Caerdav Ltd v The Commissioners for HMRC
[2023] UKUT 179 (TCC)
DHL Air Limited v The Commissioners for HMRC
13 February 2023
[2023] UKFTT 123 (TC)
First-tier Tribunal
DHL wrongly imported planes without paying tax. They asked for a do-over, but HMRC said no because DHL had a bad track record. The judge said HMRC should reconsider, but DHL still has to pay unless HMRC changes its mind and forgives the tax.
Key Facts
- •DHL Air Limited imported seven civil aircraft between June 2016 and February 2017 using an incorrect customs procedure code, resulting in no import duty being paid.
- •DHL subsequently applied for end-use authorisation with retroactive effect, which was refused by HMRC.
- •HMRC's refusal considered DHL's poor compliance record but not their proposal for future conduct.
- •Three appeals were lodged: against the refusal of authorisation, the £3 million customs debt levied, and the refusal of a refund.
Legal Principles
Unreasonableness of HMRC decisions under s16(4) Finance Act 1994
Finance Act 1994
Union Customs Code (UCC) and its implementing regulations
Regulation (EU) No 952/2013, Regulation (EU) No 2446/2015
Interpretation of 'necessary assurance of the proper conduct of operations'
UCC Article 211.3(b)
Retroactive effect of authorisations under the UCC
UCC Article 211.2 and Article 172 DA
Extinguishment of customs debt under Article 124 and relief under Article 86.6
UCC Article 124 and Article 86.6
Equity in customs matters under Article 120
UCC Article 120
Outcomes
First appeal (refusal of authorisation) allowed in part.
HMRC's decision was unreasonable for failing to consider DHL's proposal for future conduct and misinterpreting Article 211. Further review of the authorisation application is required.
Second appeal (customs debt) dismissed.
The £3 million customs debt was validly incurred under Article 79.1, and the conditions for extinguishment under Article 124.1(h) and relief under Article 86.6 were not met, unless HMRC grants retroactive authorisation on further review.
Third appeal (refusal of refund) dismissed.
Article 120.1 did not apply due to DHL's obvious negligence in importing the aircraft without proper authorisation.