD chief executive James Bielby said the campaign was a “direct result” of its meeting last month with Exchequer Secretary Sarah McCarthy-Fry.
However, he added while it was a “big win for the trade” that duty fraud was moving up the agenda”, he remained unconvinced the government’s strategy would yield results.
He said: “We’ve had plenty of promises in the past and plenty of false dawns. We’ve done as much as we can to push the government to implement policy, now we’re in the operational stages.
“Based on previous experience, I’m not that optimistic, but we’ll wait and see and review the progress.”?Gavin Partington, head of communications at the Wine & Spirit Trade Assoc-?iation, said: “Duty fraud is a significant issue for the trade and we’re all keen to see the strongest possible action introduced to stamp it out.
“The new penalties introduced this week are to be welcomed and we will continue to work closely with the authorities to tackle this problem.”