In the Media

Four jailed for alcohol-smuggling VAT and tax fraud

PUBLISHED February 10, 2012

Fraud worth ?50m a year in unpaid duty and VAT afforded gang members a luxury lifestyle, investigators say

Four members of a criminal gang have been jailed for their roles in one of the biggest alcohol-smuggling frauds ever uncovered in Britain.

The scam, worth an estimated ?50m a year in unpaid duty and VAT, allowed the men to buy fast cars and luxury homes, investigators said.

The four used their positions and contacts in the drinks trade to conceal dozens of truckloads of alcohol being moved into Britain without paying tax or duties in a scam known as diversion fraud.

The gang's ringleader, 49-year-old Kevin Burrage, and Gary Clarke, 55, were convicted of conspiracy to cheat the public revenue following a three-month trial at Canterbury crown court last month.

Their accomplices, Michael Turner, 52, and 32-year-old Davinder Dhaliwal, pleaded guilty at an earlier hearing to the same charges and fraudulent evasion of excise duty.

Sentencing them, Judge Michael O'Sullivan said: "All four of you were involved in a criminal enterprise to cheat the revenue. Alcohol was diverted into the UK without paying duty or tax due to the revenue."

Burrage, of Shoeburyness, Essex, was jailed for 10 years, and Clarke, of Thorpe Bay, also in Essex, was sentenced to six years and nine months. Turner, of Folkestone, Kent, was jailed for three years and two months and Dhaliwal, of Dartford, for 16 months.

Prosecutor Andrew Marshall said the scam focused on Promptstock Ltd, a bonded warehouse in Essex owned by Burrage. Alcohol can be stored and moved between bonded warehouses within the EU without paying excise duties.

But once the business needs to release the alcohol to retailers, the excise duty becomes payable at the rates applicable in the host country.

Burrage's brother-in-law, Clarke, managed the warehouse used by the pair to import and export alcohol without paying a penny in tax.

The gang bought beer, wine and spirits from bonded warehouses in France and imported them duty-free into Britain, destined for Promptstock Ltd. Once through Customs, the alcohol was illegally diverted to locations around the country and then sold without duty being added.

Marshall said: "What was planned and what took place was to cause enormous and continuous losses to the Revenue of millions of pounds, and those losses were only stopped by the arrests."

Over a 22-month period from January 2007, he said the total VAT and excise duty loss caused by the gang amounted to ?7.49m.

Marshall said: "Mr Burrage was the organiser and ringleader of all of this trade. It was fraudulent from the very start. It has an international element, controlling goods abroad and from abroad."

A "web of corrupt players" was involved in the fraud, he said, including transport companies that diverted the loads from their intended destinations.

Investigators said the gang also reversed the fraud by appearing to send lorries loaded with non-duty paid alcohol to the continent. HMRC said the cargo of alcohol in fact remained in the UK and was sold on, again with no tax added.

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