Bestway tobacco

HMRC told The Grocer it would review allocations on a case-by-case basis

Wholesaler tobacco sales have risen so sharply in the past few months they are having to ask HMRC to revise rules around allocations ahead of the Budget.

Purchasing restrictions, known as forestalling, took effect the week of 1 September, and are traditionally implemented a couple of months ahead of the Budget to stop businesses stockpiling tobacco prior to a hike in duty.

The period used by HMRC to calculate these restrictions is based on tobacco sales between July 2019 and June 2020.

However, since March, tobacco sales from wholesale into retail have jumped 17% year on year, according to figures submitted to the government by the Federation of Wholesale Distributors.

The FWD said this was down to a number of factors, including an increase in shoppers using the convenience channel since the onset of the coronavirus crisis, a decline in the black market and travel restrictions limiting the availability of counterfeit tobacco products.

As a result, the FWD and Association of Convenience Stores wrote to HMRC warning that businesses could run out of tobacco unless the quantities wholesalers were allowed to purchase during the controlled period were increased to reflect the surge in sales.

HMRC told The Grocer it would review allocations on a case-by-case basis, adding that only “exceptional circumstances” would be considered, but recognised the spike in sales.

Bestway Wholesale has since successfully increased its allocations after contacting HMRC.

Bestway MD Dawood Pervez said its tobacco sales had increased by up to 40% between 1 May and 31 July.

“Bestway would have run out of stock by mid-October,” he explained. “Pre-Covid the category had been in decline, but the pandemic has changed that. “We are now trading well above the level of government restrictions.”

FWD CEO James Bielby welcomed HMRC’s flexibility and is urging members to contact HMRC directly if they are concerned about allocations. “Sales of tobacco went up hugely during Covid-19 and the blanket HMRC restrictions don’t accurately reflect this,” he said