With an annual bill to the taxpayer estimated at £1.2bn, alcohol fraud has created virtual no-go zones in areas of the UK where it is impossible for legitimate wholesalers and retailers to compete.

Yet despite the issue having been high on the agenda for decades, few significant inroads have yet been made.

Last week, HMRC launched the Joint Alcohol Anti-fraud Taskforce (JAAT) in a bid to finally get a grip on the issue, along with a raft of other new measures. But what exactly is JAAT and will the new moves really herald decisive action?

Alcohol fraud in numbers:

£1.2bn: annual cost to UK on unpaid duty

£180m: individual cost of lost business, some wholesalers claim

12 million: litres of duty-unpaid alcohol seized by HMRC 2012-13, triple the amount in 2011

1,799,790: litres of illicit alcohol seized July-Sept

735: no. of interceptions at the border over same period

£700m: upper estimate for duty lost to 
illicit wine

The scale of the problem is huge. HMRC seized over 12 million litres of duty-unpaid alcohol in 2012-13, almost triple the amount seized in 2011.

In what the government claims is a sign of intent The taskforce is spearheaded by economic secretary to the treasury Nicky Morgan and chaired by the HMRC director general for business tax. It is made up of senior representatives from the Home Office, Border Agency and Trading Standards as well as from industry including FWD, ACS, BBPA and BRC. It’s the first time cross-industry and cross-enforcement agency discussions have come together, though industry has been discussing the issue for years.

The JAAT will meet every six months to try to build better intelligence sharing and develop ways so industry and authorities can “collaborate better”, with an annual progress report to the Treasury.

But with stakeholders approaching the issue with a history of huge competing concerns, can a six-monthly meeting really make a difference? “This is not just a talking shop,” an HMRC spokesman insists.

And some have renewed optimism. “What I was most impressed with and what was of real significance to me is that we’ve finally got the attention of senior representatives,” says Martin Williams, MD of Landmark Wholesale and one of the taskforce members.

Others are less optimistic. “This has been going on for so long that you do wonder whether a solution is in sight. Any wholesaler would see this as a step in the right direction but one big problem in the past is that Customs hasn’t had the resources in place to make sure rules are in force,” says AG Parfett MD David Grimes. “The question is, do they have the resource now to push it through? Action is more important than words in this case.”

“We’ve had a few false dawns before,” he adds.

The taskforce is not the only resource the government says it has in its Tackling Alcohol Fraud Strategy. As well as promising to push for stronger monitoring at EU level, HMRC says it will “tighten policies to deal more robustly with those caught holding or moving illicit products”. But given HMRC’s approach to alcohol fraud has to date been dogged by compromise, and with no firm details of how it will do this yet shared, and no timeframe set out for change, there are concerns about how tough the government is being.

HMRC’s approach to alcohol fraud has also been dogged by the need for compromise.

“Ideally we would still prefer duty stamps but obviously the brewers won the battle on that one”

Martin Williams

In his Autumn Statement, the Chancellor George Osborne set out plans for the registration of wholesalers. But HMRC had previously stopped short of the call from the wholesale sector for alcohol duty stamps after the BBPA successfully argued that it would burden brewers with extra cost and red tape.

And while wholesaler registration is widely supported, there remain some concerns from all areas of the industry over whether it too will simply saddle businesses with extra red tape.

“Ideally we would still prefer duty stamps but obviously the brewers won the battle on that one,” says Williams. “On the basis that duty stamps won’t happen in the mid-term, wholesaler registration seems a very good second option - it could almost wipe duty fraud out. If we’d gone for stamping, it would have put costs on brewers. Registration puts some costs on wholesalers but once you’ve set it up, that’s it. The view of our members is that if it eradicates duty fraud it pays for itself.”

But AG Parfett chairman Steve Parfett fears that - if not robustly policed - registration may create a “nightmare scenario” where wholesalers foot the bill for tighter regulation of the sector, while rogue traders find ways of abusing the system to achieve registration, parading as legitimate businesses.

The government is also developing a 10-point anti-fraud plan with the brewing industry, proposed by BBPA as an alternative to duty stamps, including pledges by brewers to collect robust data on sales and alert HMRC to suspicious trading patterns.

But there are no illusions in the industry as to the sophistication of the enemy they face - not backstreet cowboys but “highly organised professional criminals”, says Williams. “It’s heavy stuff.” And with even wholesaler registration not set to be implemented until 2016, the industry has at least another two years under the burden.