Official Statistics

Quality Report: Tobacco Bulletin

Updated 24 October 2022

1. Contact

• Organisation unit - Knowledge, Analysis and Intelligence (KAI)

• Name - Indirect Tax Receipts Monitoring, Indirect Taxes, Customs & Co-ordination

• Mail address – Three New Bailey, Salford M3 5FS

• Email - [email protected]

2. Data description

This publication provides a breakdown of historical Tobacco Products Duty receipts and clearances for cigarettes, cigars, hand-rolling tobacco (HRT), and other tobacco products.

The publication includes duty receipts statistics which are up to the latest full month before the bulletin release. It also includes statistics relating to clearances and production which are one month behind that of duty receipts.

Clearance statistics relate to when tobacco goods pass duty points, at which point duty is due to be paid to HM Revenue and Customs (HMRC) by registered UK businesses.

This publication only includes figures for previous years. Forecasts of future Tobacco Duty receipts are produced and published by the Office for Budget Responsibility (OBR), and can be found on their website.

2.1 Classification system

Breakdowns of duty owed to be paid by companies is determined based on data submitted by companies on their TP7 return forms, W502 reports from UK Warehouses, and reports from Registered Excise Dealers and Shippers (REDS).

These forms and returns help classify the data within the Tobacco Bulletin and provide the main breakdowns into different tobacco product types.

A unique taxpayer reference (UTR) number is assigned to each registered UK trader. These UTRs are used during the data aggregation process.

2.2 Tax coverage

Tobacco Products duties are indirect taxes charged on the profits made by retailers, tobacco producers, excise warehouses, and other such companies. Companies operating in all industry sectors are required to pay tobacco duties.

This analysis focuses on UK based tobacco retailers.

2.3 Variable definitions

Cigarettes

A cigarette is any product that comprises:

• a roll of tobacco which can be smoked as it is and is not a cigar, or rolls of tobacco which, by simple non-industrial handling, are inserted into cigarette paper tubes

• rolls of tobacco which, by simple non-industrial handling, are inserted into cigarette-paper tubes, or wrapped in cigarette paper

Cigarettes, as defined, include products consisting in whole or in part of substances other than tobacco but do not include herbal smoking products.

Cigars

Any tobacco product, which can be smoked as it is and which is either:

• a roll of tobacco with an outer wrapper of natural tobacco, or

• a roll of tobacco containing predominantly broken or threshed leaf

• with a binder of reconstituted tobacco, and

• with an outer wrapper which is of reconstituted tobacco having the normal colour of a cigar and which is fitted spirally, or

• a roll of tobacco containing predominantly broken or threshed leaf.

• with an outer wrapper of reconstituted tobacco having the normal colour of a cigar and having a unit weight, exclusive of any detachable filter or mouthpiece, of not less than 2.3 grams and not more than 10 grams and

• having a circumference over at least one-third of its length of not less than 34 millimetres

Hand-rolling tobacco (HRT)

Any product:

• in which more than 25 per cent by weight of the tobacco particles have a cut width of less than 1.5 millimetre

• that is sold or intended to be sold for making into cigarettes by hand, or

• that is of a kind used for making into cigarettes by hand

Other smoking tobacco (also known as pipe tobacco)

Other smoking tobacco includes any product that is not cigarettes, cigars, or hand-rolling tobacco and comprises of tobacco that has been cut or otherwise split, twisted or pressed into blocks, and is capable of being smoked without further industrial processing. Or any tobacco refuse put up for retail sale that can be smoked.

Tobacco duty receipts

The amount of tobacco duty paid to HMRC. This is revenue reported in the bulletin.

Tobacco duty clearances

The amount of tobacco products produced in the time period stated. These clearances statistics relate to when traders clear goods onto the UK market for sale.

Values are reported in thousands of kilograms except cigarettes which are reported in millions of sticks.

2.4 Statistical unit

The unit in the statistics is companies and other entities required to pay tobacco duties in the UK.

2.5 Time coverage

The statistics cover the time period from financial year 1991 to 1992 until the latest financial year for which a complete set of tobacco duty returns are available. The statistics are aggregated into financial years. A financial year stretches from 1 April until 31 March the following calendar year.

3. Statistical processing

The data used to compile the Tobacco Bulletin comes from several sources:

• data contained on TP7 return forms, which are submitted by the manufacturer, provide clearance data

• the Customs and Excise Core Accounting System (CECAS) which is used to extract total receipts for cigars, cigarettes, HRT, and other tobacco

• reports from UK Warehouses (W502 reports) which provide ex-warehouse receipts data for cigarettes, cigars, HRT, other tobacco, and tobacco for heating (TfH)

• reports from Registered Excise Dealers and Shippers (REDS) which provide duty deferment receipts data for cigarettes, cigars, HRT, other tobacco, and TfH

3.1 Frequency of data collection

The data for tobacco receipts are downloaded every month into databases and the data for tobacco clearances are downloaded every 3 months for analysis in the Tobacco Bulletin.

