Shopkeepers repeatedly caught selling illicit tobacco and undermining honest traders faced tax bills and penalties in excess of £11 million last year as HM Revenue and Customs (HMRC) moved to deliver a level playing field for local traders.

Over the last year a total of 51 bills for tax and penalties totalling £11.5 million were issued to individuals and businesses caught storing and selling illicit tobacco more than once.

HMRC has long focused on prosecuting shopkeepers for selling illegal cigarettes. However, shopkeepers started to keep fewer cigarettes at the premises in an attempt to avoid prosecution or ensure any sentence after criminal conviction was as low as possible. The new approach ensures those fraudsters are still hit in the pocket.

HMRC investigators examine the frequency and volume of the seizures made, as well as evidence gathered from business cash books, till receipts, bank accounts and other sources to calculate tax and penalties owed.

This approach involves using evidence collected by HMRC, Trading Standards and the police to calculate the amount of VAT, Income Tax and Corporation Tax that should have been paid.

Assessments can be appealed by the individuals and businesses.

Mel Stride MP, the Financial Secretary to the Treasury said: “We will not allow honest, hardworking shopkeepers to be undercut by tax cheats. We are determined to level the playing field.”

Cases include:

  • A Grantham man was handed a bill totalling £1,615,499 for selling illicit cigarettes.
  • The owner of a Newcastle mini market 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.
  • The owner of a London barbershop received a bill totalling £605,057 after HMRC found he was selling illicit tobacco goods and making around £1,000 a day.
  • In another case, investigations revealed off-the-book income from the sale of illicit tobacco at a Sheffield shop was equal to 89 per cent of the business’s declared turnover.
  • A Liverpool newsagents was 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 https://www.gov.uk/report-an-unregistered-trader-or-business

Source: HMRC

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