TC09667 - [2025] UKFTT 01254 (TC)

In Case C-279/19 HMRC v. WR, ECJ (10 June 2021), ECLI:EU:C:2021:473 (“WR”) the CJEU considered the meaning of “holds” in the context of the relevant Directive that is transposed into domestic legislation in the ED(HMDP)R 2010. The CJEU reformulated the question they were asked to consider as:

“in essence, whether Article 33(3) of Directive 2008/118 must be interpreted as meaning that a person who transports, on behalf of others, excise goods to another Member State, and who is in physical possession of those goods at the moment when they have become chargeable to the corresponding excise duty, is liable for that excise duty, under that provision, even if that person has no right to or interest in those goods and is not aware that they are subject to excise duty or, if so aware, is not aware that they have become chargeable to the corresponding excise duty.”

In summary, the CJEU found:

The CJEU concluded in the dispositif that:

“In the light of the foregoing, the answer to the questions referred is that Article 33(3) of Directive 2008/118 must be interpreted as meaning that a person who transports, on behalf of others, excise goods to another Member State, and who is in physical possession of those goods at the moment when they have become chargeable to the corresponding excise duty, is liable for that excise duty, under that provision, even if that person has no right to or interest in those goods and is not aware that they are subject to excise duty or, if so aware, is not aware that they have become chargeable to the corresponding excise duty.”

The CJEU thus concluded, contrary to the earlier decisions in that case of the FTT and the UT, that “the entirely innocent agent” could be liable. They rejected such a limitation, as it would “make it difficult, in practice, to collect that duty from the person with whom the competent national authorities are in direct contact and who, in many situations, is the only person from whom those authorities can, in practice, demand payment of that duty”: at [34]. They cited (at [33]) how the Advocate General had favoured a “broad definition… to ensure, so far as possible, that such duty is collected”.

In his Opinion Advocate General Tanchev had advised that there was no requirement for knowledge and liability was therefore strict (see [44] to [46]). This was based on two key policy considerations. The first is that the purpose of the 2008 Directive is to ensure that the excise duty is collected. The second is that those engaged in commerce assume the risk of being liable for the actions of those with whom they do business. Those entrepreneurs are best placed to identify and take steps to guard against those risks (see [37] to [39]).

Importantly, the judgment was in the context of a referral where physical possession was not in dispute. Hence it does not necessarily limit holding to circumstances where there is physical possession.

The referral, which was made by the Court of Appeal, was considered in HMRC v Perfect [2022] EWCA Civ 330; [2022] STC 642.