BAT to appeal against oversupply fine

British American Tobacco is to appeal against a fine imposed by the UK’s HM Revenue and Customs (HMRC) for allegedly oversupplying the Belgium market with hand-rolling tobacco that then found its way to the UK.

In a statement issued to the media, BAT described the fine as unjustified.

The £650,000 fine came to light through a story by Jamie Doward for the Observer Sunday newspaper.

Doward said that HRMC had refused to identify the company, citing ‘taxpayer confidentiality’, but that in response to questions from the Observer BAT had confirmed it was the firm recently fined for oversupplying hand-rolling tobacco to Belgium.

This was said to have been the first time HMRC had acted against a tobacco company in this way.

However, an HMRC spokesman was quoted as saying that it was now looking closely at the other major UK tobacco companies to check whether they were acting illegally.

In its response, BAT said that it was devoting considerable resources to stem the illegal supply of overseas product to UK consumers but that it was impossible to be 100 percent effective given that it was not a law enforcement agency and UK consumers were perfectly entitled to shop for cheaper products outside the UK in the EU single market.

‘The UK is caught in a perfect storm of high domestic tobacco taxes, which encourage consumers to either buy illegal tobacco or to shop for cheaper products outside the UK, combined with EU single market laws allowing the free movement of goods for consumers,’ BAT said in a press note.

‘There are two types of people bringing tobacco products into the UK from overseas: smugglers who want to make illegal profits; and genuine consumers exercising their right as EU citizens to buy any product for personal use in EU countries where the prices are cheaper than the UK. It is impossible for tobacco companies, who sell through retailers, to identify which shoppers are legitimate and which are intending to smuggle. After all, we are a business not a law enforcement agency.

‘We make every effort to control our supply chain and have collaborated and co-operated with … HMRC for many years in this area. However, we are not a law enforcement agency and cannot be expected to effectively police smuggling throughout Europe.

‘In addition, we cannot stop UK consumers exercising their right to buy products from other EU countries. In this respect, we are providing a perfectly legal supply to a legitimate demand.

‘We have an in-house team dedicated to addressing the smuggling issue and we go well beyond our legal obligations, investing significant resources over many years to tackle tobacco smuggling.

‘We also co-operate with HMRC wherever we can providing useful information regarding intelligence we have gathered on the illicit trade in tobacco. We believe this … collaboration is important in fighting the battle against criminal activity.

‘We are very surprised and disappointed to have received an unjustified and inappropriate fine given we have been in constant contact with HMRC regarding this matter and have informed them of progress made at every step of the way.

‘We will defend ourselves vigorously against the penalty and, as such, we are appealing what we believe to be an unjustified fine.

‘We believe we all need to come together to fight tobacco smuggling and British American Tobacco remains committed to working with governments, law enforcement and customs agencies to combat all forms of this crime.’