Innovation Rehab Limited v The Commissioners for HMRC
[2023] UKFTT 472 (TC)
Hayat Estates Ltd v The Commissioners for HMRC
6 June 2024
[2024] UKFTT 497 (TC)
First-tier Tribunal
A company imported PPE, claiming tax relief. The government said they didn't prove the PPE went to the right places and didn't fully follow the rules for the relief. The court agreed with the government and the company lost its appeal, except for a small part that needs further review.
Key Facts
- •Hayat Estates Ltd. imported PPE (face masks and surgical gowns) into the UK between May and July 2020, claiming customs duty and VAT relief under the Disaster Relief (Council Regulation (EC) No 1186/2009 and Commission Decision (EU) 2020/491).
- •HMRC issued a post-clearance demand note for £71,594.95 after determining that the conditions for the Disaster Relief were not met for most of the imports.
- •HMRC granted full relief for some imports and partial relief for others where a full audit trail demonstrating compliance with the Disaster Relief was provided.
- •The Appellant argued that sufficient evidence was provided to show that an eligible organisation received the goods and that they were distributed free of charge.
- •The Appellant, unrepresented, argued that the changing circumstances of the COVID-19 pandemic and global supply chain issues prevented full compliance with the Disaster Relief.
- •HMRC argued that the Appellant failed to provide a full audit trail showing that the goods reached eligible organisations and were distributed free of charge as required.
Legal Principles
The burden of proof rests on the Appellant to demonstrate that the conditions for customs duty relief were met.
Section 16(6) of the Finance Act 1994
Disaster Relief requires goods to be imported by or on behalf of State organisations or other approved charitable/philanthropic organisations for distribution free of charge to disaster victims.
Articles 74-80 of Council Regulation (EC) No 1186/2009 and Commission Decision (EU) 2020/491
The First-tier Tribunal (FtT) lacks jurisdiction to review the reasonableness of HMRC's decisions, only the application of tax provisions.
Section 16(5) FA 1994, Rotberg v R & C Comrs [2014] UKFTT 657 (TC), Aspin v Estill [1987] STC 723, Marks & Spencer plc v Customs & Excise Comrs [1999] STC 205, HMRC v Abdul Noor [2013] UKUT 071
HMRC guidance documents do not have the force of law and are subordinate to legislation.
Mahad (Ethiopia) v Entry Clearance Officer [2010] 1 WLR 48, MD (Jamaica) v Secretary of State for the Home Department [2010] EWCA Civ 213
A customs debt is incurred through non-compliance with conditions for duty exemption, with liability falling on the person required to comply with those conditions.
Article 79 of Council Regulation (EU) No. 952/2013 (Union Customs Code)
Outcomes
Appeal dismissed.
The Appellant failed to provide sufficient evidence that the goods were supplied to eligible organisations and distributed free of charge as required by the Disaster Relief. The Tribunal found that many goods went to ineligible organisations or lacked a complete audit trail.
Remission to HMRC for adjustment of relief granted to East Sussex NHS Trust.
HMRC had already conceded some relief for supplies to East Sussex NHS Trust, and further relief may be applicable based on the evidence. The matter was remitted to allow for adjustment to the assessment.