HMRC proposes tougher sanctions to tackle illicit tobacco sale

The HM Revenue & Customs (HMRC) has invited views on proposed sanctions to tackle tobacco duty evasion.

The consultation, which follows from the announcement made by the government at Spring Budget, also seeks views on extending HMRC traceability enforcement powers to trading standards officers.

The new proposed sanctions would be linked to the track and trace system for tobacco products with enforcement by HMRC and trading standards.

“Evasion of tobacco duty both robs the Exchequer of revenues and blunts the effectiveness of tobacco duty as a tool to reduce smoking,” commented Kemi Badenoch, Exchequer Secretary to the Treasury.

“Since its peak in 2000 the UK’s illicit market for cigarettes has reduced by more than a third and hand rolling tobacco by nearly half. Despite this success, the government is not complacent and recognises that the risk presented by the organised criminal groups behind the illicit tobacco trade remains high and is constantly evolving.”

The 12 week consultation, running till 23 February 2021, proposes a range of measures including:

• A new penalty of up to £10,000 for holding or possessing products that do not comply with the track and trace requirements
• Power to seize any track and trace compliant tobacco products where they are found alongside product that does not comply with the track and trace requirements
• The withdrawal of the track and trace operator ID from those retailers who are found with products that do not comply with the track and trace requirements
• The withdrawal of the track and trace operator ID from retailers that have had their ability to sell tobacco restricted or curtailed under any other legislation.

The Association of Convenience Retailers (ACS) has welcomed the proposals, highlighting the impact that the illicit trade has on legitimate retailers.

“The illicit tobacco market damages legitimate retailers and is dangerous for consumers. We have long called for tough action against the illicit trade, and welcome this consultation which aims to ensure that those selling illicit tobacco are stopped from doing so,” commented James Lowman, ACS chief executive.

“We will also be working to advise our members to make sure that they do not unwittingly fall foul of the tough enforcement measures we need.”

According to HMRC estimates, the illicit tobacco trade cost the government around £1.5 billion in lost revenue in 2018-19.