Question to the HM Treasury:

To ask Her Majesty’s Government what progress HM Revenue and Customs has made in investigating in the UK tobacco companies that over-supply low tobacco-tax foreign countries, and what action has resulted from those investigations.

The UK introduced stringent rules in 2006 requiring all UK Tobacco Manufacturers (TMs) to control their supply chains. These rules required them to take steps to avoid supplying cigarettes and/or HRT (hand rolling tobacco) to persons who are likely to smuggle them into the UK or resupply them to other persons who are likely to do the same.

Tobacco manufacturers can face penalties of up to £5m for failing to comply with the rules. HMRC action, in monitoring TM’s compliance, is reflected in a reduction in supplies of UK brand cigarettes to high risk markets of 20% since 2010. At the same time, supplies to those markets of UK brand Hand Rolling Tobacco (HRT) has reduced by 36%.

Despite this success HMRC is not complacent. They continue to closely monitor the illicit market in the UK, which today is made up of a mix of unregulated brands, non UK brands, and counterfeit as well as genuine UK brands, to ensure the legislation is working. HMRC also robustly challenge TM’s supply chain policies and procedures to ensure their continued compliance with the rules.

HMRC cannot comment on the progress of individual investigations but it is a matter of public record that one manufacturer has been subject to a supply chain penalty. This penalty is currently under to appeal.