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

The objective of the UCC at a general level is the collection and protection of revenue in the form of customs duties payable pursuant to the Tariff. The provisions in relation to customs supervision and customs controls are to ensure compliance with customs regulations. The UCC sought to simplify customs procedures, to make them more efficient and to facilitate legitimate trade. It is nevertheless clear from cases such as Döhlerthat obtaining the benefit of a particular customs treatment requires strict compliance with the relevant customs procedure.

It is convenient to start with Mr Fell’s central submission that the term “renewal” in Article 172(3) UCC DA means to repeat or recreate an authorisation that has expired. He submitted that where there are significant differences between the original authorisation and the new authorisation then it cannot be said to be a renewal. He submits that the FTT was right to conclude at [95] that the differences between authorisations under the CCC and those under the UCC mean that a CCC authorisation cannot be renewed under the UCC regime.

We accept that submission. In our view, it is implicit in the term renewal that the authorisation which has expired is simply given a new lease of life. An authorisation is renewed where the only change is to the end-date. The new authorisation must be subject to the same conditions and be on the same terms as the original authorisation. It cannot be said that the appellant’s previous CCC authorisation and the UCC authorisation which it had applied for were on the same conditions and the same terms.

End-use relief under the CCC was by way of favourable tariff treatment governed by Article 21. The 2016 Tariff provided that relief was subject to conditions and it identified Articles 291 to 300 CCC IP. Article 292 provided that relief was subject to written authorisation and Article 21 provided that Articles 86 and 87 would apply. Articles 86 and 87 would not otherwise have applied to end-use because it was not a customs procedure with economic impact as defined by Article 84(1)(b). We accept that favourable tariff treatment effectively mimicked the authorisation requirements for such customs procedures, however it was conceptually different to customs procedures under the CCC regime. In contrast, end-use under the UCC is one of a number of “special procedures” which are “customs procedures” for which authorisation is specifically required pursuant to Article 211 UCC. Favourable tariff treatment was replaced by a customs procedure. Mr White argued that there was no practical difference and the operator gets to the same end result. However, the end result is reached through a different framework.

There are other differences between the two types of authorisation pointed out by Mr Fell, the clearest of which is the position in relation to security. Pursuant to Article 293(1)(e) CCC IP, the customs authority could make authorisation conditional on the provision of security where it considered security was necessary. In contrast, authorisation under the UCC is subject to the mandatory provision of security pursuant to Article 211(3)(c). Recital (34) of the UCC stated that rules for special procedures should allow for the use of a single guarantee for all categories of special procedures. Articles 89-91 set out general provisions in relation to guarantees with separate provisions for compulsory and optional guarantees.

Article 86 CCC sets out the conditions for granting a CCC authorisation. Authorisation shall be granted only where the operator offers “every guarantee necessary for the proper conduct of the operations”. Article 211(3) UCC sets out the conditions for granting a UCC authorisation. The operator must provide “the necessary assurance of the proper conduct of the authorisations”. In our view this is not a significant difference and simply reflects different terminology. It is however the case that pursuant to Article 211(3) certain operators are deemed to fulfil the condition.

Retroactive authorisation was governed by Article 294 CCC IP. Article 294(2) provided that retroactive authorisation could be granted to the date the authorisation expired where it concerned the renewal of an authorisation for the same kind of operation and goods. Article 294(3) provided that the retroactive effect could be extended further, but not more than one year, if there was a proven economic need, no attempted deception or obvious negligence, certain accounting matters could be confirmed and all formalities to regularise the situation of the goods could be carried out. In contrast, a retroactive UCC authorisation has to be granted where the conditions in Article 211(2) UCC are fulfilled. Article 172 UCC DA deals with the date to which an authorisation can take retroactive effect. There is no reference in the UCC provisions to obvious negligence.

Article 294(3) sets out what is required in addition to exceptional circumstances for an authorisation to have retroactive effect under that provision. Article 172(2) is less prescriptive in relation to what is required if an authorisation is to have retroactive effect on the ground of exceptional circumstances.

Overall, the existence of these differences supports a conclusion that a UCC authorisation cannot amount to the renewal of a CCC authorisation.

