Uflex Europe Limited v The Commissioners for HMRC
[2023] UKFTT 409 (TC)
Laurence Supply Co (Leather Goods) Limited v The Commissioners for HMRC
6 February 2024
[2024] UKFTT 124 (TC)
First-tier Tribunal
A company imported bags and argued they were taxed wrongly. The judge agreed about one bag, but the company didn't prove the others were wrong, so only got a small refund. The judge said there is no way to appeal based on fairness.
Key Facts
- •Appeal against a C18 Post Clearance Demand Note for £603,548.58 (customs duty and import VAT) relating to handbags and purses imported from China.
- •HMRC classified the goods under CN Codes with a 9.7% duty rate (4202 22 10 00 and 4202 32 10 00), claiming they had an outer surface of plastic sheeting.
- •Laurence Supply argued the goods were made of 'suedette' (textile material) or 'leatherette' ('other'), leading to a 3.7% duty rate (4202 22 90 00, 4202 29 00, 4202 32 90 00, and 4202 39 00).
- •Only a leatherette handbag (Item C) and a suedette purse (Item D) were physically inspected by the Tribunal. Item D's classification was undisputed.
- •Laurence Supply's public law challenges (unreasonable HMRC approach) were considered.
Legal Principles
Customs classification is based on objective characteristics and properties as defined in the CN, aided by Explanatory Notes (not legally binding). Intended use can be an objective criterion if inherent to the product.
Build-a-Bear Workshop UK Holdings Ltd v HMRC [2021] UKUT 67 (TCC); BVBA Van Landeghem v Belgishe Staat, Case C-486/06
The General Rules for the Interpretation of the Combined Nomenclature (GRIs) are applied sequentially.
HMRC v Epson Telford Limited [2008] EWCA Civ 567
Undefined terms in the CN are given their customary meaning.
Skatteministeriet v Imexpo Trading A/S, Case C-379-02
The 'naked eye' test for 'outer surface' in Chapter 42 considers what is visually apparent, not material stiffness.
Howe & Bainbridge BV v Oberfinanzdirektion Frankfurt am Main C-317/81; Optoplast Manufacturing Company Ltd v The Commissioners of Customs and Excise [2003] UKVAT (Customs) C0017; Euro Packaging UK Limited v HMRC [2017] UKFTT 01060 (TC)
In customs duty disputes, the burden of proof rests on the appellant to show the assessment is wrong. A pro-rata or estimated basis might suffice if sufficiently reliable and supported by evidence.
Brady v Group Lotus Car Companies plc [1987] STC 635; Vital Nut Co Ltd v HMRC [2017] UKUT 192 (TCC); Build-a-Bear Workshop UK Holdings Limited v HMRC [2021] UKUT 67 (TCC)
Assessments for customs duty are not made on a 'best judgment' basis; HMRC must recalculate based on available information if an error is found.
Skatteministeriet v Sportsgods A/S [1998] ECR I-5285; Cooneen Watts & Stone v HMRC [2015] EWCA Civ 1261
Public law challenges (e.g., irrationality, legitimate expectation) are generally not available in customs duty appeals unless the statutory scheme permits it.
HMRC v Abdul Noor [2013] UKUT 071 (TC); KSM Henryk Zeman SP Zoo v HMRC [2021] UKUT 182 (TCC); Xerox Limited v HMRC [2022] UKFTT 00092 (TC); Caerdav Ltd v HMRC [2023] UKUT 00179 (TCC)
Outcomes
Appeal allowed in part.
Item C (leatherette handbag) was wrongly classified. It's a fabric-based polymer composite, not simply plastic sheeting, and its appearance doesn't match that of applied plastic sheeting. However, Laurence Supply failed to meet the burden of proof to show the remaining goods were wrongly classified due to insufficient evidence.
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