Corporate report

Quarter 1 and 2 outputs: April to September 2015

Updated 29 July 2016

The government has had a comprehensive strategy to tackle illicit tobacco since 2000.

This has been highly effective in reducing the illicit cigarette trade from 22% (in 2000 to 2001) to 10% today, and from 61% to 35% for hand-rolling tobacco. In the same period the revenue lost has reduced from £3.4 billion to £2.1 billion per annum.

Recognising that this remains a significant problem, to build on this success HMRC and UK Border Force published a refreshed strategy for tackling tobacco smuggling in March 2015 which explains how we will continue to catch, and punish those in the illicit tobacco trade.

For more details, read Tackling illicit tobacco: from leaf to light.

HMRC estimates the size of the illicit market using tax gap data which is reported annually, each autumn. Read the latest report: Tobacco tax gap estimates 2014 to 2015.

Tobacco strategy outputs delivered

1. Cigarette seizures

Quarter 1: April to June 2015

  Overseas Border Inland Q1 total
Volume (sticks) 313.2m 110.7m 4.7m 428.6m
Revenue value £100.5m £35.6m £1.5m £137.6m

Quarter 2: July to September 2015

  Overseas Border Inland Q2 total
Volume (sticks) 112.4m 72.1m 6.0m 190.5m
Revenue value £36.0m £23.1m £1.9m £61m

2. Hand-rolling tobacco seizures

Quarter 1: April to June 2015

  Overseas Border Inland Q1 total
Volume (tonnes) 0 64.7 11.9 76.6
Revenue value 0 £15.8m £2.9m £18.6m

Quarter 2: July to September 2015

  Overseas Border Inland Q2 total
Volume (tonnes) 8.9 44.4 7.9 61.2
Revenue value £2.2m £10.8m £1.9m £14.9m

Case studies

In April 2015 a Ugandan High Commission worker was sentenced to six years in prison following an investigation by HMRC. The employee abused privileges available to diplomats by purchasing large quantities of hand-rolling tobacco, tax free from specialist duty free sales companies. It is believed that he then sold the tobacco on the hidden market as a profit without accounting for tax or duty. In total he obtained 28 tonnes of hand-rolling tobacco and it is estimated that this equates to 44.8 million cigarettes. Revenue protected: £4.8million.

In July 2015 Border Force officers intercepted a coach driver and his passenger after they arrived at the Port of Harwich. Officers found 900kgs of raw leaf tobacco hidden behind a false wall inside a shower in the vehicle they were travelling in. The pair were sentenced to 12 months imprisonment at Chelmsford Crown Court and were also ordered to pay £900 court costs each.

3. Criminal investigations

Criminal enforcement activity1

  Q1 total Q2 total
Number of individuals prosecuted 60 135
Number of individuals convicted 58 42
Number of tobacco related confiscation orders 7 8
Value of tobacco related confiscation orders £0.30m £0.28m
Revenue loss prevented £214.2m £348.1m

Case studies

In May 2015 a couple from Manchester were jailed for a £3.8 million excise fraud, involving over 25 tonnes of counterfeit tobacco, after an investigation by HMRC. The couple from Salford, were linked to over 28 deliveries of illegal hand-rolling tobacco across the North West and eight tobacco seizures in Manchester, Liverpool and the Netherlands. The pair used ‘cover loads’ of shoes and shelves to smuggle the tobacco into the UK.

In June 2015 a furniture importer from Brighton was sentenced to 18 months in prison and suspended for two years. The case was referred to HMRC after a shipping container that had come from Indonesia was intercepted by Border Force officers where they discovered five, multi-coloured, fibre glass statues of Buddha which had been filled with more than 100,000 illicit cigarettes.

4. Civil penalties

In addition to criminal prosecutions, HMRC uses a range of sanctions and penalties to penalise anyone handling illicit tobacco products, to recover unpaid duty on seizures made at the border and inland to improve compliance.

