Beer & cig bonanza for Brits

British shoppers will soon be able to buy cut-price alcohol and cigarettes from the Continent without leaving home, as a result of an extraordinary legal test case that threatens to blow a multi-billion pound hole in the Treasury's coffers.

The European Court of Justice is expected to rule next week that goods can be bought in other EU states and delivered to the door while only the duty levied in the country of origin is paid. This is often a fraction of that charged in Britain.

If, as appears likely, the court rubber-stamps a previous adjudication by its advocate general, shoppers will be free to use the internet or mail order companies to find the best bargains around Europe and have them shipped home for their own consumption.

The potential savings are huge: 200 cigarettes purchased in Latvia cost only £7.20, a saving of about £43, while several European countries charge no duty on wine.

Businesses across Europe are gearing up for the changes, but the British Retail Confederation warns that UK businesses will lose unless action is taken to harmonise duty rates across the Continent.

The Treasury earns £15 billion a year from excise duty on alcohol and cigarettes — enough to pay the running costs of the Home Office, the Foreign Office and the Department for Culture, Media and Sport.