Cross-Channel Smuggling (Hansard, 29 October 2002)

§ Lord McIntosh of Haringey:

Tobacco smuggling grew very rapidly in the late 1990s until by 2000–01 over 20 per cent of the cigarette market was illicit. The cost of that tobacco smuggling to UK taxpayers was £3.5 billion. A further 6 per cent of the market was legally non-tax paid product bought abroad and brought back for own use.

The great majority of cigarette smuggling is undertaken by serious and organised criminals who conceal large volumes of cigarettes in excess of one million at a time in freight consignments. In 2000, a smaller proportion was smuggled by cross-Channel passengers. However in that year the total cost of such passenger excise smuggling was still £1.7 billion.

Had no action been taken over the last two years Customs and Excise estimates that the illicit share of the cigarette market would have reached 31 per cent by the end of March 2002.

Since the launch of the Tackling Tobacco Strategy in March 2000 Customs and Excise has been successful in containing growth in the illicit cigarette market. has disrupted over 100 organised crime gangs responsible for the vast majority of the smuggling and has had dramatic success in cutting losses from cross-Channel 19WA passenger smuggling by almost three-quarters. Figures for 2001–02, the second year of this strategy, will be published at the time of the Pre-Budget Report and we anticipate they will show that the strategy remains on track. In the same period consumer expenditure on legitimate cross-border shopping for alcohol and tobacco has grown by 10 per cent.

In 2000–01 Customs seized 2.8 billion cigarettes. Of these 0.9 billion were seized overseas through the work of Customs overseas' liaison officer network, a further 1.2 billion were seized in freight consignments, 400 million were seized inland and 55 million were seized at the ports from cross-Channel passenger smugglers.

The sole focus of Customs excise enforcement activity in respect of cross-Channel passenger traffic is to tackle those who smuggle tobacco or alcohol having received or intending to receive money or money's worth for those goods. The Government have consistently made clear that people are entitled to bring into the UK without liability to tax as much EU tax-paid tobacco or alcohol as they wish for their own use. Customs literature also makes this clear.

Just one-tenth of 1 per cent of those who have crossed the Channel in the past two years have had tobacco or alcohol seized by Customs. Since the start of the strategy, the average quantity seized by Customs from cross-Channel passenger smugglers was approximately 4,900 cigarettes and 15 kilos of hand rolling tobacco (equivalent to at least 18,000 cigarettes).

Of the 0.1 per cent of cross-Channel passengers who had tobacco or alcohol seized in the years 2000–01 and 2001–02, over 75 per cent chose not to make any sort of appeal against that seizure. Of those that did appeal, magistrates' courts overwhelmingly backed the judgments made by Customs and found against Customs in less than 0.1 per cent of cases, and only 1 per cent of cases were either overturned or restored by a Customs review officer or by an independent tribunal.

Building on the success of the Budget 2000 anti-smuggling measures, we are today announcing the next stage of the tackling tobacco strategy. Despite cross-Channel tobacco smuggling having been cut by around three-quarters in the past two years, smugglers are becoming increasingly sophisticated in their attempts to blend in with honest shoppers. So the measures we are announcing today will help make the distinction between smugglers and honest shoppers even clearer. The measures make clear that Customs activity is legal and fair but tough upon those who attempt to smuggle. It comprises the following components.

Regulations will be laid before Parliament today to abolish the 1992 Personal Reliefs Order and replace it with new provisions that effectively define shopping and smuggling, specify the factors Customs will take into account in distinguishing one from the other and place the onus for that decision upon Customs; reaffirm that all Customs stops are lawful and those for excise-specific purposes based on reasonable 20WA grounds for suspicion; and increase the indicative levels for tobacco from 800 to 3,200 cigarettes and from 1 kg to 3kgs of hand rolling tobacco, representing around six months' supply for an average smoker. Those bringing back larger quantities of tobacco must expect, if asked, to explain how it is that such goods are for their own use. Customs will continue to seize quantities below these levels as well as above them where they are satisfied that those goods are intended for resale or other exchange for money or money's worth.

In addition, the announcements the Government are making today will confirm that vehicles used to smuggle tobacco or alcohol will continue to be liable to seizure, but for small first offences Customs will offer restoration of the vehicle for the value of the attempted revenue evasion. Those who use vehicles to smuggle on a large scale or a repeat basis will not be offered such an opportunity and must expect to lose their vehicles.

A new clearer guide to appealing/complaining is being published by Customs today and will be given to all those who have goods seized or wish to complain about Customs behaviour towards them.

Customs is to undertake, in conjunction with the Lord Chancellor's Department, a review of the present appeals structure and to present proposals for streamlining and simplifying these arrangements by the end of January 2003. The terms of reference will be available today in the Library of the House and on the Customs website (www.hmce.gov.uk), together with details for submitting contributions.

Having brought cross-Channel passenger smuggling under control, the Government are determined that it should remain so. To this end Customs expects to conduct an increased number of prosecutions against large-scale and serial cross-Channel passenger smugglers.

Violence against Customs officers in the course of carrying out their duties will not be tolerated under any circumstances. Customs will toughen its policy and prosecute anyone who perpetrates serious assaults on staff.

This set of measures provides the public with a clear guide to their right to shop for alcohol or tobacco for their own use within the EU and to the consequences for those who attempt to evade tax in bringing in such goods, having received or intending to receive money or money's worth for some or all of them. It will also enable Customs to continue to prevent the smuggling of tobacco or alcohol and the disorder which accompanies such smuggling from ruining the enjoyment of honest cross-border shoppers. It will also enable Customs to prevent the smugglers from undermining the UK economy in alcohol or tobacco products and from depriving our public services of 21WA essential tax revenues. Customs will act fairly and in accordance with the law but it will also act firmly and with the full weight of sanctions against those who break the law.