Beer fraud costs Exchequer £700m

Fraudsters are evading as much as £700 million a year in duty and VAT, the government has admitted.

Treasury minister Sarah McCarthy-Fry said that no accurate estimate has been made since 2006-07, but confirmed that in the amount of beer sold without VAT and excise corresponded to a market share of “between 7% and 12%”.

Responding to a question from Liberal Democrat MP Paul Rowen, McCarthy-Fry said: “The Department has an internal estimate for revenue losses due to fraud in beer.

“For 2006-07 estimated losses from beer give a range of between £270 million and £490 million in respect of duty and £120 million to £220 million in respect of VAT.”

She added that “the methodology is still under development and therefore this estimate may be revised”.

Recently there has been widespread concern in the drinks trade about the activities of several independent wholesalers in major conurbations, where it is widely believed beers and wines are being sold free of duty and VAT.