CC&C Ltd v HM Commissioners of Revenue & Customs

Hearing date: 13 November 2014

INTRODUCTION

This appeal arises in the context of the regime which permits wholesale trading in alcoholic drinks and other dutiable goods which are held in, or moved between, excise warehouses without giving rise to an "excise duty point" and thus attracting liability for excise duty. Goods so traded are generally described as "duty-suspended goods". The regime is governed by both EU and domestic regulations. The Warehousekeepers and Owners of Warehoused Goods Regulations 1999 ("the Regulations" – also known as "WOWGR") provide for persons holding or buying duty-suspended goods to be approved and registered by Her Majesty's Revenue & Customs ("HMRC") as "registered owners". The regime is highly prescriptive as regards the procedures and paperwork to be employed, but there is a recognised problem of dishonest traders seeking to manipulate the system in order to evade duty, typically by so-called "duplicate loads" being moved under cover of paperwork generated for legitimate movements. Registered owners are expected to use all due diligence to prevent their legitimate trade being exploited to facilitate fraudulent transactions.

The Appellant company was approved as a registered owner of duty-suspended goods in 2004. It is majority-owned by Mr Mark Feneron and his wife. Mr Feneron is a director and runs the business. 95% of its turnover is in duty-suspended goods. It employs nine people. Its most recent annual accounts showed a turnover of £9.5m.

On 8 September 2014 Mr Geoff Germaney, a Higher Officer at HMRC, wrote to the Appellant notifying it that its registration had been revoked with immediate effect. The letter stated:

"Your registration has been revoked as you are no longer a fit and proper person (as required by Notice 196 paragraph 2), for the following reasons:

• You have failed to conduct reasonable due diligence checks with your customers, and failed to act on the findings of the due diligence carried out.

• In addition you have regularly traded with companies linked to alcohol diversion fraud, which has resulted in regular seizures of alcohol.

• An assessment for £2,0921.00 [ sic] and a wrongdoing penalty WP for £7,322.00 has been issued to you following an irregular movement of duty suspended goods as described in the attached annex.

I have set out the information on which my decision is based and this is provided as an annex to this letter."

I summarise the information referred to in the annex at paras. 19–22 below. The letter continued:

"If you do not agree with my decision, you have three options. Within 30 days you can:

• send any further information you want me to consider;

• have your case reviewed by a different officer; or

• have your case heard by an independent tribunal."

The second and third of those options refer to statutory procedures for review and/or appeal which I describe at paras. 12 and 13 below. The first is a reference to an informal process offered by HMRC.

On 30 September 2014 the Appellant took the third of the options described in HMRC's letter by commencing an appeal in the First-tier Tribunal against the revocation decision. But the appeal before us arises from separate proceedings which it commenced in the Administrative Court the following day. The aim of the proceedings is not so much to challenge the revocation decision as to obtain interim relief pending the determination of the appeal to the Tribunal. Indeed section 3 of the Claim Form, which is supposed to identify the decision sought to be reviewed, is completed as follows:

"The Defendant must forthwith restore the Claimant's registration as a Registered Owner of Duty Suspended Goods under [the Regulations] and treat same as not having been cancelled in accordance with its letter of 08 September 2014."

That does not in fact identify a decision at all. The same formula is used in section 7, which is headed "Details of remedy (including any interim remedy) being sought". A separate application seeking urgent consideration and interim relief in the same terms was also lodged.

No prior notice of the proceedings had been given to HMRC. Foskett J ordered that they should lodge a statement indicating their position in relation to the application for interim relief and that that application be listed for hearing on 9 October. HMRC complied with that direction, and the matter came on before HH Judge Keyser QC, sitting as a Deputy High Court Judge, on the date directed. He refused relief and also refused permission to apply for judicial review. He did however give permission to appeal to this Court.

On 16 October 2014 the Appellant lodged an Appellant's Notice. There was regrettably some delay in obtaining a transcript of Judge Keyser's judgment – though in truth that could have been got round by submitting counsel's note – but eventually an order for expedition was made and we heard the appeal on 13 November. Mr Geraint Jones QC, leading Mr Charles Irvine, appeared for the Appellant. Mr Timothy Brennan QC appeared for HMRC, leading Ms Marika Lemos. On 14 November the parties were notified that the appeal would be dismissed, with reasons to follow. These are my reasons for that decision.

THE STATUTORY SCHEME FOR REGISTRATION

The Regulations are made under powers conferred by sections 100G and 100H of the Customs and Excise Management Act 1979. Section 100G reads (so far as material) as follows:

"(1) For the purpose of administering, collecting or protecting the revenues derived from duties of excise, the Commissioners may by regulations under this section (in this Act referred to as "registered excise dealers and shippers regulations")—

(a) confer or impose such powers, duties, privileges and liabilities as may be prescribed in the regulations upon any person who is or has been a registered excise dealer and shipper; and

(b) impose on persons other than registered excise dealers and shippers, or in respect of any goods of a class or description specified in the regulations, such requirements or restrictions as may by or under the regulations be prescribed with respect to registered excise dealers and shippers or any activities carried on by them.

(2) The Commissioners may approve, and enter in a register maintained by them for the purpose, any revenue trader who applies for registration under this section and who appears to them to satisfy such requirements for registration as they may think fit to impose.

(3) In the customs and excise Acts "registered excise dealer and shipper" means a revenue trader approved and registered by the Commissioners under this section.

(4) The Commissioners may approve and register a person under this section for such periods and subject to such conditions or restrictions as they may think fit or as they may by or under the regulations prescribe.

(5) The Commissioners may at any time for reasonable cause revoke or vary the terms of their approval or registration of any person under this section.

(6) …"

Section 100H (1) reads (so far as material) as follows:

"Without prejudice to the generality of section 100G above, registered excise dealers and shippers regulations may, in particular, make provision –

(a) regulating the approval and registration of persons as registered excise dealers and shippers and the variation or revocation of any such approval or registration …

(b)-(p) …"

"Revenue trader" is elaborately defined in section 1(1) of the Act; so far as relevant, it includes "any person carrying on a trade or business subject to [the Act] which consists of or includes … the buying, selling, importation, exportation, dealing in or handling of [dutiable goods]".

The structure of the Regulations can be summarised for present purposes as follows:

(1) Parts II-III give power to HMRC to approve and register warehousekeepers (Part II) and "owners and duty representatives" (Part III) as registered excise dealers and shippers. Regulation 5 is headed "Registered owners" and reads as follows:

"(1) For the purposes of section 100G of the Act, the Commissioners may approve revenue traders who wish to deposit relevant goods that they own in an excise warehouse and register them as registered excise dealers and shippers in accordance with section 100G (2) of the Act.

(2) A revenue trader who has been so approved and registered shall be known as a registered owner."

(2) Part VI is headed "Privileges". Regulation 12 sets out the privileges of a registered owner, which are essentially to hold or buy dutiable goods in an excise warehouse.

(3) Part VII is headed "Conditions and Restrictions". Regulation 18 is headed "Conditions and restrictions that apply to registered owners". Paragraph (1) reads:

"The approval and registration of every registered owner shall be subject to the conditions and restrictions prescribed in a notice published by the Commissioners and not withdrawn by a further notice."

The notice published in accordance with regulation 18 (1) current at the date of the revocation of the Appellant's...