Illicit trade: JTI calls for new powers for trading standards

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Destroyed counterfeit cigarettes (Photo: iStock)

Japan Tobacco International (JTI) has called for stronger powers and additional funding for Trading Standards to tackle the issue of the illegal tobacco and vape trade as it presented further evidence to MPs on Wednesday.

The tobacco major has found counterfeit versions of a JTI hand rolling tobacco brand for £4, compared to a retail price of £29, during a recent test purchasing operation. Each pack sold saw the government lose out on approximately £20 in taxes, JTI noted, adding that one of the retail locations identified had been actively selling illegal tobacco since 2015.

Test purchasing undertaken for JTI has gathered evidence on 95 stores in north-west England selling illegal cigarettes, hand rolling tobacco and vapes. This is the first time that vaping products have also been added to these test purchasing activities.

Since 2000, HMRC estimates this criminal activity has resulted in a tax revenue loss of £51.3 billion. JTI research shows that in the last month alone, over a third of smokers have bought tobacco products that were not in the plain packs legally required in the UK.

“While Border Force prevents the smuggling of illicit tobacco into the country and HMRC conducts large scale operations that can lead to the uncovering of major illegal manufacturing sites, it is Trading Standards that undertake the lion’s share of enforcement action on the UK’s High Streets,” Ian Howell, fiscal and regulatory affairs manager at JTI, said.

“Unfortunately, despite efforts such as Operation CeCe or the Keep It Out campaign, Trading Standards is overwhelmed by the scale of the problem. They do not have access to easy to apply, hard-hitting financial sanctions that would help tackle the persistent actions of rogue retailers who are currently undeterred.”

Using the framework of tobacco ‘track & trace’ – effectively a form of licencing that requires any business trading in the tobacco sector to register with HMRC – the Finance Act 2022 gave HMRC the ability to issue ‘on-the-spot’ fines of up to £10,000 and suspend any required registration in the event of wrong-doing.

“During the consultation process, HMRC promised that these powers would be extended to Trading Standards, but the method and timeframe to accomplish this has not yet appeared. Without this, the criminals selling illegal tobacco will simply carry on regardless,” Howell said.

“JTI is calling for HMRC to extend these powers to Trading Standards, and for the Treasury to allow Trading Standards to retain the money raised through these penalties to re-invest in their services. Criminals should be made to pay the price for their criminal activity, not taxpayers.”

Howell asked retailers to report any store that is selling illicit tobacco or vapes.

“Selling illicit tobacco and vaping products puts retailers at risk of prosecution and negatively impacts their store in the community, which is why we created JTI’s ‘Don’t be Complicit’ campaign to raise awareness and give them the resources to combat this illegal trade,” he said.

Retailers can report illegal trade to Trading Standards through the Citizen Advice consumer helpline on 0808 223 1133. For further support, retailers can reach out to JTI’s Customer Care line on 0800 163503 or visit JTI’s trade retailer website.