McGeown Transport Limited v The Commissioners for HMRC

‘(2) The Tribunal must strike out the whole or a part of the proceedings if the Tribunal—

‘(3) The Tribunal may strike out the whole or a part of the proceedings if —

Without prejudice to Article 36 (1), where excise goods which have already been released for consumption in one Member State are held for commercial purposes in another Member State in order to be delivered or used there, they shall be subject to excise duty and excise duty shall become chargeable in that other Member State.

For the purposes of this Article, ‘holding for commercial purposes’ shall mean the holding of excise goods by a person other than a private individual or by a private individual for reasons other than his own use and transported by him, in accordance with Article 32.

The chargeability conditions and rate of excise duty to be applied shall be those in force on the date on which duty becomes chargeable in that other Member State.

The person liable to pay the excise duty which has become chargeable shall be, depending on the cases referred to in paragraph 1, the person making the delivery or holding the goods intended for delivery, or to whom the goods are delivered in the other Member State.

Regulation 13

Where excise goods already released for consumption in another Member State are held for a commercial purpose in the United Kingdom in order to be delivered or used in the United Kingdom, the excise duty point is the time when those goods are first so held.

Depending on the cases referred to in paragraph (1), the person liable to pay the duty is the person –

holding the goods intended for delivery; or

to whom the goods are delivered.

For the purposes of paragraph (1) excise goods are held for a commercial purpose if they are held –

Regulation 88

If in relation to any excise goods that are liable to duty that has not been paid there is –

a contravention of any condition or restriction imposed by or under these Regulations, those goods shall be liable to forfeiture.

Any thing liable to forfeiture under the customs and excise Acts may be seized or detained by any officer or constable or any member of Her Majesty’s armed forces or coastguard.

[…]

Schedule 3 to this Act shall have effect for the purpose of forfeitures, and of proceedings for the condemnation of any thing as being forfeited, under the customs and excise Acts.

Any person claiming that any thing seized as liable to forfeiture is not so liable shall, within one month of the date of the notice of seizure or, where no such notice has been served on him, within one month of the date of the seizure, give notice of his claim in writing to the Commissioners at any office of customs and excise.

If on the expiration of the relevant period under paragraph 3 above for the giving of notice of claim in respect of any thing no such notice has been given to the Commissioners, or if, in the case of any such notice given, any requirement of paragraph 4 above is not complied with, the thin in question shall be deemed to have been duly condemned as forfeited.

12 Assessments to excise duty

(1A) Subject to subsection (4) [on time limits] below, where it appears to the Commissioners –

that the amount due can be ascertained by the Commissioners,

the Commissioners may assess the amount of duty due from that person and notify that amount to that person or his representative.

[…]

Where an amount has been assessed as due from any person and notified in accordance with this section, it shall, subject to any appeal under section 16 below, be deemed to be an amount of the duty in question due from that person may be recovered accordingly, unless, or except to the extent that, the assessment has subsequently been withdrawn or reduced.

An appeal against a decision on a review under section 15 […] may be made to an appeal tribunal within the period of 30 days beginning with the date of the document notifying the decision to which the appeal relates.

[…]

In relation to any decision as to an ancillary matter, or any decision on the review of such a decision, the powers of an appeal tribunal on an appeal under this section shall be confined to a power, where the tribunal are satisfied that the Commissioners or other person making that decision could not reasonably have arrived at it, to do one or more of the following, that is to say –

On 24 February 2016, the appellant’s vehicle, driven by the appellant’s employee Jamie McAuley, was stopped at the border in Dover. The Seizure information notice was signed by McAuley (at 9:04 hrs) and provides details of the items seized, being one Scania DEZ9817, a fridge unit MGT 52, and an estimated 6 million Excellence cigarettes.

McAuley provided documentation (purporting to be a CMR dated 23 February 2016) which indicated that the cargo on board was fruit and vegetables totalling 18,610 kilograms, with the details of (i) the consignor being ‘JKM Gubbels’ in the Netherlands, (ii) the consignee being ‘Aldi Distribution Ltd’ in Ireland, (iii) the issuer of the CMR being ‘Thermotraffic’ (temperature controlled logistics); (iv) the haulier being ‘Mcgeown Haulage’; (v) transporter’s vehicle registration being DEZ9817.

Upon searching the vehicle, the border force officers discovered the cargo was in fact 6,800,400 cigarettes which would have attracted a duty of £1,640,936.00.

The cigarettes were seized as excise goods without duty having been paid.

