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HMRC internal manual

Tobacco: Anti-smuggling or the duty to avoid facilitating smuggling

Initial Notices: When is it appropriate to issue an initial notice?

The purpose of an initial notice is to act as a warning to the tobacco manufacturer. An initial notice may only be issued where HMRC believe a tobacco manufacturer is failing in his duty not to facilitate smuggling, and we have evidence of this.

A number of factors must be considered when deciding whether or not issue an initial notice. These are set out in law (TPDA 1979 s.7B(2)) and reproduced in section 6.3 of Notice 477. They are:

 

 

 

  • the content of the supply chain policy;
  • how the manufacturer has complied with his supply chain policy;
  • any action the manufacturer has taken following any notification of specified brands, countries and individuals;
  • whether the manufacturer has provided the required information relating to specified brands, countries and individuals;
  • the number, size and nature of the notified seizures of the manufacturer’s products (this will not include any notified seizures that have previously been disregarded) or any notified seizures that were not proven to be counterfeit product;
  • whether the manufacturer has provided the required information relating to notified seizures;
  • any evidence of the demand for the manufacturer’s brands in countries outside the UK including the demand from legitimate cross border shoppers; and
  • whether there is a reasonable excuse for the tobacco manufacturers acts or omissions
  • if any audits have been conducted by HMRC, their outcome and the tobacco manufacturers approach to them should be taken into account
  • any other factors we believe to be relevant.

The recommendation to issue an initial notice must be made in the form of a report, setting out how the tobacco manufacturer maybe failing in his duty not to facilitate smuggling, and must include the following:
 

  • details of any obligations the tobacco manufacturer has failed to meet;
  • available evidence of the failure(s); and
  • action the tobacco manufacturer has or is taking to rectify the situation.

The report should be produced by LB Tobacco Anti Smuggling Manager in close co-operation with Tobacco policy to arrive at a collective view on whether or not an initial notice should be issued. It should be stressed however that the final decision rests with LB Tobacco Anti Smuggling Manager. The outcome should be reported by LB to the Tobacco Delivery Group (TDG).