THYSSENKRUPP MATERIALS (UK) LIMITED v THE COMMISSIONERS FOR HIS MAJESTY’S REVENUE AND CUSTOMS [2024] UKUT 00079 (TCC)
| Jurisdiction | UK Non-devolved |
| Judge | Mrs Justice Bacon,Judge Greg Sinfield |
| Court | Upper Tribunal (Tax and Chancery Chamber) |
| Published date | 28 March 2024 |
Neutral Citation: [2024] UKUT 00079 (TCC) Case Number: UT/2023/000029
UPPER TRIBUNAL
(Tax and Chancery Chamber) Rolls Building
Fetter Lane
London, EC4A 1NL
CUSTOMS DUTY – inward processing relief – requirements of a bill of discharge (‘BoD’) –
whether a single error on BoD or data mismatch between BoD and HMRC’s Management
Support System gives rise to a customs debt under Article 204 Community Customs Code in
relation to all products on the BoD – appeal allowed
Heard on: 22 February 2024
Judgment date: 28 March 2024
Before
MRS JUSTICE BACON
JUDGE GREG SINFIELD
Between
THYSSENKRUPP MATERIALS (UK) LIMITED Appellant
and
THE COMMISSIONERS FOR HIS MAJESTY’S REVENUE AND CUSTOMS
Respondents
Representation:
For the Appellant: Valentina Sloane KC and Jeremy White, counsel, instructed by Ernst
& Young LLP
For the Respondents: Edward Waldegrave, counsel, instructed by the General Counsel and
Solicitor to His Majesty’s Revenue and Customs
2
DECISION
Introduction
1. At all material times, the Appellant (TK) was authorised by the Respondents (HMRC)
to operate the Inward Processing (IP) procedure and claimed Inward Processing Relief (IPR)
under the suspension system in relation to components used by TK in manufacturing civil and
military aircraft. As part of its obligations under the IP regime, TK submitted a Bill of
Discharge (BoD) to HMRC each quarter in the form of a spreadsheet. Each of the relevant BoD
spreadsheets contained around 100,000–200,000 data points.
2. In 2017, HMRC issued a C18 Post Clearance Demand Note requiring TK to pay
£8,889,275.43, comprised of (i) £2,409,009.91 in respect of customs duty; and (ii)
£6,480,265.52 in respect of import VAT for the period March 2014 to December 2014. The
basis of the demand was that HMRC considered that TK’s quarterly BoDs for 2014 contained
errors which breached the relevant IP requirements, such that TK was not entitled to the IPR
claimed for that period. TK agreed that its BoDs contained some errors and also some data that
was inconsistent with information in HMRC’s Management Support System (MSS) database
but maintained that the overwhelming majority of entries were accurate, and that the identified
errors were immaterial or de minimis. HMRC did not accept that: its position was (and remains)
that a single defect on a BoD means that customs duty and import VAT liabilities arise in
respect of all the imports covered by the quarterly BoD in question.
3. TK appealed to the First-tier Tribunal (Tax Chamber) (the FTT). By the time of the
hearing before the FTT in November 2021, HMRC had accepted that the quantum of the
Demand should be reduced to £7,739,730.55, comprising (i) customs duty of £2,016,400.94;
and (ii) import VAT of £5,723,329.61.
4. In its decision [2022] UKFTT 00443 (TC) (the FTT Decision), the FTT dismissed TK’s
appeal. In summary, the FTT held that any error, including a minor and immaterial error, or
any mismatch between the BoD and the MSS, can give rise to a customs debt. The FTT also
held that a single error in an import or disposal line of one import entry on a BoD means that
customs duty and import VAT are due on all the goods covered by that BoD. The FTT based
its conclusions on its interpretation of the decision of the Court of Justice of the European
Union (CJEU) in Case C-262/10 Döhler Neuenkirchen EU:C:2012:559, which we discuss
further below.
5. TK now appeals to the Upper Tribunal (Tax and Chancery Chamber) (UT) against the
Decision on the grounds that the FTT erred in respect of both of those findings, and that in any
event it did not give sufficient reasons for its conclusions.
Overview of the inward processing regime
6. In the absence of any special procedure or exemption, customs duty and VAT are payable
on goods imported into the UK from outside the EU. Where businesses regularly import goods
into the UK from outside the EU, “process” them, and then re-export them outside the EU,
these liabilities could generate significant competitive disadvantages relative to businesses
operating outside the EU. The overall purpose of IPR is to mitigate these disadvantages by
enabling an authorised business to import goods, process them, and then re-export them without
incurring liability to customs duty and import VAT.
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