TC09620 - [2025] UKFTT 01061 (TC)

Section 16(2A)(b) is not set in terms of which person(s) must comply with the effect of a decision. It is simply a question of who the decision is “about”. In this case the relevant decisions are about the two persons identified in each decision: (a) CMBC as the addressee of the approval, and (b) Majestic as the named person in relation to whom actions are restricted. There are two persons who are directly and expressly affected by the condition, limitation or restriction. CMBC as the occupier who may not dispatch or sell goods and Majestic as the named person that may not receive or buy those goods. They are equally affected because each sale or transfer has two parties, the sender at one end, the receiver at the other, as the buyer and the seller. Neither can exist without the other, and if any part of that process is prohibited at this place of security, both parties are entirely unable to act.

The same analysis applies to the personal approvals. It may be CMBC’s actions that are directly restricted, but in each case they are only restricted in relation to Majestic. CMBC may continue to take all those actions for any other customer or client, but it is the interactions between Majestic and CMBC that are prohibited. Each party is equally restricted in their activities, and each party has been made a subject or target of that prohibition which affects only them and not the rest of the world at large.

The only distinction as regards the warehouse approval decision is that where a restriction is added to a place, there is no person on whom conditions are applied. This is relevant to the gateway at s16(2A)(c). There are two persons indirectly restricted – the occupier who may not take action and the person whom they are prevented from acting for. The restriction on the place actually prevents both parties from pursuing what would otherwise have been lawful and permitted activity. Prior to the decisions Majestic was able to purchase from CMBC, it was able to instruct CMBC to send goods to its account in overseas warehouses. After the decision, Majestic was not able to do that any longer, and accordingly, a limitation or restriction was imposed on each of them. Majestic is as unable to act in the way it used to as CMBC is so limited. In circumstances where it is the place that is directly restricted and not the person, it becomes clear that a wider reading of the gateways is required.

Although it is not directly related to this appeal, there is important context for the tribunal to bear in mind. CMBC’s approved warehouse may or may not be operated solely for their own use (there is no evidence on this), but this is the main type of warehouse used by “third party warehousekeepers” who primarily store goods for other owners. As of 3 March 2025, all personal approvals to own duty suspended goods in such a warehouse have been scrapped. HMRC no longer regulates this activity under regulation 5 or 6 WOWGR. The only approvals are the warehouse and the warehousekeeper approval. Accordingly, the only way in which HMRC will be able to restrict the activity of taxpayers causing them concern will be to impose restrictions on the warehouse that stores their goods. If it is held that taxpayers do not have a right of appeal against those restrictions, there will be an enormous gap in the proper access to justice. That cannot be what Parliament intended here.

The same analysis can be applied to personal approvals as regards s 16(2A)(c). It does not restrict rights to persons that hold approvals that have conditions applied to them. There is nothing in its terms which requires only one perspective to be considered. It covers both the application of and the imposition of limitations, restrictions, prohibitions or other requirements howsoever they are applied or imposed. Apply and impose are not the same term. It does not make sense for them to both hold the same narrow definition of curtailing one’s activities only by action to approvals that have had their scope reduced. Even for the beer or AWRS approvals which are or might be personal, CMBC and Majestic are equally restricted. The conditions are imposed directly on the activities that CMBC is able to conduct using its personal approval, but the effect of the decision is still to limit CMBC and Majestic both from taking action that they could conduct before. Accordingly, even in those cases the effect of the decision is to impose limits on Majestic as the named target of the restriction. The decision was clearly ‘about’ stopping Majestic from benefiting from arrangements it previously enjoyed with CMBC.

The conditions themselves expressly state that the conditions will remain in place until HMRC are satisfied that the goods previously dispatched to Majestic have departed the UK. The focus of HMRC’s concern and the basis for the decision is squarely on Majestic.

Having restricted CMBC’s approval, HMRC took steps to ensure that Majestic could not trade with other UK suppliers. The strongest evidence can be found in the email of HMRC officer Andrew Sims of 2 November 2023 to a wholly separate supplier to Majestic. If the decisions had been made only “in relation” to CMBC, and if there was no decision to limit the activity of Majestic, they would have been free to purchase CMBC products from other sources. Instead, in this email HMRC stated as follows:

“We would consider that if you were to recommence trade with Majestic before matters have been resolved, this would bring into question your status as being Fit & Proper, as by coming to you, Majestic have directly taken steps to circumvent the restriction that was placed on CMBC, as mentioned in point 16 of Tristan Thornton’s letter of 31/08/23. We consider that if you were to recommence trading with Majestic either directly or indirectly, until the matter has been resolved you would be supporting Majestic in the circumvention of this restriction, we would have to place a condition on WOPI’s approvals to restrict any future sales to Majestic either directly or indirectly.”

HMRC have clearly and unequivocally demonstrated that their intention was, and remains, to prevent Majestic from being supplied. The aim of the condition is clearly to restrict supplies to Majestic so much so that HMRC will place equivalent conditions on other approvals to ensure that aim is achieved. HMRC confirmed they were prepared to restrict Majestic’s supplier World of Patria International Ltd, to prevent it from supplying Majestic or any indirect supplier to Majestic. This decision is and was always made in relation to Majestic with the intention to limit their ability to trade.

When the conditions were imposed, Majestic were in the process of conducting a purchase of two loads of beer from CMBC. The collection booking was requested by the haulier on 2 December 2022 and confirmed by CMBC within minutes. Preparation continued until by email of 5 December 2022 CMBC confirmed they had just been advised to hold the loads purchased by CMBC. That purchase was by that point contrary to the prohibition and Majestic was restricted from receiving the goods it had already paid for. Ultimately this had to lead to a refund to Majestic as indicated by email of 3 January 2023 at 9:37pm from CMBC to Majestic.

