TC09657 - [2025] UKFTT 01208 (TC)

During the Relevant Period customs duties were governed by a specific regime laid down in the Code, which was a directly applicable EU regulation. The events with which the Appeals are concerned all took place before the United Kingdom left the European Union (“Brexit”) . It was not suggested that Brexit or any legal changes consequential on Brexit have any relevance for these Appeals. The provisions of the Code which are relevant for us are the following:

Article 4(9) defines “customs debt” as:

“the obligation on a person to pay the amount of the import duties (customs debt on importation) or export duties (customs debt on exportation) which apply to specific goods under the Community provisions in force.”

Article 4(12) defines a “debtor” as “any person liable for payment of a customs debt.”

Article 4(17) defines a “customs declaration” as “the act whereby a person indicates in the prescribed form and manner a wish to place goods under a given customs procedure”.

Article 4(18) defines a “declarant” as “the person making the customs declaration in his own name or the person in whose name a customs declaration is made”.

Article 4(19) defines “presentation of goods to customs” as meaning “the notification to the customs authorities, in the manner laid down, of the arrival of goods at the customs office or at any other place designated or approved by the customs authorities”.

Article 14 imposes an obligation on those involved in trade in goods to provide the customs authorities with requisite documents, information and assistance within any prescribed time limit.

Article 16 requires those concerned to keep the documents referred to in Article 14 for a period of at least 3 years from (so far as relevant for us) the end of the year in which the goods are released to free circulation. However, where a check carried out by the customs authorities in respect of a customs debt shows that the relevant entry in the accounts has to be corrected, the documents shall be kept beyond the time limit provided for in the first paragraph for a period sufficient to permit the correction to be made and checked.

Article 20 provides that duties owed where a customs debt is incurred shall be based on the Customs Tariff of the European Communities. Articles 20(3)(d) and (e) provide for the Tariff to contain preferential tariff measures and Article 24-26 contain rules relating to the origin of goods. Article 24 contains the core rule, that:

“Goods whose production involved more than one country shall be deemed to originate in the country where they underwent their last, substantial, economically justified processing or working in an undertaking equipped for that purpose and resulting in the manufacture of a new product or representing an important stage of manufacture.”

Article 25 provides that:

“Any processing or working in respect of which it is established, or in respect of which the facts as ascertained justify the presumption, that its sole object was to circumvent the provisions applicable in the Community to goods from specific countries shall under no circumstances be deemed to confer on the goods thus produced the origin of the country where it is carried out within the meaning of Article 24.”

Article 26 provides that:

“1.

Customs legislation or other Community legislation governing specific fields may provide that a document must be produced as proof of the origin of goods.

2.

Notwithstanding the production of that document, the customs authorities may, in the event of serious doubts, require any additional proof to ensure that the indication of origin does comply with the rules laid down by the relevant Community legislation.”

Articles 24 and 25 are very important for the substance of the Appeals themselves. Article 26 is important for us because, for each of the declarations of cycles acquired from City Cycle, there was a certificate of origin issued by the Sri Lankan authorities.

So far as customs declarations are concerned, Article 62 provides:

“1.

Declarations in writing shall be made on a form corresponding to the official specimen prescribed for that purpose. They shall be signed and contain all the particulars necessary for implementation of the provisions governing the customs procedure for which the goods are declared.

2.

The declaration shall be accompanied by all the documents required for implementation of the provisions governing the customs procedure for which the goods are declared.”

We looked at a blank version of the customs declaration (form C88). These are very detailed forms requiring information about the goods, the importer, the exporter, transportation, and payment details, among other things. The form requires details of the name and number of the consignor/exporter (in box 2), the consignee (in box 8) and the declarant or representative (in box 14).

Article 73 provides that where the conditions for placing the goods under the procedure in question are fulfilled and provided the goods are not subject to any prohibitive or restrictive measures, the customs authorities shall release the goods as soon as the particulars in the declaration have been verified or accepted without verification.

Article 78 allows the customs authorities on their own initiative or at the request of the declarant, to amend the declaration after release of the goods. After releasing the goods, they may inspect the commercial documents and data relating to the import or export operations in respect of the goods concerned or to subsequent commercial operations involving those goods. Article 78(3) provides that:

“Where revision of the declaration or post-clearance examination indicates that the provisions governing the customs procedure concerned have been applied on the basis of incorrect or incomplete information, the customs authorities shall, in accordance with any provisions laid down, take the measures necessary to regularize the situation, taking account of the new information available to them.”

