M & S Property Services (NW) Ltd v The Commissioners for HMRC
[2023] UKFTT 969 (TC)
Canadian Solar EMEA GmbH v The Commissioners for HMRC
22 January 2024
[2024] UKFTT 85 (TC)
First-tier Tribunal
A company imported solar panels made with Taiwanese parts, but shipped from Vietnam. The UK government said they owed extra taxes. The company argued the rules were unclear. A judge agreed the rules were confusing, and let the company off the taxes because they had acted reasonably. This case shows how complicated tax rules can be and the importance of getting good advice.
Key Facts
- •Canadian Solar EMEA GmbH (Appellant) imported solar panels with cells originating from Taiwan, but shipped via Vietnam, into the UK between November 2017 and December 2017.
- •HMRC assessed ADD of £3,210,145, CVD of £691,323.36, and import VAT of £780,293.67, totalling £4,681,762.03.
- •Appellant used incorrect commodity codes (8541 40 90 49 and 8541 50 00 00), avoiding initial ADD and CVD charges.
- •HMRC notified Appellant of the debt on 5 November 2020 and issued a demand on 12 November 2020.
- •Appellant's legal advisor, Sidley Austin, advised that the 2016 Implementing Regulations did not apply given the shipment from Vietnam.
- •Appellant submitted amended invoices on 1 February 2021, containing declarations required by Article 1(2) of the 2016 Implementing Regulations.
- •HMRC rejected the amendments as outside the three-year limitation period.
Legal Principles
Trader's responsibility for accurate customs declarations.
Union Customs Code (UCC) Article 15
Three-year time limit for notification of customs debt.
UCC Article 103(1)
Rules of origin; substantial processing.
UCC Articles 59-63; Commission Delegated Regulation (EU) 2015/2446
Anti-dumping and countervailing duties; exemptions.
Council Regulation (EU) No 1238/2013; Commission Implementing Regulations (EU) 2016/185 and 2016/184
Import VAT; charged as customs duty.
Value Added Tax Act 1994, section 1(4)
Remission of duty; equity clause.
UCC Articles 116-120
Amendment of customs declarations; time limits.
UCC Article 173
Interpretation of 'consigned from'; consideration of purpose and potential for circumvention.
Case law analysis and interpretation of 2016 Implementing Regulations
Remission of duty; 'obvious negligence'; consideration of all relevant facts including complexity of provisions, trader's experience and care taken.
Case C-38/07 Heuschen Schrouff Oriental Foods Trading BV v Commission; C-48/98 Sohl & Söhlke v Hauptzollamt Bremen; T-26/03 Geologistics BV v Commission
Outcomes
Appeal against HMRC's refusal to remit duty allowed.
Appellant acted in good faith, relying on incorrect legal advice, and was not obviously negligent given the ambiguity in the regulations.
Appeal against the ADD and CVD assessment dismissed.
The 2016 Implementing Regulations apply to goods 'consigned from' Taiwan, even if shipped via an intermediary country, and HMRC's notification of the debt was valid.
Appellant's amended declarations rejected as untimely under UCC Article 173.
Amendments were submitted after HMRC established that the original declarations were incorrect.