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

The second aspect of Ground 1 raises a question of whether the FTT was right to conclude at [102] that whilst the 2017 Application concerned the same kind of goods as the previous CCC authorisation, it did not concern the same kind of operation. That was because of the different geographical scope of the 2017 Application and the CCC authorisation. The geographical scope of the 2017 Application was described by the FTT at [25]:

The geographical scope of the CCC authorisation was described in the FTT’s findings of fact at [65] and [66] as follows:

There is no challenge to the FTT’s findings in relation to the geographical scope of the 2017 Application and the CCC authorisation. The issue is what is meant by the same type of “operation” in Article 172(3) and whether any difference in geographical scope meant that the authorisations were not for the same type of operation.

Article 211(3)(b) UCC provides that as a condition of authorisation under the UCC regime the operator must provide the necessary assurance of the proper conduct of “the operations”. Following the further review directed by the FTT, HMRC have granted an authorisation pursuant to Article 211. It must therefore be accepted that the appellant has provided the necessary assurance.

Article 211(2)(h) provides that as a condition of retroactive effect, where the application concerns renewal of an authorisation for the same kind of “operation” it must be submitted within 3 years of the expiry of the original authorisation.

Mr White submitted that in these contexts, and in the context of Article 172(3) UCC DA, the reference to “operation” is simply to a customs processing operation such as storage or end-use. Operation is to be construed in this way whatever goods are imported. In relation to end-use of a civil aircraft, the operation was importing a registered aircraft or importing an unregistered aircraft and subsequently registering the aircraft with the civil aviation authority. There was no basis for the FTT to say that there were different operations involved because of the different geographical scope. The fact that the CCC authorisation was subject to a condition as to geographical scope does not mean that the 2017 Application did not concern the same type of operation. A condition applying to an authorisation does not change the nature of the operation for which authorisation is granted.

Mr White submitted that civil aircraft are in a low-risk category. He identified 3 classes of operation under the UCC in ascending order of risk:

That may be true, but in our view it sheds no light on what is meant by the term “operation” in Article 172(3).

Mr White further submitted that in 2017 and with effect for the 2018 Tariff it was realised that customs supervision and control for end-use relief in relation to civil aircraft was unnecessary, presumably because importation of civil aircraft for end-use was relatively risk free. Hence the requirements for supervision and control were removed completely. He described the original requirement for supervision and control as “an error” and submitted that one can make sense of the error if the operation is the importation of a registered aircraft or the importation and subsequent registration of an aircraft. We do not follow Mr White’s reasoning in this regard. In any event, we cannot infer that the requirement for customs supervision and control in relation to civil aircraft was an error.

There is no definition of the term “operation” in the UCC provisions. We agree with Mr Fell that the term must be given a strict construction because retroactive authorisation is an exception to the general customs rules. We take into account that customs supervision and control is an essential element of the UCC to facilitate trade, fight fraud and avoid errors. The location at which a civil aircraft was imported into the EU was fundamentally important to customs supervision and control. In our view it would be inconsistent with the UCC regime if the 2017 Application, which permitted importation and end-use at any airport in the EU, was treated as being for the same operation as the previous CCC authorisation where importation and end-use was restricted to East Midland’s Airport. Whilst civil aircraft might pose little risk of a customs debt arising, they are also high value. Further, the provisions must be construed in the same way for all types of goods and authorisations.

The 2017 Application defined not only the place at which aircraft were to be imported and put to end-use, but also made provision for aircraft parts to be put to end-use throughout Europe. This is the equivalent of what was a “single authorisation” pursuant to Article 1.13 CCC IP and which was governed by Article 292(5) of the CCC IP. However, the appellant’s CCC authorisation was not a single authorisation. Again, we are satisfied that in this regard the 2017 Application involved a different operation to that in the appellant’s CCC authorisation.

The FTT found at [32] and [33] that the 2017 Application was concerned with civil aircraft and aircraft parts for a 5 year period, subject to a proposed condition or undertaking that the appellant would not use the end-use procedure in relation to aircraft parts retrospectively or for a period of 12 months from the date authorisation was granted. Mr Fell argued that this was also a material difference between the CCC authorisation and the UCC authorisation meaning that they were not for the same kind of operation. It is not necessary for us to determine whether this in itself would have been sufficient to prevent renewal of the CCC authorisation.

For all these reasons we are satisfied that the FTT was right to find that the 2017 Application was not for the same kind of operation as the appellant’s CCC authorisation.