Wholesalers wishing to sell alcohol should be registered to help curb duty fraud a problem that is believed to be costing the Exchequer more than £1bn a year in lost revenue.

The plan is one of several proposals set out by the Federation of Wholesale Distributors, which it believes will significantly reduce the amount of illicit booze sold in the UK. The proposals were discussed this week in the Commons after MP Paul Rowen, on behalf of the FWD, tabled a parliamentary debate on duty fraud.

The creation of a register would mean that only legitimate traders would be able to supply alcohol. The FWD says wholesalers are currently the only unregulated part of the alcohol supply chain and a register would help root out the so- called 'rogue traders' responsible for much of the fraudulent activity.

FWD has also recommended that HMRC should be able to seize products being sold at suspect prices and punish those involved. It should also stop the fraud occurring in the first place by "keeping tabs" both on where and to whom the brewers supply to in the EU, and all UK supplies of duty-suspended goods to third parties in bonded warehouses.

Treasury Minister Sarah McCarthy-Fry praised the FWD's "radical" proposals and said they were being actively explored by officials. She claimed the existing strategy on duty fraud was progressing well and changes in the law to clamp down on criminals, tighten the supply chain and strengthen HMRC's operational response would be implemented from 1 April.

FWD chief executive James Bielby insisted more was needed to tackle a problem that had cost some legitimate wholesalers up to 40% of alcohol sales in the past two years.

"We don't doubt HMRC's desire to do something about the illicit trade," he said. "Unfortunately, its response is not as robust as we'd like and we will continue to apply pressure."

An Early Day Motion supporting the tougher measures has currently been signed by 37 MPs.