Upper Tribunal Tax and Chancery Chamber

[2025] UKUT 00315 (TCC)

Fecha: 18-Jun-2025

HMRC’s original and review decisions

HMRC’s original and review decisions

107.

HMRC’s original decision dated 2 September 2021 was made by Officer O’Rourke. It addressed the time limit refusing the claim for drawback as it was made outside of the Regulation 7(6) three-year time limit and there was a failure to satisfy other EGDR conditions. The officer did not consider there was a good reason to waive the time limit condition pursuant to Reg. 7(1)(a) for the reasons he explained:

“Time limits to Claiming Drawback
HMRC do have discretion set by Regulation 7(1)a of Excise Goods (Drawback) Regulations 1995, to exceptionally waive the above Regulation 7(6) of the Excise Goods (Drawback) Regulations 1995

No claim for drawback shall be made if the event giving rise to the claim occurred more than three years after the duty on the goods in question was paid

For discretion to be met, an explanation as to why the event did not occur before the three years limit was reached would have to be submitted. You have not supplied details of any circumstances that may have prevented a claim being made within the three years of UK duty being paid. When asked as to why the goods were not dispatched/moved or sold you referred me to your letter of 15 November 2019.

In your letter you have said that from the end of May 2014, the claimant liaised with HMRC via its representative Alan Powell to seek options to recover the excise duty. These options included a repayment of the duty as overpaid or drawback via destruction. Eventually this matter was taken to the First Tier Tax Tribunal and was subject to a number of extensions and delays, including on request of HMRC. This appeal was withdrawn in August 2019.

I do not consider that circumstance would have led to such a delay. In their letter dated 8 May 2014 from the claimant, Drinks & Foods UK Ltd (DFUK) to HMRC, they stated that their intention was to sell some of the goods in the UK, with the remaining stock returned to Germany. Officer Lucy Fisher in her letter dated 6 May 2016, did clearly inform the claimant that there was there is no basis for repayment of any of the duty accounted for by the excise assessment issued on 01 May 2014. Also provided HMRCs view that regulation 7(1)(a) of the Excise Goods (Drawback) Regulations 1995 does not give the Commissioners a discretion to dispense with any of the eligibility requirements and as a result, a claim to drawback on planned destruction may only be considered if the eligibility criteria are met.

In your letter of 15 November 2019, you confirmed that a portion of the goods have been sold. It is my view that the reason that the goods were still in the UK up to being dispatched/exported is a commercial decision.

DFUK did not dispatch the goods as stated in their letter dated 8 May 2014 neither were all the goods sold. It is my view that DFUK’s decision to keep the goods in the UK a purely commercial decision. DFUK then decided to dispatch their stock to Holland starting December 2020, again another commercial decision.

Conclusion:

I refer now to the email dated 27 December 2019 from the National Drawback Centre advising you that all other drawback conditions and requirements must be fully met to the Commissioner’s satisfaction:

Excise notice 207, para 14.2: The circumstances when we will reject your claim:

• You have not complied with all of the conditions or procedures set out in this notice or notified by us in writing - this includes not complying with the relevant period of notice.

After reviewing your claim, as I have detailed in my letter, I conclude that you have not complied with all of the conditions or procedures set out in notice 207.

The claim also fails Regulation 7(6) of the Excise Goods (Drawback) Regulations 1995

No claim for drawback shall be made if the event giving rise to the claim occurred more than three years after the duty on the goods in question was paid.

As the claim fails to meet the above regulation and fails to meet all the conditions or procedures set out in excise notice 207, the claim is rejected on these grounds.,,”

108.

HMRC’s review decision was made by Officer Ramsay and dated 24 November 2021. It addressed the Appellant’s claim being made outside the three-year time limit and considered the correspondence of Officer McKirdy dated 27 December 2019 as follows:

“…
As regulation 7(6) is a condition of the EGDR 1995, discretion by virtue of regulation 7(1) can be applied. This permits HMRC, if they wish to do so, to waive conditions in exceptional cases, however before applying this discretion, HMRC must be satisfied that the goods and claimant are eligible to drawback.
Officer McKirdy contacted Mr Thornton on 27 December 2019, advising that no drawback claim can be made if the event (giving rise to the claim) was more than 3 years after the duty was paid. which in this case was paid on 5 June 2014. However, the reply went on to say, if Drinks and Food UK Ltd were able to show that the goods detailed in the drawback claim were the same goods as those listed in the assessment and all other conditions were met to HMRC's satisfaction, then a claim can be considered.
A drawback claim DR1444520 for £385,165.31, was submitted on 13 May 2020.
For HMRC to exercise their discretion, they must be satisfied that all the remaining drawback conditions have been met and, in this case, satisfied that: -
…
Other factors
…
Both of these factors [the failure to notify a change in date for some of the goods exported and failure to comply with the DSR in relation to the duty stamp obliteration] add further weight to rejecting the claim, as all the drawback conditions must be met for the claim to be successful. After considering the information above, I do not believe the company have met these conditions to HMRC's satisfaction.
In addition to failing to meet the required conditions, the company have not supplied any information why the goods were not despatched, sold or removed within the 3-year time limit. When questioned on this matter, Mr Thornton directed Officer O'Rourke to his letter of 15 November 2019, this letter does not provide any specific details for the delay. It simply states that a portion of the goods has been sold. I have also noted that previous correspondence from the company, indicated the remaining goods were to be return[ed] to Germany.
I am in agreement with Officer O'Rourke for HMRC to exercise discretion, there must be exceptional circumstances. As explained above the company did not meet the conditions to HMRC satisfaction nor did they provide any details why the goods remained in the UK for 6 years. The legislation and guidance state, a drawback claim must take place within 3 years of the UK excise duty being paid, evidence to support the claim provided and all conditions are met.
After considering Mr Thornton ground for dispute, I am satisfied the company were advised in December 2019. what steps they needed to take to ensure the drawback claim was successful. I have also considered Officer O'Rourke's letter of 2 September 2021, which gives his reasoning for refusing the claim, I have nothing further to add to it nor have I found any evidence that he has not followed HMRC's guidance and processes.
In accordance with legislation and paragraph 14.2 of Excise Notice 207, the company have failed to comply with all the conditions and the claim has been rejected.
My conclusion
Regulation 7(6) of EGDR 1995 is very clear on its requirements, no claim for drawback shall be made if the event giving rise to the claim occurred more than three years after the duty on the goods in question was paid.
HMRC can by virtue of regulation 7(1) of EGDR 1995, can if they wish to do so, exercise discretion. This allows them to waive conditions in exceptional cases, however before applying this discretion, HMRC must be satisfied that the goods and claimant are eligible to drawback.
Drinks and Foods UK Ltd were advised in November 2019, that a drawback claim would be considered if all the other remaining conditions were met. The company failed to provide the required evidence and by doing so failed to comply with the conditions. Therefore, it is not appropriate for HMRC to exercise their discretion in this case.
The decision issued by Officer O'Rourke on 2 September 2021 refusing the drawback claim DR-144520 in the amount of £385,165.31 is upheld.”