A seal document of the vehicle exhibited on page 46 is dated 1 June 2016, sealed by an Officer Hirst (with the signature of a further witness) has as its entry under the heading ‘From Place/Person’: ‘Jamie McAuley/ VEH SM60YKK/DEZ9817’.

On 24 February 2016 (same date as the seizure event), with a Mr Meagher, warehouse section manager with Aldi at Aldi Regional Distribution Centre in Co. Kildare;

On 7 June 2016, with Jamie McAuley at Folkestone Police Station to discuss matters that had arisen since his previous interview on being intercepted at Dover docks;

On 14 July 2016, with Adrian McGeown, director of the appellant company, at Carne House, Belfast – the interview was conducted under police caution;

On 1 August 2016, a witness statement of 4 pages was provided by a Mr Di Gennaro who had been the UK and European Logistics manager for Thermotraffic GmbH with its UK office in Bedford for seven years;

On 4 April 2017, with a Mr Gubbels at Brunssum Police Station in the Netherlands.

From Aldi – the entity ‘Aldi Distribution Ltd’ does not exist; Aldi held no records of the consignor JKM Gubbles BV in the Netherlands; Aldi did not expect any consignment of vegetables in the three days following the date of seizure; Aldi order from local suppliers who sourced their own supplies, and vegetables never come direct to Aldi Distribution Centre.

From McAuley – that Adrian McGeown is his ‘boss’, and the ‘owner’ of the company known as McGeown Transport Ltd; that either Adrian McGeown or Mark Hughes (the transport manager of the appellant company) gave him the specific delivery instructions of the consignment in question, for which McAuley left the UK on 20 February 2016. In relation to a detour he took to attend Scania depot in Germany for repairs service:

From Thermotraffic – the Rotterdam office confirmed with the regional office in Venlo that the company has no knowledge of the load and provided details of all known loads associated with McGeown Haulage Ltd. Further it was confirmed that:

From JKM Gubbels – that it never responded to the advertisement placed by the appellant on ‘Cool Load’ website on 23 February 2016 as alleged; that JKM Gubbels has never heard of ‘Cool Load’ or worked with the appellant, and that it has always used its own haulier; that it has never done business with Thermotraffic; that it has not engaged in any business activities relating to the delivery of fruit and vegetables or potatoes since 2003; that the contact number on the CMR has a Belgian country code (not the Netherlands); that JKM Gubbels has never had a business or private address in Belgium.

From Adrian McGeown – excerpts of the transcript of the interview:

By letter dated 3 March 2016, Adrian McGeown on the headed paper of McGeown Transport Ltd wrote to Border Force National Post Seizure Unit in relation to the vehicle with registration DEZ 9817, wherein it is stated:

The ‘Hire Agreements’ attached are on the headed paper of ‘McGeown Commercials /New & Used Trucks & Plant’, which has identical address and telephone and fax numbers as McGeown Transport Ltd. The agreements were completed with hand-written entries (indicated by italics) below; the second agreement was for the trailer.

By letter dated 7 June 2016, Adrian McGeown on the headed paper of McGeown Transport Ltd wrote to Border Force, and the first paragraph states:

The cigarettes were discovered in a vehicle owned by McGeown Transport Ltd, and driven by one of its employees.

That at the relevant time McGeown Transport Ltd was the ‘controlling body responsible for the movement and delivery of the goods’.

That the ‘vehicles driven by [the appellant’s] employees contained more than one UK licence plate, concealed from view’.

That the ‘CMR documents have also been proven by Fraud Investigations Services to be fabricated’.

That the seizure of the goods was not challenged and as such the goods were deemed condemned as forfeited to the Crown after one calendar month of the date of the seizure notice had elapsed.

‘On the basis of the decision in Taylor and Woods [sic Wood] together with other reasons the Appellant would therefore contend that he is not liable for the excise duty claimed.’

‘The Appellant states that [it] relies upon … Taylor and Woods [2013] EWCA Crim 1151, wherein the Court decided that a haulier who had no notice that his vehicle was carrying excise goods could not be liable for the duty on those goods. …’

‘… The Appellant in this matter was entirely unaware that these other goods had been secreted upon his vehicle and therefore is not liable for the duty upon them.’

‘The attempt by HM Revenue and Customs to state that the simple fact that these goods had been found on a vehicle connected to the Appellant was enough to fix him with the liability for the duty flies in the face of the Judgement as set out in Taylor and Woods.’

