Call for tougher penalties on illegal tobacco sales
Fresh is calling for tougher penalties against people dealing in illicit tobacco as a national consultation looks at effective ways of tackling the black market.
Those who smuggle, distribute and sell illegal tobacco which often ends up in the hands of children on North East estates could be hit by a fourfold increase in fines together with tough new civil penalties to deter sales.
HMRC has launched a national consultation setting out proposals to create tougher sanctions, which could include:
- A potential steep increase in fines, for example increasing for first offences from £175 up to £250, for second offences from £750 to £1500, and rising from £750 to £3,000 for fourth offences
- More responsibility on landlords to take reasonable steps to stop properties like shops being repeatedly used to store, produce or sell illicit tobacco
- More naming of businesses and crime gangs who evade tobacco duty, with those responsible putting themselves at risk of detailed investigations into their tax affairs
- A new civil penalty for those involved in flouting tax marks
National HMRC tax gap figures show that the illicit market for cigarettes has fallen from 22% in 2000-01 to 13% in 2015-16, and for hand-rolling tobacco from 61% to 32% of the whole tobacco market. The amount of tax lost to the illicit market has been driven down from £3.4 billion a year to £2.4 billion a year.
However, tobacco fraud remains a serious problem with HMRC estimating that in 2015-16, five billion illicit cigarettes and 3,200 tonnes of illicit hand-rolling tobacco were consumed in the UK. The fraud is dominated globally by organised criminals.
Ailsa Rutter, Director of Fresh, said: “We know the current penalties for selling illegal tobacco are not enough of a deterrent, which is a concern to both parents and retailers who abide by the law. This encourages unscrupulous sellers to take the risk and also deters people from giving information that could stop future sales.
“The illicit tobacco trade helps enable children to buy cigarettes, undermines public health and deprives schools and hospitals. There are also cases of sellers linked to loan sharking and drugs. The government needs to send out a strong message this is not a victimless crime.”
John McClurey, who owns a shop in Newcastle, is a former North of England President of the Newsagents Federation, and said: “Most retailers take a responsible stance around the sale of tobacco, and are incredibly conscious that illegal tobacco is supporting local crime and giving local children an easy way to buy cigarettes.
“However, there is concern the current penalties are seen as little more than a slap on the wrist. Repeat offenders being made to pay £1500 or even £3,000 would put most people off taking the risk and I think most shopkeepers would support this.”
Financial Secretary to the Treasury, Jane Ellison MP, welcomed the consultation and said: “HMRC has made great progress in combatting fraud in the tobacco market, and protecting both public money and public health. However, there’s always more we can do and that’s why we are consulting on new sanctions to further tackle this illegal trade by really hitting the criminal gangs who run it.”
But Ailsa Rutter added: “We believe this should go further than just tougher penalties and that a proper licencing scheme is the next necessary step to give local authorities far more ability to reduce the illegal tobacco trade and sales of cigarettes to children. At present no licence is required for a product that kills one in two smokers and the cost of this could be funded by a levy on tobacco companies.”
1. The consultation closes at 11:45pm on 10 May 2017. The documents is available here: