TC09362 - [2024] UKFTT 001071 (TC)

The Appellant is a UK private limited company which supplies wetsuits and was incorporated on 8 July 1999.

On 18 December 2021, the Appellant made an application to HMRC for an ATaR, under s 24 of the TCBTA. Section 24 provides for the establishment of a system by which applications can be made for rulings as to the classification of particular goods under the UK Tariff. In the application, the Appellant sought a ruling on what was described as a “WET-SUIT.STYLE Ref: 5337”. The Appellant invited HMRC to agree that the Wetsuits should be classified under commodity code 4015 9000 00 of the UK Tariff.

HMRC responded to the application by an ATaR issued on 31 January 2022 (“the January 2022 ATaR”). HMRC rejected the Appellant’s proposed classification of the Wetsuits. HMRC’s view was that the Wetsuits should be classified under commodity code 6113 0010 00 of the UK Tariff.

On 2 August 2022, a meeting was held between the Appellant, its agent and HMRC. At the meeting, Commission Regulation (EC) No 2345/2003, of 23 December 2003, concerning the classification of certain goods in the Combined Nomenclature(“the European Regulation”) was discussed. The European Regulation classified double-sided wetsuits to commodity code 6113 0010 00. The Appellant’s representatives were also made aware of the Sola Wetsuits decision, which had been successful in arguing against HMRC’s classification of wetsuits under Heading 6113.

The Appellant’s agent recognised that the European Regulation had not been referred to in the January 2022 ATaR. A discrepancy was also identified with customs’ methodology as wetsuits had been classified with reference to rule 1 and rule 6 of the GIRs, without reference to rule 3(b) (as the European Regulation recommended). The Appellant’s agent considered that the January 2022 ATaR, and other rulings by customs, had undermined the European Regulation.

On 3 October 2022, HMRC sent a right to be heard letter to the Appellant. The letter stated that HMRC intended to revoke the January 2022 ATaR, as it should have contained a reference to rule 3(b) of the GIRs. The letter gave the Appellant 30 days in which to provide representations, further evidence or arguments.

On 10 October 2022, the Appellant’s agent made further representations. The representations stated that the textile layers on the Wetsuits have no use in terms of the primary function (i.e., keeping the wearer warm). Rather, the outer surface textile is there to improve durability, whilst the textile lining (i.e., the inner layer) aids comfort.

On 11 October 2022, HMRC revoked the January 2022 ATaR.

On 27 October 2022, HMRC issued another ATaR (“the October 2022 ATaR”) (i.e., the decision under appeal). The reasons given for HMRC’s classification of the Wetsuits under commodity code 6113 0010 00 differed, slightly, in the October 2022 ATaR from those given in the January 2022 ATaR. In particular, the October 2022 ATaR included specific reference to rule 3(b) of the GIRs.

On 14 November 2022, the Appellant requested a review of the October 2022 ATaR. HMRC undertook a review and concluded that the October 2022 ATaR should be upheld. The review conclusion was notified to the Appellant by a letter dated 22 December 2022.

On 19 January 2023, the Appellant appealed to the First-tier Tribunal (‘the FtT’) against the October 2022 ATaR.