DHL Air Limited v The Commissioners for HMRC
[2023] UKFTT 123 (TC)
Ocean Choice International Limited v The Commissioners for HMRC
13 March 2023
[2023] UKFTT 289 (TC)
First-tier Tribunal
A company imported seafood without the required paperwork at first. The government's rules were confusing, so the judge forgave the company the extra taxes because it wasn't their fault.
Key Facts
- •Ocean Choice International Limited (OCI) appealed HMRC's decisions to issue a C18 Post Clearance Demand Note for £447,479.61 in customs duty and refuse remission of that duty.
- •The dispute centered on OCI's use of an end-use authorisation for importing seafood with zero-percent duty, without a guarantee in place initially.
- •OCI argued that HMRC's guidance was unclear and inconsistent, leading to their non-compliance.
- •HMRC contended that OCI incurred a customs debt due to non-compliance with the mandatory guarantee requirement under the Union Customs Code (UCC).
- •The guarantee was eventually provided, but HMRC argued that the debt was incurred before that.
- •OCI had an exemplary compliance record and there was no loss of duty.
Legal Principles
Customs debt on import is incurred through non-compliance with obligations or conditions governing customs procedures, including end-use.
UCC Article 79
End-use procedure requires mandatory authorisation from HMRC, granted only if the trader provides a guarantee.
UCC Article 211
HMRC may annul, amend, or revoke a decision that does not conform to customs legislation.
UCC Article 23(3)
Remission of customs debt is possible in the interests of equity if there are special circumstances, no deception, and no obvious negligence; the debtor must be in an exceptional situation compared to others.
UCC Article 120
The guarantee covers both incurred and potential customs debts.
UCC Article 89
HMRC must approve the guarantee and notify the debtor.
IR Article 151(1)
The importer is responsible for the accuracy and completeness of customs declarations.
UCC Article 15
Outcomes
OCI incurred a customs debt for the imports before the guarantee was provided.
OCI breached the condition in the end-use authorisation requiring an adequate guarantee at all times; the guarantee itself acted as security, not a separate entity.
No further debt was incurred after the guarantee was provided.
The end-use authorisation lacked a condition requiring HMRC's approval of the CCG; OCI reasonably believed no further approval was needed.
The original end-use authorisation was not revoked.
Although confusingly worded, the authorisation's validity was contingent on an adequate guarantee, becoming effective upon its provision. Retroactive authorisation was not necessary.
Remission of the duty was granted.
HMRC's unclear guidance and inconsistent application of the rules, combined with OCI's good faith and lack of obvious negligence, constituted special circumstances justifying remission under Article 120.