Key Issue in Drinks and Food UK Ltd v HMRC: Compliance with Excise Duty Drawback Claim Regulations and Tribunal Jurisdiction.

Citation: [2023] UKFTT 979 (TC)
Judgment on

Introduction

In the recent case of Drinks and Food UK Limited v The Commissioners for HM Revenue and Customs, key legal principles surrounding excise duty draw back claims and the jurisdiction of the First-tier Tribunal (Tax Chamber) were under scrutiny. This article analyses the decision in the First-tier Tribunal (FTT) and the application of legal principles therein, focusing exclusively on the case contents.

Key Facts

Drinks and Food UK Limited (the Appellant) appealed against HMRC’s refusal of a claim for drawback of excise duty amounting to £385,165.31, related to imported goods. The dispute centered on HMRC’s contention that the claim did not comply with the criteria set forth by the Excise Goods (Drawback) Regulations 1995 (EGDR) and the related Excise Notice 207 (EN 207). The key issues revolved around the time limit for making the claim, notification of intention (NOI), accurate record-keeping, especially regarding duty stamp obliteration, and the provision of export documentation.

1. Time Limits and Conditions for Drawback Claims

The Tribunal examined whether the claimant complied with the prescribed three-year time limit under regulation 7(6) EGDR and other associated conditions, and the impact of an email from HMRC which the Appellant believed constituted a waiver of the time limit.

2. Jurisdiction of the Tribunal

There was significant discussion on the FTT’s jurisdiction in cases where statutory conditions of a drawback claim are not met, under section 16(5) of the Finance Act 1994 (FA 1994). This addressed whether the Tribunal had the power to require HMRC to conduct a re-review of their decision beyond verifying if the statutory conditions were met.

3. Conditions for Proper Obliteration of Duty Stamps

The case hinged strongly on the proper compliance with the conditions laid down in the Duty Stamp Regulations 2006 (DSR) and the Force of Law through notices like EN 207, regarding the obliteration of duty stamps before claiming drawback.

4. Adequacy of Evidence of Export

Another topic of legal analysis centered on whether the Appellant provided the necessary CHIEF S8 documentation showing a ‘departed’ status of 60 or equivalent evidence of export, which is a condition as per EN 207.

Outcomes

The FTT found that the Appellant was not entirely compliant with the above principles, which resulted in a partial allowance of the appeal:

  1. Time Limit Waiver: The Tribunal agreed with the Appellant that an email from HMRC communicated a waiver of the three-year time limit condition.
  2. Amendment of NOI: The FTT ruled that the Appellant did not need to amend the NOI for changes in dispatch dates or for post-Brexit exports.
  3. Proper Obliteration of Duty Stamps: The Tribunal agreed with HMRC that the Appellant failed to fully obliterate duty stamps in accordance with the DSR.
  4. Required Evidence of Export: The FTT held that the Appellant’s failure to provide proper export documentation could not be considered unreasonable.

As a result, the Tribunal allowed the appeal in part, granting the claim to the extent of £9,695.27, and refused the remaining part of the appeal.

Conclusion

The FTT’s decision in Drinks and Food UK Limited v The Commissioners for HMRC reaffirms strict compliance with conditions set by both regulation and public notices for drawback claims. The case further delineates the extents and limits of the Tribunal’s jurisdiction in excise duty matters, clarifying that while a supervisory jurisdiction is employed in evaluating HMRC’s decision-making, the FTT also retains a full appellate jurisdiction that includes the power to assess compliance with conditions unless the statutory scheme explicitly states otherwise. The decision underlines the importance for claimants to meticulously comply with all requirements and procedures to successfully claim excise duty drawbacks.