British-American Tobacco (Holdings) Ltd v The Commissioners for Her Majesty's Revenue & Customs, TC 05659
| Jurisdiction | UK Non-devolved |
| Judge | Guy BRANNAN |
| Judgment Date | 14 February 2017 |
| Neutral Citation | [2017] UKFTT 0167 (TC) |
| Respondent | The Commissioners for Her Majesty's Revenue & Customs |
| Appellant | British-American Tobacco (Holdings) Ltd |
| Reference | TC 05659 |
| Court | First-tier Tribunal (Tax Chamber) |
[2017] UKFTT 0167 (TC)
TC05659
Appeal number:TC/2014/05060
EXCISE DUTY – tobacco – penalty – ss 7 A-C Tobacco Products Duty Act 1979 –
duty not to supply tobacco in circumstances where likely to be resupplied to
smugglers – basis of imposition of penalty – Article 6 European Convention on
Human Rights – whether a criminal charge – requirement of access to a court of
full jurisdiction and scope of the Tribunal’s jurisdiction under s 16 (5) Finance Act
2004 – burden of proof – citation of Hansard – relationship between initial notice
and penalty notice – whether a breach of Articles 30 and 34-36 Treaty for the
European Union – whether penalty an unlawful customs charge – whether a
quantitative restriction on the free movement of goods – appeal allowed in part
FIRST-TIER TRIBUNAL
TAX CHAMBER
BRITISH-AMERICAN TOBACCO (HOLDINGS) LTD
Appellant
- and -
THE COMMISSIONERS FOR HER MAJESTY’S Respondents
REVENUE & CUSTOMS
TRIBUNAL:
JUDGE GUY BRANNAN
Sitting in public at the Royal Courts of Justice, London on 19-29 July 2016
Philip Moser QC and Brendan McGurk instructed by Hogan Lovells
International LLP for the Appellant
Melanie Hall QC, Eric Metcalfe and David Gregory, instructed by the General
Counsel and Solicitor to HM Revenue and Customs, for the Respondents
© CROWN COPYRIGHT 2017
2
CONTENTS
Topic Paragraph
Introduction 1 – 4
Evidence 5 – 8
The legislation 9 – 22
The facts 23
Background and sequence of events 24 – 93
Legitimate demand 94 – 134
Track and Trace and Additional Customer Tracking 135 – 179
Seizures and SERP 180 – 214
Specification notices 215 – 228
BAT’s relationship with wholesalers and retailers 229 – 235
Memoranda of understanding 236 – 267
EUCA 268 – 282
Standards of Business Conduct 283 – 286
Contractual terms 287 – 301
HMRC’s Supply Chain Audit 302 – 324
“Little and often” smuggling and Project Falcon 325 – 356
Political pressure 357 – 377
Competitors 378 – 393
HMRC Notice 477 394 – 406
Discussion and submissions 407
Scope of the section 7A(1) duty 408 – 416
EU law arguments 417 – 435
3
Article 6 – whether TPDA penalty a “criminal charge”
for Convention purposes 464 – 485
Article 6 – right to a fair trial 486 – 517
Jurisdiction of the Tribunal – section 16 (5) Finance Act
1994 518 – 520
Article 6 – burden of proof 521 – 538
Reasonable excuse 539 – 541
Relationship between Initial Notice and Penalty Notice 542 – 574
Decision – penalty grounds 575 – 603
Decision – quantification of penalty 604 – 612
Decision 613 – 617
Rights of appeal
Appendix 1 – Initial Notice
Appendix 2 – Penalty Notice
DECISION
Introduction 5
1. The appellant (“BAT”) appeals, under section 16(5) Finance Act 1994, against
HMRC’s decision made pursuant to section 7B(4) Tobacco Products Duty Act 1979
(as amended by the Finance Act 2006) (“TPDA”) contained in a letter from HMRC
dated 5 June 2014 (“the Penalty Notice”). The Penalty Notice was upheld on review
by a letter dated 13 August 2014 (“the Review Decision”). The Penalty Notice 10 imposed a penalty of £650,000 on BAT.
2. This appeal is the first time that the penalty provisions of section 7 A-C TPDA
have been considered and, therefore, both parties regarded this as a test case.
3. Essentially, the dispute concerns whether BAT was supplying hand-rolling
tobacco (“HRT”) where the nature or circumstances of the supply made it likely that it 15 would be resupplied to persons who were likely to smuggle the tobacco into the UK.
Alternatively, HMRC argued that BAT were “otherwise facilitating” the smuggling of
tobacco products into the UK. The circumstances in which HMRC could impose a
penalty, the jurisdiction of this Tribunal, the application of the European Convention
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