HMRC cracks down on shops selling illicit alcohol

04 May, 2012

HM Revenue & Customs has stepped up its work with local councils to strip retailers who sell duty-defrauded and counterfeit alcohol of their licences.

The department told the House of Commons Public Accounts Committee that 30 shops in Brighton & Hove face losing their licences after a massive raid by police, Trading Standards and HMRC.

Previous raids have targeted no more than a handful of shops at a time, and a spokesman for HMRC told OLN the department is keen to do more work with local licensing authorities to crack down on businesses selling illicit alcohol in this way.

HMRC chief executive Lin Homer told MPs: “We must send messages to people that the risks of cheating are high. We can do that through prosecutions or by revoking a licence. If you no longer have a licence to sell your product, that is quite impactful.” 

She added that HMRC had removed illicit stock from shops: “We seized £12 million worth of goods from small outlets. You must put all of that together and make it sufficiently risky for people not to be in it.”

The raid in Brighton in February seized more than £72,000 worth of suspected smuggled and fake alcohol, including 2,270 litres of suspected illegal beer. 

David Visick, spokesman for the Federation of Wholesale Distributors, said: “This is not one of its main powers, but obviously it is the one it thinks is most punitive. 

“It’s important people know that one of the methods HMRC has for disrupting the illicit supply chain is to target retailers. It is much easier than trying to take down complex international gangs.”

Giving evidence to the PAC, Homer said that HMRC was seeking to add “some extra things to the toolkit to ensure that, for those people who want to stay legitimate, it will be easier for them to do so.” 

FWD chief executive James Bielby also gave evidence to the committee, and told MPs that brewers, wholesalers and retailers must take responsibility for the illegal sale of beer products.

He said: “As well as costing the Treasury £500 million a year in duty revenue, beer duty fraud has a huge negative impact on legitimate wholesalers. Wholesale margins are wafer thin and every day this goes on they are being eroded. We believe fiscal marks are a good step, along with civil penalties for companies that supply to markets which don’t exist.”

The PAC investigation of HMRC’s alcohol strategy is in response to the recent National Audit Office report which said the strategy had had “no tangible success” in reducing duty fraud.

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