50m fraud stengthens FWD case

The Federation of Wholesale Distributors (FWD) is calling on the Government to introduce measures to prevent the illegal sale of alcohol products after the scale of just one criminal gang’s operation was revealed this week.

Four men, including the owner of a bonded warehouse in Essex, cheated the Treasury out of £50m a year in unpaid duty and VAT in a scam involving both inbound and outbound diversion of alcohol products. Following an extensive investigation by HMRC, the men received jail sentences of between 10 years and 16 months.

FWD chief executive James Bielby said: “This illegal operation was just one of many which together defraud the public purse of £1.2bn a year, and take millions more in business from responsible, legitimate wholesalers. They also put any retailer who, knowingly or not, buys this illicit stock at risk of losing their licence.

“Diversion fraud is complex and it requires immense resources to track, catch and prosecute the perpetrators. While we congratulate HMRC on this successful case, FWD believes that the Government must introduce measures that will prevent the scam happening in the first place and make it easier to detect those who attempt it.”

FWD has recommended the setting up of a registration scheme for wholesalers, the introduction of fiscal marks to beer products, and tighter controls on the movement of goods between bonded warehouses. A consultation on duty fraud is expected to be launched by the Treasury later in the year.

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