Tobacco smugglers 'due payouts'

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Thousands of tobacco smugglers could be due compensation because their assets were wrongly confiscated, customs officials have admitted.

More than £10m has been recovered from smugglers during the last four years.

But officials failed to notice a change in the law in 2001, which meant only the main players in smuggling scams should have had their assets seized.

HM Revenue and Customs (HMRC) has called the slip "deeply regrettable", while critics said it was "farcical".

The law change meant that only those proven to have masterminded smuggling operations, or caught in the act of importing tobacco illegally, should have been required to pay duty on the goods.

How can they not spot for eight years that the law had changed - it's just impossible to comprehend Paul Holmes, Liberal Democrats

However, many people lower down cigarette smuggling chains - such as those who transported or sold the tobacco - have also been subject to confiscation orders.

These are made by judges to allow agencies to secure ill-gotten gains from convicted criminals.

HMRC officials have already reviewed more than 700 cases, with at least three such orders being quashed.

A further 3,300 remain to be checked, with an estimated 10% of cases likely to require repayment and compensation.

A spokesman said: "Whilst the error is deeply regrettable we were not alone in making it: the same error has been made in academic texts and by practitioners at all levels."

Liberal Democrat home affairs spokesman Paul Holmes said: "A lot of professionals are involved. How can they not spot for eight years that the law had changed?

"It's just impossible to comprehend, apart from the legislative diarrhoea of the government that constantly swamps people with new laws."