Stamping out fraud

Pubs are to be on the front line in the fight against smuggling, as Michelle Perrett discovers.

If someone offers to sell you cut-price vodka it may seem like a good deal - but you are likely to be putting money into the pockets of ruthless international criminal gangs. According to the Treasury, spirit fraud is more widespread than any other form of alcohol smuggling and has forced it to take drastic action, which includes the introduction of duty stamps.

Any legitimate bottle of spirits will have to carry the stamp to prove duty has been paid. After October it will be a criminal offence to sell such products unless they have this mark. The Treasury has indicated that penalties for pubs which flout this law will kick in from January 1 next year.

Under the new system, all spirits which are 30 per cent ABV or more, contained in bottles of 35cl or above, will need duty stamps when entering the country.

Monitoring duty stamps on spirits may not sound like an important part of a publican's every day activities - but it should become a major priority.

This is the message from Treasury minister John Healey. "I don't want people to be under the misapprehension that this is somehow some small-scale Robin Hood type of operation," he says. "This is not about half a dozen bottles of cut-price vodka. These are serious, organised, often international criminal gangs, running these frauds and they often will recycle the profits from these into other types of smuggling.

"Our latest figures - which were from 2003/2004 - suggest that the illicit market is worth about £250bn a year. That means about seven per cent of spirits in the UK that are consumed are illegal and have not had duty paid. In other words honest businesses that are buying and selling and paying the duty - the publican, the wholesaler and the shipper - are being undercut."

Raising the profile​

Mr Healey, financial secretary to the Treasury, has pledged to raise the profile of the new scheme and to ensure that licensees have the correct due diligence in place to prove the legal purchase of old stock without the stamps. Alcohol fraud is more often than not the smuggled or diverted spirits which haven't had the duty paid, reintroduced back into the supply system.

"By the time it reaches the publican most don't know whether or not it has had the duty paid, but with duty stamps they will," Mr Healey argues.

He also wants to get licensees on board with the new legislation, ensuring they are checking their stock deliveries and reporting any concerns they have to the Treasury.

"I would hope the publicans will be part of our eyes and ears and part of our source of information about where major concerns in the supply chain that need investigation are," said Mr Healey. "I would encourage licensees with concerns or suspicions to help us by reporting these."

• Call 0845 010 9000 for further details or visit www.ukdutystamps.info​

Case study: how spirits fraud is being tackled​

An investigation into one smuggling ring revealed that loads allowed to leave UK excise warehouses for export were being offloaded to cash and carry outlets in the UK. Front companies were being used to carry out the fraud. The investigation, which lasted nearly a year and deployed more than 600 officers, resulted in 13 defendants being convicted of conspiracy to cheat HM Revenue & Customs. They received sentences ranging from 16 months to 10 years, with confiscation orders totalling £740,000. Total revenue losses (excise duty and VAT) were estimated at £33.7m.