Eastenders Cash & Carry has shut all six of its depots following police and HMRC dawn raids last week.

One eyewitness told The Grocer how officers surrounded and stormed Eastenders’ Birmingham depot at 7am last Tuesday.

“There were plain clothes customs officers and uniformed police,” he said. “They went round the back too so no-one could get out.”

As The Grocer went to press, HMRC investigators were still working inside its Birmingham and Croydon depots and Eastenders was preparing to bring proceedings against HMRC challenging the seizure of its stock, which is held at the Birmingham ­depot and suppliers are currently ­unable to reclaim.

The Grocer understands the raids were part of an ongoing investigation into an estimated £50m excise duty fraud. HMRC said it had launched the investigation as “it is suspected that alcohol, bought duty free and said to be destined for markets in the EU, was smuggled back onto the UK market without the appropriate payment of excise duty and VAT”.

More than 200 HMRC criminal investigators, supported by the police, conducted co-ordinated raids on 12 commercial and 17 domestic premises across the South East and the Midlands. Searches are also taking place in Germany.

Twenty men have been arrested and released on police bail until June 2011, pending further enquiries. Four of the men have had their passports confiscated and been ordered to report to a police station twice a week.

“HMRC has threatened for a while that it intends to step up its activities and the raids are proof,” said one wholesaler. “It’s good news for legitimate wholesalers, especially at peak seasonal trading.”

The Federation of Wholesale Distributors claims that duty fraud costs legitimate wholesalers 40% of lost beer sales. Its chief executive, James Bielby, welcomed HMRC’s focus on tackling high-level duty fraud. “It makes sound economic sense to invest in stamping it out when public spending is being cut elsewhere,” he said.

HMRC estimates that ­alcohol fraud costs the Exchequer over £500m each year in lost revenue from beer alone.

In October, chancellor George Osborne announced that HMRC would invest £900m to tackle tax avoidance as part of the government’s comprehensive spending review. Resources will be ­designated to prevent ­tobacco and alcohol fraud.

The HMRC was also ­given new powers to fine anyone handling products on which UK duty and VAT had not been paid. Stock can also be confiscated and a bill for the missing duty issued.

The Grocer contacted all six depots. No-one from Eastenders, which recorded pre-tax profits of £0.8m in its latest set of accounts, was available for comment.