Are tobacco companies supplying the black market?

10 October 2013

cigarettes The big UK cigarette companies have been accused of supplying the black market so they can smuggle in sly cigs and swindle Britain out of millions of pounds in taxes.

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.

TOPICS:   Tax

4 comments

  • jim ?.
    good - the government are the worst drug dealers ever. bumping up prices of cigs - when they know its adictive.
  • Dick
    British people buying fags in other countries is part of a legitimate market in those countries. If they are fulfilling demand in a particular country then it is not oversupply. What those people do with their fags (for example, smuggling into the UK) is not the fault of the manufacturers, it is the fault of border control.
  • joulupukki
    It's only ever been about the money. Just like the Govt bleating on about free markets and then shutting down companies, based and legitimately trading overseas, who tried to set up online shops here. They broke NO rules, but HMR&C would have lost tax. So they're gone. Job done, any right to appeal a waste of time.
  • Tim
    So people in other countries are buying cigarettes, and the tobacco companies are selling cigarettes to those people? Business in supply-demand shocker! Why on earth would the tobacco companies care what happens after they've sold them? Again, this seems like one of those problems that wouldn't exist if the UK didn't charge so much tax as to drive companies to find loopholes.

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