‘We trust that the Respondent is now fully aware of the nature of the Appellant’s case and can produce a Statement of Case in this matter.’ (Emphasis added)

‘Article 33(3) of Council Directive 2008/118/EC of 16 December 2008 concerning the general arrangements for excise duty and repealing Directive 92/12/EEC must be interpreted as meaning that a person who transports, on behalf of others, excise goods to another Member State, and is in physical possession of those goods at the moment when they have become chargeable to the corresponding excise duty, is liable for that excise duty, under that provision, even if that person has no right to or interest in those goods and is not aware that they are subject to excise duty or, if so aware, is not aware that they have become chargeable to the corresponding excise duty.’ (HMRC’s emphasis)

The Tribunal is bound by law to find that the appellant being unaware that its cargo was excise goods does not prevent the appellant being liable to the excise duty.

As such, the appellant’s only ground of appeal is one of which the Tribunal is unable to find in its favour.

HMRC consider that if the appellant were to ask the Tribunal to make different finding that the CJEU and the Court of Appeal, that would be in effect asking the Tribunal to exceed its jurisdiction and to act contrary to primary legislation in the form of the European Union (Withdrawal) Act 2018.

‘The Appellant herein McGeown Transport Ltd states that the strike out application in this matter is entirely misconceived.

It is an essential component of HMRC’s case that the Appellant herein was the person holding the goods at the duty point. The Appellant’s case is that McGeown Transport Ltd was not the party holding the goods at the duty point.

The goods were being held by McGeown Haulage which is an entirely separate road transport operator.

The Appellant would direct the Tribunal’s attention to the fact that both the CMR document and the transport order clearly identify the transporter and holder of the goods in this matter. The Appellant is neither.

We trust that it should be clear that HMRC’s reliance upon the case of Perfect is entirely misconceived in this matter given that it should be clear that the present Appellant could not be liable for the duty under the Excise Goods (Holding, Movement and Duty Point) Regulations 2010.’

The CJEU has confirmed in HMRC v WR that a haulier does not require knowledge of possession of excise goods, nor a right or interest in the goods, to be liable to the duty. The only requirement for liability to arise is ‘holding’ of the goods.

The Court of Appeal in Perfect 2022 at [14] considered that the CJEU judgment in HMRC v WR to have ‘binding force in their entirety on and in the United Kingdom’ as provided by the agreement between the UK and the EU.

The Court of Appeal in Perfect 2022 reached the same conclusion as the CJEU:

HMRC contend therefore that this Tribunal must determine that the appellant’s original ground of appeal, that it had no knowledge of ‘holding’ the cigarettes in its vehicle has no reasonable prospect of success, since the Tribunal is bound by the CJEU reference decision and the Court of Appeal decision in Perfect 2022.

Further, HMRC submit that it is perhaps for this reason that the appellant seems to have abandoned this argument stated in its Further and Better Particulars following the CJEU reference decision in HMRC v WR and Perfect 2022.

While HMRC do not (currently) wish to take a point on this from a conduct or costs perspective, the respondents note that it is inappropriate for a professional representative to change the appellant’s grounds of appeal in this way, particularly after claiming to have made the respondents ‘fully aware’ of its case in the Further and Better Particulars.

‘1. Is a person ... who is in physical possession of excise goods at a point when those goods become chargeable to excise duty in Member State B liable for that excise duty pursuant to Article 33(3) of Directive [2008/118] in circumstances where that person:

had no legal or beneficial interest in the excise goods;

Is the answer to Question 1 different if [the person in question] ... did not know that the goods he was in possession of were excise goods?’

‘[33] ...the Advocate General observed [that] …, the intention of the EU legislature was to lay down a broad definition, in Article 33(3) of Directive 2008/118, of the category of persons liable to pay excise duty in the event of a movement of excise goods already ‘released for consumption’ in one Member State and held, for commercial purposes, in another Member State in order to be delivered or used there, so as to ensure, so far as possible, that such duty is collected.

[34] However, to impose an additional condition requiring that the ‘person ... holding the goods intended for delivery’, within the meaning of Article 33(3) of Directive 2008/118, is aware or should reasonably have been aware that excise duty is chargeable would make it difficult, in practice, to collect that duty from the person with whom the competent national authorities are in direct contact and who, in many situations, is the only person from whom those authorities can, in practice, demand payment of that duty.’

‘[66] … in the absence of any relevant information relating to any prior release for consumption, HMRC must assess the person who it finds to be holding the goods in question, if that is the only excise duty point which can be established. … where, as here, a driver is unable to identify the consignor, or the importer, or his employer, the only person who can be assessed for the duty is the driver himself. If he cannot be assessed in circumstances where HMRC or a Tribunal concludes that he was unaware that the goods were liable to duty, the opportunities for smuggling and fraud are manifestly greater. Accordingly, strict liability appears to have been an accepted feature of the regime under successive Directives as explained by Lord Hoffmann in [Greenalls Management Ltd v Customs and Excise Commissioners [2005] UKHL 34, [2005] 1 WLR 1754].’

