OWD Ltd (t/a Birmingham Cash and Carry) and Another v Revenue and Customs
| Jurisdiction | England & Wales |
| Judge | Lady Black,Lord Reed,Lord Sumption,Lord Briggs,Lord Hughes |
| Judgment Date | 19 June 2019 |
| Neutral Citation | [2019] UKSC 30 |
| Court | Supreme Court |
| Date | 19 June 2019 |
[2019] UKSC 30
Lord Reed, Deputy President
Lord Sumption
Lord Hughes
Lady Black
Lord Briggs
HMRC
James Eadie QC
Amy Mannion
(Instructed by HMRC Solicitor's Office)
OWD and another
Philip Coppel QC
David Bedenham
(Instructed by Rainer Hughes Solicitors)
Heard on 12 July 2018
( with whom Lord Reed, Lord Sumption and Lord Briggs agree)
The Finance Act 2015 introduced a regulatory scheme requiring wholesalers supplying duty-paid alcohol to be approved by Her Majesty's Revenue and Customs Commissioners (“HMRC” or “the Commissioners”) under section 88C of the Alcoholic Liquor Duties Act 1979 (“ALDA”). Approval may only be given if HMRC are satisfied that the person seeking to carry on the activity is a fit and proper person to do so.
OWD, Hollandwest and Budge Brands (“the wholesalers”) were already involved in the wholesale supply of duty-paid alcohol when the scheme was introduced. They needed HMRC approval to continue to trade. Approval was refused because HMRC were not satisfied that they were fit and proper. Each wholesaler appealed to the First-tier Tribunal (“FTT”) against the decision, inviting HMRC to permit them to continue trading whilst the appeals were pending. When HMRC refused to permit this, the wholesalers brought judicial review proceedings in the High Court challenging that refusal, and seeking orders that would permit them to carry on trading until after the determination of the FTT appeal. Having failed in the High Court, they obtained a measure of relief in the Court of Appeal, but on terms that they did not find satisfactory. Both they and HMRC appeal to this court against aspects of the Court of Appeal's decision.
Two principal questions arise for determination on the appeal. The first, in broad outline, is this: when HMRC have refused a person's application for approval under section 88C of ALDA, what, if any, power do they have to permit that person to carry on trading pending the determination of an appeal to the FTT?
HMRC's case is that they have no power to grant temporary approval pending the determination of a wholesaler's appeal. The wholesalers argue that section 88C of ALDA enables HMRC to grant such approval or, failing that, HMRC can do so under section 9 of the Commissioners for Revenue and Customs Act 2005 (“the 2005 Act”). The Court of Appeal held that temporary approval can be granted to a person under section 88C of ALDA, but not under section 9 of the 2005 Act. However, contrary to the wholesalers' argument, it held that considerations of hardship and the impact on the person's appeal rights were irrelevant to the decision whether to grant temporary approval to cover the appeal period, and that HMRC's focus must be purely on whether the person was fit and proper for that limited purpose. The issues that require attention in relation to this first question are, therefore, whether HMRC have any power at all, and if so, on what basis it is to be exercised.
The second question concerns the position if HMRC either do not have power to permit trading pending the determination of an appeal to the FTT, or have power but decline to exercise it. In those circumstances, what interim relief, if any, can the High Court grant to ensure that the appeal to the FTT is not thwarted by the wholesaler going out of business whilst awaiting its determination?
The Court of Appeal held that the High Court was able to grant injunctive relief under section 37 of the Senior Courts Act 1981. Drawing on CC & C Ltd v Revenue and Customs Comrs [2014] EWCA Civ 1653; [2015] 1 WLR 4023 (“ CC & C Ltd”), it held that relief would only be granted in rare circumstances, but that this could include where there was a clear and properly evidenced claim that a failure to grant interim relief would render the appeal to the FTT illusory. This accorded with the position of HMRC. The wholesalers disagreed with the narrow limits imposed by the Court of Appeal on the scope for relief, but were refused permission to appeal to this court on that ground. Accordingly, the hearing before us began on the basis that the High Court had power to grant injunctive relief, exercisable in exceptional circumstances.
