European Brand Trading Ltd v The Commissioners of HM Revenue and Customs
| Jurisdiction | England & Wales |
| Judge | Lord Justice Lewison,Lord Justice Ryder,Sir Terence Etherton |
| Judgment Date | 16 February 2016 |
| Neutral Citation | [2016] EWCA Civ 90 |
| Docket Number | Case No: A3/2014/2137 |
| Court | Court of Appeal (Civil Division) |
| Date | 16 February 2016 |
[2016] EWCA Civ 90
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE UPPER TRIBUNAL TAX & CHANCERY CHAMBER
Mr Justice Morgan
FTC /31/2013
Royal Courts of Justice
Strand, London, WC2A 2LL
THE CHANCELLOR OF THE HIGH COURT
Lord Justice Lewison
and
Lord Justice Ryder
Case No: A3/2014/2137
Mr James Pickup QC (instructed by Hill Dickinson LLP) for the Appellant
Mr Jonathan Swift QC & Mr James Puzey (instructed by Solicitors Office HMRC) for the Respondent
Hearing date: 9 February 2016
Where excise duty should have been paid on imported goods, but has not been, those goods are liable to forfeiture under the Customs and Excise Management Act 1979 ("the 1979 Act"). Where goods are liable to forfeiture HMRC has power to seize or detain them. Once goods have been seized or detained, the owner of the goods has one month to challenge the seizure on the ground that the goods seized are not liable to forfeiture. If no challenge is made then at the end of the month the goods are deemed to have been duly condemned as forfeited. If a challenge is made in time, then HMRC must take proceedings for condemnation in the magistrates' court or the High Court. If the court finds that the goods were liable to forfeiture it must condemn them to be forfeited. Running alongside these provisions HMRC has a discretionary power to restore to the owner anything "forfeited or seized" under the provisions of the 1979 Act. Where HMRC have decided not to restore the owner of the goods can ask for a review of the decision under the Finance Act 1994 ("the 1994 Act") and, if dissatisfied with the review appeal to the First Tier Tribunal ("the FTT").
The question on this appeal is whether after goods (a) are deemed to have been duly condemned or (b) have been condemned by the magistrates, an officer of HMRC exercising that discretionary power can or should investigate a claim that the goods were not liable to forfeiture after all. In a decision promulgated on 23 May 2014 ( [2014] UKUT 0226 (TCC)) the Upper Tribunal (Morgan J) held that the answer to that question was "No". I agree and would dismiss the appeal.
I can take the facts from the decision of the Upper Tribunal. In June 2009, a large quantity of wine and beer belonging to EBT was in a warehouse in Letchworth. On 17 June 2009, HMRC detained those goods. HMRC gave written notice to EBT that the goods were detained for the following stated reason: "Proof of Duty Payment". On 13 July 2009, HMRC gave a further notice to EBT listing the items detained "pending proof of excise duty payment being confirmed". The listed items excepted some of the goods initially detained and the excepted goods were released to EBT. On 22 July 2009, HMRC removed the detained goods from the warehouse in Letchworth. On 19 August 2009, EBT's solicitors wrote to HMRC asking for answers to a number of questions and protesting at HMRC's conduct. On 20 August 2009, HMRC replied stating that a notice of seizure would be served that day.
On 20 August 2009, HMRC sent EBT a notice of seizure of most of the goods detained. The notice was given pursuant to the 1979 Act. The notice said that the goods were liable to forfeiture under the Act. The notice also said that if EBT did not give notice of claim pursuant to schedule 3 to the 1979 Act, then the goods would be duly condemned as forfeited. The notice went on to say that it was the policy of HMRC not to restore goods which were liable to forfeiture. It then said that if EBT did not agree with the decision not to restore the goods, it could ask for a review of the decision. HMRC's formal policy at the relevant time was set out in the form of Notice 12A then current which said:
"Our general policy is not to return seized excise goods (such as alcohol or tobacco products) vehicles used for commercial smuggling or any seized prohibited thing (such as illegal drugs, offensive weapons or endangered plant and animal species). However, we will consider all requests taking into account all relevant facts."
Those goods that had been excluded from the notice of seizure on 20 August were the subject of a separate notice on 20 August 2009 stating that they remained detained pending proof of payment of excise duty.
