MPs have urged Customs and Excise to step up its efforts to tackle the problem of alcohol duty fraud.

A report published by the Commons public accounts committee said that there was currently "significant uncertainty" about the scale of the problem.

It is thought that well organised criminal gangs are involved in the fraud schemes which take advantage of EU rules suspending tax on alcoholic products until they are released for consumption.

The diverted goods are sold on the UK market without the payment of duty, generally through smaller commercial and retail outlets.

"This type of fraud can take place at any point in the long and complicated alcohol supply chain, without the complicity of the final sales point," said the MPs.

But they found that more could be done to tackle the estimated at around £600 million in 2001/02.

"Customs should make better use of existing information from alcohol producers to track suspected illicit products," said the report.

"Customs could then target resources more effectively at the point where alcohol is diverted in the supply chain.

"They should also discuss with the trade the effectiveness of current anti-fraud measures and the opportunity for further regulatory or operational improvement."

The committee also found that poor communication within Customs and Excise "has undermined anti-fraud operations and prosecutions".

"Customs need to improve communication between their anti-fraud teams throughout the department to avoid repeating failures in previous operations which have led to the loss of key evidence and the destruction of documentation," they concluded.

"Customs also need to improve the sharing of lessons learned from successful operations across the department to allow these to be taken into account in future anti-fraud activities."