There is also some support for that conclusion in Beeren at [34] where the Court described Article 211(2) of the UCC as a “new substantive rule”. In Beeren, the operator’s CCC authorisation for end-use expired. The operator continued to import the goods and subsequently applied for an authorisation with retroactive effect to the date of expiry of the previous authorisation. The customs authority granted that application but with retroactive effect only to the date the application was made. In a decision dated 13 May 2015, the customs authority refused to back date the authorisation to the date of expiry pursuant to Article 294(2) CCC. It also took the view that the operator could not rely on Article 294(3). A complaint against the decision was rejected on 6 April 2016 and the operator appealed the decision on 3 May 2016, after the UCC came into effect.

The operator contended that the decision refusing retroactive effect should be examined in the light of Article 211 UCC on the basis that it was a purely procedural provision. In the alternative, the operator contended that the customs authority had wrongly applied Article 294(2) and (3) CCC.

The CJEU re-formulated the first and third questions which had been referred as follows:

The CJEU rejected the operator’s argument that the UCC should govern an application for retroactive authorisation made and rejected prior to the introduction of the UCC. The provisions in the UCC were not purely procedural:

Mr White relied on a number of arguments in support of his submission that there was no “prohibition”, as he called it, on renewing a CCC authorisation on or after 1 May 2016 when the UCC regime came into effect. He submitted that there was no express provision to that effect and that it would require clear words if that was the intention when the UCC regime was introduced. He also relied heavily on the terms of Article 211 UCC.

Article 211(1) UCC sets out the requirement for authorisations in relation to a number of special procedures, including end-use. It provides that the conditions under which those procedures are permitted shall be set out in the authorisation. Mr White submitted that if a CCC authorisation could not be renewed then it is necessary to give the word “authorisation” in Article 211(1) a different meaning to the same word in Article 211(2)(h).

Article 211(2) deals with retroactive authorisations. It provides that customs authorities shall grant an authorisation with retroactive effect where eight conditions are satisfied, labelled (a) to (h). Article 211(2)(h) echoes Article 172(3) UCC DA and provides for the following condition:

HMRC’s case is that the authorisation in Article 211(2)(h) refers only to a UCC authorisation. It is also implicit in HMRC’s case that “authorisation” in Article 211(1) must refer only to a UCC authorisation. Mr White submitted that would be absurd because when the UCC came into force, many authorisations in existence would have been CCC authorisations; so Article 211(1) must also refer to CCC authorisations.

We do not accept the premise of Mr White’s submission that authorisation in Article 211(1) must include a reference to CCC Authorisations and that it would be absurd if it did not. That is because the UCC DA contained transitional provisions which prevent any absurdity from arising. We must construe the UCC in its context and that context includes the UCC DA. It is clear from the transitional provisions that Article 211(1) UCC can be construed as referring only to UCC authorisations in the same way as Article 211(2)(h).

Recital (56) to the UCC DA states that to safeguard the interests of operators it is necessary to establish transitional provisions to allow for the adaptation of authorisations to the new legal rules. The fact that authorisations required adapting itself suggests that they could not simply be renewed. The transitional provisions operate as follows:

The transitional provisions do not simply validate all existing CCC authorisations. They also apply the UCC conditions to those authorisations. Further, the transitional provisions apply only to those CCC authorisations which were valid as at 1 May 2016. There is no reference in the transitional provisions to CCC authorisations which had already expired on 1 May 2016. In our view one would expect the transitional provisions to deal with renewal of expired CCC authorisations if there were to be provision for such renewal.

The transitional provisions serve to emphasise the substantive differences between CCC authorisations and UCC authorisations. Not only do CCC authorisations require reassessment but they only remain valid with UCC conditions being read into the authorisation. The scheme of the UCC clearly distinguishes CCC authorisations from UCC authorisations. In our view this distinction supports the FTT’s conclusion that CCC authorisations could not be renewed under the UCC regime.

Further, it does not seem to us that there was any real need to make provision for CCC authorisations to be renewable under the UCC regime. The only reason to do so would be if the operator was unable to rely on Article 172(2) UCC DA because goods otherwise qualifying for relief were imported without an authorisation more than one year prior to an authorisation being granted. The UCC regime was enacted in 2013 and there was plenty of time for operators to ensure that CCC authorisations were in place before the introduction of the UCC.

