Clarity over tobacco duty and anti-forestalling has been urged by representatives of the UK retail and wholesale industry.
Trade bodies the Association of Convenience Stores (ACS) and the Federation of Wholesale Distributors (FWD) have called for more information regarding tobacco supplies. The cancelled Autumn Budget and no duty increase on tobacco has led to confusion in the sector, particularly around anti-forestalling regulations which are designed to prevent retailers taking advantage of a shift in duty by stockpiling product.
ACS chief executive James Lowman and FWD chief executive James Bielby had written a joint letter urging clarity in the situation.
The letter stated that “Retailers are currently seeing increases in tobacco sales, largely due to the non-UK-duty-paid market shrinking significantly due to a significant decrease in illicit product in the market and restricted opportunities for people to legally bring in foreign-duty-paid tobacco from abroad”.
It added: “Retailers and wholesalers are making live decisions on tobacco orders in order to supply their customers. Despite the cancellation of the Autumn Budget, HMRC officials have indicated that anti-forestalling restrictions could still apply. During the current period of uncertainty, anti-forestalling restrictions applied close to the Christmas period would present an additional burden for wholesalers and retailers.
“If there is no formal Budget, the pre-Budget allocation rules should not be kept in place. Retailers need to be able to ensure they can obtain enough supply to meet anticipated demand from their customers. Without adequate supply from legitimate retailers, there is an increased risk of customers purchasing from the illicit market.”
In response to this appeal, Kemi Badenhoch MP gave little information beyond stating that an announcement on the matter would be made in due course.
“While it was confirmed there would not be a Budget this autumn, final decisions on the timing of tobacco duty rate changes are still to be made. An announcement will be made in due course. In the meantime, anti-forestalling restrictions remain in place.”
This prompted Lowman and Bielby to make a further appeal on the issue.
FWD chief executive James Bielby said: ““Wholesale tobacco sales to independent retailers went up by 18% yoy during the first lockdown, and restrictions do not reflect the increased demand we expect to see in the months ahead. Wholesalers have to anticipate demand well in advance in order to offer retailers the stock they need, so delays in giving legitimate distributors a clear steer on allocations is a gift to illicit tobacco traders who will pick up any shortfall in supply.”
ACS chief executive James Lowman added: “Retailers need the Government to make the right decision on the status of the forestalling restrictions urgently. Sales patterns during the Covid-19 pandemic have been unpredictable and extraordinary. Continued disruption from Covid-19, combined with the end of the EU Exit transition period at the end of this year, means that setting allocations would effectively be a guess, and that would lead to a risk that retailers will face shortages. We must do everything we can to ensure that customers are not forced to seek out tobacco products on the illicit market.”