Upper Tribunal Tax and Chancery Chamber

UT (Tax & Chancery) UT/2023/000087 - [2025] UKUT 00176 (TCC)

Fecha: 05-Mar-2025

Ground 1

Ground 1

62.

Ground 1 alleges that the FTT erred in law in concluding at [102] and [103], and in directing at [145(2)], that the 2017 Application did not qualify as the “renewal of an authorisation for the same kind of operation and goods” within Article 172(3) UCC DA. The issues raised under this ground concern the construction of Article 172(3). The provision falls to be construed in its context and by reference to the objectives pursued by the UCC and UCC DA (see the judgment of the CJEU in Kaplan International Colleges UK Ltd v HM Revenue & Customs Case C-77/19 at [39]).

63.

It is well established that exceptions to liability for customs duties are to be strictly interpreted.In Firma Sohl & Söhlke v Hauptzollamt Bremen Case C-48/98 the Court of Justice set out the principle at [52]:

52.

… the repayment or remission of import and export duties, which may be made only under certain conditions and in cases specifically provided for, constitutes an exception to the normal import and export procedure and, consequently, the provisions which provide for such repayment or remission are to be interpreted strictly.

64.

We agree with the Opinion of Advocate General Tanchev in Beerenv Hauptzollamt Erfurt C-825/19, where he stated at [45]:

45.

The authorisation for the end-use procedure may only be granted under certain conditions and that procedure thus constitutes an exception to the general customs rules. As such, the rules regulating that procedure should be interpreted strictly. The granting of an authorisation with retroactive effect pursuant to Article 211(2) of the UCC and Article 172(1) of the UCC DR likewise constitutes an exception to the general rule for the granting of authorisations, which is subject to specific conditions. The granting of an authorisation with retroactive effect from the date on which the original authorisation expired pursuant to Article 211(2)(h) of the UCC and Article 172(3) of the UCC DR is a yet further exception to the general rules for authorisations with retroactive effect, which is subject to additional conditions. An expansive interpretation of the application, ratione temporis, of those rules does not, therefore, appear justified.

65.

Beneficiaries of special procedures must also comply strictly with obligations in relation to those procedures. In Döhler Neuenkirchen GmbH v Hauptzollamt Oldenburg Case C-262/10 the Court of Justice said as follows:

40.

It must be observed that the inward processing procedure in the form of a system of suspension constitutes an exceptional measure intended to facilitate the carrying-out of certain economic activities. That procedure involves the presence, on the customs territory of the European Union, of non-Community goods, which carries the risk that those goods will end up forming part of the economic networks of the Member States without having been cleared through customs (see Case C-234/09 DSV Road [2010] ECR I-7333, paragraph 31).

41.

Since that procedure involves obvious risks to the correct application of the customs legislation of the European Union and the resulting collection of duties, the beneficiaries of that procedure are required to comply strictly with the obligations resulting therefrom. Similarly, the consequences of non-compliance with their obligations must be strictly interpreted (see Joined Cases C-430/08 and C-431/08 Terex Equipment and Others [2010] ECR I-321, paragraph 42).

66.

Having said that, it is also established that a strict construction does not require a provision to be restrictively construed and the provision must not be deprived of its intended effect (see the CJEU in Future Health Technologies Ltd v Revenue and Customs Commissioners Case C-86/09 at [30] and most recently the Court of Appeal in WTGIL Limited v HM Revenue & Customs [2025] EWCA Civ 399 at [55]). We must also take into account that Article 172 is intended to apply to end-use relief covering many kinds of goods, not just aircraft and aircraft parts.

67.

There are two aspects to this ground of appeal which may be summarised as follows:

(1)

Whether as a matter of principle a CCC authorisation for end-use can be the subject of a “renewal” under the UCC regime. Mr White submits that CCC authorisations can be renewed under the UCC regime and the FTT was wrong to find otherwise. Mr Fell submits that as a matter of principle, CCC authorisations cannot be “renewed” under the UCC regime because there are substantive differences between the two regimes in relation to end-use authorisation.

(2)

If a CCC authorisation can be renewed under the UCC regime, whether the 2017 Application was for the same kind of operation as the appellant’s previous CCC authorisation. In particular, we must consider what is meant by the term “operation” in Article 172(3). Mr White submits that the relevant operation for these purposes is the importation and end-use of civil aircraft and parts. As such, the appellant’s CCC authorisation and the 2017 Application for a UCC authorisation were for the same kind of operation and the 2017 Application fell within Article 172(3). Mr Fell submits that they were not for the same kind of operation because the two authorisations differed in material respects. Those differences concerned the geographical scope of the authorisations and the subject matter of the authorisations. In the case of the CCC authorisation it was restricted to importation and use at East Midlands Airport and covered civil aircraft and parts. In contrast, the 2017 Application was for use in multiple member states and would not cover parts retroactively or for the first 12 months following the authorisation.

68.

In relation to Ground 1, Mr White submitted that HMRC were unduly focusing on the term renewal. He says that the focus ought to be on the compendious term “renewal of an authorisation for the same kind of operation and goods”. We do not agree. In our view it is appropriate to consider whether as a matter of principle a CCC authorisation can be the subject of a “renewal” under the UCC regime. It is logical to consider that issue first. We have found it a difficult issue, but on balance and for the reasons given below we have decided that the FTT was right to find that a UCC authorisation could not amount to a renewal of a CCC authorisation. Even if we are wrong on that aspect of Ground 1, it is clear to us on the facts found by the FTT that it was right to find that the 2017 Application did not concern the renewal of an authorisation “for the same kind of operation” as the CCC authorisation. We are satisfied therefore that the FTT was right to conclude at [103] that Article 172(3) UCC DA was not engaged. In our view, Ground 1 does not establish any error of law in the FTT’s decision.