3.2 Data collection

Using R, data on tobacco duty receipts are sourced from CECAS, W502 reports, and REDS. Tobacco clearances data is sourced from TP7 forms. This data is then collated in internal files. Collection is part of the team’s normal administrative procedures. Data is sense checked and checked against previous months and years for differing trends. Any unexpected trends are thoroughly investigated and explained.

3.3 Data validation

For data extraction, analysis, and compilation in the Tobacco Bulletin, a quality assurance checklist is followed. This includes, but is not limited to, assurance checks such as:

• source data is checked against the previous release within the Tobacco Bulletin data collation file using an R script to identify any revisions and any revisions are clearly marked

• statistics are sense checked after compilation to ensure there are no mistakes or unexplained outliers
• there are no other related output datasets that the data can be compared to

3.4 Data compilation

Imputation for missing data

Since February 2018, for companies where data is unavailable, a component of cigarette clearances is estimated based on the averaging of historical data combined with TP7 data as a proportion of the overall receipts figure. This does not affect overall receipts figures or the breakdown of tobacco duty receipts by product.

3.5 Adjustment

No significant adjustment takes place within the Tobacco Bulletin.

4. Quality Management

4.1 Quality assurance

All official statistics produced by KAI must meet the standards in the Code of Practice for Statistics produced by the UK Statistics Authority and all analysts adhere to best practice as set out in the ‘Quality’ pillar.

Analytical Quality Assurance describes the arrangements and procedures put in place to ensure analytical outputs are error free and fit-for-purpose. It is an essential part of KAI’s way of working as the complexity of our work and the speed at which we are asked to provide advice means there is a risk of error.

Every piece of analysis is unique, and as a result there is no single quality assurance (QA) checklist that contains all the QA tasks needed for every project. Nonetheless, analysts in KAI use a checklist that summarises the key QA tasks, and is used as a starting point for teams when they are considering what QA actions to undertake.

Teams amend and adapt it as they see fit, to take account of the level of risk associated with their analysis, and the different QA tasks that are relevant to the work.

At the start of a project, during the planning stage, analysts and managers make a risk-based decision on what level of QA is required.

Analysts and managers construct a plan for all the QA tasks that will need to be completed, along with documentation on how each of those tasks are to be carried out and turn this list into a QA checklist specific to the project.

Analysts carry out the QA tasks, update the checklist, and pass onto the Senior Responsible Officer for review and eventual sign off.

4.2 Quality assessment

The QA for this project adhered to the framework described in ‘4.1 Quality assurance’ and the specific procedures undertaken were as follows:

Stage 1 – Specifying the question

Up to date documentation was agreed with stakeholders setting out outputs needed and by when; how the outputs will be used; and all the parameters required for the analysis.

Stage 2 – Developing the methodology

Methodology was agreed and developed in collaboration with stakeholders and others with relevant expertise, ensuring it was fit for purpose and would deliver the required outputs.

Stage 3 – Building and populating a model/piece of code

The bulletin was quality assessed as follows:

• analysis was produced using the most appropriate software and in line with good practice guidance

• data inputs were checked to ensure they were fit-for-purpose by reviewing available documentation and, where possible, through direct contact with data suppliers

• QA of the input data was carried out

• the analysis was audited by someone other than the lead analyst – checking code and methodology

Stage 4 – Running and testing the model/code

The bulletin was quality assessed as follows:

• results were compared with those produced in previous years and differences understood and determined to be genuine

• results were determined to be explainable and in line with expectations

Stage 5 – Drafting the final output

The final outputs were quality assessed as follows:

• checks were completed to ensure internal consistency (e.g. totals equal the sum of the components)

• the final outputs were independently proofread and checked

5. Relevance

5.1 User needs

This analysis is likely to be of interest to users under the following broad headings:

• national government – policy makers and MPs

• regional and local governments

• academia and research bodies

• media

• industry stakeholders

• general public

5.2 User satisfaction

The demand for the Tobacco Bulletin is measured by the number of unique page views which represents the number of visits during which the page was viewed at least once. Within the financial year ending in 2021, there were 903 unique page views.

