TC09667 - [2025] UKFTT 01254 (TC)

The provisions of the FA 2008, so far as they are relevant to the Penalty, are as follows:

“Schedule 41: Penalties: failure to notify and certain VAT and excise wrongdoing

…

Handling goods subject to unpaid excise duty etc

4.—

(1)

A penalty is payable by a person (P) where—

(a)

after the excise duty point for any goods which are chargeable with a duty of excise, P acquires possession of the goods or is concerned in carrying, removing, depositing, keeping or otherwise dealing with the goods, and

(b)

at the time when P acquires possession of the goods or is so concerned, a payment of duty on the goods is outstanding and has not been deferred.

…

Amount of penalty: standard amount

6.—

(1)

This paragraph sets out the penalty payable under paragraph 1.

(2)

If the failure is in category 1, the penalty is—

(a)

for a deliberate and concealed failure, 100% of the potential lost revenue,

(b)

for a deliberate but not concealed failure, 70% of the potential lost revenue, and

(c)

for any other case, 30% of the potential lost revenue.

…

6A.—

(1)

A failure is in category 1 if—

(a)

it involves a domestic matter…

…

Potential lost revenue

…

9.

In the case of—

(a)

the doing of an act which enables HMRC to assess an amount of duty as due under a relevant excise provision, or

(b)

supplying a product knowing that it will be used in a way which enables HMRC to assess an amount as duty due from another person under a relevant excise provision,

the potential lost revenue is the amount of the duty which may be assessed as due.

Reductions for disclosure

12.—

(1)

Paragraph 13 provides for reductions in penalties—

(a)

under paragraph 1 where P discloses a relevant failure that involves a domestic matter, and

(b)

under paragraphs 2 to 4 where P discloses a relevant act or failure.

…

(1B) Sub-paragraph (2) applies where P discloses—

(a)

a relevant failure that involves a domestic matter,

(b)

a non-deliberate relevant failure that involves an offshore matter, or

(c)

a relevant act or failure giving rise to a penalty under any of paragraphs 2 to 4.

(2)

P discloses the relevant act or failure by—

(a)

telling HMRC about it,

(b)

giving HMRC reasonable help in quantifying the tax unpaid by reason of it, and

(c)

allowing HMRC access to records for the purpose of checking how much tax is so unpaid.

…

(3)

Disclosure of a relevant act or failure—

(a)

is “unprompted” if made at a time when the person making it has no reason to believe that HMRC have discovered or are about to discover the relevant act or failure, and

(b)

otherwise, is “prompted”.

…

13.—

(1)

If a person who would otherwise be liable to a penalty of a percentage shown in column 1 of the Table (a ‘standard percentage’) has made a disclosure, HMRC must reduce the standard percentage to one that reflects the quality of the disclosure.

(2)

But the standard percentage may not be reduced to a percentage that is below the minimum shown for it—

(a)

for a prompted disclosure, in column 2 of the Table, and

(b)

for an unprompted disclosure, in column 3 of the Table.

(3)

Where the Table shows a different minimum for case A and case B—

(a)

the case A minimum applies if—

(i)

the penalty is one under paragraph 1, and

(ii)

HMRC become aware of the failure less than 12 months after the time when the tax first becomes unpaid by reason of the failure, and

(b)

otherwise, the case B minimum applies.

Standard %	Minimum % for prompted disclosure	Minimum % for unprompted disclosure
30%	case A: 10% case B: 20%	case A: 0% case B: 10%
70%	35%	20%
100%	50%	30%

…

Special reduction

14.—

(1)

If HMRC think it right because of special circumstances, they may reduce a penalty under any of paragraphs 1 to 4.

(2)

In sub-paragraph (1) “special circumstances” does not include—

(a)

ability to pay, or

(b)

the fact that a potential loss of revenue from one taxpayer is balanced by a potential over-payment by another.

(3)

In sub-paragraph (1) the reference to reducing a penalty includes a reference to—

(a)

staying a penalty, and

(b)

agreeing a compromise in relation to proceedings for a penalty.

…

Reasonable excuse

20.—

(1)

Liability to a penalty under any of paragraphs 1, 2, 3(1) and 4 does not arise in relation to an act or failure which is not deliberate if P satisfies HMRC or (on an appeal notified to the tribunal) the tribunal that there is a reasonable excuse for the act or failure.

(2)

For the purposes of sub-paragraph (1)—

(a)

an insufficiency of funds is not a reasonable excuse unless attributable to events outside P’s control,

(b)

where P relies on any other person to do anything, that is not a reasonable excuse unless P took reasonable care to avoid the relevant act or failure, and

(c)

where P had a reasonable excuse for the relevant act or failure but the excuse has ceased, P is to be treated as having continued to have the excuse if the relevant act or failure is remedied without unreasonable delay after the excuse ceased.

It is common ground that excise duty on the Goods had been neither paid nor deferred. Thus, Len Lothian is liable to the penalty charged by the Penalty Assessment if, and only if, after an excise duty point arose, Len Lothian “acquired possession” of the Goods, or was “concerned in… keeping” the Goods.

It is common ground that even if Len Lothian had possession of the Goods or was “concerned in… keeping” the Goods then the act was not “deliberate”.