Saqib Munir v The Commissioners for HM Revenue and Customs
| Jurisdiction | England & Wales |
| Judge | Lord Justice Edis,Lord Justice Arnold,Lord Justice Lewison |
| Judgment Date | 26 May 2021 |
| Neutral Citation | [2021] EWCA Civ 799 |
| Date | 26 May 2021 |
| Docket Number | Case No: A3/2020/0499 |
| Court | Court of Appeal (Civil Division) |
[2021] EWCA Civ 799
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE UPPER TRIBUNAL (TAX AND CHANCERY CHAMBER)
UT Judge Cannan and UT Judge Greenbank
UT/2018/0157
Royal Courts of Justice
Strand, London, WC2A 2LL
THE RT HON Lord Justice Lewison
THE RT HON Lord Justice Arnold
and
THE RT HON Lord Justice Edis
Case No: A3/2020/0499
Rashid Ahmed and Farhan Asghar (instructed by Asghar & Co) for the Appellant
Howard Watkinson (instructed by HMRC Solicitors Office) for the Respondent
Hearing dates: 19 May 2021
Approved Judgment
Introduction
The issue in this appeal is how the First-tier Tribunal (“the FTT”) may treat a conviction which is said to prove that an appellant was either holding or involved in holding excise goods on which no duty had been paid for the purposes of the Excise Goods (Holding, Movement and Duty Point) Regulations 2010 (SI 2010/593) (“the HMDP Regulations”).
This is an appeal from the Upper Tribunal (Tax and Chancery Chamber) 1 who allowed an appeal by the Respondent to the present appeal (“HMRC”) against the refusal by the FTT to strike out the appellant's appeal against an assessment to excise duty in the sum of £22,044 made on 21 July 2017 (“the Assessment”). The FTT's decision was released on 11 September 2018, and the Upper Tribunal decision was published on 13 September 2019. I have set out the link to the Upper Tribunal judgment in a footnote below.
The facts
The appellant was seen on 3 September 2016 driving a Fiat van on Bury New Road, Manchester. When the police tried to stop him, he drove away at speed. The police did manage to stop the van, at which point the appellant ran away. The back of the van was locked, and no key to open it was recovered from the appellant. When the police opened it, they found 44,734 non-UK duty paid cigarettes and 54kg of non-UK duty paid tobacco. The appellant was arrested on suspicion of the fraudulent evasion of excise duty. When he was searched, he was found to have on his person £4,065 in cash and two mobile phones.
In interview, the appellant said that he did not know what was in the back of the van and had been told he would be paid £30 if he drove it from one place to another. He named Mr. Hama Hussein as the person he said he had been working for, and said that the van and the cash which was found on him belonged to that person.
On 4 May 2017 he pleaded guilty before the Magistrates' Court to two offences arising out of his arrest.
i) An offence contrary to section 170(2) and (3) of the Customs and Excise Management Act 1979 of being knowingly concerned in the fraudulent attempt at evasion of any duty chargeable on the cigarettes and tobacco.
ii) An offence contrary to sections 329(1) and 334 of the Proceeds of Crime Act 2002, of acquiring, using or having possession of criminal property, namely the £4,065 in cash. In order to commit this offence, the offender must know or suspect that the property is criminal property, see section 340(3)(b) of the Proceeds of Crime Act.
The appellant was represented by solicitors both at the interview and again at the hearing before the Magistrates' Court. On the same day as he entered his pleas, he was sentenced to concurrent community orders with unpaid work requirements, he was
ordered to pay a total of £170 in surcharge and costs, and a deprivation order was made in respect of the cashThe Assessment was reviewed by an HMRC Appeals and Reviews Officer on 20 September 2017. In seeking that review, the appellant made two points:-
i) He claimed that he had already been charged with a criminal offence arising out of the finding of the cigarettes and tobacco.
ii) He said he did not own the cigarettes and tobacco.
The review upheld the Assessment, and informed the appellant about his right of appeal to the FTT, pointing him to two websites where he could find information about what was required of him if he wished to appeal. The basis of the Assessment was that the appellant was “the person holding the Excise goods at the time they were released for consumption by virtue of sub-paragraph 6(1)(b)” of the HMDP Regulations. A person “holding” the goods is liable to be assessed under Regulation 10(1) of the HMDP Regulations.
