Alcohol wholesaler European Food Brokers Ltd - owner of troubled off-licence chain Oddbins - was the subject of an HMRC investigation codenamed ’Operation Cracker’.

EFB Ltd, based in Walsall, West Midlands, is blaming Brexit uncertainty and tough high street conditions on the decision to appoint Duff & Phelps as administrators for Whittalls Wines Merchants (trading as Oddbins), Wine Cellar Trading and EFB Retail Ltd.

The EFB group is linked to island-based businessman Raj Chatha.

Other parts of the group, including companies based at the head office in Peel Road, Douglas, are unaffected by the move.

A tribunal last year upheld a decision by HMRC that EFB Ltd and Whittalls Wines Ltd were not ’fit and proper’ to own and warehouse duty-suspended alcohol.

Operation Cracker, the HMRC investigation launched in 2011, found no evidence of fraud.

But tracing onward transaction chains into mainland Europe, Customs and Revenue officers found missing traders, non-compliant businesses or transport movements that were not at all credible.

The tribunal, which was heard in 2017 but made its ruling in February last year, dismissed an appeal by EFB Ltd against the decision to revoke approvals held for 10 years.

It criticised the ’evasion, lies and misleading evidence’ given to HMRC and the Tribunal by key people in the company.

EFB Ltd’s approval to operate as a registered owner of duty suspended goods was revoked.

Whittalls Wines Ltd also had its approval revoked to operate general storage and distribution warehouses in Birmingham, Walsall and Gateshead.

HMRC considered EFB and Whittalls Wines were not fit and proper to hold excise approvals due to the way they had conducted their business over a significant period.

This had ’exposed the Revenue to an unacceptable risk of loss through fraud,’ said the HMRC. It said alcohol due diligence had not been ’sufficiently robust to guard against the risk of tax fraud’.

But the HMRC stressed there was no allegation, and no evidence, that the appellants had been or were knowingly involved in fraudulent tax loss.

Rather, it said many and valuable supplies of duty suspended alcohol to mainland Europe between 2011 and 2014 had ended in missing or defaulting traders further down the chain.

This resulted in a large loss of tax abroad and potential tax losses in the UK.

As well as selling to the retail duty-paid trade in the UK, EFB supplied duty suspended alcohol via two associated Isle of Man-based wholesale companies, Global Beverage Distribution Ltd and Bridgewell Ltd.

These operated through nominee directors but the tribunal found Mr Chatha was the ultimate beneficial owner.

It found Global and Bridgewell were ’latterly used for the express purpose’ of enabling EFB Ltd and Chatha family members to ’mask’ from suppliers that it was reselling - in direct competiton - into the wholesale market in Europe.

Island-based Mr Chatha founded both EFB Ltd and Whittalls Wine Ltd, respectively the group’s buying and storage companies.

He resigned as director in 2010 but remained sole beneficial owner through his 100% shareholding of EFB Holdings Ltd in the UK, according to the tax tribunal.

He continued to control both companies through the services contract with island-based EFB (IoM) Ltd, which provides head office services to EFB Ltd including buying and selling functions.

It received £1.8m a year for these services, the tribunal heard. The tribunal stated that EFB (IoM) is beneficially owned by Mr Chatha.

One of its directors, until he resigned at the end of May 2018, was former Chief Minister Allan Bell.