Key Facts
- •Kerrie Brennan appealed excise duty and wrongdoing penalty assessments totaling £1,206,142.00 and £783,992.00 (later revised to £277,412.00) issued by HMRC on April 15, 2022.
- •A shipment of 4444.15kg of tobacco was discovered in a container destined for Brennan in Northern Ireland. The paperwork listed her as consignee, but she claimed it was a shipment arranged on behalf of a tenant, Jamie McKeown, through her work at Cruz Deliveries Ltd.
- •Brennan arranged the transport, using her personal bank account for payments. She maintained she had no knowledge the shipment contained tobacco.
- •HMRC argued Brennan was 'holding' the tobacco at the excise duty point due to her involvement in arranging transport and her name appearing on all paperwork.
- •Brennan argued the investigation was flawed, citing errors in HMRC's witness statement and a lack of due diligence.
- •HMRC conceded the wrongdoing penalty should be reduced to reflect non-deliberate behavior.
Legal Principles
Determining 'holding' under Regulation 13(1) of the Excise Goods (Holding, Movement and Duty Point) Regulations 2020 (HMDP) doesn't require physical possession; de facto/legal control suffices.
Hartleb [2024] UKUT 34 (TCC), Kent Couriers Ltd v HMRC [2024] UKFTT 145 (TC), Dawson’s (Wales) Ltd v HMRC [2019] UKUT 296 (TCC)
'Holding' can be a question of law, satisfied by constructive possession and the ability to exercise de jure and/or de facto control over goods.
R v Tatham [2014] EWCA Crim 226
Excise duty assessments must be made within one year of sufficient evidence coming to HMRC’s knowledge (FA 1994, s. 12(4)(b)).
Finance Act 1994, section 12(4)(b)
For a wrongdoing penalty under Schedule 41 FA 2008, HMRC must prove the penalty is correct. The burden then shifts to the appellant to show a reasonable excuse.
Schedule 41 to Finance Act 2008
A broad interpretation of 'holding' is needed to ensure excise duty collection (WR [Case 279/19]).
Case 279/19 The Commissioners for Her Majesty’s Revenue and Customs v WR
Outcomes
Appeal dismissed; excise assessment and amended wrongdoing penalty upheld.
The Tribunal found Brennan had de facto and legal control over the tobacco, as evidenced by the paperwork listing her as consignee. Her explanation for her involvement was not credible, and the Tribunal rejected her arguments regarding HMRC's investigative failings. The lack of a reasonable excuse for her actions resulted in the penalty being upheld.