As a result of questions which arose in the course of oral argument about the High Court's power, we received further written submissions on the point, after the hearing. Although both parties continued to support the existence of a power in the High Court, the issue needs attention in this judgment.
The regulatory scheme introduced by the Finance Act 2015 was designed to combat fraud in relation to tax due on alcohol. Alcoholic liquors are subject to excise duty. Generally the charge to duty arises at the moment of importation into the United Kingdom, or at the moment of production here. The charge normally falls exclusively on the distiller/manufacturer/importer of alcohol. The duty paid is then reflected in the price of the alcohol as it passes down the supply chain. Alcohol was, however, entering the supply chain without the requisite duty being paid, resulting in a significant loss of tax revenue. There had long been a requirement for those dealing in duty-suspended alcohol to be approved by HMRC, but there was no equivalent requirement for those dealing in duty-paid alcohol. The introduction of the present scheme, known as the Alcohol Wholesaler Registration Scheme (“AWRS”), closed that gap.
Section 54 of the Finance Act 2015 inserted Part 6A and Schedule 2B into ALDA. Much of the fine detail of the statutory provisions is not necessary for present purposes and what follows is, at times, a broad summary only.
A central concept is “controlled activity”. By virtue of section 88A(8), “controlled activity” means selling controlled liquor wholesale, offering it for sale wholesale, or arranging in the course of a trade or business for it to be sold or offered for sale wholesale. By section 88A(2), a sale is of “controlled liquor” if it is a sale of dutiable alcoholic liquor on which duty is charged under the Act at a rate greater than nil, with the excise duty point for the liquor falling at or before the time of the sale. By section 88A(3), subject to some exceptions, the sale is “wholesale” if the seller makes the sale, in the course of his trade or business, to a trade or business buyer, for the buyer to sell or supply in the course of his trade or business. It must be noted that one of the exceptions is, by section 88A(3)(d), “an excluded sale”. Section 88A(7) defines a sale as an “excluded sale” if it is “of a description prescribed by or under regulations made by the Commissioners”.
Section 88B gives the Commissioners power to make provision, by regulations, for certain matters, including as to the cases in which sales are, or are not, to be treated for the purposes of Part 6A as (amongst other things) wholesale sales, and sales of controlled liquor.
Section 88C deals with approval to carry on controlled activity. It provides:
“ 88C. Approval to carry on controlled activity
(1) A UK person may not carry on a controlled activity otherwise than in accordance with an approval given by the Commissioners under this section.
(2) The Commissioners may approve a person under this section to carry on a controlled activity only if they are satisfied that the person is a fit and proper person to carry on the activity.
(3) The Commissioners may approve a person under this section to carry on a controlled activity for such periods and subject to such conditions or restrictions as they may think fit or as they may by or under regulations made by them prescribe.
(4) The conditions or restrictions may include conditions or restrictions requiring the controlled activity to be carried on only at or from premises specified or approved by the Commissioners.
(5) The Commissioners may at any time for reasonable cause revoke or vary the terms of an approval under this section.
(6) In this Part ‘approved person’ means a person approved under this section to carry on a controlled activity.”
Section 88D obliges HMRC to maintain a register of approved persons. It is to contain “such information relating to approved persons as the Commissioners consider appropriate” (section 88D(2)). HMRC may make publicly available “such information contained in the register as they consider necessary to enable those who deal with a person who carries on a controlled activity to determine whether the person in question is an approved person in relation to that activity” (section 88D(3)). This publicly available information is important as section 88F provides that “[a] person may not buy controlled liquor wholesale from a UK person unless the UK person is an approved person in relation to the sale.”
Section 88G supports the statutory scheme by establishing various criminal offences. For example, section 88G(1) makes it an offence to contravene section 88C(1) by selling liquor wholesale knowing, or having reasonable grounds to suspect, that the buyer is carrying on a trade or business and the liquor is for sale or supply in the course of that trade or business. Buying controlled liquor from an unapproved person, contrary to section 88F, is also an offence, if the person knows or has reasonable grounds to suspect the unapproved status of the supplier.
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