Are tobacco companies supplying the black market?
Apparently, firms oversupplied some European markets with rolling tobacco by 240% and then proceeded to turn a blind eye when it was smuggled back to Britain. On top of that, the tax authorities failed to fine or prosecute the big four tobacco companies.
This has contributed £660m to the loss to the public purse.
"[HMRC] has failed to challenge properly those 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,” said Margaret Hodge, chairwoman of the Public Accounts Committee (Pac).
The oversupply went to countries like Belgium and the Netherlands, as well as Spain, which just happen to be convenient holiday destinations or somewhere you could drive to in a van.
Of course, the tobacco industry contested the claims and said: "We don’t oversupply, it wouldn't make any sense to do that. The UK is one of our most profitable markets." The HMRC defended themselves too, saying that the illegal cigarette market had been more than halved with nearly 3.6 billion illicit smokes and more than 1,000 tons of rolling tobacco seized in the last two years.