As distributors of tobacco products, FWD members help to ensure that age-restricted goods are sold legally through responsible retailers.
We are currently concerned about the implementation of tobacco tracking trace legislation, which was introduced in 2019 and is now subject to revision as the UK prepares to exit the EU.
Since the introduction of the highly successful Alcohol Wholesaler Registration Scheme (AWRS) in April 2017 (pushed for by FWD) we’ve seen a marked decline in the illicit trade in alcohol. However, there is still more work to be done on enforcement of this scheme and it is essential that the Government continues to be vigilant in tackling fraud and illegal traders.
Further, following the introduction of the Soft Drinks Industry Levy in April 2018, we are now concerned about the rise of a soft drinks grey market. It appears to be the case that unscrupulous importers are bringing stock into the UK that has not been subject to the levy.
February 20: Brexit and the future of Track and Trace
Until December 31, 2020, the EU Tobacco Track and Trace system will continue to operate in the UK and comply with The Tobacco Products (Traceability and Security Features) Regulations 2019. HMRC cannot say what their plans are for tobacco track and trace from January 1, 2021. There are three potential outcomes:
May 20 2020; sell-through period ends
All cigarettes and hand-rolling tobacco produced before May 20, 2019, which do not have security features and unique identifiers, must be sold by May 20, 2020. The end of the sell-through period means that all stock in depots should have been produced post 20th May 2019 and have unique identifier codes so they can be tracked through the supply chain. From May 20, 2020, wholesalers can only sell cigarettes and hand-rolling tobacco to retailers which have an Economic Operator Identifier Code and Facility Identifier Code – unless instructed otherwise by HMRC prior to that date.
Track and Trace Compliance after May
Track and trace regulations came into effect on May 20, 2019 and require distributors and wholesalers to record the sale and movement of cigarettes and hand-rolling tobacco products. HMRC’s approach to compliance during the sell through period is to support businesses involved in legitimate trade to comply while taking action against those who seek to deliberately avoid or abuse the rules. Following the sell through period, HMRC will continue to help businesses understand the requirements of the systems so that they can comply with the Regulations. HMRC say they understand there are issues wholesalers are still working out to comply with their scanning and reporting requirements under track and trace. If a business is unable or fails to comply with the Regulations, HMRC will consider what action to take on a case-by-case basis according to the facts of the particular case.
December 2019: HMRC has responded to our questions regarding outstanding issues with the track and trace system, which is attached to this update. Please let us know if the responses to the questions are able to resolve the issues you are experiencing in your business or if more clarification or detail is needed. The questions do not provide too much extra detail to what is already known, although there is some clarity about technical areas regarding despatch.
If you require further clarification or information, HMRC has asked if specific examples could be provided of the issues or operational difficulties that your business is facing so that they can provide a more detailed response.
Reporting product movements
The EU Commission has published a document of common reporting mistakes found since the EU Secondary Repository and Router have been in operation. Also published is the EU System of Tobacco Traceability information sheet, which outlines the rules for the reporting of product movement within the distribution chain.
The documents can be found here: https://ec.europa.eu/health/tobacco/tracking_tracing_system_en.
HMRC’s IT systems and forms have been updated for the recording of tobacco for heating (TfH). From 1 November 2019, traders are required to use the updated systems and forms to declare excise duty for any TfH products under Tax Type code 633. This process will replace previous instructions of recording TfH as hand-rolling tobacco.
Since November 2019, all TfH products must be recorded on forms and systems, as follows: TP7 (43633), W6 (31633) and W6D (633).
In addition, it will no longer be necessary to maintain additional records when using the updated IT sys- tems. Traders must however, retain any previous records that were used to verify the proportion of TfH recorded under the hand-rolling tobacco tax type of 619.