At the commencement of the appeal hearing, we heard HMRC’s application to admit late evidence, which comprised of further evidence of the employment status of Stewart Allerton and Dean West, both of whom were said to have worked for the third-party hauliers/drivers (“the late evidence”). HMRC had previously obtained witness statements from Wayne Bentley.

Mr Boyle indicated that he did not object to the admission of the late evidence. As Mr Boyle is a litigant-in-person, we considered: (i) whether the evidence was relevant to the appeal; (ii) whether there was any prejudice to the Appellant if the evidence was admitted; and (iii) whether there was any prejudice to HMRC if the evidence was not admitted. Having considered the issues in the appeal, we were satisfied that the new evidence was relevant to the appeal and did not introduce any new issues, but was intended to corroborate the evidence previously disclosed and relied on by HMRC (as notified to the Tribunal and the Appellant). We, therefore, admitted the late evidence; the presumption being that all relevant evidence should be admitted unless there is a compelling reason to the contrary: Atlantic Electronics Ltd v R & C Comrs [2013] EWCA Civ 651, at [31].

Mr Carey submitted that he was not intending to call Officer Davie and indicated that this had been dealt with by way of consent following discussions with Mr Boyle where Mr Boyle was said to have indicated that he did not wish to ask Officer Davie any questions on the basis that Officer Idowu (“the assessing officer”) had retired and Officer Davie did not appear, in his opinion, to add anything to the case. We explored Mr Boyle’s understanding of the significance of not being in a position to test any live evidence, in relation to any submissions that he later wished to make. Mr Boyle subsequently indicated that he did wish to cross-examine Officer Davie after all.

In his opening submissions, Mr Carey submitted that:

There were witness statements (included in the Hearing Bundle) from Stewart Allerton - of Abbey Logistics; Dean West - of Custom Haulage; and Wayne Bentley - of Bassett & Sons. On 2 October 2023, HMRC’s application to rely on the third-party hearsay evidence was granted by the Tribunal.

On 20 May 2014, Mr Bentley gave a witness statement to HMRC stating that on 3 August 2012, he was instructed to pick up an unknown load from the Appellant’s premises. He explained that he had arrived at the site at approximately 12:45 and had to wait for approximately an hour for the load to arrive. When it did arrive, the vehicle bore an Irish number plate and the driver stated he had come from “the Continent” via Dover. The goods were moved from the Irish vehicle to the Bassett & Sons vehicle by forklift and consisted of mixed beers and wines in, generally, poor condition. He added that he was not given any paperwork for the goods. He left the Appellant’s premises at approximately 14:10 and delivered the goods to Bassett & Son’s depot. He believed the goods were delivered to Liverpool the next day by another driver.

On 29 July 2014, Mr West gave a witness statement to HMRC regarding the collection of alcohol from the Appellant’s premises on 14 August 2012. He stated that he collected 26 pallets of beer from the Appellant, which he then delivered to Expo in Doncaster.

On 22 August 2014, Stewart Allerton gave a witness statement to HMRC. Mr. Allerton was employed as a driver for Abbey Logistics. He stated he was instructed to pick up a load from the Appellant’s premises on 13 August 2012. On arrival, he was informed the load was not at the Appellant’s premises. He was then instructed to collect the load from Fios in Peterborough. The load picked up was ‘mixed alcohol’, which was then delivered to Ascos in Liverpool.

The witness statements of both Dean West and Stewart Allerton make reference to access to the Appellant’s site as being by dirt road.

HMRC did not propose to call any live evidence from either of those individuals, as they were said to no longer work for the third-party hauliers and could not be contacted.

We heard oral evidence from Officer Davie. Officer Davie is a Higher Officer of HMRC. His duties include assurance and compliance work in the area of alcohol duties. Officer Davie was not involved in the Assessment, but has familiarised himself with the case in light of the retirement of the assessing officer (Officer Idowu), and has adopted the decision. In his oral evidence, Officer Davie adopted the contents of his witness statements, dated 14 July 2017, 4 October 2023 and 26 January 2024, as being true and accurate. He was not asked any further questions in examination-in-chief by Mr Carey.

