TaxPersonal TaxCustoms slammed for losing £600m

Customs slammed for losing £600m

Over £600m has been lost by HM Customs & Excise when it failed to prevent a massive alcohol duty scam.

Drink supposedly destined for export was diverted into the UK market losing the Treasury some £620m in unpaid duty over a four-year period.

Customs knew about the so-called ‘Outward Excise Diversion’ fraud as long ago as 1994 but failed to take action until 1998, according to a report released today by the National Audit Office.

The report said over £300m would not have been lost if Customs had decided to intercept the fraudulent consignments.

Instead, in a serious breakdown of control, Customs allowed the drink to be end up in the UK market while trying to gather evidence to prosecute those involve in the scam.

NAO chief Sir John Bourn said: ‘I am concerned about these substantial losses and I will be making a further report to parliament on the causes of the diversion fraud, the lessons to be learned and the action planned by Customs.’

In a statement, Customs said: ‘This should not have happened. The essential issue is the correct balance between securing the conviction of fraudsters and maximising the revenue. We got the balance wrong in this case.’

A spokesperson added that in the light of the report Customs would be considering whether disciplinary action would be taken against those involved in the management of the investigations.

When the losses first came to light last year, paymaster general Dawn Primarolo ordered an independent investigation, headed by ex-Deloitte senior partner John Roques.

Links

Primarolo ‘unconvinced’ by tax merger

Outsourcing jeopardised by Customs

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