Soaring tobacco sales lead to wholesaler push back

With wholesaler tobacco sales soaring since lockdown, wholesalers are putting HMRC under pressure to reassess allocation of cigarettes and hand-rolling tobacco during the purchasing restrictions that are in place until the Budget.

The measures, which came into effect on 1 September, are designed to stop a tax-avoidance practice known as forestalling, which prevents businesses stockpiling ahead of an increase in duty.

However, HMRC has based its allocation on pre-lockdown sales which do not accurately represent tobacco sales from wholesale into retail. According to FWD, these have increased 17% year on year as shoppers opt to use convenience stores rather than supermarkets and black market tobacco declines.

It also doesn’t take consideration of the menthol ban and the full implementation of Track and Trace.

As a result, the FWD and Association of Convenience Stores have written to HMRC warning that businesses could run out of tobacco unless the quantities wholesalers were allowed to purchase during the restricted period were increased to recognise the spike in sales.

HMRC has said it will review allocations on a case-by-case basis and wholesalers are able to challenge the decision. Bestway Wholesale has successfully increased its allocation and others are expected to follow suit.

ACS Bestway Wholesale budget FWD HMRC tobacco track and trace