TC09592 - [2025] UKFTT 00891 (TC)

Section 1 of the Tobacco Products Duty Act 1979 (“TPDA 1979”) provides, so far as relevant to this case:

“(1)

In this Act “tobacco products” means any of the following products, namely,—

(a)

cigarettes;

(b)

cigars;

(c)

hand-rolling tobacco;

(d)

other smoking tobacco;

(e)

chewing tobacco, and

(f)

tobacco for heating,

which are manufactured wholly or partly from tobacco or any substance used as a substitute for tobacco

[…]

(3)

The Treasury may by order made by statutory instrument provide that in this Act references to cigarettes, cigars, hand-rolling tobacco, other smoking tobacco, chewing tobacco and tobacco for heating shall or shall not include references to any product of a description specified in the order, being a product manufactured as mentioned in subsection (1) above”

TPDA 1979, s 2(1) provides:

“There shall be charged on tobacco products imported into or manufactured in the United Kingdom a duty of excise at the rates shown in the Table in Schedule 1 to this Act.”

The relevant rates set out in the Table in Schedule 1 to the TPDA 1979 show the rate for chewing tobacco as a certain price per kilogram. The rates have increased over time; for most of the period in question the rate was £134.24 per kilogram, rising to £144.17 per kilogram towards the end of the period.

The Treasury, under the powers conferred by TPDA 1979, s 1(3), has made the Tobacco Products (Descriptions of Products) Order 2003 (“2003 Order”). Article 8 of the 2003 Order provides as follows:

“Chewing tobacco

8 (1) Subject to paragraph (2) below, references to chewing tobacco in the Act include any product that—

(a)

is not cigarettes, cigars, hand-rolling tobacco, or other smoking tobacco,

(b)

consists of or includes tobacco, and

(c)

has been prepared so that it can be chewed.

(2)

References to chewing tobacco in the Act include any product prepared for chewing that does not include tobacco but consists in whole or in part of a substitute for tobacco, except for such a product that is intended solely as an aid to persons to give up smoking.”

Regulation 5 of the Excise Goods (Holding, Movement and Duty Point) Regulations 2010 (“2010 Regulations”) provides that:

“Subject to regulations 7(2) and 7A, there is an excise duty point at the time when excise goods are released for consumption in the United Kingdom.”

Regulation 6 of the 2010 Regulations provides, so far as relevant:

“(1)

Excise goods are released for consumption in the United Kingdom at the time when the goods—

(a)

leave a duty suspension arrangement;

(b)

are held outside a duty suspension arrangement and excise duty on those goods has not been paid, relieved, remitted or deferred under a duty deferment arrangement;

(c)

are produced outside a duty suspension arrangement; or

(d)

are charged with duty at importation unless they are placed, immediately upon importation, under a duty suspension arrangement.

(2)

In paragraph (1)(d) “importation” means—

(a)

the entry into the United Kingdom of excise goods, unless the goods upon their entry into the United Kingdom are immediately placed under a customs suspensive procedure or arrangement”

Regulation 12 of the 2010 Regulations provides, so far as relevant:

“(1)

The person liable to pay the duty when excise goods are released for consumption by virtue of regulation 6(1)(d) (importation of excise goods) is the person who declares the excise goods or on whose behalf they are declared upon importation.”

The Tobacco Products Regulations 2001 (“the 2001 Regulations”) include provisions relating to the registration of premises for the manufacture and storage of tobacco, and the payment of excise duty by tobacco manufacturers.

Regulation 4 of the 2001 Regulations provides that tobacco products may only be manufactured in a registered factory and empowers HMRC to register premises for these purposes.

Regulation 14 of the 2001 Regulations states, so far as material:

“(1)

Except where regulations 17 to 19 below (deferred payment) apply, the duty must be paid at or before the excise duty point.

(2)

For the purpose of calculating the amount of duty payable at the excise duty point, the weight of tobacco products (other than cigarettes) is their weight—

(a)

at the time of their entry into the production account, or

(b)

at such other time as the Commissioners may allow.

(3)

For the purposes of complying with this regulation a manufacturer must keep a production account that shows for each tobacco product the quantity produced, the type, brand and size of retail packet, and the date of production and entry into that account.

(4)

Except as the Commissioners may otherwise allow, the details referred to in paragraph (3) above must be entered into the production account immediately after whichever of the times specified in paragraph (5) below is the earliest practicable time for this to be done before removal from the registered factory.

(5)

The following times are specified for the purposes of paragraph (4) above—

(a)

the time when the tobacco products are first put into a state suitable for use;

(b)

the time when the tobacco products are first put into a state suitable for removal; and

(c)

the time when the tobacco products are first packed for delivery.

(6)

Except as the Commissioners may otherwise allow, a manufacturer must preserve a production account for not less than six years from the date of the last entry in that account.”

In Kevan Denley v HMRC [2017] UKUT 340 (“Kevan Denley”), the Upper Tribunal said at [74a]:

“an assessment to excise duty which has become due is not a matter of discretion. We also do not see it in any way as a penalty: it is due because, for the reasons we have given, a duty point has occurred regardless of any wrongdoing…”