Corporate report

Quarter 3 and 4 outputs: October 2015 to March 2016

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 3: October to December 2015

  Overseas Border Inland Quarter 3 total
Volume (sticks) 377.4 million 140 million 28 million 545 million
Revenue value £121 million £45 million £9 million £175 million

Quarter 4: January to March 2016

  Overseas Border Inland Quarter 4 total Year-end total 2015 to 2016
Volume (sticks) 488 million 82.3 million 11 million 581 million 1.7 billion
Revenue value £157 million £26.4 million £3.6 million £187 million £561 million

2. Hand-rolling tobacco seizures

Quarter 3: October to December 2015

  Overseas Border Inland Quarter 3 total
Volume (tonnes) 1.3 60.4 31.5 93.2
Revenue value £0.3 million £14.8 million £7.7 million £22.8 million

Quarter 4: January to March 2016

  Overseas Border Inland Quarter 4 total Year-end total 2015 to 2016
Volume (tonnes) 0 49.3 2.9 52.2 286
Revenue value 0 £12 million £0.7 million £12.7 million £70 million

Case studies

Cigarette smuggler’s plan goes pear-shaped - A lorry driver was jailed for almost 7 years for smuggling more than 147 million cigarettes, behind crates of rotting pears.

In October 2015 Border Force officers using various search techniques which in addition to sniffer dogs, includes carbon dioxide detectors, heartbeat monitors and scanners as well as visual searches seized a total of 1,050,000 cigarettes that were hidden inside shrink wrapped boxes that were labelled as roofing materials.

3. Criminal investigations

Criminal enforcement activity1

  Quarter 3 total Quarter 4 total Year-end total 2015 to 2016
Number of individuals prosecuted 88 148 431
Number of individuals convicted 85 83 268
Number of tobacco related confiscation orders 11 12 38
Value of tobacco related confiscation orders £0.52m £0.22m £1.32m
Revenue loss prevented £278.3m £142.5m £983.1m

Case studies

Two hair salon owners were arrested in July 2013 following a HMRC investigation. HMRC associated them with seizures of nearly 3 tonnes of fruit flavoured tobacco.

Christmas behind bars for tobacco smuggler - In December 2015 a lorry driver was caught trying to smuggle more than 3 tonnes of illicit hand-rolling tobacco into the UK through Dover.

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

  Quarter 3 total Quarter 4 total Year-end total 2015 to 2016
Number of assessments for tobacco products duty issued 359 637 1,461
Value of tobacco products duty assessments issued £5.9 million £6.7 million £15.7 million

Wrongdoing penalties

  Quarter 3 total Quarter 4 total Year-end total 2015 to 2016
Number of assessments for tobacco products duty issued 291 601 1,335
Value of tobacco products duty assessments issued £0.9 million £0.7 million £2.2 million

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

Trade press

In March the Independent Retail News magazine reported on a 2 day operation by HMRC to disrupt the sale and supply of illegal tobacco and alcohol in Leicester. The operation uncovered more than 30,600 cigarettes, 51kg of tobacco and 919 litres of alcohol, all believed to be illicit. The operation involved raids on 18 shops.

Also in March, the Independent Retail News magazine reported about the imprisonment of an independent retailer for selling illegal tobacco. The owner of the store in Newport in South Wales was jailed for 2 years and 8 months for making up to £3,000 a day selling illegal tobacco, while a Bolton shopkeeper was given an 8 month suspended prison sentence for failing to pay duty on illicit tobacco.

Furthermore, a store in Preston was stripped of its alcohol licence after a seizure of 2,200 packets of illegal tobacco and an outlet in Sutton-in-Ashfield, Nottinghamshire, also lost its licence after trading standards officers found contraband tobacco hidden in the shop. Another Preston shopkeeper was ordered to do 200 hours of unpaid work for selling illicit tobacco, in what was his third prosecution for such offences.

HMRC multi-agency events

Widespread coverage was gained about an operation in Manchester and Bolton. HMRC officers with support from agencies and 4 sniffer dogs visited 50 retail premises and storage units in October 2015. The visits as part of HMRC’s Tobacco Taskforce activity, led to suspected illegal tobacco and alcohol products being seized from 29 premises. Over 1 million cigarettes were seized as well as 73.60 kg of hand rolling tobacco and 52.36 kg of shisha tobacco. Estimated revenue protected: £267,000.

In February 2016 HMRC officers, Police and Trading Standards raided eight retail premises as part of Operation Henry – a national crackdown on the sale of illicit tobacco products. Seizures were made at 7 out of the 8 premises. A total of 21,300 cigarettes and 107 bottles of vodka suspected to have counterfeit labels. At one shop cigarettes were concealed in pockets of coats hanging in the back room.

Regional/local campaigns to raise awareness

JTI’s continued regional media engagement programme resulted in campaigns being run in Aberdeen Evening Express, the Exeter Express & Echo, the Torquay Herald Express and the Liverpool Echo. A combined readership of over 337,000 were made aware of the problems caused by the illegal trade and encouraged to use Crimestoppers and the HMRC Hotline to report criminal activity.

JTI continued to remove gantries from retailers found to have been dealing in illegal tobacco. A further 4 gantries were removed between December 2015 and March 2016 bringing the total number of removals in 2015 to 2016. The removal of a gantry from Amani News, a Manchester retailer with a Bestway account, led to further action by the Bestway group who terminated the stores membership. This was widely reported in the trade press, in particular as part of Retail Express’s Smoke Them Out campaign.

At the end of March 2016 Imperial Tobacco launched their anti-illicit trade Suspect it? Report it! website which has received over 1,000 unique visitors. A dedicated newsfeed provides visitors with the latest daily developments around illicit tobacco, from regional, national and international perspectives. Visitors can also view and download Suspect It? Report It! Posters, videos and infographics. Imperial continue to promote their Anti Illicit Tobacco messaging through the Suspect it? Report it! Campaign throughout trade press publications including Asian Trader, Convenience store, Independent Retail News, The Grocer and many more.

Imperial have continued to remove a number of Imperial Tobacco gantries from retailers convicted of illicit trading. Furthermore, where the gantry is owned by another tobacco company Imperial now review cases and remove all sales support to those criminal retailers as another way of demonstrating that Imperial Tobacco will not tolerate illegal activities, or the damage they impose on honest retailers and communities.

In quarter 3 Phillip Morris Limited undertook 11 test purchase visits to UK towns and cities. A team of ex-law enforcement officers investigated the illegal trade in tobacco. All findings, including details of where illegal tobacco was being sold was reported to HMRC. A further 9 test purchase visits were undertaken between January 2016 and March 2016.

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