Dawson's (Wales) Ltd v The Commissioners for HM Revenue & Customs
| Jurisdiction | England & Wales |
| Judge | Lady Justice Asplin,Lord Justice Arnold,Lady Justice Elisabeth Laing |
| Judgment Date | 28 March 2023 |
| Neutral Citation | [2023] EWCA Civ 332 |
| Docket Number | Case No: CA-2019-001534 |
| Court | Court of Appeal (Civil Division) |
[2023] EWCA Civ 332
Lady Justice Asplin
Lord Justice Arnold
and
Lady Justice Elisabeth Laing
Case No: CA-2019-001534
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE UPPER TRIBUNAL
TAX AND CHANCERY CHAMBER
Mrs Justice Falk and Judge Timothy Herrington
[2019] UKUT 296 (TCC)
Royal Courts of Justice
Strand, London, WC2A 2LL
Michael Firth (instructed by Morrisons Solicitors LLP) for the Appellant
Kieron Beal KC and Natasha Barnes (instructed by HMRC Solicitor's Office and Legal Services) for the Respondents
Hearing date: 8 March 2023
Approved Judgment
This judgment was handed down remotely at 11.00am on 28 March 2023 by circulation to the parties or their representatives by e-mail and by release to the National Archives.
This appeal is concerned with the concept of “holding” for the purposes of Article 7(2)(b) of the EU Directive 2008/118 (the “Excise Directive”) and regulation 6 of the Excise Goods (Holding Movement and Duty Point) Regulations 2010 SI 2010/593 (the “HMDP Regulations”) and whether questions in relation to “holding” were appropriate to be dealt with as a preliminary issue.
The Appellant, Dawson's (Wales) Limited (“DWL”) contends that whilst the Upper Tribunal (the “UT”) was correct to decide that a person who is able to exercise legal or de facto control of excise goods is a “holder” of those goods, it erred in deciding that it was an additional requirement that the person “intends to assert that control against others”. DWL also contends that the UT erred in over-refining the test for control by laying down factors necessary to establish that control and erred in purporting to identify an error of law in the First Tier Tribunal (Tax Chamber)'s (the “FTT's”) decision to decide the meaning of “holding” as a preliminary issue.
It is now common ground that the Respondents, the Commissioners for His Majesty's Revenue and Customs (“HMRC”), are required, as a matter of law, to assess the first “holder” of the excise goods, within the meaning the Excise Directive and the HMDP Regulations, whose identity it can establish. DWL's case is that on a correct understanding of the law, it was not the first holder of the relevant goods known to HMRC and, therefore, should not have been the subject of an excise duty assessment.
The Excise Directive and the HMDP Regulations
Article 7(1) of the Excise Directive provides that excise duty becomes chargeable at the time of release for consumption. Article 7(2) states that “release for consumption” shall mean any of the circumstances described in (a) – (d) of that sub-article. We are concerned with Article 7(2)(b) which provides as follows:
“(b) the holding of excise goods outside a duty suspension arrangement where excise duty has not been levied pursuant to the applicable provisions of Community law and national legislation;”
It is not in dispute that the goods with which this appeal is concerned were held outside a duty suspension arrangement and that excise duty had not been levied. The person liable to pay the excise duty in relation to the holding of excise goods as referred to in Article 7(2)(b) is “the person holding the excise goods and any other person involved in the holding of the excise goods”: Article 8(1)(b).
Although Article 33 is not directly relevant in this case, it is the basis of a number of authorities which have been relied upon. It is also accepted that “holding” in Article 7 must be given the same meaning as in Article 33. It is convenient to set it out here, therefore.
Article 33 makes provision for the charging of excise duty in a second Member State when dutiable goods have already been released for consumption in another Member State. So far as relevant, it provides:
“1. Without prejudice to Article 36(1), where excise goods which have already been released for consumption in one Member State are held for commercial purposes in another Member State in order to be delivered or used there, they shall be subject to excise duty and excise duty shall become chargeable in that other Member State.
For the purposes of this Article, ‘holding for commercial purposes’ shall mean the holding of excise goods by a person other than a private individual or by a private individual for reasons other than his own use and transported by him, in accordance with Article 32.
…
3. The person liable to pay the excise duty which has become chargeable shall be, depending on the cases referred to in paragraph 1, the person making the delivery or holding the goods intended for delivery, or to whom the goods are delivered in the other Member State.”
The HMDP Regulations give effect to the Excise Directive. There is no dispute that they must be construed in conformity with the Excise Directive.
Regulation 5 provides that:
“Subject to regulation 7(2), there is an excise duty point at the time when excise goods are released for consumption in the United Kingdom.”
