HM Revenue and Customs (HRMC) has failed to meet any of its targets on reducing the smuggling of illicit tobacco into the UK, according to a story by Angus Crawford for BBC Online, quoting an official watchdog.
The National Audit Office (NAO) said HMRC’s latest strategy, launched in 2011, had so far prevented tax revenue losses of £328m – less than two-thirds of the total projected.
And its target of saving £1.4 billion over four years now seemed ‘unachievable’.
HMRC said it was committed to tackling tobacco smuggling and had invested an extra £25 million in doing so.
HMRC has estimated that in 2010-11 alone, duty was not paid on 9 per cent of the cigarettes and 38 per cent of the hand-rolling tobacco smoked in the UK, at a cost of £1.9 billion in lost revenue.
The report acknowledged HMRC had achieved some success in building up its intelligence network overseas, resulting in the seizure of an estimated 1.27 billion cigarettes and 56 tonnes of tobacco overseas in 2012-13.
But it said key initiatives to curb smuggling had been delayed or cancelled – in part due to legal concerns – while HMRC lacked a ‘good understanding’ of the volume of prosecutions and other legal sanctions needed to provide an effective deterrent.
Despite legislation in 2006 aimed at cracking down on tobacco manufacturers facilitating smuggling, the NAO said the supply of some hand-rolling tobacco brands to certain countries was still estimated to exceed legitimate demand by 240 per cent.
The job of HMRC is not made easy by government policy, which uses taxation to raise the price of licit cigarettes to the point where the poorest smokers cannot afford them; in the knowledge that those smokers are addicted to a tobacco habit that, on average, takes five years and seven attempts to break.