Mr White also pointed out that if the FTT’s construction of Article 172(3) was right, then Articles 211(2)(e) and (h) could not be used by operators for 3 years. That must be right, but the UCC was intended to apply for many years. The CCC had been introduced in 1993 and was in force until 2016. It is not surprising therefore that these provisions might not be used for the first three years of the UCC regime.

Overall, we are satisfied that as a matter of principle CCC authorisations could not be renewed by way of a UCC authorisation. In so far as this conclusion relies on a strict construction of Article 172(3), it is consistent with the objectives of the UCC provisions and does not involve going beyond a fair reading of the words used in the provisions.

Mr White made the point that Döhler involved a strict construction because of risks to the collection of duties but that there was no such risk on the importation of civil aircraft for end-use. Also, the recitals to the UCC emphasise the need for efficient and simple customs procedures and reducing those procedures to those which are economically justified. We do not consider that these points support a different conclusion. We accept that there may be little risk in relation to the importation of civil aircraft and little scope for a customs debt to arise. Either the aircraft are imported having been registered with the CAA and the end-use requirement is satisfied on importation, or there is only a short period of time before registration and it is easy for customs authorities to confirm that an aircraft has been registered. However, there does still remain the risk that a customs debt will arise if the aircraft is not registered or if it is imported to a different airport to that named in the end-use authorisation. Mr White suggested that when end-use relief for civil aircraft was abolished in 2018 that was because the legislative body had originally made a mistake in placing civil aircraft under the end-use procedure. We cannot infer that is the case. We must apply the law as it stood at the time of the 2017 Application. We must also take into account that end-use authorisation applies not only to civil aircraft but to all goods imported using the end-use special procedure under the UCC.

Mr White submitted that it was clear there was no substantive difference between CCC authorisations and UCC authorisations because there was no amendment to end-use relief for civil aircraft and aircraft parts in the 2016 Tariff. The 2016 Tariff provided for relief subject to the conditions in Articles 291 to 300 of the CCC IP. There was no amendment to those provisions until the 2017 Tariff came into effect on 1 January 2017. At that stage, the relief was expressed to be subject to the conditions in Article 254 UCC. Throughout 2016 therefore, the applicable law in relation to the relief incorporated conditions from the CCC regime. This included a period of 8 months from 1 May 2016 to 31 December 2016 when the UCC regime was in force.

We do not accept that is the case. The UCC and the UCC DA came into effect on 1 May 2016. The conditions applicable to any new authorisation were the UCC conditions. The UCC DA included the transitional provisions referred to above. The conditions attaching to a valid CCC authorisation were those in the table of correspondence at Annex 90 UCC DA. There is apparently an inconsistency between the conditions for authorisation in the 2016 Tariff and the conditions in the UCC regime. However, we are satisfied that at most this must have been a matter of oversight. The 2016 Tariff referred to relief being subject to “conditions laid down in the relevant provisions of the European Union”. With effect from 1 May 2016, those conditions were in the UCC. The CCC was no longer in effect. Indeed, the CCC had been repealed by Article 286 of the UCC and Article 286(3) provides that references to the repealed regulations were to be read as references to the UCC. The CCC IP was itself repealed by Commission Implementing Regulation (EU) 2016/481 with effect from 1 May 2016. The wording of the 2016 Tariff was therefore effective as a matter of law to incorporate the UCC conditions.

Further, the 2016 Tariff does not say that relief is subject to the conditions in Articles 291 to 300 of the CCC IP. It is subject to “the relevant provisions of the European Union”. In our view those provisions must be construed as being the UCC provisions. The reference in the Tariff to “see Articles 291 to 300” cannot be construed as reviving the CCC IP for certain limited purposes in connection with end-use relief for civil aircraft.

