The Commissioners for HM Revenue and Customs v Martyn Glen Perfect
| Jurisdiction | England & Wales |
| Judge | Lord Justice Newey,Lord Justice Baker,Lord Justice Snowden |
| Judgment Date | 15 March 2022 |
| Neutral Citation | [2022] EWCA Civ 330 |
| Docket Number | Case No: CA-2018-001593 |
| Court | Court of Appeal (Civil Division) |
[2022] EWCA Civ 330
Lord Justice Newey
Lord Justice Baker
and
Lord Justice Snowden
Case No: CA-2018-001593
(formerly A3/2018/0911)
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE UPPER TRIBUNAL
(TAX AND CHANCERY CHAMBER)
Mrs Justice Whipple and Judge Ashley Greenbank
[2017] UKUT 476 (TCC)
Royal Courts of Justice
Strand, London, WC2A 2LL
Jessica Simor QC (instructed by The General Counsel and Solicitor to HM Revenue and Customs) for the Appellants
The Appellant was neither present nor represented at the hearing
Hearing date: 23 February 2022
Approved Judgment
Remote hand-down: This judgment was handed down remotely at 10:30am on 15 March 2022 by circulation to the parties or their representatives by email and by release to BAILII and the National Archives.
The respondent, Mr Martyn Perfect, is a lorry driver. On 6 September 2013, he collected from Calais a lorry which was loaded with 26 pallets of beer and with which there was documentation referring to an “Administrative Reference Code” (or “ARC”). When he reached Dover, Mr Perfect was stopped by UK Border Force officers who found that the ARC had been allocated to a previous consignment and that excise duty had not been paid on the goods he was carrying. In the circumstances, both the beer and the lorry were seized and the appellants, HM Revenue and Customs (“HMRC”), subsequently assessed Mr Perfect to excise duty in the sum of £22,779 pursuant to regulation 13 of the Excise Goods (Holding Movement and Duty Point) Regulations 2010 (“the 2010 Regulations”). HMRC also imposed a penalty on Mr Perfect.
Mr Perfect appealed to the First-tier Tribunal (“the FTT”), which allowed his appeal and discharged both the excise duty assessment and the penalty. The FTT made findings to the effect that:
i) Mr Perfect had no interest of his own in the beer, was not part of any conspiracy and had simply followed instructions;
ii) The only information that Mr Perfect had was to be found in the documentation he collected when he picked up the goods;
iii) That documentation appeared to be consistent with the movement of goods subject to a valid duty-suspended arrangement; and
iv) Mr Perfect had no means of checking whether the ARC on the documentation had been used or not.
HMRC appealed to the Upper Tribunal (“the UT”). The appeal was dismissed, but HMRC then appealed to this Court. In a judgment given on 19 March 2019, Baker LJ, giving the judgment of the Court (which also included Patten LJ and Nugee J), dismissed the appeal in so far as it concerned the penalty which HMRC had sought to impose on Mr Perfect. As regards the assessment to excise duty, the Court concluded that the appeal raised a question of European Union (“EU”) law which was not acte clair and so should be referred to the Court of Justice of the European Union (“the CJEU”).
The CJEU received the reference on 3 April 2019. Advocate General Tanchev delivered his opinion on 21 January 2021 and judgment was given on 10 June 2021: see Case C-279/19 Commissioners for Her Majesty's Revenue and Customs v WR EU:C:2021:473. The matter was then listed for a further hearing in this Court, which took place before us on 23 February 2022. In the event, Mr Perfect was neither present nor represented at that hearing. Mr David Bedenham of counsel prepared a skeleton argument on Mr Perfect's behalf in December 2021 in which he addressed in appropriately measured terms, first, whether the fact that the United Kingdom has withdrawn from the EU has the consequence that this Court is not bound by the CJEU's decision and, secondly, if not, whether the Court should take a different approach to the CJEU. On 17 February 2022, however, Mr Perfect's solicitors informed the Court that, in the light of the decision of Nugee LJ, sitting as a first instance Judge, in Wilson v McNamara [2022] EWHC 243 (Ch), Mr Perfect no longer sought to resist HMRC's appeal on the excise duty issue.
The judgment which this Court gave on 19 March 2019 ( [2019] EWCA Civ 465, [2020] STC 705) explains the history much more fully. This judgment supplements that one.
The legislative framework
At the material times, regulation 13 of the 2010 Regulations provided:
“(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 ….”
“Excise duty point”, as used in regulation 13(1) of the 2010 Regulations, was defined by section 1 of the Finance (No. 2) Act 1992 to mean “the time when the requirement to pay any duty with which goods become chargeable is to take effect”.
The 2010 Regulations were designed to transpose chapters I to V of Council Directive 2008/118/EC concerning the general arrangements for excise duty and repealing Directive 92/12/EEC (“the 2008 Directive”). Recital 8 to the 2008 Directive explains that, “[s]ince it remains necessary for the proper functioning of the internal market that the concept, and conditions for chargeability, of excise duty be the same in all Member States, it is necessary to make clear at Community level when excise goods are released for consumption and who the person liable to pay the excise duty is”. Article 33, the key provision in the present context, states so far as relevant:
“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.
2. The chargeability conditions and rate of excise duty to be applied shall be those in force on the date on which duty becomes chargeable in that other Member State.
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 ….”
This Court's views in 2019
Having regard to the FTT's unchallenged findings to that effect, the UT correctly proceeded on the basis that Mr Perfect had had neither actual nor constructive knowledge of the fact that the beer in his lorry was being smuggled. However, HMRC appealed to this Court on the ground that Mr Perfect's innocence did not matter. HMRC contended that liability for excise duty is strict: in other words, that an individual in physical possession and control of excise goods need not be aware that excise duty is being evaded to be “holding” or “making … delivery of” the goods for the purposes of regulation 13 of the 2010 Regulations and article 33 of the 2008 Directive.
In its 2019 judgment, this Court saw considerable force in HMRC's submissions. It said in paragraphs 66–68:
“66. We agree that the underlying policy of the 2008 Directive is, as identified by the Upper Tribunal in [ B&M Retail Ltd v Revenue and Customs Commissioners [2016] UKUT 429 (TCC)], that it is the obligation of every Member State to ensure that duty is paid on goods that are found to have been released for consumption. It would be a distortion of the internal market were Member States not to take steps to ensure that goods in respect of which excise duty should have been paid cannot circulate freely within the single market alongside goods on which duty has been paid. As the Upper Tribunal further observed in [ Davison and Robinson Ltd v Revenue and Customs Commissioners [2018] UKUT 437 (TCC)], in the absence of any relevant information relating to any prior release for consumption, HMRC must assess the person who it finds to be holding the goods in question, if that is the only excise duty point which can be established. We note HMRC's submission that where, as here, a driver is unable to identify the consignor, or the importer, or his employer, the only person who can be assessed for the duty is the driver himself. If he cannot be assessed in circumstances where HMRC or a Tribunal concludes that he was unaware that the goods were liable to duty, the opportunities for smuggling and fraud are manifestly greater. Accordingly, strict liability appears to have been an accepted feature of the regime under successive Directives, as...
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