Major tax fraud case quashed

A major fraud case involving allegations of £105m in lost duty and VAT has been quashed by the Court of Appeal.

The judges' decision to overturn the convictions of seven men, including one who had pleaded guilty to the charges, is a major blow to Customs and Excise, which launched the case.

Defence lawyers said up to 90 other people convicted in a series of prosecutions could now bring successful appeals.

The case revolved around "Operation Stockade", an investigation into alcohol and tobacco allegedly stored in a bonded Ipswich warehouse for export but illegally diverted to the domestic market.

The court is compelled to allow the appeals, even in the case of one man who pleaded guilty

Lord Justice Longmore

If further convictions are now quashed it could cost the taxpayer millions in compensation and costs.

And it is estimated the total amount of duty and VAT lost in the various cases which have been tried is around £2bn.

'Diverted'

Operation Stockade was an investigation into the removal of "duty suspended" beers, wines and spirits from the Fort Patrick bonded warehouse in Ipswich, Suffolk, on the pretence of their being lawfully transported overseas, mainly to other bonded warehouses within the EU.

In one of the biggest cases in its history Customs alleged that the goods were diverted on to the home market instead, with no payment of duty or tax.

It is an absolute disgrace that the prosecutions have been brought

Andrew Benson
Mr Grant's solicitor

Seven men convicted for their parts in the alleged fraud had their appeals allowed on Tuesday.

The prosecution withdrew its opposition to the appeals, admitting it should have handed over information to the defence about another case which could have allowed them to get the trial stopped in its infancy.

Prosecution lawyers admitted the original trial judge would have wanted to hear evidence from a Customs officer who had dealt with the owner of London City Bond warehouse, who became an informer.

The prosecution said the unreliability of the officer's evidence had led to the collapse of a trial involving the London warehouse.

Lawyers argued this extra information did not suggest the defendants innocence, but could still have been used by the defence at their trial.

'Melancholy result'

An inquiry by Mr Justice Butterfield into the collapse of the London City Bond case is now expected to be widened to include Operation Stockade.

Lord Justice Longmore said: "This is a melancholy result. The court is compelled to allow the appeals, even in the case of one man who pleaded guilty."

The judge, sitting with Mr Justice Sachs and Mr Justice Davis, allowed appeals by Christopher Grant, a proprietor of Fort Patrick, who was jailed for nine years in August 2001, and six others who received sentences of between six months and six and a half years.

Michael Boparan was alleged to have diverted duty suspended goods on to the home market through a series of companies.

Compensation move

Five hauliers - Malcolm Gell, Martin Challis, David Johnston, Alan Smith and Paul Jenkins - had also been accused of working for a sham transport company.

As well as quashing the convictions, the judges set aside criminal confiscation and compensation orders and costs orders made against the defendants.

After the hearing, Mr Grant's solicitor, Andrew Benson, said his client, who spent 16 months in jail, would be taking legal advice over compensation.

"The public should be absolutely outraged," he said.

"It is an absolute disgrace that the prosecutions have been brought and the only people who knew the prosecutions were wrong were those within the Customs and Excise."