On 17 September 2009, EBT's solicitors wrote to HMRC. The letter was treated both as a notice of claim under paragraph 3 of schedule 3 to the 1979 Act and a request for restoration of the goods and/or a review of the earlier decision not to restore the goods. The letter referred to certain matters which were relied upon by EBT as showing that duty had been paid on at least some of the goods which had been seized.
On 1 October 2009, EBT's solicitors wrote a lengthy letter to HMRC. It said that EBT had already challenged the legality of the seizure and it now requested a review of the decision not to restore the goods. It said that a request for a review could be considered by HMRC while a challenge to the legality of the seizure was being pursued. The letter set out in detail EBT's case that duty had been paid on all or some of the goods which had been seized. The letter said that EBT had difficulties in some respects in establishing that duty had been paid on all of the goods. The letter contained significant criticisms of the way in which HMRC had conducted matters and in particular had failed to communicate with EBT.
On 7 October 2009, HMRC wrote to EBT's solicitors accepting that the letter of 17 September 2009 was a claim under schedule 3 to the 1979 Act. HMRC said that the case would be prepared for condemnation proceedings in the magistrates' court within six months. HMRC also accepted, in response to the letter of 1 October 2009, that it would review the decision not to restore the goods contained in the letter of 20 August 2009. On three occasions, in October and November 2009 and in January 2010, HMRC asked for extensions of time within which to complete the review of the decision not to restore the goods. The letters explained that time was being taken to establish the supply chains for the goods which had been seized. This suggested that HMRC was investigating whether duty had been paid on some or all of those goods.
On 16 February 2010, HMRC served on EBT notice of seizure of the goods which had been detained on 20 August 2009 but which had not been the subject of the notice of seizure served on that date. The notice of 16 February 2010 did not refer to any question as to the restoration of the goods which were the subject of that notice.
On 25 February 2010, a review officer of HMRC wrote to EBT's solicitors upholding the decision not to restore the goods seized on 20 August 2009. She said that from the documents available to her, she was not satisfied that excise duty had been paid on those goods.
On 2 March 2010, EBT appealed to the FTT against the review decision of 25 February 2010. The main ground of appeal was:
"We maintain that the goods are duty paid, they were purchased from a number of regular suppliers and the purchase invoices stated that the goods were duty paid."
The grounds of appeal also said that if HMRC established that duty had not been paid on some of the goods then EBT had acted in good faith and that HMRC should use their discretion to restore the goods to EBT as an innocent party.
On 4 March 2010, agents for EBT requested restoration of the goods seized on 16 February 2010.
On 16 March 2010, HMRC issued a summons in the Manchester City Magistrates' Court for condemnation as forfeited the goods seized on 20 August 2009. The summons recited the history of the matter and stated that the goods were liable to forfeiture on the ground that the goods were chargeable to excise duty and no excise duty had been paid on the goods. The summons also said that the burden of proving that duty had been paid or secured on the goods was on EBT.
On 29 March 2010, HMRC served this summons on EBT. On the same day, HMRC wrote to the agents for EBT stating that the request for restoration of the goods seized on 16 February 2010 was rejected.
On 22 April 2010, the solicitors for EBT wrote to HMRC stating that EBT was not pursuing its claim under schedule 3 to the 1979 Act that the goods seized on 20 August 2009 were not liable to forfeiture. The solicitors completed a form to be sent to the magistrates' court stating that EBT no longer wished to contest the summons and agreed to HMRC asking the court to give them an order enabling them to keep the goods seized.
On 13 May 2010, the magistrates' court made an order, reciting the contents of the summons, which included paragraph 4 as follows:
"the goods were liable to forfeiture … in that:
a) they were chargeable with excise duty …; and
b) no excise duty had been paid on the goods."
The formal part of the order read:
"IT IS THIS DAY ADJUDGED that the Complaint is true and it is ordered that the said goods be condemned as forfeit."
The order also said that the reasons for forfeiture were that EBT had not supplied evidence of duty payment and no longer contested the condemnation.
On 22 June 2010, EBT's agents asked for a review of the decision not to restore the goods seized on 16 February 2010. This was treated as a valid request for a review and a review officer of HMRC wrote to EBT's agents on 22 July 2010 confirming the decision not to restore those goods. The letter said that as there had not been a challenge to the forfeiture of the goods seized on 16 February 2010, those...
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