Smugglers evade pounds 750m in taxes

Smuggling of alcohol and tobacco into the UK is costing the Exchequer more than pounds 750m in lost taxes each year, at least 50 per cent more than earlier estimates, according to a survey from HM Customs & Excise.

UK brewers claimed yesterday that the figures, which contrast with earlier estimates of about pounds 500m, vindicated their long-running warning about the damage to their industry caused by smuggling.

A spokesman from Whitbread said: "The announcement by Customs & Excise comprehensively endorses [our] argument.

"Since restrictions on cross-Channel imports were lifted in January 1993, illegal beer sales are growing at an accelerated rate year-on-year. The most logical conclusion would be to reduce excise duty by around 50 per cent."

However, a Customs & Excise spokesman said that, while large, the amount evaded still represented less than 5 per cent of the pounds 18.6bn annual excise duty and VAT collected on alcohol and tobacco.

Customs believes that while the revenue evaded by smuggling is pounds 770m, the actual loss will be less because a considerable part of this amount is additional consumption. It is unlikely that equivalent amounts would be bought in the UK otherwise.

Phillip Oppenheim, the Customs Minister, pledged additional resources to plug the gaps in cross-border smuggling. Almost 300 staff are now employed to combat smuggling from Europe.

The biggest source of evasion, Customs investigators estimate, is hand- rolling tobacco, which costs the taxman pounds 425m a year.