Kerrie Brennan v The Commissioners for HMRC
[2024] UKFTT 1011 (TC)
H Tideswell & Sons Limited v The Commissioners for HMRC
16 January 2024
[2024] UKFTT 54 (TC)
First-tier Tribunal
A company was fined for having undeclared cigarettes. They argued someone else should have been fined first, but couldn't prove it. The court reduced the fine because it wasn't shown they *knew* the cigarettes were illegal, even if they were careless.
Key Facts
- •HMRC seized non-UK duty-paid cigarettes from H Tideswell & Sons Ltd on 14 May 2019.
- •Two excise duty assessments were issued totaling £727,248 and two penalties totaling £280,000.
- •Tideswell appealed both assessments (Liability Appeal) and penalties (Penalty Appeal).
- •The cigarettes were stored in a unit owned by Tideswell, who rented space to a seemingly fraudulent 'McGrath Office Supplies'.
- •HMRC's investigation focused on Mr. Woodcock, who was arrested at the site.
- •The CMR document provided was deemed fraudulent.
- •The issue in the Liability Appeal was whether an earlier duty point could be established, shifting the burden of proof.
Legal Principles
Where multiple excise duty points exist, HMRC must assess against the first established point.
Directive 2008/118 EC, Excise Duty (Holding, Movement and Duty Point) Regulations 2010, HMRC v B&M Retail Ltd [2016] UKUT 429 (TCC), Davison & Robinson Limited v HMRC [2018] UKUT 437 (TCC)
The burden of proving an earlier excise duty point lies on the appellant.
Dawson’s Wales Ltd v HMRC [2019] UKUT 296 (TCC), HMRC v Perfect [2022] EWCA Civ 330
Strict liability for excise duty applies; fairness and proportionality are not grounds for appeal against assessment.
Case C-325/99 G van de Water v Staatsecretaris van Financien, HMRC v Perfect [2022] EWCA Civ 330, Paul Eveleigh v HMRC [2023] UKFTT 256 (TC)
For a penalty under Schedule 41 Finance Act 2008, the appellant's behavior must be 'deliberate'. This includes 'Nelsonian blindness'.
Schedule 41 Finance Act 2008, Hare Wines Limited v HMRC [2023] UKFTT 25 (TC), HMRC v Tooth [2021] UKSC 17, CPR Commercials Ltd v HMRC [2023] UKUT 61 (TCC)
The evidential burden may shift if the appellant makes a prima facie case or if the evidence lies solely with the respondent.
Brady v Group Lotus plc [1987] STC 635, Wood v Holden [2006] EWCA Civ 26, Royal Borough of Kensington & Chelsea v HMRC [2014] UKFTT 729 (TC)
Outcomes
Liability Appeal dismissed.
Tideswell failed to prove an earlier duty point, despite acknowledging the burden of proof was on them. HMRC did not possess sufficient evidence to establish an earlier duty point.
Penalty Appeal allowed; penalties reduced to 12% of PLR.
Tideswell's actions were deemed not 'deliberate' under Schedule 41, Finance Act 2008. While careless, they did not demonstrate intentional knowledge or deliberate avoidance of knowledge.