Dawson's (Wales) Ltd v The Commissioners for HM Revenue and Customs
| Jurisdiction | UK Non-devolved |
| Judge | Mrs Justice Falk,Judge Herrington |
| Neutral Citation | [2019] UKUT 0296 (TCC) |
| Court | Upper Tribunal (Tax and Chancery Chamber) |
| Subject Matter | Tax,4 October 2019 |
| Date | 04 October 2019 |
| Published date | 04 October 2019 |
[2019] UKUT 0296 (TCC)
Case number:UT/2018/0033
JR/2019/004
EXCISE DUTY – assessment on wholesaler in possession of non-duty paid excise
goods – whether legislation implementing article 7(2)(b) Directive 2008/118/EC
proportionate – whether the FTT has jurisdiction to consider unreasonableness of
assessment – meaning of “holding” excise goods – Excise Goods (Holding,
Movement and Duty Point) Regulations 2010 reg 6
JUDICIAL REVIEW – whether decision by HMRC to assess claimant was
unlawful
UPPER TRIBUNAL
TAX AND CHANCERY CHAMBER
IN THE MATTER OF JUDICIAL REVIEW PROCEEDINGS
AND ON APPEAL FROM THE FIRST-TIER TRIBUNAL (TAX CHAMBER)
DAWSON’S (WALES) LTD
Appellant/Claimant
- and -
THE COMMISSIONERS FOR HER
MAJESTY’S
Respondents/Defendants
REVENUE & CUSTOMS
TRIBUNAL:
Mrs Justice Falk
Judge Timothy Herrington
Sitting in public at The Royal Courts of Justice, Rolls Building, Fetter Lane,
London EC4 on 22 and 23 July 2019
Sam Grodzinski QC and Michael Firth, Counsel, instructed by Morrisons
Solicitors LLP and TT Tax, for the Appellant
Kieron Beal QC and Natasha Barnes, Counsel, instructed by the General
Counsel and Solicitor to HM Revenue and Customs, for the Respondents
© CROWN COPYRIGHT 2019
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DECISION
Introduction
1. This decision relates to (i) an appeal by Dawson’s (Wales) Limited (“DWL”)
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against a decision of the First-tier Tribunal (“FTT”) (Judge Mosedale) in respect of
three preliminary issues released on 8 February 2018 (the “Decision”) and (ii) a claim
by DWL for judicial review of a decision by HMRC dated 17 October 2013 to assess
DWL to excise duty in respect of certain goods held by it.
2. As is apparent from the limited agreed facts that were before the FTT, DWL was
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at all material times a wholesaler of alcoholic drinks. HMRC considered that there
was insufficient evidence that certain supplies of goods made to DWL between 21
February 2011 and 15 May 2012 were UK duty-paid, that a duty point must have
occurred and that an assessment for excise duty was required. The assessment was
raised against DWL on 17 October 2013 in the sum of £3,729,381 and it is that
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assessment (the “Assessment”) which is the subject of these proceedings.
3. The goods in respect of which HMRC have raised the Assessment were physically
held by DWL. In the agreed statement of facts, it is assumed that they were not
physically received and held by DWL’s suppliers but that DWL’s suppliers were
responsible for arranging for the goods to be physically shipped direct to DWL’s
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premises. Those suppliers had the power to instruct the physical holder of the goods
to deliver them to its chosen customer and, in the present case, gave instructions for
them to be delivered to DWL.
4. In respect of all the assessed supplies, HMRC traced the supply chain back from
DWL’s suppliers to missing, deregistered or hi-jacked companies. HMRC have no
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evidence that excise duty was paid, nor have they been able to establish that any of
the companies, that appear further back in the chain, took physical possession of the
goods prior to DWL.
5. The Assessment was made under s 12(1A) of the Finance Act 1994 (“FA 1994”)
on the basis that the goods were physically held outside a duty suspension
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arrangement and UK excise duty on those goods had not been paid, with the
consequence that a duty point had arisen under regulation 6(1)(b) of the Excise Goods
(Holding, Movement and Duty Point) Regulations 2010 (SI 2010/593, the
“Regulations”). HMRC considered that DWL was the first known person to hold the
goods and was liable to pay the excise duty under Regulation 10(1) of the
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Regulations.
6. DWL appealed to the FTT against the Assessment. The FTT directed that the
following matters should be determined, on the basis of assumed facts, as preliminary
issues on the appeal:
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(1) Whether Regulation 6(1)(b) of the Regulations and/or Article 7(2)(b)
of Directive 2008/118/EC (“the 2008 Directive”) are incompatible with
the principles of proportionality and legal certainty either:
(a) generally; or
(b) where the person assessed upon the basis of those provisions has
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identified its supplier to the relevant tax authority
(the “Proportionality Point”).
(2) Whether the FTT has jurisdiction to consider a challenge to a decision
to assess under Regulation 6(1)(b) of the Regulations based on its
unreasonableness and/or public law principles on an appeal under s 16(5)
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FA 1994 (the “Jurisdiction Point”).
(3) Whether a person who has de facto and/or legal control of the goods
but who does not have physical possession of the goods “holds” the goods
for the purpose of Regulation 6(1)(b)/Art 7(2)(b), consistent with the
definition of “held” under Regulation 33 of the Regulations (the “Holding
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Point”).
7. By the Decision, the FTT decided the preliminary issues as follows:
(1) Neither Regulation 6(1)(b) of the Regulations nor Article 7(2)(b) of
the 2008 Directive is incompatible with the EU law principles of
proportionality and legal certainty. That is so both generally and where the
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person assessed can identify its supplier.
(2) The FTT does not have jurisdiction to consider a challenge to a
decision to assess under Regulation 6(1)(b) based on its unreasonableness
and/or public law principles on an appeal under s 16(5) FA 1994.
(3) A person who has de facto and/or legal control of the goods but who
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does not have physical possession of the goods and who knows that the
goods are duty unpaid “holds” the goods for the purposes of Regulation
6(1)(b) and Article (7)(2)(b), consistent with the definition of “held”
under Regulation 33 of the Regulations.
8. The FTT’s conclusions on the Proportionality Point and Jurisdiction Point
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determined the preliminary issues in favour of HMRC, and accordingly its conclusion
on the Holding Point in DWL’s favour was obiter. On 26 March 2018 the FTT
granted DWL permission to appeal against the Decision. In a Respondent’s Notice,
HMRC stated that it did not accept the FTT’s findings concerning the test for
“holding” excise goods.
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9. DWL also sought judicial review of HMRC’s decision to make the Assessment.
Permission to bring judicial review proceedings was initially refused by Andrew
Baker J but was granted on appeal by David Richards LJ on 5 February 2019. He
remitted the matter to the High Court and directed that the claim should subsequently
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