Under cross-examination by Mr Boyle, Officer Davie stated that the first visit in 2012 by the FIS was by a different unit within HMRC, and that the assessing officer had not been involved in that investigation. Therefore, no assessment could have been raised at that point. The remainder of Mr Boyle’s cross-examination of Officer Davie can, more adequately, be described as statements that were more suited to his submissions. In this respect, Mr Boyle submitted that the third-party statements (from witnesses not called to give evidence) all appeared to be identical and did not describe the actual layout of the Appellant’s premises. He added that there were two other tenants on the Appellant’s premises/site and that the officers who visited did not speak to those tenants. Officer Davie stated that if he had conducted the Visit, he would have spoken to those tenants.

We then heard from Mr Boyle. Mr Boyle adopted the contents of his witness statement, dated 14 July 2017, as being true and accurate. In his witness statement, he described the Appellant’s business activity. He further explained that all commercial vehicles are weighed in and logged at the Appellant’s site, with copy records kept on the premises to comply with the Appellant’s EA permit (as well as the records of the weight, logs, vehicle registrations, details of the company name and of who owns the vehicle entering the Appellant’s site and details of the goods type being delivered or collected).

Mr Boyle added that Freedom Farm (the Appellant’s premises/site) is a secure location with only one way in and only one way out. All vehicles and personnel can only enter the site by crossing a bridge over a waterway, and then by entering a gate which is closed and locked each night to secure the site. He identified photographs of the site showing the entrance to the premises. He explained that once a vehicle goes through the Appellant’s weigh-in, the details of that vehicle have to be recorded. He further referred to photographs of the weigh - in area on site.

Mr Boyle emphasised that the recycling industry is a regulated industry, which requires all vehicles entering the site to be weighed, and for those records to be kept in accordance with the Appellant's EA permit. He reiterated that the Appellant does not deal in alcoholic beverages, at all, and never has. He stated that he was surprised to hear what he had been told by the assessing officer during the Visit as HMRC had said that a mistake had been made after the first visit, and he thought that that would be the end of the matter. He further stated that he had never heard of any of the third-party hauliers whose statements were being relied on as the basis of HMRC’s investigation and Assessment. In his witness statement, Mr Boyle referred to deficiencies that he had identified in the documentation relied on and referred to by HMRC (in respect of the third-party hauliers).

Mr Boyle’s written evidence was also that the assessing officer never asked to look around the site when the Visit took place in 2014. He added that the officer(s) who had attended on that occasion went straight to his office, and would not have been able to see the full extent of the site as all one can see out of the office windows are the front of other buildings. He further added that the officers asked him if he had heard about the third-party entities, and also asked about vehicles coming in and out of the premises in August 2012. He stated that he had advised them that the Appellant keep records and then showed them records of the vehicles entering, and leaving, the site on the relevant days.

Under cross examination by Mr Carey, Mr Boyle repeated that all vehicles are logged on arrival at the Appellant’s site, which has a moat at the entrance. He once again referred to that the weighbridge to the right of the entrance, and stated that lorries are ordinarily weighed by staff. He further added that staff then input the information into a record book and a handwritten weighbridge ticket is issued (which acts as a log for the Appellant’s records), but stated that there is no automated system in place. He confirmed that he was not responsible for managing the gate and accepted that he would have no way of knowing if staff at the gate were accurately recording information, or knowledge of whether the possible delivery of alcohol would have been recorded.

Mr Boyle accepted that there was nothing in the notes to the first visit in 2012 that indicated that HMRC accepted having made a mistake in respect of whether the Appellant had any involvement in excise goods. He also accepted that HMRC were still conducting an investigation when the Visit in 2014 took place. He could not, however, recall whether the consignment notes were discussed at that time, or whether he was handed any information about his rights. His position was that there as an inaccuracy in HMRC’s investigation and that the Assessment could have been raised prior to 2014.