Tobacco products duty assessments

  Q1 total Q2 total
Number of assessments for tobacco products duty issued 252 213
Value of tobacco products duty assessments issued £998,499 £2,120,350

Wrongdoing penalties

  Q1 total Q2 total
Number of tobacco related wrongdoing penalties issued 242 201
Value of tobacco related wrongdoing penalties issued £216,730 £330,096

In the news

HMRC aims to maximise the use of free media to:

  • broaden the knowledge and awareness of enforcement action and penalties, in order to increase its deterrent impact
  • raise awareness and understanding of illicit tobacco products and change behaviour
  • encourage the public and businesses to pass on information and intelligence on the illicit market

HMRC illicit tobacco media coverage in the quarter:

Trade press

In May the Independent Retail News magazine reported that Imperial Tobacco removed a gantry from an independent retailer in Smethwick after they were prosecuted for selling illegal tobacco. Also in May the Lancashire Evening post reported that Japan Tobacco International (JTI) took a gantry from a Preston based retailer.

In August the Independent Retail News magazine reported on a criminal gang that were jailed for more than 15 years for using their freight company as cover to smuggle more than 14 million cigarettes inside boxes of fruit and vegetables.

HMRC multi-agency events

Widespread coverage was gained about an operation in Bolton. HMRC officers with the support from agencies including four tobacco dogs visited 11 retail premises and storage units on Wednesday 24 June 2015. The visits as part of HMRC’s multi-agency activity led to 53,340 cigarettes, 63.1 kgs of HRT and 1.5 kgs of shisha being seized from ten premises. Revenue protected: £31,575.

Widespread coverage was gained for the joint operation by HMRC, North Wales Police, UK Border Force Agency and Flintshire, Wrexham, Conwy and Denbingshire Trading Standards officers. 55 retail premises, private addresses and self-storage units were visited on the 14, 15 and 16 July. Eight tobacco dogs and their handlers also worked on this operation. The visits as part of HMRC’s Tobacco Taskforce activity led to tobacco and alcohol products being seized at 15 locations. This included 1,646,000 cigarettes and 700 kilos of hand rolling tobacco. Potential revenue protected: £716,500.00.

Regional/local campaigns to raise awareness

74 regional daily newspapers, with a readership of 4.8 million adults, carried Japan Tobacco International’s (JTI) anti-illegal tobacco message on 29 May. This communication urged readers of the newspapers to ‘Take a Stand’ against illegal tobacco and report any information to Crimestoppers or HMRC.

JTI continued to remove gantries from retailers found to have been dealing in illegal tobacco. Four were removed in Q1 and three in Q2, bringing the total for the past 12 months to 15. As with previous gantry removals there was much supportive comment in the trade media.

In quarter 1, Crimestoppers’ anti-illicit trade awareness campaign took place, funded by Philip Morris, and aimed at the general public.This included coverage across national/regional press, trade press and local radio. Five test purchase visits were also undertaken to UK towns and cities.

In late September publication of the New Statesman roundtable that was arranged to discuss the subject “Illicit tobacco, not a victimless crime”.

Imperial Tobacco’s ‘Suspect It? Report It!’ campaign has continued its excellent traction in the trade press, featuring in publications including The Grocer, Independent Retail News, Retail Newsagent, Convenience Store, Asian Trader and Scottish Local Retailer. Recent instalments have focused on the fact that illegal tobacco is often being peddled where people least expect it, and also that it can potentially contain unwelcome – even harmful – ingredients. The latest addition to the campaign features a gantry removal we undertook from Ari Aziz Mohammed’s UK Mini Market in Smethwick in April, following his conviction in court of selling illegal tobacco products. In addition to removing the aforementioned gantry, Imperial Tobacco has withdrawn all sales and promotional support from a number of other illicit traders.

The ‘Suspect It? Report It!’ campaign encourages retailers to report suspicious outlets selling illicit tobacco to the Customs Hotline. Imperial Tobacco has detected a significant increase in quality intelligence from retailers since the campaign’s launch in 2013; this is shared with law enforcement to assist targeted enforcement activity throughout the UK.

Help HMRC tackle tobacco smuggling

To report any kind of excise fraud or tax evasion you can contact HMRC with the information, in confidence:

  1. Convictions do not necessarily relate to the prosecutions started in this period, since outcomes to cases will depend on the time taken for them to be processed through the judicial system