“Because of serious failings by HM Customs and Excise, revenue of over £600 million has been lost from the diversion of alcohol onto the UK market. I am concerned about these substantial losses and I will be making a further report to Parliament on the causes of the diversion fraud, the lessons to be learned and the action planned by Customs.”
In reviewing Customs’ systems, Sir John also reported on the operation of the Landfill Tax Credit Scheme which permits landfill site operators to reclaim contributions towards environmental projects under the Landfill Tax Regulations.
The regulations and the workings of the scheme itself are complex; and payments for projects that fall within the scheme’s rules are not public expenditure because decisions to contribute to environmental projects are made by landfill site operators. This makes external examination of the value-for-money achieved by the scheme difficult for anyone to assess. Sir John concludes among other things that:
In other parts of his report, Sir John recorded the results of his examination of a variety of key systems operated by the Department. Work on import controls highlighted the need to improve checks by Customs at Belfast docks on consignments imported from outside the European Union which ensure that the correct amount of duties has been paid by importers. Sir John concluded that both risk assessment and control over movements were weak, and that significant reliance was placed on importers to pay the correct amount of duty.