‘[15] … the law on pleadings is clear: the appellant must state what are its grounds of appeal. If it does not, it cannot rely on those grounds. And if it wants to rely on a new ground of appeal, as it does here, it must apply for permission to amend. …’

‘[36] An application to amend will be refused if it is clear that the proposed amendment has no real prospect of success. The test to be applied is the same as that for summary judgment under CPR Part 24. Thus the applicant has to have a case which is better than merely arguable. The court may reject an amendment seeking to raise a version of the facts of the case which is inherently implausible, self-contradictory or is not supported by contemporaneous documentation.’

[38] Drawing these authorities together, the relevant principles can be stated simply as follows :

a) whether to allow an amendment is a matter for the discretion of the court. In exercising that discretion, the overriding objective is of the greatest importance. Applications always involve the court striking a balance between injustice to the applicant if the amendment is refused, and injustice to the opposing party and other litigants in general, if the amendment is permitted;

b) where a very late application to amend is made the correct approach is not that the amendments ought, in general, to be allowed so that the real dispute between the parties can be adjudicated upon. Rather, a heavy burden lies on a party seeking a very late amendment to show the strength of the new case and why justice to him, his opponent and other court users requires him to be able to pursue it. The risk to a trial date may mean that the lateness of the application to amend will of itself cause the balance to be loaded heavily against the grant of permission;

c) a very late amendment is one made when the trial date has been fixed and where permitting the amendments would cause the trial date to be lost. Parties and the court have a legitimate expectation that trial fixtures will be kept;

d) lateness is not an absolute, but a relative concept. It depends on a review of the nature of the proposed amendment, the quality of the explanation for its timing, and a fair appreciation of the consequences in terms of work wasted and consequential work to be done;

e) gone are the days when it was sufficient for the amending party to argue that no prejudice had been suffered, save as to costs. In the modern era it is more readily recognised that the payment of costs may not be adequate compensation;

f) it is incumbent on a party seeking the indulgence of the court to be allowed to raise a late claim to provide a good explanation for the delay;

g) a much stricter view is taken nowadays of non-compliance with the Civil Procedure Rules and directions of the Court. The achievement of justice means something different now. Parties can no longer expect indulgence if they fail to comply with their procedural obligations because those obligations not only serve the purpose of ensuring that they conduct the litigation proportionately in order to ensure their own costs are kept within proportionate bounds but also the wider public interest of ensuring that other litigants can obtain justice efficiently and proportionately, and that the courts enable them to do so.’

This is an appeal under s 16 FA 1994 against HMRC’s review conclusion to raise the excise duty assessment, and it is asserted that the appellant is ‘entitled to change its case at any time’.

The Court of Appeal ‘changed the interpretation of the law which had been up to that point set out in the decision of Taylor and Wood’.

The appeal process directs that a Statement of Case be served by HMRC before the appellant serves its evidence – ‘the stage at which at appellant’s evidence is to be submitted has not yet been reached’.

The essential part of the pleadings is whether the appellant was ‘holding the goods’. The appellant’s contentions are that: (a) it was not the operator, and (b) it was not the owner of the vehicle in which the goods were held.

The two essential elements for evidence in the appeal are therefore: (a) who in law was the operator; and (b) who in law owned the vehicle.

It is asserted that ‘McGeown Transport Ltd did not have operator licence’, whereas ‘McGeown Haulage did have an operator licence’; and that the appellant would be ‘providing absolute proof’ that it held no operator licence.

The appellant further contends that it did not have ‘ownership’ of the vehicle in which relevant goods were found; that the appellant company provides employment of a driver to operate but it did not have control over the driver. It is asserted that the regulations provide that it must be the operators who control the driver, and this is a matter to be flashed out in a full trial.

Following the CJEU and Court of Appeal decisions in the Perfect case, HMRC are of the view that the only way for the appellant to avoid liability is to demonstrate that it was not ‘holding’ the goods at the duty point.

In short, the appellant must demonstrate that it was not in physical possession of the cigarettes when the goods entered the UK, which now appears to be the appellant’s sole contention.

In making this argument, the appellant now states that the documents which purport to be the CMR and the Transport Order showing the name McGeown Haulage, as opposed to McGeown Transport.

HMRC know McGeown Haulage Ltd to be another haulage company, owned and operated by the same family as McGeown Transport Ltd, based on the same street.