In his oral reply, Mr White pointed out for the first time that in other contexts the 2016 Tariff had been amended with effect from 1 July 2016. This was in relation to subheading 8443 91 which applied to parts and accessories of certain printing machinery and subheading 8803 90 in relation to parts for certain aircraft. Entry under those subheadings was amended so as to refer to Article 254 UCC. Mr Fell did not have an opportunity to respond to this argument given the circumstances in which it was raised. It is not clear why these amendments were made with effect from 1 July 2016 and not 1 May 2016, with no amendment being made in relation to end-use relief for civil aircraft. However, we do not infer that the absence of an amendment in relation to the conditions for end-use relief for civil aircraft was a deliberate or conscious decision on the part of the legislature. We remain of the view that the absence of an amendment in relation to end-use relief for civil aircraft was a matter of oversight which was corrected in the 2017 Tariff.

We were also referred to guidance published by HMRC and by the European Commission. Mr White submitted that such guidance could be persuasive but only to the extent that it was in existence at the time the dispute arose. When the dispute arose between the appellant and HMRC there was no direct guidance on the question of whether a CCC authorisation could be renewed under the UCC regime.

HMRC’s guidance in Notice 3001: Customs Special Procedures for the Union Customs Code was published in May 2016 and republished in July 2016 and December 2016. Mr White pointed out that there was no reference in any version to a prohibition on renewing a CCC authorisation. The various versions simply referred to the conditions for retroactive authorisation. He submitted that if there was a prohibition, one would expect to see reference to it in Notice 3001. We do not consider that the absence of a reference to the fact that a CCC authorisation could not be renewed under the UCC regime assists in construing the UCC.

We were also referred to guidance for member states and traders published by the European Commission in a document described as SPECIAL PROCEDURES – Title VII UCC “Guidance for MSs and Trade”. The guidance came with a disclaimer stating that it was not legally binding and was explanatory in nature. Mr White submitted that the guidance when published on 15 July 2016 and on 24 March 2017 supported the appellant’s case. It stated:

We do not agree that the note supports the appellant’s case. It references only Article 172(2) UCC DA which gives retroactive effect for up to a year where there are exceptional circumstances. It does not reference Article 172(3) which concerns renewals of an authorisation. We do not accept Mr White’s suggestion that this omission can be explained on the basis that no-one imagined a CCC authorisation could not be renewed under the UCC regime.

We know from Beeren that if goods were imported without an authorisation prior to 1 May 2016, and an application for retroactive effect was made before that date, then a decision after 1 May 2016 had to be made on the basis of the CCC regime. The fact that Article 172(2) UCC DA could apply retrospectively tells one nothing about the meaning of the word “renewal” in Article 172(3). The note might also apply in a scenario where goods were imported before 1 May 2016 with an application for retroactive authorisation being made after that date. That scenario was not considered in Beeren. It may be that such an application would have been dealt with under the CCC even though the CCC had been repealed. Alternatively, it might have been dealt with under the UCC regime, applying the exceptional circumstances provision in Article 172(2). It is not necessary for us to express a view on that issue. What the note does not say or shed any light on is whether as a matter of principle a CCC authorisation could be renewed after 1 May 2016.

When an updated version of the Commission guidance was published on 23 January 2019 and in subsequent updates the note remained but the following passage was added:

Mr White submitted that this guidance was not persuasive because it was not contemporaneous. Clearly the guidance is given after the events in this appeal and it contains little reasoning as to why Article 172(3) should not be taken as permitting renewal of a CCC authorisation under the UCC regime. It does refer to the UCC regime as being very different to the CCC regime. It also expresses the view of the Commission which carries some weight. Lord Sales JSC indicated in an extra-judicial speech at the Annual Lecture of the UK Association for European Law on 20 November 2023 that the views of the Commission whilst not binding are at least influential. That was said in the context of submissions by the Commission to the Court of Justice on a reference, but there is no reason we should not treat views expressed in official guidance as having some weight, albeit with an appropriate degree of caution. In the event it has not been necessary for us to rely on this material in reaching our conclusion that a CCC authorisation cannot be renewed under the UCC regime. It does however provide us with some comfort that our interpretation is correct.

For all the reasons given above we are satisfied that the FTT was right to conclude that the 2017 Application could not qualify as the “renewal” of an authorisation within Article 172(3) UCC DA.