HMRC data was analysed and showed that almost £3bn was generated from smuggling and big business tax 
avoidance with excise duty investigations into big business revenue soared by 1100%
During the year HMRC’s figures showed that the yield from investigations into underpayments of ‘sin taxes’ doubled to almost £2.99bn.
In 2015/16 HMRC’s additional revenue from investigations into unpaid excise duty on products such as cigarettes, alcohol and those relating to gambling was £1.46bn.
The rise in extra revenue from investigations is partly being driven by the UK’s continued smuggling problem around cigarettes and alcohol.
This is a major issue in the UK because of the high level of duty levied on cigarettes and alcohol which drives demand for smuggled goods. The UK has one of the highest tax rates in Europe on cigarettes – with tax making up 84% of the average cost of cigarettes in the UK.
Additionally, HMRC data out on October 26 2017 shows that the tobacco tax gap stood at £2.4bn for 2015/16.
Investigations into large businesses have also contributed to the increase in HMRC’s additional tax take. Additional revenue from excise investigations into large businesses grew at a dramatic rate to £198m in 2016/17 – more than ten times the £16m generated in 2015/16.
HMRC often target the underpayment of excise duty by focusing on companies who have business structures to avoid paying the full amount of duty on cigarettes, alcohol, and gambling products.
if there is a ‘hard Brexit’ it’s likely cross-border smuggling could get far worse as businesses look at ways to reduce their tax bill.
Leaving the customs union would result in importers paying an extra levy to move goods into the UK, resulting in higher prices. Consequently, the demand for cheaper goods could increase.
