Store losses to illicit sales increase

Convenience stores are losing out more to the sale of illicit tobacco and alcohol compared to the same time last year, according to HMRC’s latest tax gap report.

Published last week, the statistics estimate the tax lost due to the illicit trade in tobacco alone has increased 15% in the past year alone to £2.2bn. The figures make last year the highest year since 2005 for tax losses on tobacco, with £1 in every £6 spent on tobacco going to the black market. While the estimated share of illicit rolling tobacco declined, the share of illicit cigarettes increased.

In addition, the alcohol tax gap including beer, wine and spirits is estimated to be £1.37bn

(duty and VAT combined) for 2021-22, with the illicit trade’s market share predicted to have decreased.

In response, ACS chief executive James Lowman is calling for tougher enforcement to tackle the illicit trade. “It is important to recognise that although the tax gap is considered to be low, the sale of illicit or non-duty paid alcohol or tobacco has a detrimental impact on the economy, the safety of our communities and is damaging to retailers who operate on the right side of the law,” he said.

“We are urging HMRC and trading standards to ensure that the focus remains on tackling the sale of non-duty and illicit products.”