UK sales of illicit tobacco have continued to grow in the past year, new HM Revenue and Customs (HMRC) figures show.
The government missed out on an estimated £2.5bn in unpaid taxes in 2016/17, up from £2.4bn in 2015/16, the 2018 edition of the official Measuring Tax Gaps report shows.
Of that £2.5bn, an estimated £1.9bn was lost in tobacco duties and a further £0.5bn in VAT.
The cigarette tax gap is currently estimated to be £1.8bn, up from £1.6bn, while the roll your own (RYO) tobacco tax gap is estimated to be £0.7bn.
The alcohol tax gap (including beer, wine and spirits) is estimated to be £1.3bn, of which £0.9bn was in alcohol duties and a further £0.4bn in VAT.
There is no change on the previous year’s figures, which also estimated a total alcohol tax gap of £1.3bn.
Commenting on the figures, the Association of Convenience Stores (ACS) called local enforcement authorities to be granted greater powers to tackle the problem.
ACS chief executive James Lowman said: “The illicit trade in tobacco harms legitimate retailers trading in communities across the UK.
“We believe that local enforcement authorities should be given more powers to deal with those who supply and sell illicit goods, including the power to remove alcohol licences from offenders.”
The government is currently working towards the implementation of ‘track and trace’ regulations (as set out in the EU Revised Tobacco Products Directive) in a bid to significantly reduce the illicit trade.
Set to be introduced in May 2019, the regulations will put in place a new method of tracking the sale of legitimate tobacco products through the supply chain.
ACS has called on the government for clarity on the time-frames for the ‘track and trace’ regulations to give retailers enough time to prepare.