HMRC contend that this argument has no reasonable prospect of success in accordance with the approach set out by the Upper Tribunal in HMRC v Fairford Group plc & Another [2014] UKUT 329 (TCC) at [41]:

The appellant’s contention appears to rest entirely on a single document the purported CMR and the purported Transport Order attached to it.

HMRC contend that the argument is simply not arguable, because the documents relied on are ‘very clearly fabricated’. On the face of it, the purported cargo was to be fruit and vegetables, when the real cargo was in cigarettes, and other numerous inaccuracies as concerns the identities of the consignor, consignee, and transporter. The documents were produced to be ‘deliberately inaccurate’, ‘with the sole intention being to mislead the respondents and the UK authorities’.

The driver of the vehicle which contained the cigarettes, Jamie McAuley, was employed exclusively by McGeown Transport Ltd at the time of the seizure.

In his interview, McAuley referred to Adrian McGeown as his ‘boss’, and the ‘owner’ of McGeown Transport Ltd.

As such, the cigarettes were held by an employee of McGeown Transport Ltd in the course of his work for the appellant company, and consequently, the cigarettes were held by McGeown Transport Ltd as a matter of fact.

During an interview conducted under police caution, Adrian McGeown, the director of McGeown Transport Ltd, confirmed that the business concerned in the seizure event was indeed McGeown Transport Ltd (and not McGeown Haulage Ltd as now asserted). Adrian McGeown confirmed that ‘McGeown Transport is McGeown Transport’ in no uncertain terms.

During the interview, Adrian McGeown went into considerable detail about how a second number plate came to be found on the vehicle used in the transport of cigarettes, which had the registration number DEZ 9817, and that Adrian McGeown stated that he was the person handling ‘all the breakdowns’ and would be the person to have arranged for McAuley to attend repairs of DEZ 9817 at Scania Germany before its arrival at Dover.

During the interview, Adrian McGeown was specifically asked whether McGeown Transport Ltd controls the vehicle with registration number DEZ 9817, and he confirmed: ‘That’s correct. Those trucks we run the trans … we run the transport fleet, yeah’.

Adrian McGeown then queried with the interviewing officer regarding the restoration DEZ 981 by referring to the vehicle as ‘my lorry’: ‘Well what of my lorry, …, that’s still in Dover, DEZ?

McAuley’s PAYE employment records show that he had been employed for nearly 2 years since 6 April 2014 when the seizure event took place (on 24 February 2016).

The sale invoice dated 18 February 2016 produced by Adrian McGeown in relation to the sale of Scania SM60 YKK by McGeown Commercials, which was also controlled by Adrian McGeown, and was part of the background and connection to the fact that SM60 YKK number plate (for whatever reasons) was found to be attached to the number plate of DEZ 9817 (in whatever manner).

The letter of 3 March 2016 to apply for restoration of the seized DEZ 9817 was written by Adrian McGeown on McGeown Transport Ltd headed paper as the party with control and ownership of the DEZ 9817 to have the legal standing to request restoration.

The ‘Hire Agreement’ attached to the restoration application letter was the evidence Adrian McGeown relied on to establish ownership and control of DEZ 9817 for the purposes of the restoration request.

In the letter of 7 June 2016 in relation to the decision by Border Force not to restore DEZ 9817, Adrian McGeown referred to the vehicle as ‘my lorry and trailer’.

The ‘Registered Keeper’ of the vehicle Scania DEZ 9817 on Form V5C(NI) clearly stated the connection of ‘McGeown’ (however construed) at the same business premises of the appellant company.

During Adrian McGeown’s interview, when he was asked several times from different angles by HMRC about the entity in question which was concerned with the seizure event, at no stage did Adrian McGeown mention McGeown Haulage.

In the Notice of Appeal, there was no reference whatsoever that McGeown Haulage was the haulier.

The appeal was stayed for some two years behind Perfect and the appellant did not object at any stage that McGeown Transport Ltd was in fact not the holder of the goods but McGeown Haulage should be the relevant entity.

In the Further and Better Particulars, the reliance of Taylor and Wood by the appellant would make no sense if McGeown Transport Ltd was not the ‘holder’ of the goods, since Taylor and Wood is a case about the haulier having knowledge of the cargo being carried.

Mr Fallon points out that ‘[t]he absurdity of the appellant’s position is made clear in its Further and Better Particulars’ where its representative has stated:

As a matter of fact, the appellant’s representative has confirmed in the Further and Better Particulars that the cigarettes found on the vehicle was connected to McGeown Transport Ltd as a ‘simple fact’: