Japan Tobacco International (JTI) has called on HMRC to provide additional funding and vowed to give it power to help the Trade Standards Department tackle the problem of illegal tobacco trade that has caused a loss of £51.3 billion in revenue since 2000.
During a parliamentary reception, JTI disclosed evidence that 95 shops in northwestern England had been found to sell illegal cigarettes, hand-rolled tobacco, and e-cigarettes to Members of Parliament.
A recent study revealed that counterfeit versions of JTI hand-rolled tobacco brands are being sold for £4, while their retail price is £29. This causes the government to lose approximately £20 in tax revenue for every pack of tobacco sold.
Since 2015, one retail outlet has been actively selling illegal tobacco.
According to HMRC, illegal tobacco trade has caused a tax revenue loss of £51.3 billion since 2000. Recent research by JTI also found that over a third of smokers bought tobacco products without the required plain packaging in the UK last month.
Ian Howell, the manager of fiscal and regulatory affairs at JTI, outlined the scope of the issue. While border forces prevent illegal tobacco smuggling into the country and large-scale operations by HMRC may lead to the discovery of major illegal manufacturing sites, the majority of law enforcement actions on the streets of the UK are carried out by the Department for Trade Standards.
Unfortunately, despite efforts such as Operation CeCe or the Keep It Out campaign, trade standards are still overwhelmed by the scale of the problem. They cannot obtain financial sanctions that are easy to implement and have a strong impact, which would help to address the ongoing actions of rogue retailers who are not deterred at present.
Honoré de Coulon (I couldn't find the name "Hauer") stated that more support is needed for trade standards in order to combat illegal trade. "By using the 'track and trace' framework for tobacco - essentially a licensing system that requires any business in the tobacco industry to register with HMRC - the 2022 Financial Act enables HMRC to issue on-the-spot fines of up to £10,000 and suspend any necessary registration in cases of wrongdoing," he explained.
During the consultation process, HM Revenue & Customs promised to extend these powers to trading standards, but the method and timeframe for achieving this goal have yet to be established. Otherwise, criminals selling illegal tobacco will continue to operate with impunity.
He added that HMRC needs to extend these powers to trading standards as soon as possible. "JTI calls on HMRC to extend these powers to trading standards, and calls on the Treasury to allow trading standards to retain the funds raised through these penalties, to reinvest in their services. Criminals should pay the price for their wrongdoing, not taxpayers.
Selling illicit tobacco and e-cigarette products can place retailers at risk for prosecution and have a negative impact on their stores in the community. This is why we have launched JTI's "Don't Be Complicit" campaign to raise awareness and provide resources to combat this illegal trade.
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