Who is likely to be affected
Any individual or business carrying out a controlled activity in relation to raw tobacco, which includes supplying, receiving, storing or using, including domestic users for smoking or non-smoking purposes.
Raw tobacco is any part of the plant that has been harvested, but does not yet meet the definition of any tobacco products as defined in UK law.
General description of the measure
The measure will give HM Revenue and Customs (HMRC) additional powers to prevent evasion of excise duty through use of raw tobacco. It will be a condition of the registration that the person can show that their involvement with raw tobacco will not result in the fraudulent evasion of tobacco products duty.
The scheme is tailored to reflect a proportionate response to the risks presented. It will enable HMRC and Border Force (BF) officers to identify and seize raw tobacco when evidence isn’t provided to show that the raw tobacco is destined for a registered person or approved premises. The measure will also allow for appropriate sanctions against an unapproved person prohibited from having any involvement with raw tobacco.
Policy objective
The measure intends to reduce the risk of evasion of tobacco excise duty by prohibiting the use of raw tobacco by an unapproved person, to prevent the illegal manufacture of tobacco products. The introduction of a new forfeiture power and penalty will be effective, proportionate and dissuasive.
Background to the measure
The measure was announced at March Budget 2015 following a consultation which was undertaken between 20 October 2014 and 30 January 2015. The consultation exercise concluded that the most proportionate manner to address the issue was to introduce a domestic registration scheme. A technical consultation was undertaken in summer 2015 on the definition of raw tobacco and other legitimate uses for non-smoking purposes.
The design of the scheme and its draft regulation will be developed in January 2016. Another tax information and impact note will be published for the regulations when they are finalised.
Detailed proposal
Operative date
The law will be enacted on and after the date of Royal Assent to Finance Bill 2016.
The measure will have effect from 1 October 2016 when a three month application window will open for existing businesses and individuals to register. HMRC will assess their ‘fit and proper’ status prior to approval to the scheme. On and after 1 January 2017, the penalty powers and forfeiture power will come into effect. New businesses and individuals who carry out raw tobacco activities after the 1 January 2017 must ensure that they are registered prior to commencement of activity.