Mr Carey then took Mr Boyle to the invoices obtained from the third-party hauliers and Mr Boyle accepted that, on the face of the documents, they showed the collection address for the Goods as being the Appellant’s address. He added, however, that the Appellant was a 90% tenant as there were two other tenants on site. He nevertheless stated that he did not speak to the other tenants to establish any anomalies in respect of their activities as that would have been a difficult conversation to have.

In respect of the Penalty, Mr Boyle disagreed that the Penalty had been correctly applied, but accepted that the criticisms he had made in respect of the Penalty was in relation to his opinion about the paperwork.

In response to questions for the purposes of clarification from the panel, Mr Boyle stated that he spends 90% of his time in his office (on the premises), and could only see the entrance to the premises when he looked out of the window as his desk faced away from that window. He added that another reason why he did not make his own enquiries with the tenants was that HMRC had walked around the premises in high visibility vests during the visit(s). He further added that there were 13 to 14 members of staff on the Appellant’s site.

In respect of whether the Assessment and the Penalty were in time, Mr Carey submits that:

In respect of whether the Appellant had any involvement in the Goods, Mr Carey submits that:

In respect of whether the Penalty has been correctly applied:

Mr Boyle’s submissions can be summarised as follows:

Following completion of the appeal hearing, we reserved our decision, which we now give with reasons.

The relevant law, so far as is material to the issues in this appeal, is as follows:

Where goods are held outside a duty suspension arrangement, and UK excise duty has not been paid, relieved, remitted or deferred under a duty deferment arrangement, a duty point is created under reg. 6(1) of the Excise Goods Regulations. Section 1 of the Finance (No. 2) Act 1992 contains the authority for making regulations to implement the provisions of Directive 2008/118/EC (‘the 2008 Directive’) concerning the chargeability of goods to excise duty in the United Kingdom, and persons liable to pay such duty. The Excise Goods Regulations implement provisions of the 2008 Directive.

Regulation 5 of the Excise Goods Regulations provides that there is an excise “duty point” at the time when excise goods are released for consumption in the United Kingdom. Regulation 6 of the Excise Goods Regulations provides that:

Therefore, four excise duty points are prescribed by reg. 6.

Regulation 10(1) of the Excise Goods Regulations identifies the “person liable to pay the duty” when excise goods are “released for consumption”, by virtue of reg. 6(1)(b), as the person “holding” excise goods at that time:

Section 12(1A) and 12(4) of the Finance Act 1994 (‘FA 1994’) provide that:

Section 13A FA 1994 sets out the meaning of ‘relevant decision’ and s 16 deals with appeals to a tribunal:

In relation to appeals to the FtT, s 16 FA 1994 provides that:

Section 154(2)(a) of the Customs & Excise Management Act 1979 (‘CEMA’) provides that:

Schedule 41 provides that:

A penalty is payable by a person (P) where–

for a deliberate and concealed act or failure, 100% of the potential lost revenue,

Paragraphs 12 and 13 of Schedule 41 provide for reductions for disclosure and whether the disclosure is prompted or unprompted.

Paragraph 14 of Schedule 41 provides for “special circumstances” to reduce a penalty,

Paragraph 19 sets out the FtT’s jurisdiction. ‘Flawed’ means flawed in light of the principles applicable in judicial review proceedings.

We have derived considerable benefit from hearing the evidence and submissions and find as follows:

Our findings above are based on a balanced appraisal of all of the evidence, despite our conclusion that Mr Boyle was a truthful witness who gave his evidence in a clear and straightforward manner, without equivocation.