Over time the Tobacco Bulletin has evolved as a result of information found out through consultations and surveys:

• there was a user engagement survey in 2010 which led to some changes to the bulletin (for example consolidating into one bulletin and including historical data)

• following this and the 2012 UKSA report, further changes were made to the bulletin, which included added commentary, graphs and background information

• in 2016, the frequency of the bulletin was then altered from monthly to quarterly as a result of a consultation

The Tobacco Bulletin was not up for consultation in the 2021 survey and as a result will see no changes.

5.3 Completeness

It is a legal requirement that all businesses are regulated and submit the relevant returns required. Penalties exist for non-compliance. The statistics contained in this report can therefore be considered as complete.

HMRC report estimates of the tax gap across all taxes and duties annually.

6. Accuracy and reliability

6.1 Overall accuracy

This bulletin is based on administrative data, and accuracy is addressed by eliminating non-sampling errors as much as possible through adherence to the quality assurance framework. The nature of the administrative data used may mean some errors exist in the recorded figures which would impact the accuracy of production estimates.

The potential sources of error include:

• companies entering incorrect information onto return forms

• human or software error when entering the data into systems

• companies not completing their returns by the required date

• mistakes in the programming code used to analyse the data and produce the statistics

The potential sources of error include:

• companies entering incorrect information onto return forms

• human or software error when entering the data into systems

• companies not completing their returns by the required date

• mistakes in the programming code used to analyse the data and produce the statistics

6.2 Sampling error

No sampling takes place within the Tobacco Bulletin.

6.3 Non-sampling error

Coverage error

The data used to produce these publications is exhaustive, and covers all hydrocarbon oil sold under UK jurisdiction which is subject to excise duty. This means that data on clearances and receipts refers to all oils sold legally, with the exception of duty-free oil, which is not counted for this purpose as by definition duty is not paid on these goods. Coverage error is therefore not relevant.

Measurement error

The main sources of measurement error could be categorised as respondent errors and include the following:

• companies may make errors entering their information onto return forms, whether this is done on paper or electronically

• company tax return data is subsequently entered onto HMRC systems either manually or by electronic transmission, which is another point at which data may be altered due to human or software error

Nonresponse error

The Tobacco Bulletin is routine administrative data based on receipts and clearances that must be submitted, therefore nonresponse error is not relevant.

Processing error

It is possible that errors exist in the programming code used to analyse the data and produce the statistics. This risk is reduced through developing a good understanding of the code and thoroughly reviewing and testing the programs that are used.

6.4 Data revision

Deferments and late returns can influence the data used for the publications. For that reason, the last 3 months of data at any given time are labelled as ‘provisional’, although revisions tend to be minor. Where there are revisions they are clearly marked as ‘revised’, and information is given as to the reasons and scale of the revisions if appropriate.

Every 3 months on release of a new publication, previous data is reviewed and any revisions required are made. If revised data was not previously marked as provisional it is clearly highlighted in the statistics with a ‘[revised]’ markup within the statistical tables.

Planned revisions occur with the release of the annual receipts publication. This alignment occurs every March and involves the previous financial year. Receipts are considered provisional until the publication is released.

The United Kingdom Statistics Authority (UKSA) Code of Practice for Official Statistics requires all producers of Official Statistics to publish transparent guidance on the policy for revisions.

6.5 Seasonal adjustment

No seasonal adjustment occurs within the Tobacco Bulletin and is therefore not relevant to the publication.

7. Timeliness and punctuality

7.1 Timeliness

The bulletin is published one month after the end of the reporting period for receipts. That is, the bulletin relating to tobacco duty received in January is published at the end of February. The bulletin takes around one week to produce, with the data not being available until after the middle of the month. The remaining time is spent quality assuring the information in the bulletin.

7.2 Punctuality

In accordance with the Code of Practice for official statistics, the exact date of publication will be given not less than one calendar month before publication on both the Schedule of updates for HMRC’s statistics and the Research and statistics calendar of GOV.UK.

Any delays to the publication date will be announced on the HMRC National Statistics website.

The full publication calendar can be found on both the Schedule of updates for HMRC’s statistics and the Research and statistics calendar of GOV.UK.

There have been no incidents of late publication of the bulletin since the previous Tobacco Bulletin Quality Report was produced in 2013 which is available through the UK Government Web Archive from the National Archive.

8. Coherence and comparability

8.1 Comparability over time

From October 2015 onwards, the home produced and imported split of total cigarette clearances has been removed to preserve commercial confidentiality. From November 2015 onwards, the home produced and imported split of total cigarette receipts has been removed to preserve commercial confidentiality.

Breakdowns of tobacco receipts are not available in the 1991 calendar year, only the overall receipts total is available. This is because tobacco receipts for January 1991 are not available.

