HMRC has admitted it will struggle to meet its targets on recouping lost revenue from tobacco smuggling.
The taxman had been aiming to recoup £1.4bn in lost revenue in the four years to March 2015, but it was now likely to hit a figure of £900m, HMRC’s chief executive Lin Homer told the Public Accounts Committee (PAC) of MPs yesterday.
However, PAC chairwoman Margaret Hodge threw doubt on this revised target, after Homer revealed HMRC had only recouped £328m by the end of last year. “You are assuming in the next two years you will get another £600m,” Hodge said. “I am a bit sceptical about that. We shall wait and see.”
Homer admitted that the amount of British-made tobacco – particularly handrolled – making its way back to the UK illegally was “creeping up”.
The HMRC has been given an extra £25m over four years to fight tobacco smuggling, although Homer admitted that, once other spending cuts were taken into account, spending on the tobacco fight had dropped slightly from £68.9m in 2011-12 to £67.64m this year.
Tobacco seizures
Giving evidence to the PAC on seizures of illicit tobacco, director general of Border Force, Sir Charles Montgomery, admitted that targets had been “overly optimistic”, and had been missed two years in a row. Nonetheless, he said his agency had seized more illegal cigarettes this year than last.
“The criminals are changing their behaviour,” Sir Charles said. “Our judgment is that they are now using more routes and smaller packages at any one time, which means that although, as you rightly say, we did not hit our targets, it is worthwhile reflecting that in HRT [hand-rolled tobacco], for example, although the volume that we took was lower, the number of seizures was significantly greater.”
“You have to bear in mind that we are also seeing a significant reduction in the numbers of people smoking, so we are taking more out of a market that is diminishing,” Homer added.
An HMRC spokeswoman told The Grocer the extra £25m it received in 2010 had ensured it was able to do more to tackle tobacco smuggling than ever before: “The illicit cigarette market has continued to decline and through our work with Border Force, in the last two years nearly 3.6 billion illicit cigarettes and 1,050 tonnes of rolling tobacco have been seized. This has resulted in 432 prosecutions and over 1,600 assessments and penalties issued with a value of nearly £24m.
“We continue to work across government, to further improve our intelligence and ensure the organised criminal gangs behind this crime are brought to justice.”
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