The appellant appealed to the FTT setting out the following Grounds of Appeal:-
i) He had already been charged and punished for the offence;
ii) The goods did not belong to him and the van was locked from the back door;
iii) He could not afford to pay the assessment.
It is unnecessary to say anything about his first and third grounds except that they raise matters which are irrelevant to the Assessment and could not conceivably justify any interference with it by the FTT. His means are irrelevant, and the Assessment is not a civil penalty, only an assessment of the amount of duty payable in respect of the tobacco and cigarettes.
HMRC applied to the FTT under Rule 8(3)(c) of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 (“the 2009 Rules”) for a direction that the appeal be struck out. This provides that the tribunal may strike out a party's case if it considers that there is no reasonable prospect of the appellant's case, or part of it, succeeding. That was plainly true of the first and third grounds of appeal. In relation to the second ground of appeal, HMRC said that by pleading guilty to the first of the criminal charges, the appellant had admitted that he knew what was in the back of the van and that he knew no duty had been paid on the tobacco and cigarettes. It was therefore submitted that the appeal had no real prospect of success.
The FTT judge refused to strike out the appeal.
HMRC's powers
The right to make an assessment of duty of excise arises under section 12 of the Finance Act 1994. In deciding whether the appellant was a person from whom an amount of duty of excise had become due, HMRC were required to apply the HMDP Regulations. Regulation 10 provides for liability to excise duty when excise goods are released for consumption in the United Kingdom. It provides as follows:
“10(1) 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.
(2) Any 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 circumstances in which excise goods are treated as “released for consumption in the United Kingdom” are described in regulation 6 of the HMDP Regulations. It provides, so far as relevant:
“6(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, …;
Mr. Howard Watkinson, on behalf of HMRC, assisted us with a review of the current state of the law in relation to the meaning of “holding” for the purposes of the HMDP Regulations. These authorities culminate in the decision of this court in The Commissioners for HM Revenue and Customs v. Perfect [2019] EWCA Civ 465, and its reference to the European Court of Justice. It is enough for our purposes to record that HMRC's case on the strike out application which led to this appeal is that the evidence that the appellant knew what was in the back of the van, and that it was duty unpaid, is overwhelming. That is why it sought to strike out the appellant's appeal to the FTT. It says that even on the most favourable view of the law possible, the appellant has no reasonable prospect of persuading the FTT that he was ignorant of the contents of the van, and of the fact that were not duty paid. It is not submitted that the Assessment should be upheld without a full hearing on the merits of the appeal to the FTT if HMRC fails to make good this case on the facts.
I record therefore that I have considered the authorities to which we were referred, and that for the purposes of this appeal I need say nothing about them. The FTT judge and the Upper Tribunal directed themselves in accordance with the decision of the Upper Tribunal in McKeown v. HM Revenue and Customs [2016] UKUT 479 (TCC) where the term “holding” was considered by reference to Regulation 13(2)(b) of the HMDP Regulations. This is the most favourable view of the law on the question to the appellant, and is reflected in HMRC's approach to this appeal as explained in the previous paragraph. The passage relied upon is this:-
“65. There is no question that the Appellants had physical possession of the goods but that is neither necessary nor, by itself, enough to constitute ‘holding’ for the purposes of reg 13. In order to be ‘holding the goods’, a person must be capable of exercising de jure and/or de facto control over the goods, whether temporarily or permanently, either directly or by acting through an agent. In this case, as the tribunals found, the drivers had control over the goods. That was, in our view, obviously correct. The Appellants, as drivers, had custody of the goods and were responsible for them during their transportation. The fact that the drivers had obligations to others, who had engaged them to transport the goods, and those others had control over the drivers does not mean that the drivers did not also have de jure and de facto control, albeit subject to obligations owed to and direction by the others.
66. A person who has de jure and de facto control of goods but who lacks both actual and constructive knowledge of them and the fact that duty is payable on them, cannot be said to be ‘holding’ the goods for the purposes of reg 13. …”
The FTT Decision
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