UK Recovers GBP 1.6 Billion From Smugglers

March 22, 2016 Taxation in UK

Sin TaxLONDON – The rapidly growing tax burdens on alcohol and tobacco are fuelling mass smuggling in the UK, although efforts by tax authorities are helping to bring a significant portion of the contraband back into the tax net.

Investigations into smuggling of tobacco and cigarettes in the UK in 2015 led to the recovery of GBP 1.63 billion in taxes, according to the results of new research completed by the UK accounting firm UHY Hacker Young.

The amount of taxes collected from uncovered smuggling operations in 2015 is 6 percent higher than in the previous year.

The increase in collections has been partially attributed to the fact that while the tax and duties on alcohol and cigarettes is raised at a higher rate than inflation, the production costs on such products is much slower, leading to a wider potential saving for consumers and wider profits for smugglers.

Currently approximately four fifths of the price of cigarettes is made up of taxes.

In the new report it was shown that approximately 14 percent of all cigarettes sold in the UK in 2014 were smuggled or not properly taxes.

The rate of smuggling in rolling tobacco was found to be even higher, with 40 percent, or 4.5 million tonnes, of the country’s supply being sold on the black market.

Alcohol smuggling is also a significant issue, and in 2014 alone the HMRC discovered nearly 5.3 million litres of smuggled beer, 1.5 million litres of wine, and 190 thousand litres of spirits.

Photo By: Curran Kelleher