Awards Drinks Ltd (In Liquidation) v The Commissioners for HM Revenue and Customs
| Jurisdiction | UK Non-devolved |
| Judge | Judge Raghavan,Judge Thomas Scott |
| Neutral Citation | [2020] UKUT 0201 (TCC) |
| Court | Upper Tribunal (Tax and Chancery Chamber) |
| Subject Matter | Tax,22 June 2020 |
| Date | 22 June 2020 |
| Published date | 23 June 2020 |
[2020] UKUT 0201 (TCC)
Appeal number: UT/2019/0040
VAT – Best judgment assessments to VAT – whether FTT erred in not
finding that the appellant could not have made taxable supplies in the
United Kingdom because it had lost possession and control of the relevant
goods in France – no – whether insufficient reasons for decision – yes –
decision remade confirming FTT decision.
UPPER TRIBUNAL
TAX AND CHANCERY CHAMBER
AWARDS DRINKS LIMITED
(in liquidation)
Appellant
- and -
THE COMMISSIONERS FOR HER
MAJESTY’S REVENUE AND CUSTOMS
Respondents
TRIBUNAL:
JUDGE SWAMI RAGHAVAN
JUDGE THOMAS SCOTT
Sitting in public at The Royal Courts of Justice, Strand, London WC2 on 1 and 2
March 2020
Joseph Howard, counsel, instructed by TT Tax, for the Appellant
Brendan McGurk, counsel, instructed by the General Counsel and Solicitor to Her
Majesty’s Revenue & Customs, for the Respondents
© CROWN COPYRIGHT 2020
DECISION
Introduction
1. This is an appeal by Awards Drinks Limited (in liquidation) (“Award”), a
wholesale alcoholic beverages distributor, against a decision of the First-tier Tribunal
(“FTT”) issued on 23 October 2018 published as Award Drinks Limited (In
Liquidation) v HMRC [2018] UKFTT 632 (TC) (“the FTT Decision”).
2. Award had appealed to the FTT against two “best judgment” VAT assessments
which HMRC had made on it for VAT for £1,543,714 and £5,029,677 in respect of
goods which HMRC considered Award had sold or traded for consideration within
the United Kingdom. The consideration was based on 1,311 separate sterling deposits
made into 42 different UK bank branches to an account held by Award totalling £32
million. The FTT rejected Award’s case that the deposits were payments for sales of
alcohol from bonded warehouses in France to cash and carry operators in France and
went on to dismiss Award’s appeal. The backdrop against which the assessments arose
was HMRC’s view, having traced the relevant supply chains, that the goods sold had
entered the UK as a result of “inward diversion fraud”. Such fraud entails goods held
in duty suspension purportedly being released for consumption in a country where
they attract a lower duty rate, for instance France, with an obfuscatory paper trail. In
fact, the goods are smuggled to the UK where they are typically sold immediately for
cash. HMRC had clarified in advance of the hearing that their case before the FTT
involved no allegation of fraud against Award.
3. Award’s case on appeal to the Upper Tribunal (“UT) is that the FTT erred in law
in two respects. First, it erred by failing to conclude Award could not have made
supplies of the goods in the UK. This was because of documentary evidence consisting
of various transaction documents, which Award submits went unchallenged, proving
that Award had divested itself of possession and/or control of the goods while they
were located outside the UK, thereby depriving Award of the ability to have made the
alleged supplies in the UK. Second, Award asserts that the FTT also gave insufficient
reasons for rejecting this argument.
Facts and background and FTT Decision
4. Award does not, and may not, given the terms of its permission, mount any
challenge to the findings of fact made by the FTT. We set out a summary of the FTT’s
Decision below.
5. Award, a company based in the UK, was incorporated on 11 June 2002. It
registered for VAT on 1 August 2002, describing itself as a wholesaler of beers, wines
and spirits with an estimated annual turnover of £10 million. ([19] [22])
6. After discussing the burden of proof, which we deal with below, the FTT outlined
the documentary and oral evidence with which it was provided. The oral hearing took
place over five days and further written submissions were received from both the
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