Diversion Fraud | HMRC Tax Dispute resolution | Tax Solicitors & Tax Barristers | London Tax Advice & Tax Services | City Law Firm, LondonHMRC Tax Dispute resolution | Tax Solicitors & Tax Barristers | London Tax Advice & Tax Services | City Law Firm, London

Call our HMRC Tax Disputes Helpline:

02071830529

LEXLAW, 4 Middle Temple Lane, London

Diversion Fraud

Outward Excise Diversion Fraud

Outward diversion frauds involve the illegal diversion onto the UK market of beers, wines and spirits moving under duty suspension ostensibly for export from a UK excise warehouse to a similarly approved warehouse in the EU. The goods move under cover of an Accompanying Administrative Document, or AAD and a guarantee for the duty involved provided by the warehouse, haulier or any other party. The frauds usually involve large numbers of individuals including the owners of the goods, the hauliers, wholesalers and those selling the product onto the UK market.

The essential part of the fraud involves the false certification of the AADs and sometime CMRs (‘Convention Marchandises Routiers’), an internationally recognised consignment note used by hauliers to show the goods have arrived at the foreign warehouse, when in fact the goods never left the UK, and normally enter the secondary wholesale market in bulk.

In the mid 1990s, the first of a whole series of outward diversion frauds was uncovered involving a warehouse in East London, London City Bond, which HMCE had used as undisclosed informants. Two directors of the company, Alf and Ed Allington, had regularly provided information to their handler in HMCE concerning account holders using the bond, together with details of duty suspended loads of alcohol leaving London City Bond, ostensibly destined for foreign warehouses but in reality never leaving the UK.

More than 25 separate fraud trials were brought before the courts in which Alf Allington or other witnesses from London City Bond gave evidence for the Prosecution, explaining the procedures for the receipt, storage and subsequent export of duty suspended goods from London City Bond. The AADs were formally produced for the movements in question involving the particular defendants, showing a stamped receipt of the goods at the receiving warehouse in Europe.

Over £680 million in excise duty was evaded from these frauds which HMCE had allowed to continue in order to apprehend those involved. HMCE was severely censured for their handling of these frauds, and these failings became the subject of the report by Mr Justice Butterfield, published in 2003.

Inward Excise Diversion Fraud

A variation on outward diversion fraud is the situation where duty suspended goods are imported into the UK from a warehouse in the EU, ostensibly and according to the documentation, to a UK excise warehouse, but in reality to be illegally diverted on to the UK market, without payment of duty. Again, beers, wines and spirits are the preferred commodity.

Inward diversion frauds often use goods originally exported from the UK to an EU warehouse; the AAD will show the destination to be a UK excise warehouse, although the goods will only be delivered there if the load and documentation is inspected on entry into the UK by Customs. Otherwise, once through the port, the goods will be diverted into the UK market, and a false UK warehouse stamp provided on the AAD to be sent back to the EU warehouse as evidence of arrival of the goods at the UK warehouse.

Excise diversion frauds are usually prosecuted under Customs & Excise Management Act 1979 s 170 as the fraudulent evasion of duty, or cheating the revenue under common law.

Expert London VAT Investigation Lawyers

If you need HMRC VAT Investigation advice, we are available to aid you at every stage of the HMRC investigate process. Members of our legal team have first-hand experience and knowledge of the internal workings of HMRC. We can provide you with the very best representation in negotiations with HMRC and defending all forms of HMRC fraud, tax inquiry, tax fraud investigation, criminal tax evasion and HMRC enquiries and investigations. Our team specialises in successfully challenging HMRC decisions and will assist you in every aspect of the investigation.

Our specialist Tax Solicitors and Barristers deliver expert technical knowledge, strong negotiation skills and respected advice, which can make a pronounced difference to eventual tax penalties, charges and liability.

HAS HMRC MADE YOUR PART OF AN EXCISE DIVERSION INQUIRY? We provide urgent advice and representation to clients from our unique expert team of established Tax and Duties specialist solicitors and barristers with a proven track record of delivering authoritative results. Just call us on 0207 1830 529, or email contact@lexlaw.co.uk.

Call us on ☎ 02071830529 or email us on for more information about the legal services we provide. Our team of London lawyers are based in Middle Temple adjacent to the Royal Courts of Justice. We are committed to providing professional and specialist legal advice.