Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what estimate she has made of the annual tax revenue loss from (a) illicit and (b) non-duty paid tobacco.

The new joint HMRC and Border Force strategy to tackle illicit tobacco was published earlier this year, ‘Stubbing out the problem’. The strategy:

• targets the demand for illicit trade (the consumers that criminals seek to exploit) as well as the supply (the criminals themselves)
• is supported by over £100 million new funding over the next 5 years to boost HMRC and Border Force enforcement capability
• establishes a new, cross-government Illicit Tobacco Taskforce – combining the operational, investigative and intelligence expertise of various agencies, and enhancing our ability to disrupt organised crime.

HMRC estimates the size of the illicit market using tax gap data, which is reported annually.

The duty gap for tobacco duty is 14.5% of the theoretical tobacco duty liability, or £1.7 billion in absolute terms, in tax year 2022 to 2023.

The tax gap for tobacco includes losses from the importation or production of illicit tobacco products and tax evaded on the smuggling of non-duty paid tobacco and genuine tobacco products sourced overseas.

The link to the tobacco tax gap is here Measuring tax gaps 2024 edition: tax gap estimates for 2022 to 2023.Measuring tax gaps 2024 edition: tax gap estimates for 2022 to 2023 - GOV.UK (www.gov.uk)