UT/2023/000019 - [2024] UKUT 00108 (TCC)

Before the FTT, the Appellant’s grounds of appeal stated as follows:

“The review officer has erred in his findings regarding the circumstances surrounding the seizure of cigarettes. The officer has equated ‘holding to ‘possession’. If the Regulations intended to use the well known concept of ‘possession’ to trigger liability for duty on excise goods, the word ‘possession’ would be used. We submit that holding denotes a much more intimate connection between the person and the goods. We don’t argue that ‘possession’ cannot mean ‘holding’. Clearly the literal act of holding would be caught by the concept of ‘possession’. That does not apply in this case. We contend that ‘holding’ must denote a specific beneficial relationship to the goods. There is no such relationship in this case. Further the Appellant had no knowledge of the presence of the goods. Others had access to the premises. That HMRC have failed to identify that other person is not proper grounds to fix liability on the Appellant. HMRC have erred in using the concept of possession and taking any element of control of the premises to fix the Appellant with liability. If that were a proper application of the Regulations every landlord would be in a perilous position. The Applicant was not holding any excisable goods, had no knowledge of said goods and there is no evidence that she ever held, possessed, controlled or owned the goods.”

Mr Forde and Ms Vicary also appeared for the Appellant and HMRC respectively before the FTT. Mr Forde submitted to the FTT that three points arose in the appeal, namely:

In relation to the “holding” issue, the FTT discussed the relevant legal principles to be drawn from the following cases:

The FTT accepted HMRC’s submission that because the FTT had found as a fact that the Appellant was in physical possession of the cigarettes in the Shed, it followed from WR that she was the holder. It was irrelevant, said the FTT, whether the Appellant had any right or interest in the goods and whether or not she was or should have been aware that the goods were chargeable to excise duty. The FTT pointed out that, following the CJEU reference, the Court of Appeal had confirmed that it was bound by WR, in HMRC v Martyn Perfect [2022] EWCA Civ 799 (“Perfect 2022”): FTT [64]-[66].

In relation to the earlier excise duty point, the FTT held that the Appellant had failed to discharge the burden of proof which rested on her to establish an earlier duty point. We deal in detail with the FTT’s reasoning below.

In relation to fairness and proportionality, Mr Forde argued that, in accordance with comments in Perfect, it was not fair or proportionate to impose the duty point on the Appellant when it was accepted that other actors were involved. In addition, Mr Forde said, the Appellant had health issues and did not have the means to discharge the assessment. Mr Forde referred in support to the FTT decision in Paul Murphy v HMRC [2021] UKFTT 0204 (TC) (“Murphy”). The FTT rejected the argument that the assessment breached the principles of fairness and proportionality.

The FTT dismissed the appeal.