A new enforcement approach between National Trading Standards (NTS), local authority Trading Standards, Scottish Trading Standards Services and HM Revenue and Customs (HMRC) has led to more than £1.4 million in civil penalties being issued to retailers and individuals involved in the sale of illicit tobacco.
The £1 million milestone, reached in late November 2025, had risen to £1.4 million by early January 2026. It comes as enforcement activity against illegal sellers continues to grow, with the strengthened partnership between NTS and HMRC speeding up investigations and delivering tougher sanctions for those supplying or selling illegal tobacco products.
The stronger powers, which came into force in July 2023, enable local authority Trading Standards officers to make direct referrals to HMRC. HMRC can then investigate and issue civil sanctions, including penalties of up to £10,000. This has led to unprecedented sanctions, which escalate for persistent offenders, since the referral approach began in October 2023.
Retailers who sell illicit tobacco, risk being removed from the Tobacco Track and Trace (TT&T) system which is required to be part of the legitimate UK tobacco market.
The enforcement approach is part of Operation CeCe, a joint UK-wide initiative between HMRC and Trading Standards to target the illicit tobacco trade. Since it began in January 2021, the operation has removed more than 74 million illicit cigarettes, 19,750kg of hand-rolling tobacco and almost 175kg of shisha products from sale.
Lord Bichard, Chair, National Trading Standards, said, “Illegal tobacco harms communities, undermines legitimate retailers and fuels wider criminal activity. The vast majority of retailers play by the rules. These sanctions demonstrate that we are taking decisive action against those who don’t.
“We urge anyone tempted to sell illegal tobacco to think again. The organised criminals supplying you don’t care about your community, your business or your safety – and you’re funding their wider criminal exploits as well as risking tougher penalties by selling their products.”
Alexandra Connell, Chair of the Society of Chief Officers of Trading Standards in Scotland (SCOTSS) said, “Scottish Trading Standards Services welcome the opportunity to work with colleagues at NTS and HMRC in the ongoing, targeted effort against the supply of illegal tobacco products in our communities. We know full well of the detrimental impact this illicit trade has on legitimate businesses, and the amounts of money this raises for organised crime.
“We have rapidly adopted the Sanction regime which sits alongside our existing powers to report those involved with the associated criminality to the Crown. Since the inception of the Sanctions regime, our colleagues in local authority teams have submitted almost 250 referrals to HMRC to consider.
“We will continue to do so as we appreciate that this is an effective and efficient means of denying organised criminals any profits gained through their abuse of the tax system.”
Rachel Nixon, HMRC Director Indirect Tax, said, “These tougher enforcement sanctions strengthen HMRC’s ability to hit illicit tobacco sellers’ pockets with penalties of up to £10,000, which harms the wider criminal supply chain.
“Successful collaboration with Trading Standards continues to tackle the sale of illicit tobacco, which is estimated to cost the UK around £1.8 billion each year in lost tax revenue, undercutting retail businesses and funding crime across our communities.
“We encourage anyone with information about the smuggling, sale or supply of illicit tobacco to report it online.”
The clampdown aims to protect honest businesses by targeting the criminal networks and opportunistic sellers who profit from illegal tobacco, often at the expense of local communities and legitimate trade.
Retailers are being encouraged to check that their own tobacco sales processes meet legal requirements and to report any concerns about illegal sales in their area.
Illicit tobacco includes any tobacco products that are counterfeit, non-UK duty paid or do not comply with UK Tobacco Track and Trace (TT&T system) requirements. The Tobacco Track and Trace system, introduced in 2019, gives HMRC the ability to monitor and track legitimate tobacco products manufactured in, or imported into, the UK.
The tougher referral and sanction powers came into force on 20 July 2023 and relate to detection of non-compliance with TT&T regulations