Ask FWD: Track and trace tobacco

What has changed for retailers buying tobacco from an FWD wholesaler this month?

Since last year retailers have needed to have an Economic Operator Identifier Code (EOID) and Facilities Codes for each of their premises that sell or store tobacco. There was a 12-month sell-through period, but since 20 May it’s been a case of “No ID, no sale”, with full HMRC enforcement.

Why’s that?

Tobacco products now carry a unique identifier that helps track them through the supply chain. HMRC estimates that 9% of all cigarettes and 32% of roll your own tobacco products in the UK are illicit and cost £1.8bn in lost tax revenue in 2017/18. Track and trace is part of a EU-wide scheme to prevent fraud, and driving criminals out of the market is obviously good news for legitimate traders.

Wait a minute – if it’s an EU regulation why does it apply in the UK?

Because we’re bound to follow EU rules during the Brexit transition period, which ends in December. After that we will lose access to the EU Secondary Repository which records and uploads the movement of tobacco products across the EU membership.

And then what?

The government has said it will set up a standalone UK track and trace scheme, “as soon as possible” after 31 December.

When is that likely to be?

HMRC can’t say but it is highly unlikely to be in place from 1 January.

So this scheme could be policed for just seven months? Isn’t that rather pointless?

We wouldn’t say that, but it has required wholesalers to invest in installing scanning equipment, training staff, and allowing for delays and confusion at cash and carry checkouts, as well as encouraging retailers to apply for their EOID.

Have retailers done that?

Not all of them, unfortunately. They’re the ones who will be turned away if they come into purchase tobacco. EOID applications take a couple of days to process, so they can’t do it on the spot. But to be fair, wholesalers have been warning them about this for over a year – the past 12 months have seen a ‘light touch’ enforcement by HMRC as wholesalers tackle the technical aspects and sell though the older unmarked stock. Some of our members have felt they were punished for enforcing the rules early, as customers went elsewhere rather than sign up.

And now?

Time’s up – a year is plenty of warning, and HMRC says the current Covid-19 situation won’t impede its ability to catch anyone who doesn’t follow the rules. Inspectors will work with wholesalers and retailers who still have operational issues, but beyond that – no excuses.

FWD Government HMRC retail tobacco track and trace wholesale