The Federation of Wholesale Distributors is close to securing a victory in its campaign to curb the impact of duty fraud on wholesalers and retailers. The FWD presented HM Revenue & Customs with a specially commissioned report on UK and EU law, including a series of proposals that could cut duty fraud, back in November.

It now appears that the government is on the verge of adopting some of these measures, including the removal of the option of duty drawback.

The FWD believes that this practice, which allows suppliers to claim a duty rebate on goods due for export before they are shipped overseas, can be exploited by rogue traders who divert the stocks back into the UK at much lower prices, costing wholesalers and retailers huge amounts of money.

The problem is particularly pertinent to sales of beer.

FWD director general John Murphy said he hoped the move would be announced before the Budget on 21 March. "We have been working closely with HMRC and confidently expect changes to be introduced in Customs procedures to alleviate the problem," said Murphy. "Once introduced we will keep a close eye on the market to ensure the changes prove effective and if necessary come up with other steps that need to be taken."

If the government adopts the recommendation it is believed duty drawback would be outlawed immediately.