A Customs & Excise charge of nearly £2m means ruin for a major London bonded warehouse – while Customs itself faces an official inquiry and may be stripped of some of its powers.
Trapps Cellars Ltd, a bonded warehouse in London with 550 clients, faces closure as a result, its directors say, of a ruinous Customs and Excise operation.
The company has voluntarily called in the administrators because it is unable to pay the £1.87m duty assessment levied by UK Customs and Excise for allegedly holding contraband spirits. All wine must be claimed by clients by December 16 this year or it will be sold by the administrators. Managing director John Davis told decanter.com, ‘Our chances of survival are zero.’
In August this year Customs officers raided Trapps along with 50 other wine warehouses, seizing paperwork and computers. They were looking for discrepancies in records relating to 21 containers of spirits (about 20,000 cases) destined for mainland Europe that had allegedly been illegally diverted to the UK.
Trapps insists it has been effectively fined with no evidence against it. Davis said, ‘We have documentary proof that we did nothing illegal.’
Customs & Excise have far-reaching powers of prosecution. ‘As far as they are concerned you are guilty until you can prove yourself innocent,’ Davis said, adding that the loss of all its computers and paperwork was devastating for the company as they can no longer efficiently keep track of clients’ holdings.
Customs have now moved to take away Trapps’ right to operate as a bonded warehouse. It is now not allowed to receive wines and from January next year it will not be allowed to store wines.
The warehouse holds wine and spirits ‘in bond’ – that is, with duty unpaid – for clients who pay duty only when they remove it from the warehouse. Trapps had some 550 clients who keep an average of 25 cases each. The wine stored is mostly claret.
Customs & Excise itself is meanwhile facing an official inquiry after the collapse of a contraband spirits fraud investigation that has cost the UK taxpayer £30m. There is debate as to whether the agency should be stripped of its powers of prosecution.
Central to the case were the operations of another bonded warehouse, London City Bond, whose owner Alfred Allington became a C&E informant, holding fraudulent consignments while the agency built its case against 15 alleged black marketeers.
But according to a witness at the trial, Customs officers ‘were caught up in a conspiracy to pervert the course of justice’ by not disclosing Allington’s true role. Another witness spoke of an ‘explosion of fraud’ within Customs.
Amidst speculation that the Trapps Cellars case is bound up with the LCB debacle, one industry observer said, ‘Customs & Excise are motivated by malice and corruption. This is a conspiracy to drive London bonded warehouses out of business – they want all of London to be controlled by London City Bond.’
A Customs & Excise spokesperson said they are unable to comment on individual cases due to taxpayers’ confidentiality.
We do not wish at present to comment on court cases and will leave it to the judicial inquiry to make their findings known. We would however like to state that at all times Alf Allington and his staff have acted honestly and all actions taken were with HM Customs & Excise knowledge and guidance.
Written by Adam Lechmere26 November 2002