Retailers repeatedly caught selling illicit tobacco faced tax bills and penalties in excess of £11m last year as HM Revenue and Customs (HMRC) deployed a new approach to punishing the crime.
With unscrupulous retailers starting to keep fewer illicit cigarettes in their stores in an attempt to avoid prosecution or ensure lower sentences, HMRC is now focusing more energy on gathering evidence from business cash books, till receipts, bank accounts and other sources to calculate tax and penalties owed, it said.
Fraudulent retailers were increasingly concealing illicit tobacco away from their stores, in rented storage units and garages, or in the back of vans.
This new approach ensured that they were “still hit in the pocket,” it added.
HMRC investigators examine the frequency and volume of the seizures made along with other evidence collected by themselves, Trading Standards and the police to calculate the amount of VAT, Income Tax and Corporation Tax that should have been paid.
Over the last year a total of 51 bills for tax and penalties totalling £11.5m were issued to individuals and businesses caught storing and selling illicit tobacco more than once.
Financial secretary to the Treasury, Mel Stride MP, said: “We will not allow honest, hardworking shopkeepers to be undercut by tax cheats. We are determined to level the playing field.”
Recent cases include the owner of Newcastle mini market who was given a bill totalling £1,098,488 after investigations revealed he made around £2,500 a day from the sale of illicit tobacco over a five-year period.
In another case, investigations revealed off-the-book income from the sale of illicit tobacco at a Sheffield shop was equal to 89% of the business’s declared turnover.
A Liverpool newsagent was also handed a tax bill totalling more than £70,000 after investigations revealed the shop was making more than £250 a day from the sale of illicit tobacco.
Information about any type of tax fraud can be reported to HMRC online at www.gov.uk/report-an-unregistered-trader-or-business