The Appellant appeals against: (i) an Assessment to excise duty in the sum of £46,749; and (ii) a Penalty in the sum of £14,024.70 (reduced from £32,724.30). HMRC’s position is that evidence received from three separate arm’s length third parties (i.e., the third-party hauliers) revealed that two consignments of alcohol products had been collected from the Appellant’s premises on 3 August 2012 and 15 August 2012, and had been transported to other destinations in circumstances where excise duty had not been paid. An investigation was conducted to ascertain the Appellant’s involvement, if any, in the storage and transportation of excise goods, leading up to the Assessment in 2015.

The relevant haulage invoices (all addressed to CJM) that had been obtained by HMRC confirming collection were as follows:

All of the above invoices and other delivery/job notes named the collection point as being the Appellant’s premises, and the delivery or end users were various cash and carries. HMRC concluded that the Appellant held and controlled excise goods outside of a duty suspension arrangement, and was liable to pay duty. There was no evidence to suggest that the goods were duty paid. HMRC’s position is also that it was not possible to refine the Assessment from any documentation provided by the Appellant as there was no information available to identify specific liability.

Excise duty is charged when goods subject to excise duty, such as alcoholic beverages, are produced and imported, unless duty suspension arrangements apply to them. Excise duty is an indirect tax charged on specific goods deemed to be harmful to public health and is chargeable in addition to customs duty. Excise duty applies inter alia, to alcohol, tobacco products, gambling activities and hydrocarbon fuels (consumption tax). The duty falls at the time when goods leave any duty suspension arrangement. Excise goods subject to duty must, generally, be held in a ‘tax warehouse’, operated by an authorised warehouse keeper. If duty suspension arrangements do not apply, then chargeability to excise duty is deferred until the goods depart from a duty suspension arrangement. The identity of the person liable to pay the duty depends on the circumstances in which chargeability arises. The person liable to pay the duty is the person ‘holding’ the excise goods at the time. Penalties are charged for any wrongdoing.

The Appellant criticises the basis upon which the Assessment had been issued against the Appellant by reference to s 12(1) FA 94. The Assessment in this appeal was raised under s 12(1A) FA 94. The discretion to assess conferred upon the HMRC under s 12(1A) of the FA 1994 is limited. The boundaries of the discretion found in s 12(1A) are those contained in s 12(4). There are no words to be found in the legislation which confer a general supervisory jurisdiction over the HMRC’S exercise of discretion: C & E Comrs v J H Corbitt (Numismatists) Ltd [1981] AC 22, at 60H-61A (Lord Lane). The present appeal is not a s 16(4) appeal.

The FtT has power to review decisions of HMRC in a number of administrative areas which are specified in Schedule 5, FA 1994. These decisions are referred to, collectively, as “ancillary matters”. Section 16(4) FA 1994 confers a limited jurisdiction on the FtT to examine the reasonableness of ancillary decisions, but with very limited powers to give effect to such findings. It would not allow the FtT, or the Upper Tribunal, to quash the decision appealed against: CC&C Ltd. v R & C Comrs [2015] 1 WLR 4043 (‘CC&C Ltd’), at [16] (per Underhill LJ). Assessments to duty are not ancillary decisions. As the Court of Appeal in CC&C Ltd, observed, at [15]-[16], (per Underhill LJ with whom Lewison and Arden LJJ agreed), s 16(4) deals with management decisions involving some element of subjective assessment. The FtT has no jurisdiction under s 16(5) to consider a Wednesbury unreasonableness challenge to an assessment issued on the basis that an excise duty point was triggered.

The jurisdiction invoked by the Appellant’s appeal to the FtT was under s 16(5), and not that under s16(4). The jurisdiction of the FtT in respect of the Assessment is, therefore, determined by s 16(5) FA 1994. In this respect, the FtT has a full appellate jurisdiction: Butlers Ship Stores v HMRC [2018] UKUT 58 (TCC) (‘Butlers Ship'), at [150].

