Two petrol stations have been raided and seven men and two women from across southern England have been arrested for their involvement in a suspected £3m fuel fraud, during an operation by HM Revenue and Customs (HMRC).

About 170 HMRC officers, assisted by the Vehicle and Operator Services Agency (VOSA) and Sussex and Hampshire Police, searched 12 residential premises, 5 business premises and two petrol stations in East and West Sussex, Kent, Essex, Hampshire and Somerset on 23 July.

The investigation is focused on the suspected illegal purchase and sale of rebated kerosene and biofuel to motorists as duty-paid road diesel. It is believed the fraud is worth an estimated £3m in unpaid excise duty and VAT.

All those arrested were questioned by HMRC investigators and released on bail while enquiries continue.

David Margree, assistant director, criminal investigation, HMRC, said: “Motorists need to be aware that using illicit fuel can damage and destroy vehicle engines, has a detrimental effect on legitimate fuel traders and deprives the government of money used to fund public services.

“Anyone with information about fuel fraud or people involved in the sale, storage or distribution of illicit fuel can contact the Customs Hotline on 0800 595000.”

Three of the arrested men, who were aged 45, 46, and 67 and one of the women, aged 63, were from Hastings, East Sussex, two men aged 43 and 46 were from Belvedere south east London, one woman aged 48, from Pulborough, West Sussex, one man aged 34, from Romford, Essex and one man aged 46 from Hayling Island, Hampshire.