Upper Tribunal Tax and Chancery Chamber

[2025] UKUT 00315 (TCC)

Fecha: 18-Jun-2025

INTRODUCTION

INTRODUCTION

Drinks and Food UK Ltd (“the Appellant” or “DFUK”) appeals the decision of the First-tier Tribunal (“FTT”) dated 16 November 2023: [2023] UKFTT 1044 (TC) (“the Decision”). The Decision dismissed, for the most part, the Appellant’s appeal against the decision of the Respondents (“HMRC”) to refuse its claim for drawback of excise duty in the sum of £385,165.31. The FTT allowed the appeal to a limited extent in the sum of £9,695.27.

A Notice of Intention (“NOI”) to claim drawback of excise duty paid was lodged by the Appellant with HMRC on 16 November 2020 in respect of excise goods, namely alcoholic drinks, that had previously been assessed to excise duty which the Appellant paid in June 2014. The Appellant then exported the excise goods from the UK in a number of tranches between 7 December 2020 and 8 April 2021. The Appellant thereafter made the excise duty drawback claim on 21 April 2021.

HMRC gave a number of reasons for refusal of the drawback claim in its original decision dated 2 September 2021 and in its review decision dated 24 November 2021. These included: i) the claim being made outside the three year time limit following payment of the excise duty provided by Regulation 7(6) of The Excise Goods (Drawback Regulations) 1995 (“EGDR”); and various other conditions of public notice Excise Notice 207 (“EN 207”) not being complied with, such as ii) the requirement to obliterate duty stamps in accordance with applicable regulations; and iii) the requirement to provide certain documents as proof of export.

In its Decision the FTT did not uphold the failure to comply with the time limit for making the claim as a reason to refuse it because it found HMRC had agreed in correspondence not to rely upon the time limit. Nonetheless the FTT confirmed that i) the failure to obliterate duty stamps in accordance with the Duty Stamp Regulations 2006 (“DSR”); and ii) the lack of proof of export of the goods exported in April 2021, each disentitled the Appellant to drawback of the excise duty paid and HMRC acted reasonably in relying upon these grounds and not exercising its discretion to otherwise allow the claim.

The Appellant now appeals to the Upper Tribunal (“UT”) against the Decision. It submits that the FTT erred in law in largely upholding HMRC’s decision to refuse the excise duty drawback claim. The Appellant was granted permission to appeal on three grounds:

Ground 1- The FTT erred in law in deciding that paragraph 4.5 EN207 contained a lawful condition pursuant to the DSR forming part of the drawback claim procedure that the independent person removing duty stamps from bottles had to record the number of each stamp removed and/or that the claimant had to satisfy himself that such a record had been kept and/or that positive steps were ordinarily required by any claimant to ensure compliance (see Decision at [123]).

Ground 2 - The FTT erred in law in deciding that the provision found at paragraph 7.4 of EN 207 requiring an S8 document showing status 60 was a valid, lawful condition which applied to Roll-on Roll-off (“RoRo”) exports from the UK, whether by concession or at all (see Decision at [131-132]).

Ground 3 - The FTT erred in law by dismissing the appeal instead of remitting the decision back to HMRC to make a new decision. In particular, the Decision found that HMRC did take into account irrelevant factors insofar as there was any considered exercise of discretion at all. In any event, HMRC presented no evidence or argument to support a finding that any decision would inevitably be the same again, and that aspect was not considered by the FTT in relation to the export condition.

In HMRC’s Response to the UT, they oppose the Appellant’s grounds of appeal. They seek to uphold the FTT’s decision on alternative grounds by which they also cross-appeal, seeking that the appeal be dismissed, the Decision be remade and the drawback claim be refused in its entirety. In the Response / Cross-Appeal HMRC submit that the FTT erred in law based upon three grounds for which they have been granted permission:

Ground 1 – The FTT erred in deciding that the meaning of HMRC’s letter of 27 December 2019 constituted a waiver of the time limit condition for making a claim without HMRC having an opportunity to making oral submissions on the issue at the hearing. There was a serious procedural irregularity for a disputed issue to have been determined by the FTT before hearing and considering submissions of a party on the point.

Ground 2 - In any event that there was a material error of law in the FTT finding as fact that the terms of HMRC’s letter of 27 December 2019 constituted a waiver of the time limit conditions for a drawback claim without any caveat. As a finding of fact, it was not open to the FTT on an Edwards v Bairstow basis but it also constituted a misinterpretation of the wording of the letter.

Ground 3 - The FTT erred in concluding that it had jurisdiction to consider HMRC’s operation of their discretion to allow or disallow a drawback claim after the time limit expired. A challenge to that exercise of discretion is a public law matter and a refusal to waive the time limit can only be challenged by way of judicial review by the High Court. The FTT erred in finding that the power in s16(4) Finance Act 1994, to consider the reasonableness of the decision, was also available in respect of HMRC’s refusal of the drawback claim because it is one of the ‘other decisions’ for which the powers and remedies are circumscribed by way of s16(5).

We are very grateful to Mr Thornton who appeared for the Appellant and Ms McArdle who appeared for HMRC, for their helpful written and oral submissions. We have considered them all but only referred to those necessary to determine the appeal and cross-appeal.

We will address the cross-appeal grounds first and in reverse order because they raise the scope of the FTT’s jurisdiction on appeal as a prior question. We therefore determine all grounds in the order in which we were addressed at the hearing because they follow a logical course.

Numbers in square brackets [] are references to paragraph numbers of the Decision unless the context requires otherwise.