HMRC is targeting illicit cigarettes. A consultation recently closed and now awaits Government attention. This may seem immaterial to landlords, however some of the proposals reflect a perception by HMRC that some landlords might be turning a 'blind eye'. There are broadly two proposals.

The first merely asks landlords to include a clause in their leases to prohibit illicit tobacco / excise trading (arguably unnecessary as any commercial lease should already contain provisions requiring compliance with any relevant statutes and prohibiting illegal activity).

The alternative is far more worrying for landlords. This would impose a duty of care on landlords to prevent tobacco duty (or other excise duty) fraud, together with a financial penalty for failure to take reasonable steps to ensure that their property is not used to evade duty. The duty of care would arise once a landlord has been notified that the tenant has evaded excise duty and could mean landlords may be required to undertake periodic checks to ensure that they are aware of any illicit activity on the property and reporting this to HMRC, or taking action to evict the tenant.

We'll let you know on the progress of any changes although the recent election might mean the proposals disappear in a puff of smoke.