New Government anti-illicit tobacco strategy

Tuesday 24 March 2015

ASH welcomed the Government’s refreshed anti-illicit tobacco strategy launched today. The new strategy had been pre-announced in the Budget, which noted that it would not only protect public finances but also “help meet public health objectives by driving down smoking prevalence.” [1]

ASH acknowledges the work done to reduce tobacco smuggling and welcomes the commitment to setting up a cross ministerial group on smuggling, and the pledge to support EU ratification of the World Health Organisation’s Illicit Trade Protocol. ASH also welcomes the Government’s intention to work with partners including health organisations such as Public Health England and ASH.

However, ASH is concerned about the use of an industry authentication system, Codentify, to tackle the illicit market given the tobacco industry’s ongoing record of complicity in the illicit market. Most recently, in November 2014, British American Tobacco (BAT) was fined £650,000 for not complying with its legal obligations to control its supply chain [2] after a Public Accounts Committee report which criticised HMRC for not taking tougher action on industry misconduct.[3] Codentify has also been criticised in a report for the WHO, which concluded that it was not compliant with the Illicit Trade Protocol requirement that ‘the tracking and tracing system has to be “controlled by the Party” (i.e. the relevant state or states)’.[4]

ASH welcomes the review of sanctions for involvement in the illicit trade, including naming and shaming, which in the past HMRC has inexplicably refused to use against the tobacco manufacturers. For example, when BAT was fined by HMRC this information was released through the media and not through HMRC, which had insisted that it should be kept confidential.

Deborah Arnott, Chief Executive of health charity ASH said:

“The Public Accounts Committee report on tobacco smuggling was very clear. The tobacco industry has continued to facilitate tobacco smuggling and HMRC has failed to challenge the manufacturers properly for their misdeeds. Although there are welcome new actions in the updated strategy, it is still not clear that HMRC has taken this crucial point fully on board. HMRC still seems far too willing to work collaboratively with the industry, rather than treating them as potential tax avoiders. HMRC’s apparent willingness to co-operate with the industry’s Codentify scheme threatens to make the industry far too influential in future action on illicit trade.”


Notes and Links:

[1] Tackling illicit tobacco: From leaf to light. HMRC & Border Force. 24 March 2015

Para. 2.17 of The Budget report states: Tobacco duty– tackling the illicit trade. “The government is fully committed to tackling the illicit trade in tobacco to protect public finances and support health
objectives. On 24 March, HMRC and the UK Border Force will be publishing a
refreshed strategy to address this fraud and the criminality behind it.”

[2] BAT fined for oversupplying tobacco in low-tax European jurisdictions.
The Guardian 16 Nov. 2014
[3] The Public Accounts Committee. HM Revenue & customs: Progress in tackling tobacco smuggling. Twenty-third report of session 2013-14.
[4] Secretariat study of the basic requirements of the tracking and tracing regime
to be established in accordance with Article 8 of the Protocol to Eliminate Illicit Trade in Tobacco Products. Paper presented to the Conference of the Parties to the WHO Framework Convention
on Tobacco Control. 6th Conference of the Parties, Moscow, , 13–18 October 2014