Tax evader’s plan up in smoke: HMRC’s clampdown on tobacco smuggling and excise duty evasion

HMRC are taking a hard line on those found to be in evasion of excise duty through smuggling. In a recent case, an individual from London Dhanji Varsani (who claimed to be jobless) was found to have shipped 6,930kg of hand-rolling tobacco worth £1.2 million in unpaid excise duty. Following an investigation by HMRC he was subsequently jailed for almost 4 years.

This case is proof that HMRC are taking a hardline on smugglers. If you suspect that you or your business may be implicated in smuggling or excise duty evasion it is essential that you seek legal advice as soon as possible to avoid the criminal sanction of imprisonment and the hefty penalties levied against you.

How was the tobacco smuggled into the UK?

The tobacco was smuggled through a shipment of pocket tissues arriving Purfleet in Essex and then being further transported to a storage company in Southall, West London.

Despite claiming to be jobless Dhanji Varsani, aged 56, enjoyed an expensive lifestyle which included playing at top golf courses and enjoying exotic holidays. with Matt Palmer, Assistant Director, Fraud Investigation Service, HMRC stating:

“Varsani thought he was above the law and could flout his wealth playing at top golf courses – but now he’s in the bunker. He is paying the price for denying a living for decent, hard-working retailers who don’t trade in such dodgy tobacco and have to fight against an unfair playing field.

HMRC Spokesman

What was the punishment for the smuggling?

Varsani pleaded guilty to the fraudulent evasion of excise duty; he was sentenced on 11 January 2019 to three years and ten months in prison.

What is Smuggling?

Smuggling is importing or exporting goods illegally, usually to avoid paying duty on them. The types of smuggling that are common relate to products such as drugs, illegal alcohol or tobacco sales.

What kinds of goods are smuggled into the UK?

Current commercial smuggling trends in the UK involve mainly alcohol, cigarettes and hand-rolling tobacco, usually involving criminal organisations. The contents of freight are mis-described, understated, or concealed by purporting to be some other type of legitimate or otherwise duty paid commodity. Detections by HMRC are usually by way of intelligence which can sometimes be covert.

How do HMRC deal with smuggling?

HMRC are currently taking an aggressive approach in relation to smuggling cases and have recently been targeting those they suspect are avoiding pay duty on goods. Recent cases have shown that the courts are also taking smuggling cases seriously and have the power to hand out prison sentences in excess of 6 years imprisonment.

It is therefore vital that anyone is who suspected of avoiding to pay the correct duty on goods has legal representation from the outset.

What is excise duty?

An excise tax is a legislated indirect tax and is chargeable, in addition to any Customs Duty which may be due, on the following goods:

  • Alcohol: including beer, wine, cider, and spirits;
  • Tobacco products: including cigarettes, cigars, rolling tobacco, and chewing tobacco;
  • Gambling activities: including bingo, the National Lottery, machine games, and online games that involved the betting of money; and
  • Hydrocarbon fuels: including light fuels, heavy fuels, biofuels, and road fuels.

These goods may be either of UK origin, received following an intra EU movement or imported from outside the EU.

The duty falls due at the time when the goods leave any duty suspension arrangements including when:

  • they are released for consumption or otherwise made available for consumption (generally via the warehouse system) registered trader (REDS) or occasional importer receives them in the UK;
  • a vendor makes a delivery under distance selling arrangements;
  • missing consignments and other dutiable shortages are discovered; and
  • goods imported for personal use are then sold or put to commercial use.

I deal in duty-paid excise goods

If you intend to import into the UK, or arrange the importation of excise goods that are duty-paid or released for consumption, in another EU Member State for a commercial purpose, the goods will be liable to excise duty in the UK.

There are three different ways in which duty-paid excise goods can be imported into the UK for a commercial purpose:

  • the standard UK duty-paid scheme for unregistered commercial importers.
  • the Registered Commercial Importer scheme.
  • distance selling arrangements for sales to private individuals.

Expert London Smuggling Investigation Lawyers

We have experience of all manner of smuggling cases. Members of our team have enjoyed major successes before the Court of Appeal and at the Central Criminal Court against HMRC in duties based alcohol smuggling fraud investigations and in avoiding the potentially catastrophic effect of confiscation of assets under the Proceeds of Crime Act.

If you have been approached by HMRC in connection with importing or exporting goods then you should contact us immediately so that we can liaise with HMRC on your behalf and advise you in relation to any potential inquiry and/or action brought against you.

HAS HMRC MADE YOU A PART OF A SMUGGLING ENQUIRY? We are able to provide clear advice to assist you. Our Tax Disputes professionals are available to give information and advice. Just call us on 0207 1830 529, or email [email protected].

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