HM Revenue & Customs: Progress in Tackling Tobacco Smuggling, Twenty-third Report of Session 2013-14, Report, Together with Formal Minutes, Oral and Written Evidence - House of Commons Papers (Paperback)Great Britain: Parliament: House of Commons: Committee of Public Accounts (author), Margaret Hodge (other)
Paperback Published: 10/10/2013
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Tobacco smuggling represents a significant risk to revenues. It undermines initiatives to reduce smoking and it is linked to the activities of organised criminal gangs. HMRC estimates that duty not paid on tobacco smoked in the UK in 2010-11 resulted in revenue losses of around GBP1.9 billion. Some 9% of cigarettes and 38% of hand-rolling tobacco sold in the UK are estimated to be illicit, yet there were only 265 prosecutions for tobacco smuggling in 2012-13. HMRC's 2010 Spending Review settlement included GBP25 million over four years to invest in new initiatives to tackle tobacco smuggling. However HMRC was also required to find efficiency savings so total spending on HMRC's tobacco strategy in 2011-12 rose by only GBP3 million to GBP68.9 million and fell to GBP67.4 million in 2012-13. By the end of 2012-13, three of the five Spending Review-funded projects had yielded nothing and the Committee is not convinced that the Spending Review projects will deliver the GBP900 million benefit, in terms of revenue loss prevented, that HMRC now predicts they will achieve by March 2015. The Department has also failed to challenge UK tobacco manufacturers who turn a blind eye to the avoidance of UK tax by supplying more of their products to European countries than the legitimate market in those countries could possibly require. The tobacco then finds its way back into the UK market without tax being paid. The supply of some brands of hand-rolling tobacco to some countries in 2011 exceeded legitimate demand by 240%.
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