British American tobacco has said it will appeal against the £650,000 fine it has received from HMRC for oversupplying its products in Belgium.

The fine for apparently ‘failing in its duty not to facilitate smuggling’ is the first of its kind imposed by customs on a firm for supplying to areas that are a “high risk” for smuggling.

HMRC judged BAT to be in breach of an amendment to the Tobacco Products Duties Act of 1979. The maximum penalty is a fine of £5m.

However BAT described the fine as “unjustified” and defended its record in terms of seeking to reduce smuggling.

“We are devoting considerable resources to stem the illegal supply of overseas product to UK consumers but it is impossible to be 100% effective given that we are not a law enforcement agency and UK consumers are perfectly entitled to shop for cheaper products outside the UK in the EU single market,” said BAT spokesman.

“We make every effort to control our supply chain and have collaborated and cooperated with Her Majesty’s Revenue & Customs (HMRC) for many years in this area. However, we are not a law enforcement agency and cannot be expected to effectively police smuggling throughout Europe.  We have an in-house team dedicated to addressing the smuggling issue and we go well beyond our legal obligations, investing significant resources over many years to tackle tobacco smuggling. 

“We also co-operate with HMRC wherever we can providing useful information regarding intelligence we have gathered on the illicit trade in tobacco. We believe this is collaboration is important in fighting the battle against criminal activity.”

The spokesman also blamed the current high levels of duty imposed on tobacco in the UK for fuelling the problem of smuggling.

“We are very surprised and disappointed to have received an unjustified and inappropriate fine given we have been in constant contact with HMRC regarding this matter and have informed them of progress made at every step of the way,” he explained.

“We will defend ourselves vigorously against the penalty and, as such, we are appealing what we believe to be an unjustified fine.”