An investigation by the Commons home affairs select committee said failures in dealing with illicit cigarettes were “a matter of grave concern”.
But it also suggested that concerns over boosting the black market should not trump public health considerations in the debate over plain packaging.
Rogue products smoked in the UK soared by 49 per cent to a billion in 2012, it said, suggesting a reduction in enforcement action.
The committee was especially scathing of the failure to fine a single firm for deliberately oversupplying cigarettes to high-risk markets so they can be smuggled back to the UK. The taxpayer loses out on around £2bn in unpaid duty because of the illegal trade.
The committee welcomed efforts by HM Revenue and Customs and the Border Force to address acknowledged communication failures, but said more needed to be done to beef up a joint strategy introduced in 2011.
The cross-party group said: “It is astonishing that no UK tobacco manufacturer has ever been fined for oversupply of products to high-risk overseas markets, and that only one statutory warning letter has been issued.
“The penalties available are too weak and enforcement too rare. We find it farcical that a respected enforcement agency such as HMRC has not imposed tougher punishments on those over-supplying overseas markets.”
A Border Force spokeswoman said: “The priority for Border Force is security of the UK border and that means both passengers and goods. Overall cigarette seizure performance has steadily improved and Border Force and HMRC are working closely together to address the source, supply and demand for illicit tobacco in the UK.”
HMRC insisted: “Tackling tobacco smuggling is a priority for HMRC.”