The Fed Reacts to HMRC’s Reported “Tax Gap” on Illegal Tobacco 

The Fed has reacted to recent government data published by His Majesty’s Revenue and Customs (HMRC) indicating that there is a big difference between tobacco products sold and tax collected, indicating a huge market share has been taken by black market tobacco from responsible retailers like Fed members.

In data shared in June HMRC data showed that £1.3 billion lost in tobacco duty and about £0.4 billion lost in Value Added Tax (VAT). The HMRC says its data is based on “methodology which estimates the total market size for each tobacco product and then takes away the amount actually cleared.”

Commenting, Fed National President, Hemanshu Patel, said: “This data is concerning – but it is also unsurprising and may even be an underestimate. Fed members across the country – including the business I run myself as a retailer in Kent – report anecdotal evidence that tobacco is being sold by rogue traders for much less than what the official price should be.”

“The Fed is calling for extra resourcing to be provided by central Government to help local authorities provide proper support for retailers seeking to do the right thing. Whilst the Government is starting to take efforts to tackle this, looking at new powers to close down shops for up to 1 year, more needs to be done.  The vast lost tax revenue from shows that extra resourcing can ultimately pay for itself and this could be a win-win for Government and business if they more in this area.”