ACS has responded to the publication of HM Revenue and Customs’ report on the prevalence of non-duty paid alcohol and illicit tobacco in the UK, reiterating calls for targeted action at a local level to reduce the impact of the illicit trade on responsible retailers.
According to HM Revenue and Customs, the tobacco tax gap driven by the illicit market in cigarettes and hand-rolling tobacco is estimated to be £2.5 billion in 2016-17. Of this, £1.9 billion was lost in tobacco duties and a further £0.5 billion in VAT.
The alcohol tax gap (including beer, wine and spirits) is estimated to be £1.3bn, of which £0.9bn was in alcohol duties and a further £0.4bn in VAT. There is no change on the previous year’s figures, which also estimated a total alcohol tax gap of £1.3bn.
ACS chief executive James Lowman said: “The illicit trade in tobacco harms legitimate retailers trading in communities across the UK. We believe that local enforcement authorities should be given more powers to deal with those who supply and sell illicit goods, including the power to remove alcohol licences from offenders.”
The Government is currently considering the implementation of ‘track and trace’ regulations as set out in the EU Revised Tobacco Products Directive, due be introduced in May 2019, which will put in place a new method of tracking the sale of legitimate tobacco products through the supply chain. The intention of the ‘track and trace’ regulations is to significantly reduce the illicit tobacco trade.
ACS has called on the Government for clarity on the timeframes for the ‘track and trace’ regulations to give retailers enough time to prepare.
Mr Lowman continued: “Measures like the track and trace regulations which aim to reduce the tax gap are welcome, but there are still unanswered questions when it comes to the operation of these regulations. We are working with HMRC to clarify the timescales for applying for Economic Operator Identifier Codes and preparing for the day to day operations under the new regulations.”
Retailers looking to report those selling illicit goods should call the HMRC fraud hotline on 0800 788 887.
The full HMRC Measuring Tax Gaps Report can be found here: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/715742/HMRC-measuring-tax-gaps-2018.pdf
