Ali Salamat v The Commissioners for HMRC
[2024] UKFTT 150 (TC)
Ali Khazaal v The Commissioners for HMRC
18 March 2024
[2024] UKFTT 229 (TC)
First-tier Tribunal
Someone tried to smuggle a lot of cigarettes into the UK. They said it was a mistake, but a court decided they were lying and had to pay a big fine. Even though they said they were poor, the court said that didn't matter.
Key Facts
- •Ali Khazaal appealed Customs and Excise evasion penalties totaling £2,726 for 14,400 undeclared cigarettes seized at Heathrow.
- •Khazaal claimed the cigarettes were inadvertently brought to the UK, he misunderstood the allowance, and he intended to declare them.
- •HMRC argued Khazaal acted dishonestly by falsely declaring he had nothing to declare and providing inconsistent accounts.
- •HMRC reduced the penalty by 60% for disclosure and cooperation.
- •The Tribunal found Khazaal's testimony less credible than HMRC's evidence.
Legal Principles
A penalty can be imposed for conduct involving dishonesty in evading excise duty.
Section 8(1) Finance Act 1994
A penalty can be imposed for conduct involving dishonesty in evading customs duty and import VAT.
Section 25(1) Finance Act 2003
The tribunal can reduce a penalty to an amount they deem proper; financial circumstances cannot be considered.
Sections 8(4), 8(5) Finance Act 1994; Sections 29(1), 29(2), 29(3) Finance Act 2003
The burden of proof for dishonesty lies with HMRC.
Section 16(6) FA 1994 & Section 33(7)(a) FA 2003
HMRC's penalty mitigation policy allows up to 80% reduction for early and truthful explanation and cooperation.
HMRC Notices 160 and 300
Outcomes
Appeal dismissed; penalties upheld.
The Tribunal found Khazaal acted dishonestly by knowingly evading duties and providing inconsistent accounts. The level of mitigation was deemed reasonable.