TC09158 - [2024] UKFTT 00369 (TC)

Under Schedule 41, a penalty is payable if, when “P acquires possession of the goods or is so concerned, a payment of duty on the goods is outstanding and has not been deferred”. In the event that para. 4 of Schedule 41 is satisfied, a person is liable to a penalty. Reductions are available when disclosures are made to HMRC.

Mr Boyle submits that a non-deliberate penalty cannot be sustained. He further submits, that the Penalty cannot be applied because the Goods have been destroyed. Mr Boyle submits that, since access to its site is secure and controlled, the alleged wrongdoing could not possibly have been non-deliberate.

Mr Carey submits that if the criteria set out in para. 4 of Schedule 41 are met, liability to a penalty arises, and that: (i) there is no evidence to suggest that the Goods were destroyed or irretrievably lost as opposed to being used on the open market - the excise fraud having been successful; (ii) the Appellant has not adduced any evidence to show that the Goods were “unusable”; and (iii) the Goods were liable to forfeiture as excise duty had not been paid while the Goods were being held outside of duty suspense. In those circumstances, he submits, a penalty can be charged.

In Euro Wines, the Court of Appeal said this, at [3]:

“3.

As is apparent from the terms of paragraph 4(1), a penalty may be imposed on any person irrespective of their own ability to pay the excise duty on the goods. It is enough if they have come into possession of the goods or been concerned in their carriage etc. at a time when duty should have been, but has not been, paid…”

The Penalty calculated is a percentage of the PLR. The first stage is to consider the penalty range. The penalty range depends on behaviour (the behaviour that led to the wrongdoing) and disclosure (whether this was prompted or unprompted). The penalty range in this appeal is 35% to 70%.

The second stage is that relating to reductions for the quality of any disclosure. In relation to “Telling”, the conclusion reached by HMRC was that there was a total denial of any activities having taken place. In relation to “Helping”, the conclusion reached was that there was a total denial of any activities having taken place. In relation to “Giving”, the conclusion reached was that, once again, there was a total denial of any activities having taken place. No reductions were, therefore, given.

The third stage is that relating to calculation of the penalty percentage. HMRC worked out the difference between the minimum and maximum penalty percentages, then multiplied that figure by the total reduction to get the percentage reduction. HMRC then reduced the percentage reduction from the maximum penalty percentage that could be charge, giving the penalty percentage. Based on the information HMRC had, they did not consider there are any special circumstances which would lead them to further reduce the Penalty.

As considered earlier, following the Visit to the Appellant’s premises on the 21 March 2014, the Appellant was considered to have been instrumental in facilitating the movement of two loads of alcohol from its premises to addresses in Liverpool and Doncaster, in August 2012. Mr Boyle was shown three invoices from third-party hauliers, each stating that they picked up full loads of alcohol from the site. The collections were done over a two-week period in August 2012. The Appellant was afforded an opportunity to put forward any evidence in support of its position. HMRC have concluded that there was no deliberate action on the Appellant’s part. This reduced the penalty from £32,724.30 to £14,024.70. We find that the Penalty was properly applied.