Pressure is mounting on the government to take more seriously the issue of alcohol duty fraud, which the wholesale industry says is costing it up to 40% of sales on some products.

Proposals put forward by the Federation of Wholesale Distributors (FWD) include a registration scheme which would ensure only legitimate wholesalers could sell alcohol.

Duty fraud, in which unscrupulous wholesalers sell alcohol that they claim to have paid duty on in another country, costs the Exchequer more than £1bn a year in lost revenue. In many cases, retailers are not even aware that they are buying duty-avoiding alcohol.

More than 30 parliamentary questions from MPs and peers have demanded that the government tackle the issue, described in a House of Commons debate last week as “growing and pernicious” by Rochdale MP Paul Rowen.

“Only seven people were prosecuted in 2008 for crimes relating to alcohol fraud and the number of prosecutions has fallen by almost 50% since 2006,” he said. 

Treasury minister Sarah McCarthy-Fry praised the FWD for its “radical” proposals to clamp down on the problem, which also include giving HMRC powers to seize products being sold at suspect prices, punish those involved, and prevent the fraud occurring by tracking goods both within the UK and when entering and leaving the country.

The government’s strategy was “progressing well,” McCarthy-Fry said. She added that changes in the law to clamp down on criminals, tighten the supply chain and strengthen HMRC’s operational response were due in April.

FWD chief executive James Bielby said: “We are pleased that the Treasury is looking at what we have proposed, but remain concerned this issue is not being taken as seriously as it should be.”