A statement by The Rt Hon Margaret Hodge MP, Chair of the Committee of Public Accounts:
In 2010-11 nearly £2 billion of potential revenue was lost from the public purse because HMRC hasn’t got a grip on tobacco smuggling. Despite extra funding and new programmes, it is clear that HMRC’s performance is falling short. It is disappointing that, even with an extra £25 million of funding, it is unlikely it will meet its own target to prevent an additional £1.4 billion being lost over the 2010 spending review period.
Large quantities of UK hand rolling tobacco brands, which far outweigh legitimate demand, are being sold abroad. This is despite legislation introduced 7 years ago to crack down on tobacco manufacturers facilitating smuggling. HMRC has been too weak to fully enforce the law in this area and needs to be tougher to stop products being available to smuggle.
HMRC’s inability to crack down on unlawful tobacco smuggling not only affects the public purse, but undermines Government efforts to stop people smoking, as members of the public can access cheap illicit cigarettes. HMRC also has a duty to prevent criminal gangs from making big money out of this profitable illicit business.