Euro Trade and Finance Ltd v The Commissioners For Her Majesty's Revenue & Customs, TC 05052
| Jurisdiction | UK Non-devolved |
| Court | First-tier Tribunal (Tax Chamber) |
| Judge | Barbara MOSEDALE |
| Judgment Date | 25 April 2016 |
| Neutral Citation | [2016] UKFTT 0279 |
| Reference | TC 05052 |
| Appellant | Euro Trade and Finance Ltd |
| Respondent | The Commissioners For Her Majesty's Revenue & Customs |
[2016] UKFTT 0279 (TC)
TC05052
Appeal number: TC/2013/2893 and
TC/2014/144
EXCISE DUTY –conditions imposed on WOWGR – first appellant in breach
– whether UK legislation under which conditions imposed authorised by EU
Directive – whether conditions in breach of TFEU – whether conditions
proportionate - ex parte Lumsdon considered – question to be referred to
CJEU – appeal dismissed in part
FIRST-TIER TRIBUNAL
TAX CHAMBER
EURO TRADE AND FINANCE LTD
-AND-
PIERHEAD DRINKS LTD
Appellants
- and -
THE COMMISSIONERS FOR HER MAJESTY’S Respondents
REVENUE & CUSTOMS
TRIBUNAL:
JUDGE Barbara Mosedale
Michael Sharp
Sitting in public at the Royal Courts of Justice, the Strand, London on 22-24, 27,
29-30 April and 1, 5-6 May 2015
with further submissions from the appellant (undated but received on 18 May
2015) with a response on 3 June from HMRC with a reply to the response from
the appellant dated 9 June, and further submissions from HMRC on 15
September 2015 and a response from the appellant dated 2 October 2015; and
further submissions from HMRC dated 15 January 2016 with a response from
the appellant dated 1 February 2016
Mr J Shelley, CTA, for the Appellant
Mr B McGurk, Counsel, instructed by the General Counsel and Solicitor to HM
Revenue and Customs, for the Respondents
© CROWN COPYRIGHT 2016
2
DECISION
1. The first appellant is Euro Trade Finance Ltd, which we refer to as Euro Trade
in this decision. The second appellant is Pierhead Drinks Limited, which we refer to 5 in this appeal as Drinks. As the two appellants had the same director, the two sets of
appeals had overlapping witnesses and to some extent the same facts were relevant to
both, such that hearing the appeals separately would have given rise to the risk of
inconsistent findings of fact, the Tribunal had joined the appeals.
2. Euro Trade appealed against four decisions made by HMRC, in particular: 10
(1) HMRC’s decision of 21 March 2013 to issue Commissioners’ Directions
to warehouses storing goods owned by Euro Trade;
(2) HMRC’s decision of 2 May 2013 to refuse to restore those same goods
which were seized on 11 April following the Commissioners’ Directions.
(3) HMRC’s decision of 2 May 2013 to refuse Euro Trade’s application to 15 amend the conditions on which its WOWGR was granted;
(4) HMRC’s decision of 13 December 2013 revoking Euro Trade’s
WOWGR;
3. Drinks appealed against HMRC’s decision of 13 December 2013 refusing its
application for a WOWGR. By ‘WOWGR’ we refer to registration as a trader in duty 20 suspended excise goods under the Warehousekeepers and Owners of Warehoused
Goods Regulations 1999 no 1278 which we refer to in detail at §§153-158 below.
Facts
Pierhead Purchasing Ltd
4. It is not, we find, possible to understand the facts in this case without starting 25 with a company called Pierhead Purchasing Ltd. We will refer to this company as
‘PPL’ to distinguish it from Drinks.
5. Mr Richard Hercules was the director of PPL. PPL had traded since 1976 and
held a WOWGR, without any conditions being attached to it, since 1999 when they
were first required for trading in alcohol. 30
6. PPL was issued in the years 2007-2009 with three assessments totalling
approximately £1.4million in relation to its trading in mobile phones. The grounds of
these assessments were that PPL was not entitled to input tax which it had recovered
from HMRC because (HMRC considered) it had engaged in transactions which it had
known or should have known were connected with missing trader intercommunity 35 fraud (normally referred to as MTIC fraud).
7. PPL appealed all three assessments but withdrew the appeals on the first day of
the hearing in April 2012. It then applied in October 2012 to have the appeals
3
reinstated but this Tribunal refused the reinstatement on 7 March 2013 ([2013]
UKFTT 172 (TC)). This decision was upheld on appeal to the Upper Tribunal in July
2014 ([2014] UKUT 321(TCC)). PPL then applied to the Court of Appeal for
permission to appeal against the Upper Tribunal decision: this application had been
refused on paper at the time of the hearing before us but renewed to an oral hearing. 5 The oral hearing took place on 20 May 2015, after the hearing in this appeal. It was
refused.
8. Following the withdrawal of its appeal, and before the application for
reinstatement, HMRC withdrew PPL’s WOWGR on the grounds that PPL and
Richard Hercules were not, in HMRC’s opinion, fit and proper persons to hold a 10 WOWGR. This was because PPL had not discharged its very substantial debt to
HMRC and Richard Hercules was its director. While HMRC retained some
repayments owing to PPL to set off against this debt, when liability to interest is taken
into account the debt owing to HMRC by PPL was and remains about £1.4 million.
9. PPL has appealed against the withdrawal of its WOWGR but that appeal was 15 not a part of this hearing. That appeal was, we understand, stayed pending the
outcome of its reinstatement application. The stay should now be lifted.
Euro Trade
10. Euro Trade was incorporated and started to trade in April 1991. Its original
trade was in general merchandise and not in excise goods. Its shareholders were five 20 family members each holding one fifth of the shares: Richard Hercules had one fifth,
Ian Hercules (his son) another fifth and three other family members held one fifth
each.
11. For the first twenty odd years until August 2012 Richard Hercules was the
director of Euro Trade. 25
12. Euro Trade had no employees and owned no premises. Its need for staff was
met by using the staff of PPL. To the extent it needed premises, this was met by
occupying the same building as PPL, which was owned by Richard Hercules. Re-
charges for the use of staff and premises by Euro Trade were made.
13. Euro Trade applied for a WOWGR sometime in 2011 and this was granted in 30 January 2012. The WOWGR included conditions. While PPL’s WOWGR had been
granted without conditions, as we find was usual when it was granted back in 1999,
by the time Euro Trade applied in 2011, it was, we find, policy for HMRC to impose
conditions on new holders of WOWGRs. We discuss HMRC’s policy in more detail
below at §§110-123. 35
14. The conditions attached to Euro Trade’s WOWGR only permitted Euro Trade to
trade in duty suspended goods in the following circumstances:
(1) It was not re-exporting previously imported goods (we will refer to this as
the ‘condition prohibiting re-export’);
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