Anra Deals Limited v The Commissioners for HMRC
[2023] UKFTT 755 (TC)
Petmaster Limited v The Commissioners for HMRC
1 August 2024
[2024] UKFTT 718 (TC)
First-tier Tribunal
A Turkish company's cat litter was seized by UK customs because they used a warehouse that wasn't properly registered. A judge ruled that the company was misled and the customs decision was unfair, ordering them to reconsider.
Key Facts
- •Petmaster Limited (Petmaster), a Turkish company, imported cat litter to the UK via an unapproved Fulfilment House (FH).
- •HMRC seized and forfeited the cat litter due to Petmaster's non-compliance with the third country Fulfilment House Due Diligence Scheme (FHDDS).
- •HMRC refused Petmaster's request to restore the cat litter, a decision upheld on review.
- •Petmaster appealed to the First-tier Tribunal (Tax Chamber).
- •Petmaster was not registered for VAT in the UK, despite incorrect advice from its accountants.
- •The FH did not inform Petmaster of its lack of approval under the FHDDS.
- •The Tribunal found that HMRC's decision was unreasonable.
Legal Principles
The Tribunal has a supervisory jurisdiction in appeals against ancillary decisions (like restoration of seized goods) and must determine whether the decision could not reasonably have been arrived at.
Finance Act 1994, Section 16(4)
To determine the reasonableness of a decision, the Tribunal considers whether the officers reached decisions no reasonable officer could have, whether there were errors of law, whether all relevant considerations were taken into account, and whether irrelevant considerations were excluded.
Customs and Excise Commissioners v J H Corbitt (Numismatists) Ltd [1980] 2 WLR 753; Behzad Fuels Limited v HMRC [2017] 0321 (TCC)
A company's residence is where its real business is carried on, determined by the location of central management and control.
De Beers Consolidated Mines Ltd v Howe [1906] AC 455
HMRC has a lawful policy requiring compelling reasons for restoration of seized goods, considering proportionality.
HMRC policy
Outcomes
Appeal allowed.
HMRC's decision was unreasonable due to errors of fact (incorrectly stating Petmaster hadn't paid import VAT), an error of law, and the Tribunal's finding that Petmaster was an 'innocent actor' misled by its accountants and the FH.
HMRC directed to remake the restoration decision.
The Tribunal found compelling reasons to set aside the original decision. The new decision must consider the Tribunal's findings and be made by an officer not previously involved.