Taxman's plan to curb tobacco smuggling in question after stinging report Legislation in 2006 which placed legal responsibility for controlling the supply chain on tobacco companies was found not to have been enforced. Just one letter of warning had been sent to a manufacturer by HMRC, who declined to name the company for "legal reasons." A new postal system was also found to be two years behind schedule while plans for a special mobile freight unit were scrapped because a prototype was never actually produced. Amyas Morse, head of the NAO, called tobacco smuggling a "significant threat" to tax revenues and said HMRC had the right strategy but was failing to apply it effectively. Two of the biggest four tobacco companies, British American Tobacco and Imperial Tobacco, are based in Britain. The country's high tobacco duty rates are believed to be fuelling illicit trading. A spokesman from HMRC said the illicit cigarette market is "continuing to decline" and pointed out the UK Border Force has seized nearly 1,050 tonnes of rolling tobacco and 3.6 billion illegally smuggled cigarettes in the last two years.