In respect of the Penalty, on an appeal pursuant to para. 17(1) of Schedule 41, the FtT may affirm, or cancel, a penalty. On an appeal pursuant to para. 17(2), the FtT may: (i) affirm HMRC’s decision; or (ii) substitute HMRC’s decision for another decision that HMRC had the power to make.

Mr Boyle submits that the Assessment, dated 11 March 2015, is out of time because all of the relevant evidence was held by HMRC following the first visit to the Appellant’s premises on 5 December 2012. In further amplification of this argument, he submits that the conclusion of the visit on 5 December 2012 was that there was no evidence of smuggling activity on the Appellant’s site.

Mr Carey, on the other hand, submits that at that stage (i.e., in 2012), what had taken place was little more than HMRC trying to identify matters that were relevant to the Assessment, without having sufficient evidence to proceed to make the Assessment. In this respect, he submits that the assessing officer was not part of the team (the FIS) that visited the Appellant’s premises on 5 December 2012. Mr Carey further submits that additional investigative work was required to be undertaken before an assessment could be raised because of the requirement to assess the first duty point: Davison & Robinson. The witness statement provided by the drivers who were identified as having collected the Goods from the Appellant’s premises then provided sufficient evidence such that HMRC could proceed to make the Assessment, after Mr Boyle had denied that the Appellant had any involvement in alcohol in 2014 when Officer Idowu visited the Appellant’s premises.

In reliance on DCM, Mr Carey submits that it is the evidence which justified the assessment which was in fact made, and not the hypothetical assessment that might have been made, which is significant

The burden of proof is upon the Appellant to show that the Assessment was issued out of time: Pegasus Birds Ltd v C & E Comrs [1999] STC 95 (‘Pegasus Birds’), at [101] – [102]. In Pegasus Birds, the court concluded that the correct approach for a tribunal to adopt is:

Dyson J held that the test is a subjective, rather than an objective, one. The Court of Appeal approved the test formulated by Dyson J: at [2000] STC 91. The court further made clear that it is the task of the tribunal to assess whether, as a matter of fact, the officer held the opinion in question. In a later case involving the same taxpayer, the court clarified the test to be applied in determining whether an assessment was to best judgment: [2004] EWCA Civ 1015. The correct test is whether there has been an honest and genuine attempt to make a reasoned assessment (per Carnwath LJ at [22]). These principles were reaffirmed by the Supreme Court in DCM. In Lithuanian Beer Ltd v R & C Comrs [2018] EWCA Civ 1406 (‘Lithuanian Beer’), at [24], the Court of Appeal accepted that the propositions in Pegasus Birds equally apply to excise duty assessments, and to the time-limit specified in s 12(4)(b) FA 94. As held by the Upper Tribunal in Rasul, at [10], in reference to the decision in Pegasus Birds:

In Lithuanian Beer, the Court of Appeal considered the importance of the word “knowledge”, finding that “constructive knowledge” was not sufficient. It is not, therefore, enough for the relevant HMRC officer to know that relevant evidence exists, if he does not know what its contents are, as this would amount to constructive knowledge of the facts said to be evidenced by the material in question. Furthermore, the court was satisfied that there is no distinction to be spelled out of the phrase “evidence of the facts” between knowing that evidence exists and knowing what that evidence reveals about the facts of the case. The court further considered that the last piece of evidence is “communicated” to the Commissioners when it is communicated in such a way that the contents of the evidence are, in fact, known to them. This requires the evidence to be digested by HMRC, and not just made available to HMRC.