Article 201 provides that a customs debt on importation is incurred at the time of acceptance of the customs declaration in question. Article 201(3) provides as follows:

“The debtor shall be the declarant. In the event of indirect representation, the person on whose behalf the customs declaration is made shall also be a debtor.

Where a customs declaration in respect of one of the procedures referred to in paragraph 1 is drawn up on the basis of information which leads to all or part of the duties legally owed not being collected, the persons who provided the information required to draw up the declaration and who knew, or who ought reasonably to have known that such information was false, may also be considered debtors in accordance with the national provisions in force.”

Article 217 provides that:

“Each and every amount of import duty or export duty resulting from a customs debt, hereinafter called ‘amount of duty’, shall be calculated by the customs authorities as soon as they have the necessary particulars, and entered by those authorities in the accounting records or on any other equivalent medium (entry in the accounts).”

Article 220(1) provides that:

“Where the amount of duty resulting from a customs debt has not been entered in the accounts in accordance with Articles 218 and 219 or has been entered in the accounts at a level lower than the amount legally owed, the amount of duty to be recovered or which remains to be recovered shall be entered in the accounts within two days of the date on which the customs authorities become aware of the situation and are in a position to calculate the amount legally owed and to determine the debtor (subsequent entry in the accounts). That time limit may be extended in accordance with Article 219.”

Article 220(2) sets out certain circumstances where a subsequent entry in the accounts is not to occur. These include a case where:

“(b)

the amount of duty legally owed was not entered in the accounts as a result of an error on the part of the customs authorities which could not reasonably have been detected by the person liable for payment, the latter for his part having acted in good faith and complied with all the provisions laid down by the legislation in force as regards the customs declaration. Where the preferential status of the goods is established on the basis of a system of administrative cooperation involving the authorities of a third country, the issue of a certificate by those authorities, should it prove to be incorrect, shall constitute an error which could not reasonably have been detected within the meaning of the first subparagraph. The issue of an incorrect certificate shall not, however, constitute an error where the certificate is based on an incorrect account of the facts provided by the exporter, except where, in particular, it is evident that the issuing authorities were aware or should have been aware that the goods did not satisfy the conditions laid down for entitlement to the preferential treatment. The person liable may plead good faith when he can demonstrate that, during the period of the trading operations concerned, he has taken due care to ensure that all the conditions for the preferential treatment have been fulfilled.

The person liable may not, however, plead good faith if the European Commission has published a notice in the Official Journal of the European Communities , stating that there are grounds for doubt concerning the proper application of the preferential arrangements by the beneficiary country;”

Article 221 provides that:

“1.As soon as it has been entered in the accounts, the amount of duty shall be communicated to the debtor in accordance with appropriate procedures.

…

3.Communication to the debtor shall not take place after the expiry of a period of three years from the date on which the customs debt was incurred. This period shall be suspended from the time an appeal within the meaning of Article 243 is lodged, for the duration of the appeal proceedings.

4.

Where the customs debt is the result of an act which, at the time it was committed, was liable to give rise to criminal court proceedings, the amount may, under the conditions set out in the provisions in force, be communicated to the debtor after the expiry of the three-year period referred to in paragraph 3.”

Article 222 sets out the period (usually 10 days) within which “amounts of duty communicated in accordance with Article 221” are to be paid.

Articles 236-239 provide for import duties to be repaid or remitted in certain circumstances.

Article 243 deals with appeal rights. It provides:

“1.

Any person shall have the right to appeal against decisions taken by the customs authorities which relate to the application of customs legislation, and which concern him directly and individually.

Any person who has applied to the customs authorities for a decision relating to the application of customs legislation and has not obtained a ruling on that request within the period referred to in Article 6 (2) shall also be entitled to exercise the right of appeal.

The appeal must be lodged in the Member State where the decision has been taken or applied for.

2.

The right of appeal may be exercised:

(a)

initially, before the customs authorities designated for that purpose by the Member States;

(b)

subsequently, before an independent body, which may be a judicial authority or an equivalent specialized body, according to the provisions in force in the Member States.”

Article 245 provides that:

“The provisions for the implementation of the appeals procedure shall be determined by the Member States.”

The Appellants and HMRC agreed a statement of agreed facts for the purposes of the preliminary issues hearing. The following paragraphs are taken from that statement.