Ali Khazaal v The Commissioners for HMRC
[2024] UKFTT 229 (TC)
Hussain Ali Omar v The Commissioners for HMRC
2 February 2023
[2023] UKFTT 101 (TC)
First-tier Tribunal
A man brought lots of tobacco into the UK without declaring it. He said he didn't understand the rules because he didn't speak English well, but the judge didn't believe him because he travels a lot. The judge said he was dishonest and had to pay a penalty, but the government reduced it a bit because he eventually cooperated.
Key Facts
- •Mr. Omar imported 12kg of shisha tobacco and 800 cigarettes through Heathrow Airport, declaring nothing.
- •The tobacco was seized by Border Force.
- •HMRC assessed civil evasion penalties totaling £1363.
- •Mr. Omar claimed he didn't understand customs regulations due to language barriers and fatigue.
- •HMRC initially assessed penalties with a 25% reduction, later increasing it to 40% after further correspondence.
- •Mr. Omar appealed the penalty assessment.
Legal Principles
HMRC may issue penalties for evading excise or customs duty if the conduct involves dishonesty.
Section 8 Finance Act 1994 & Section 25 Finance Act 2003
HMRC can reduce penalties as they see fit.
Section 8(4) FA 1994 & Section 29(1) FA 2003
The burden of proof is on HMRC to prove dishonesty on a balance of probabilities.
Section 16(6) FA 1994 & Section 33(7)(a) FA 2003
The test for dishonesty is primarily objective, considering what a reasonable person would know, but also takes into account the individual's knowledge and circumstances.
Sahib Restaurant Ltd v HMRC, Barlow Clowes International Limited v Eurotrust International Limited, Zuned Osman v HMRC
Outcomes
Appeal dismissed.
The Tribunal found Mr. Omar's conduct dishonest based on his experience as a regular international traveler, his understanding of the green channel, and inconsistencies in his explanations.
HMRC's 40% penalty reduction upheld.
The Tribunal found the reduction fairly reflected Mr. Omar's disclosure and cooperation.