Regulation 6 defines “release for consumption”. We are concerned with regulation 6(1)(b) which transposes Article 7(2)(b) in the following way:
“(1) Excise goods are released for consumption in the United Kingdom at the time when the goods—
…
(b) are held outside a duty suspension arrangement and UK excise duty on those goods has not been paid, relieved, remitted or deferred under a duty deferment arrangement;
…”
Regulation 7(1) prescribes the time at which excise goods leave a duty suspension arrangement.
The person liable to pay the duty when excise goods are released for consumption by virtue of regulation 6(1)(b) (holding of excise goods outside a duty suspension arrangement) “is the person holding the excise goods at that time”: regulation 10(1). Sub-regulation 10(2) provides that “[a]ny other person involved in the holding of the excise goods is jointly and severally liable to pay the duty with the person specified in paragraph (1).”
The provisions of Article 33 of the Excise Directive are transposed by regulation 13. Where relevant, regulation 13 provides as follows:
“13.—(1) Where excise goods already released for consumption in another Member State are held for a commercial purpose in the United Kingdom in order to be delivered or used in the United Kingdom, the excise duty point is the time when those goods are first so held.
(2) Depending on the cases referred to in paragraph (1), the person liable to pay the duty is the
person—
(a) making the delivery of the goods;
(b) holding the goods intended for delivery; or
(c) to whom the goods are delivered.
(3) For the purposes of paragraph (1) excise goods are held for a commercial purpose if they
are held—
(a) by a person other than a private individual; or
…”
Background
In summary, the background to this matter is as follows. In 2011–2012, HMRC investigated purchases of wine by Tesco and Morrisons. The supermarkets had purchased the wine from two suppliers who, in turn, had purchased them from DWL. DWL, which is a wholesaler of alcoholic drinks, had held the wine in its warehouse. HMRC traced the supply chain prior to DWL and, in respect of the supplies with which this appeal is concerned, concluded that there was insufficient evidence that excise duty had been paid. The supplies were traced back to missing, de-registered or hijacked companies. HMRC was unable to establish that any of the companies in the supply chain prior to DWL had taken physical possession of the goods and it is assumed that DWL's suppliers did not receive the goods but were responsible for arranging for them to be shipped to DWL.
HMRC exercised its powers of assessment under section 12(1A) Finance Act 1994 and raised a notice of assessment against DWL in the sum of £3,729,381 which was issued on 17 October 2013 for the period from 21 February 2011 to 15 May 2012.
The assessment was made on the basis that the goods were physically held outside a duty suspension arrangement and UK excise duty on those goods had not been paid with the consequence that a duty point had arisen under regulation 6(1)(b) of the HMDP Regulations. HMRC considered that DWL was the first known person to hold the goods in the sense of having been in physical possession of them and was liable to pay the excise duty under Regulation 10(1).
The FTT
DWL appealed the assessment to the FTT. It applied for three preliminary issues to be determined on the appeal on the basis of assumed facts. After initial opposition, HMRC consented to that approach but noted that it did not consider that the preliminary issues would resolve the appeal one way or the other. The FTT recorded the basis upon which the tribunal had agreed to hear the preliminary issues at [3] of its decision dated 8 February 2018, [2018] UKFTT 66 (TC), however, as follows:
“… if the Tribunal were to determine the preliminary issues in favour of the appellant, the appeal would be successful without the need to determine the disputed issues of fact and other disputed matters of law and there would be real costs savings.”
Having noted at [4] that the assumed facts were the facts which one or other of the parties would seek to prove if the matter went to a full hearing, the FTT summarised them at [5] – [8] of its decision as follows:
“5. The appellant purchased certain alcoholic drinks from about 10 suppliers. It is assumed for the purposes of the preliminary hearing that the appellant's immediate suppliers at no point took physical possession of the goods the excise duty assessment on which was at issue in this appeal. It is, however, also assumed that the appellant's immediate supplier arranged for the goods to be shipped and delivered to the appellant's premises. More particularly, it is assumed that the appellant's immediate suppliers had the power to...
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AGNIEZSKA HARTLEB T/A HARTLEB TRANSPORT v THE COMMISSIONERS FOR HIS MAJESTY’S REVENUE AND CUSTOMS [2024] UKUT 00034 (TCC)
...not having physical possession of them (Ground 2). 14. On 28 March 2023 the Court of Appeal decision in Dawson’s (Wales) Ltd v HMRC [2023] EWCA Civ 332 (“Dawson”) was released. As the case was of relevance to the matters being appealed, the UT (at the instruction of Judge Rupert Jones) cont......