As mentioned in the Imputation for missing data section of Data compilation, cigarette clearances data after February 2018 is based partially on an estimate. As the estimate is based on a minor component of overall cigarette clearances and is generated using reliable data sources and historic data, these figures are easily comparable over time and insufficient to cause a break in the series.

Comparability over time of duty rates and receipts at constant prices is reliant upon the deflator used. HMRC uses the Inflation and price indices series published by the Office for National Statistics (ONS), and values are therefore subject to any biases this series might present.

8.2 Coherence – cross domain

No known issues regarding coherence between domains.

Coherence – sub-annual and annual statistics

No known issues regarding coherence between sub-annual and annual statistics.

Coherence – national accounts

The statistics are coherent with the national accounts framework, but users should note that tobacco duty revenue is reported on a cash basis by HM Revenue and Customs (HMRC), i.e., when cash payments are received, but within some national accounts publications, such as the Office of National Statistics Public Sector Finances publication, tobacco duty revenue is published on an accrued basis, i.e., when tax liability was accrued by taxpayers.

8.3 Coherence – internal

No known issues regarding coherence between internal datasets.

9. Accessibility and clarity

9.1 News release

Link all press releases linked to the data over the past year.

9.2 Publication

The data is publicly available within the Tobacco Bulletin and is published at 9.30 am on the pre-announced date of release.

The Tobacco Bulletin commentary is published in accessible Hypertext Markup Language (HTML) format, as generated within internal UK government HTML Markdown software. The Tobacco Bulletin data tables which accompany the commentary are published in accessible Open Document Spreadsheet (ODS) format.

Accompanying the bulletin is a background and references document which includes:

• definitions for Tobacco duties and products

• details on how Tobacco duties are levied and paid

• methodology for producing Tobacco duties statistics

• statistical quality information, including HMRC’s rounding policy

• hyperlinks to relevant pages where bulletin users can find more information

There is also an historical Tobacco Duty rates document.

Both historical duty rates and background and references are published in HTML format.

Following major changes in November 2020, substantial formatting changes were made to the Tobacco Bulletin to ensure alignment with accessibility regulations for digital content from public bodies as legislated within the Public Sector Bodies (Websites and Mobile Applications) (No. 2) Accessibility Regulations 2018.

This reformatting of the Tobacco Bulletin formed part of HMRC’s wider accessible documents policy. Changes made to the Tobacco Bulletin included:

• replacement of Portable Document Format (PDF) files previously used for statistics commentary with HTML documents for the same purpose

• migration of all Tobacco duties background, references and rates information from Microsoft Excel tables to HTML documents

• migration of data tables from Microsoft Excel to ODS format

• simplification of language used to avoid jargon and clear explanations used to describe all non-decorative features

An accessibility report was first produced to identify required format changes. The overriding aim of this reformat was to improve how perceivable, operable, understandable and robust the Tobacco Bulletin is for all users, in line with the Web Content Accessibility Guidelines (WCAG 2.1) design principles for accessibility.

9.3 Online databases

This analysis is not used in any online databases.

9.4 Micro-data access

Access to this data is not possible in micro-data form, due to HMRC’s responsibilities around maintaining confidentiality of taxpayer information.

9.5 Other

There aren’t any other dissemination formats available for this analysis.

9.6 Documentation on methodology

Background and references to the Tobacco Bulletin is publicly available to users within the Tobacco Bulletin.

9.7 Quality documentation

All official statistics produced by KAI, must meet the standards in the Code of Practice for Statistics produced by the UK Statistics Authority and all analysts adhere to best practice as set out in the ‘Quality’ pillar.

Information about quality procedures for this analysis can be found in section 4 of this document.

10. Cost and burden

The quarterly update to the Bulletin takes up to 4 working days in total for the main analyst to complete and receive QA from other analysts, the team leader, and the person signing off the release. The annual cost, therefore, is around 16 days a year (4 days per bulletin completed 4 times a year).

There is no respondent burden since the data is taken from administrative sources which are used by taxpayers to make their usual returns to HMRC.

11. Confidentiality

11.1 Confidentiality – policy

HMRC has a legal duty to maintain the confidentiality of taxpayer information.

Section 18(1) of the Commissioners for Revenue and Customs Act 2005 (CRCA) sets out our duty of confidentiality.

This analysis complies with this requirement.

11.2 Confidentiality – data treatment

There are no special rules for confidentiality or data treatment in these statistics.

Before going live, the bulletin is classified as pre-released National Statistics, and is therefore subject to a restricted protective marking when referred to in email correspondence and is subject to the Code of Practice for Official Statistics, which is strictly enforced.