By analogy, the court considered a situation where an HMRC officer is presented with a room full of documents and told that he can look at anything that he likes. The court found that in this situation, the officer will not have knowledge of the “evidence of facts” contained in each and every document in the room. The court held, at [26] to [30], that:

In relation to the issue of whether there is a concept of “collective knowledge”, in Tooth - where the Supreme Court was considering the meaning of “deliberate” in the context of Schedule 24 of the Finance Act 2007 and a discovery assessment - the Supreme Court considered the operation of s 29(1) of the Taxes Management Act 1970 (‘TMA’), which confers two separate powers; namely:

The Supreme Court held, at [68] and [69], inter alia, that:

And that:

And, at [69], that:

The case of R (National Association of Health Stores) v Department of Health [2005] EWCA Civ 154 considered “the Carltona principle”, which takes its name from Carltona Ltd v Commissioner for Works [1943] 2 All ER 560, in relation to implied delegation of decision-making functions to civil servants within government departments, at [23] to [38] (Sedley LJ) and [71] to [74] (Keene LJ), as follows:

Sedley LJ added this, at [71] to [74]:

It is, therefore, clear that there is no doctrine of “collective knowledge”. This has the same effect as express delegation of power: s 13(1) of the Commissioners for Revenue and Customs Act 2005 (‘CRCA’).

Having considered all of the evidence, we find that the visit on 5 December 2012 was conducted by the FIS, at which time Officer Idowu (the assessing officer) formed part of the CITEX/ISBC Team. Officer Idowu did not attend the Appellant’s premises on 5 December 2012 and his involvement in the investigation only began significantly later. We find that the earliest date of his involvement was 6 February 2013. At that stage, the supply chain enquiries had only just begun. The investigative work that took place following on from the visits to third-party hauliers was ongoing until the end of 2013/beginning of 2014. We accept that whilst Officer Idowu may have inferred from the delivery documentation that alcoholic goods had been collected from the Appellant’s premises, this was not ascertained until after Officer Idowu made enquiries on 2 May 2014 with Bassetts & Sons, and with Mr Bentley in particular. It was only as a result of those enquiries that HMRC acquired knowledge of the contents of the load collected from the Appellant’s site on 3 August 2012 (being mixed wines and beers).

We accept that it was reasonable for Officer Idowu to seek further evidence to verify the information provided to him during the investigation. In relation to HMRC’s duty to assess against the earliest duty point which can be established, we accept that it was reasonable for Officer Idowu to make enquiries with the Appellant in order to check for evidence of facts, including any facts on which HMRC might have established an earlier duty point. All of the information gathered pointed towards the Appellant’s premises as being the place from which excise goods were collected.

We are satisfied, from the chronology given, that Officer Idowu did not obtain all of the relevant information until 21 March 2014. Before the Visit to the Appellant’s premises on this date, it is reasonable to believe that Officer Idowu was expecting to identify an earlier duty point. HMRC’s enquiries and investigations would have been based around tracing the whole supply-chain, back to the point of importation (or production). We find that there is considerable force in Mr Carey’s submission that it is the evidence which justified the Assessment which was, in fact, made and not a hypothetical assessment that might have been made. The Assessment was then made in March 2015 and is in time (given the timing of the visit to the Appellant’s premises in 2014 when the last piece of information was communicated to Officer Idowu).

The Assessment is the “assessment of the amount of any duty of excise due”. The application of the time-limit in s12(4)(b) will only arise once an assessment to the amount of duty has been made. It will be a question of fact for the Tribunal, having considered the evidence, as to which facts justified the Assessment that was made from the point of view of the officer who made the Assessment. As established by case law, there is then to consider when the last piece of evidence of sufficient weight in relation to the fact came before the Commissioners. It is at this point when the time-limit in s 12(4)(b) starts to run. The 12-month time-limit for the purposes of s 12(4)(b) did not expire until 21 March 2015. The Assessment was issued on 11 March 2015, within the time-limit.

The Appellant also challenges the Penalty on the same basis as the Assessment. HMRC submit that the Appellant’s position is predicated upon a misunderstanding of when the penalty assessment time-limit commences, and that even if the Assessment is out of time, that does not change liability to excise duty as a matter of fact. The question of liability to a penalty, and the provisions in s 13A(2) FA 1994, were considered in Caerdav Ltd v R & C Comrs [2023] UKUT 179 (TCC), at [146] to [159]. A material question in the respect of whether the Assessment is in time is: when did the last piece of information that was critical to the assessment come to HMRC’s knowledge? The question requires identification of the evidence taken into account by the officer who issues the assessment as the justification for issuing it; or the evidence of which he was aware which ought, rationally, to have compelled him to reach the opinion that an assessment would be justified at some earlier stage. This turns on the subjective state of mind of HMRC officers regarding what they understand the evidence available to them actually shows.