When the conditions were imposed, CMBC had Majestic registered as a collection only client who was responsible for completing the export from the UK – see the email from CMBC to Majestic on 26 January 2023at 6:45pm. This was an error as confirmed by Majestic in its reply of 27 January 2023. Accordingly, when HMRC restricted CMBC’s approvals because they were not satisfied the goods had been exported, CMBC had Majestic recorded as the exporter. HMRC have not disclosed the interaction between them and CMBC, but given what they are claiming to Majestic it is likely to reflect this. HMRC therefore restricted CMBC believing that to be the only way to require Majestic to prove they had completed their required actions.

By email of 15 March 2023 at 4pm CMBC’s agent described the background to HMRC’s decision as their “querying a number of movements from CMBC to Majestic”. They describe the decision itself as HMRC have “required CMBC not to supply any more goods to [Majestic] until the matter is resolved.” The decision was clearly seen by CMBC’s agents as being made in relation to the trade between CMBC and Majestic, and was therefore made in relation to both of them. The limitation was very clearly on that trade between the two of them, affecting both of them.

During a presentation by HMRC to Majestic’s supplier World of Patria International Ltd on 14 July 2023 HMRC confirmed that they had imposed a temporary condition on CMBC’s approvals in order to restrict supplies to Majestic. They went so far as to describe the basis of the decision as being a significant risk of outward diversion fraud “within the Majestic Global FZE supply chain”. It was not described as a CMBC supply chain, because the decision was made in relation to Majestic.

By email of 4 October 2023 CMBC confirmed to Majestic that the restriction was still in place, and so CMBC was still not able to supply Majestic. This confirms the ongoing prohibition against Majestic’s purchases.

By letter of 6 October 2023 HMRC wrote the only proactive letter they chose to send to Majestic. This letter was written “…to outline HMRC’s position with regards to the 20 loads Majestic Global FZ-LLC, formerly Majestic Global FZE, purchased from Carlsberg Marston Brewing Company in 2021.”In making this comment they properly acknowledge that any decision made in relation to a supply is about two people, and it is a matter of perspective whether one describes them as CMBC sales or Majestic purchases. Either way, the decision is about both. Also in this letter, in order to consider lifting the condition, HMRC requested that Majestic, “provide details of onward sales of the goods in relation to the 20 transactions…”Majestic’s onward sales, which CMBC had no part of, could only be relevant if HMRC’s concerns and their decision were in relation to Majestic as well as CMBC.

It is clear that CMBC and HMRC both considered these decisions to have been made in relation to Majestic. Whether or not the decisions applied conditions or other limitation to CMBC, does not prevent limitations, restrictions or prohibitions being imposed on Majestic. In circumstances where two-party activities are prohibited, they will usually so afflict both parties.

Decisions that directly affect a person or approval will usually affect the person whose approval it is, or the person responsible for operating the place that is approved. These persons will usually have standing to appeal and that will not be surprising. Decisions such as these which name a third party will often be as much “about” the person who controls the restricted approval as the person who they can’t take action in relation to. This will be a factual matter to consider looking at the decision itself and surrounding details. Decisions such as these which name a third party will usually affect that third party as much as they affect the person whose approval it is or who occupies the premises. This should not be surprising and there is nothing in the wording of the gateway provisions at s16(2A) to indicate Parliament intended to exclude these people from appeal rights. To the contrary, the structure of the appeal provisions within FA 1994 demonstrate an intention for other people to exercise their appeal rights.

A fair view of appeal rights where a warehouse or warehousekeeper is involved will likely be crucial for proper access to justice in the alcohol industry. This is now the only way by which limits may be formally imposed by HMRC on duty suspended trade where HMRC have concerns. Whilst it is right that HMRC retain the ability to act where they have concerns, it must also be right that the named and targeted taxpayers have recourse to the tribunal to test those concerns and challenge whether they are reasonable. A warehousekeeper will have its own relationship with HMRC and it is neither reasonable to require them to jeopardise that nor to incur the financial liability of appealing on their client or customer’s behalf. Those individuals must surely have the right to bring such challenges themselves.

Woodstream was a customer of a UK manufacturer, Grosvenor Chemicals Limited (“Grosvenor”). In November 2010 HMRC granted to Grosvenor an authorisation, subject to conditions, to receive at its premises a stated amount and type of Trade Specific Denatured Alcohol (“TSDA”) subject to it only being used to produce disinfectants. The authorisation covered receipt and use but not production.

In September 2016 Woodstream applied to HMRC to vary that authorisation for a change of use from using the relevant TDSA to manufacture disinfectants to using it to manufacture agrochemicals. Woodstream explained that it had selected Grosvenor to act as its toll manufacturer. HMRC informed Woodstream that the application should be made by Grosvenor. On 28 September 2016 Grosvenor submitted a request to amend its November 2010 authorisation, stating that it was applying in conjunction with Woodstream.

On 31 October 2016 HMRC refused that request. On 18 January 2017 HMRC notified Grosvenor that it had, as requested, reviewed its decision, and upheld it.

On 15 February 2017 Woodstream appealed to the tribunal against HMRC’s decision to refuse Grosvenor’s request to vary its authorisation.

HMRC applied to the tribunal to strike out the appeal for two reasons one of which was that Woodstream had no standing to bring the appeal before the tribunal as it was simply a customer of the person who was so entitled, namely Grosvenor.