TC09592 - [2025] UKFTT 00891 (TC)

I deal first with the question of whether HMRC should be permitted to amend their application for the appeal to be struck out.

The grounds on which HMRC seek the appeal to be struck out have not changed, namely, that the case has no reasonable prospects of success. They have sought an amendment because their original application referred to the wrong legal provisions and they wish to correct this.

I am satisfied that HMRC’s original strike-out application was indeed incorrect to cite Regulation 14 of the 2001 Regulations. Regulation 14 provides that excise duty must be paid at or before the excise duty point, then makes provisions about how tobacco products manufacturers should calculate the duty, and what records they should keep. This case does not concern the duty payable by a tobacco products manufacturer, rather it is about the duty payable on importation.

I note that the Appellant’s grounds of appeal, while addressing the duty payable on importation, also incorrectly cite Regulation 14 when setting out relevant statutory provisions.

It is clearly in the interests of justice that the Tribunal should make decisions based on the correct legal provisions. It would, nonetheless, be contrary to the interests of justice for HMRC to put forward a new legal argument in circumstances where the Appellant had no opportunity to prepare and present its case in response to that new argument.

However, I do not consider that this is what happened in this instance. The question in this case concerns the correct method for calculating excise duty on importation, and the Appellant addressed this question in its grounds of appeal. HMRC’s application to strike out the appeal referred, incorrectly, to the law concerning the imposition of excise duty when tobacco products are manufactured in a registered factory. This had the effect of compounding the previous error in the Appellant’s grounds of appeal and misleading the Appellant into addressing this point directly when it objected to the strike-out application. While HMRC’s error led the Appellant into making unnecessary arguments in its objection to the strike-out application, the Appellant had already made its key submissions in its grounds of appeal.

The provisions to which HMRC seek to refer in their amended application do not raise any novel legal point, but provide authority for the basic proposition that excise duty is payable when tobacco products are imported into the UK. This is not a point that can have taken the Appellant by surprise.

HMRC applied to amend their application on 24 March 2025, more than three months before the hearing on 7 July 2025. The Appellant has therefore been aware of HMRC’s error for this amount of time and had ample opportunity to raise any new grounds for objecting to the strike-out application.

The Appellant’s objection to the application to amend, set out above, states that HMRC should not be allowed to adjust their application after the Appellant’s response, and that this would put the Appellant to further costs. In the absence of any further response from the Appellant, however, I had no indication of what these further costs might be. It may be a reference to adviser time, but I am unable to infer what further work would have been required, beyond the straightforward task of redacting any previous incorrect references to provisions relating to the manufacture, rather than importation, of tobacco products.

The Appellant has been on notice, since the Tribunal’s communication of 9 May 2025, that the application to amend the strike-out application would be considered at the hearing on 7 July 2025, together with the strike-out application itself. It should therefore have been aware that if it had any additional arguments to raise, it needed to do so at or before the hearing.

I accept that the Appellant incurred some adviser time in responding to a legal point that HMRC raised in error and have now withdrawn. However I consider this factor to be outweighed by the inherent desirability of the Tribunal being directed to the correct legal provisions, the opportunity the Appellant has had to respond to the amended application, and the lack of novelty in the legal argument HMRC now wish to pursue.

For these reasons HMRC’s application to amend their strike-out application is granted.