UT/2019/000009 - [2024] UKUT 00176 (TCC)

The case-law in this area was most recently considered by the Upper Tribunal in Agniezska Hartleb t/a Hartleb Transport v HMRC [2024] UKUT 00034 (TCC). In that case the Upper Tribunal agreed with HMRC that the haulage company employer was “holding” the goods in the particular circumstances of her case despite her argument that it was her employee driver who had physical possession of the goods not her.

The Upper Tribunal considered (at [78]) the four factors mentioned in Dawson UT aboveregarding establishing an earlier duty point to bea useful guide in determining whom to regard as holder in circumstances where physical possession and de facto and/or legal control were separated, as they were on the facts of the case before it.

As regards physical possession, the Upper Tribunal explained that was not determinative ([80]) and that a more detailed consideration of the facts was needed ([81]). Referencing the approach taken by the Upper Tribunal in Dawson’s (at [143]), the Upper Tribunal in Hartleb held that it was consistent with the legislation and case-law to adopt an approach which established first, who had physical possession of the goods, but then considered whether the circumstances of that possession were such that it was inappropriate for that person to be considered to be “holding” the goods ([83]).

It is also useful to note that at the time of the FTT hearing in Mr Ali’s case and at the time when the FTT issued its decision, and also when the Upper Tribunal gave Mr Ali permission to appeal, there was an outstanding issue as to extent to which a person’s knowledge that the goods were duty unpaid was relevant. The CJEU’s decision in Case C-279/19 Commissioners for Her Majesty’s Revenue and Customs v WR (“WR”) and the Court of Appeal’s application of it in HMRC v Martyn Perfect [2022] EWCA Civ 330 has confirmed that it is not. The CJEU concluded (at [36]) that:

(While that passage was about Article 33 of the 2008 Directive (implemented in the Regulations by Regulation 13) the Court of Appeal in Dawson’s confirmed the meaning of “holding” had the same meaning through the directive and this therefore applied to Regulation 6(1)(b).)

It is also relevant to note an example discussed in the Advocate General’s opinion regarding a delivery driver who did not know the goods were duty unpaid being held liable given its similarly with Mr Ali’s arguments that he was simply an employee/driver for someone else. In WR the taxpayer argued commercial chaos would follow if a delivery driver, who, while they knew or ought to have known the goods were excise goods, did not know they were duty unpaid was still found liable. Rejecting the concern, the Advocate General considered that the undertaking rather than the driver would be liable, contrasting the employed status of the delivery driver in the example with the taxpayer’s status as a self-employed entrepreneur. The entrepreneurial risks which came with that could be protected through insurance or contractual assignment. The Upper Tribunal in Hartleb also referred (at [94]) to this example by way of reinforcement for its view that under the 2008 Directive and Regulations simple physical possession was not the only way in which a person could be found to be holding, and that Ms Hartleb, the employer, not her employee driver, was liable.