A High Court judge has advised senior customs officials to "consider" litigation which he said has already cost the taxpayer £2.5 million.

Mr Justice David Richards said the case involving HM Revenue & Customs (HMRC) and a freight firm called Abbey Forwarding - which had gone into liquidation after being launched in the early 1970s - was "worrying".

Detail has emerged in a written ruling by the judge following the latest in a series of civil court hearings.

He said HMRC thought that Abbey was involved in the fraudulent evasion of excise duty on "alcoholic goods" on a "very significant scale".

In 2009 it asked for Abbey to be wound up and a provisional liquidator was appointed by a judge.

Abbey shut down shortly afterwards and one director suffered a mental breakdown.

But the following year a High Court judge concluded following a trial that there had been "no evasion of duty".

At the latest hearing - at the High Court in London in November - Abbey asked Mr Justice David Richards to order an inquiry into the damage it had suffered.

HMRC opposed the application - arguing that officials were entitled to advance a case that Abbey had been "knowingly involved in the fraudulent evasion of excise duty".

Mr Justice David Richards said he had decided to order an inquiry into damages suffered by Abbey.

"This is a worrying case," he added. "It has already cost HMRC some £2.5 million and it seems to me that, if this has not already been done, their position should be considered at a very high level within the HMRC."