Upper Tribunal Tax and Chancery Chamber

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

Fecha: 05-Mar-2025

Ground 2

Ground 2

119.

Ground 2 is that the FTT erred in law in limiting the scope of what could amount to exceptional circumstances for the purposes of Article 172(2) UCC DA.

120.

We can deal with Ground 2 relatively briefly. There is no issue as to the meaning of exceptional circumstances. However, the appellant says that the FTT erred in its approach at [113] of its decision. It was wrong to exclude from consideration of exceptional circumstances the fact that the 2015 Application had been made and if allowed would have authorised end-use. This was a factor to be considered individually and as part of the circumstances as a whole in deciding whether the circumstances were exceptional so as to justify granting authorisation with retroactive effect.

121.

In this context Mr White pointed to the fact that Article 243(1) CCC made provision for a right of appeal where an operator had made an application to the customs authority but the customs authority did not provide a decision. However, the UK provisions do not provide for any such right of appeal. The parties did not make any submissions as to whether the possibility of judicial review might satisfy the requirements of Article 243(1) in this regard. In the event, it is not necessary for us to consider such arguments. We are satisfied that the FTT made no error of law.

122.

The FTT set out at [109] all the circumstances relied upon by the appellant as amounting to exceptional circumstances for the purposes of Article 172(2). At [110] to [112] it discounted all those factors, including [109(4)] which was the fact that the appellant had made the 2015 Application. The one factor the FTT did not discount was [109(5)], which was the fact HMRC had failed to make a decision on the 2015 Application. As a result of that finding, the FTT directed at [145(2)] that in carrying out their further review, HMRC should take into account the FTT’s analysis of law at [105] to [113].

123.

The FTT referred at [111] to the decision of the CJEU in Unipack v Bulgarian Customs Authority Case C-391/19. In that case the operator had challenged the date on which a retroactive authorisation for end-use was granted on the basis that there were exceptional circumstances within Article 172(2) UCC DA. The customs authority had granted authorisation from the date on which the application was made pursuant to Article 172(1). The question referred to the CJEU was whether certain circumstances constituted exceptional circumstances for these purposes. The CJEU stated at [22] and [23]:

22.

As a preliminary point, it should be recalled that the Union Customs Code is based on a system of declarations … with the aim of keeping customs formalities and controls to a minimum while preventing fraud or irregularities that could harm the EU budget. Because of the importance of those prior declarations for the proper functioning of the customs union, the Union Customs Code, in Article 15, places an obligation on declarants to provide accurate and complete information.

23.

More specifically, the end-use procedure provided for in Article 254 of the Union Customs Code allows goods to be released for free circulation with total or partial exemption from duties according to their specific use. It relies on a system of prior authorisation following the submission of an application by the operators concerned, in accordance with Articles 211 and 254 of the Union Customs Code. Under Article 172 of Delegated Regulation 2015/2446, when an authorisation is granted it takes effect at the earliest on the date of acceptance of the application. It is only by way of derogation, where there are ‘exceptional circumstances’, that paragraph 2 of that article provides that an authorisation may take effect earlier than the date of acceptance of the application.

124.

It is clear to us that the FTT took the same approach to exceptional circumstances as the CJEU took in Unipack. In that case, the CJEU considered that the following were not exceptional circumstances: an amendment to the Tariff; the fact customs authorities did not object for 10 months; and the fact that the goods would have qualified for end-use if the importer had authorisation for end-use. At [30], the CJEU stated that none of those factors were capable of constituting exceptional circumstances:

30.

It follows that none of the circumstances mentioned by the referring court is capable of constituting an ‘exceptional circumstance’ within the meaning of Article 172(2) of Delegated Regulation 2015/2446, without there being any need to define that concept further. The failure to comply with obligations under the Union Customs Code and measures resulting from it cannot justify more favourable treatment of the economic operator responsible for that failure.

31.

In the light of all the foregoing considerations, the answer to the question referred is that Article 172(2) of Delegated Regulation 2015/2446 must be interpreted as meaning that matters such as the early expiry of the validity of a binding tariff information decision due to an amendment to the combined nomenclature, a failure by the customs authorities to take action in relation to imports bearing an incorrect code or the fact that goods have been used for a purpose exempted from anti-dumping duty cannot constitute ‘exceptional circumstances’ within the meaning of that provision, for the purposes of the grant under Article 254 of the Union Customs Code of a retroactive authorisation to use the end-use procedure provided for in that latter article.

125.

The FTT was not saying that the fact an application for authorisation had been made in 2015 was irrelevant. Plainly that could not be the case because, as the FTT found, the fact the application had not been determined was relevant and it directed HMRC to have regard to that point in the further review. The question of exceptional circumstances would arise if HMRC decided to grant an authorisation following the further review which in the event it did. The FTT was simply saying that the mere making of the 2015 Application could not in itself amount to exceptional circumstances. That is unobjectionable.

126.

The FTT correctly stated at [114] that it did not have jurisdiction to consider whether there was an exceptional circumstance:

114.

However, in my view, it is outside the scope of the tribunal’s s16(4) FA 1994 jurisdiction for me to make a findings as to whether or not this circumstance is “exceptional” – that is a matter for HMRC’s administrative discretion, subject to the tribunal’s supervisory jurisdiction, if, upon a further reviewed ordered by the tribunal, HMRC were to decide to grant authorisation (and so come to consider whether it should have retroactive effect). The most I can do is decide, having made full findings of fact, whether no reasonable panel of commissioners could conclude that item (5) of the appellant’s list comprises exceptional circumstances.

127.

Mr Fell accepted that the FTT was required to take into account the combination of factors in determining whether the decision on exceptional circumstances was one which was reasonably available to HMRC. We are satisfied that was what the FTT did. It referred at [114] to “having made full findings of fact”. It went on to make findings of fact at [115] as to the circumstances in which HMRC never made a decision on the 2015 Application. When the FTT gave directions for the further review, it directed HMRC to have regard to its findings of fact, including its findings at [115] and at Appendix 2, which included detailed findings about the 2015 Application.

128.

In the circumstances, we do not consider that Ground 2 identifies any error of law by the FTT.