Non-UK duty paid tobacco sales in further drop

The market share for illicit cigarettes is continuing to fall, experts have claimed.

Tobacco sources believe the upper estimate for smuggled cigarettes now stands at about 13% a 23.5% drop on the HMRC's 17% upper estimate revisions recorded in March.

The drop in smuggled tobacco was the "surprise result" of the recession as 17% fewer people holidayed in the EU, a senior industry source said. "When people do go on holiday, they're stocking up less because the 25% devaluation in sterling meant the difference in price was not as keen," he said. "There's also more risk involved for smugglers as the margin declined."

But tobacco manufacturers cautioned that sales of counterfeit and illicit white products were on the rise.

"Counterfeit tobacco is cheaper to buy so the profit is greater," said a Tobacco Retailers' Alliance spokeswoman.

"And the ­recent recovery in sterling, combined with tax increases on tobacco we've had 30p this year so far plus the VAT hike in January could stimulate cross-border shopping again."