TC09158 - [2024] UKFTT 00369 (TC)

The Appellant appeals against: (i) an Assessment to excise duty in the sum of £46,749; and (ii) a Penalty in the sum of £14,024.70 (reduced from £32,724.30). HMRC’s position is that evidence received from three separate arm’s length third parties (i.e., the third-party hauliers) revealed that two consignments of alcohol products had been collected from the Appellant’s premises on 3 August 2012 and 15 August 2012, and had been transported to other destinations in circumstances where excise duty had not been paid. An investigation was conducted to ascertain the Appellant’s involvement, if any, in the storage and transportation of excise goods, leading up to the Assessment in 2015.

The relevant haulage invoices (all addressed to CJM) that had been obtained by HMRC confirming collection were as follows:

All of the above invoices and other delivery/job notes named the collection point as being the Appellant’s premises, and the delivery or end users were various cash and carries. HMRC concluded that the Appellant held and controlled excise goods outside of a duty suspension arrangement, and was liable to pay duty. There was no evidence to suggest that the goods were duty paid. HMRC’s position is also that it was not possible to refine the Assessment from any documentation provided by the Appellant as there was no information available to identify specific liability.

Excise duty is charged when goods subject to excise duty, such as alcoholic beverages, are produced and imported, unless duty suspension arrangements apply to them. Excise duty is an indirect tax charged on specific goods deemed to be harmful to public health and is chargeable in addition to customs duty. Excise duty applies inter alia, to alcohol, tobacco products, gambling activities and hydrocarbon fuels (consumption tax). The duty falls at the time when goods leave any duty suspension arrangement. Excise goods subject to duty must, generally, be held in a ‘tax warehouse’, operated by an authorised warehouse keeper. If duty suspension arrangements do not apply, then chargeability to excise duty is deferred until the goods depart from a duty suspension arrangement. The identity of the person liable to pay the duty depends on the circumstances in which chargeability arises. The person liable to pay the duty is the person ‘holding’ the excise goods at the time. Penalties are charged for any wrongdoing.

The Appellant criticises the basis upon which the Assessment had been issued against the Appellant by reference to s 12(1) FA 94. The Assessment in this appeal was raised under s 12(1A) FA 94. The discretion to assess conferred upon the HMRC under s 12(1A) of the FA 1994 is limited. The boundaries of the discretion found in s 12(1A) are those contained in s 12(4). There are no words to be found in the legislation which confer a general supervisory jurisdiction over the HMRC’S exercise of discretion: C & E Comrs v J H Corbitt (Numismatists) Ltd [1981] AC 22, at 60H-61A (Lord Lane). The present appeal is not a s 16(4) appeal.

The FtT has power to review decisions of HMRC in a number of administrative areas which are specified in Schedule 5, FA 1994. These decisions are referred to, collectively, as “ancillary matters”. Section 16(4) FA 1994 confers a limited jurisdiction on the FtT to examine the reasonableness of ancillary decisions, but with very limited powers to give effect to such findings. It would not allow the FtT, or the Upper Tribunal, to quash the decision appealed against: CC&C Ltd. v R & C Comrs [2015] 1 WLR 4043 (‘CC&C Ltd’), at [16] (per Underhill LJ).Assessments to duty are not ancillary decisions. As the Court of Appeal in CC&C Ltd, observed, at [15]-[16], (per Underhill LJ with whom Lewison and Arden LJJ agreed), s 16(4) deals with management decisions involving some element of subjective assessment. The FtT has no jurisdiction under s 16(5) to consider a Wednesbury unreasonableness challenge to an assessment issued on the basis that an excise duty point was triggered.

The jurisdiction invoked by the Appellant’s appeal to the FtT was under s 16(5), and not that under s16(4). The jurisdiction of the FtT in respect of the Assessment is, therefore, determined by s 16(5) FA 1994. In this respect, the FtT has a full appellate jurisdiction: Butlers Ship Stores v HMRC [2018] UKUT 58 (TCC) (‘Butlers Ship'), at [150].

In respect of the Penalty, on an appeal pursuant to para. 17(1) of Schedule 41, the FtT may affirm, or cancel, a penalty. On an appeal pursuant to para. 17(2), the FtT may: (i) affirm HMRC’s decision; or (ii) substitute HMRC’s decision for another decision that HMRC had the power to make.