Paragraph 16(4)(a) of Schedule 41 provides that the time-limit operates from the time that the excise assessment has been determined. The Assessment in this appeal is the subject of this appeal and has not, therefore, been finally determined. The Penalty was issued on 23 February 2016 and, consequently, is in time.

We hold that the Assessment and the Penalty were issued in time.

Mr Boyle submits that the Appellant is a recycling company that has never traded in alcohol. He further submits that the Appellant’s premises are in a secure location, with one way ‘in’ and ‘out’, and that all commercial vehicles entering its premises are weighed, and a record is kept. In this respect, his submissions are that the third parties referred to by HMRC are not recorded, or listed in the Appellant’s visitor book. The third-party statements obtained by HMRC are further submitted by Mr Boyle to be at odds with the layout of the Appellant’s premises. Furthermore, it is submitted on behalf of the Appellant that the documentation relied on by HMRC (as obtained from the third parties) is not consistent with the Appellant’s own documentation as the Appellant uses formal references made up of a combination of numbers and letters (in its invoices and delivery notes).

HMRC acknowledge that: (i) the sale and movement of alcohol may not typically be indicative of the Appellant’s ordinary trading; and (ii) the Appellant has evidenced a log of entries to its premises on or about the relevant dates, but Mr Carey submits that the clear and overwhelming inference that can be made from the third-party evidence is that there was alcohol being collected from the Appellant’s premises. The evidence obtained from the hauliers demonstrated, in HMRC’s view, that the hauliers were told to collect the Goods from the Appellant’s premises. The clear and overwhelming inference was that alcohol was being collected from the Appellant’s premises, and that someone at the Appellant’s premises must, therefore, have been engaging in the facilitation of the collection of the alcohol. The explanation given by the hauliers was considered to be clear and unequivocal, and the drivers had identified the Appellant’s address.

Ultimately, Mr Carey submits that the Appellant is liable to the excise assessment because it was “holding” the goods within the meaning of the Excise Duty Regulations, and as a person who handled the goods (i.e., for the purposes of para. 4 of Schedule 41), and that the Appellant was able to control access to its premises upon which the collections took place.

During the appeal hearing, Mr Carey submitted that three separate arms-length entities who collected the alcohol could not each have come up with the same factual matrix, particularly in light of the vehicle tracking information held in respect of one of the hauliers (Customs Haulage). In his view, the more likely explanation was that the Appellant had an employee who was facilitating the collection. He further submitted that the purpose of the Excise Directive was to cast a wide net, which would encourage the collection of duty.

We have considered the authorities to which we were referred:

The Appellant’s appeal was previously stayed pending the outcome of the decision of the Upper Tribunal in B & M Retail Ltd v HMRC [2016] UKUT 429 (TCC) (‘B & M Retail’). In B & M Retail, the Upper Tribunal decided that a person holding excise duty goods in respect of which duty had not been paid could be assessed under reg. 6(1)(b) of the Excise Goods Regulations. This was notwithstanding the fact that, in principle, an earlier release for consumption had occurred. Since the decision in B & M Retail, the Upper Tribunal has handed down the decision in Davison & Robinson, which we consider later.

Where HMRC assess the person holding duty unpaid goods, a challenge to the assessment on the basis that there was an earlier excise duty point can only be successful if it can be established:

The case of Dawson’s concerned a wholesaler of alcoholic drinks. HMRC assessed that it owed around £3,700,000 of excise duty on the basis that there was insufficient evidence that excise duty had been paid on certain supplies of good made and physically held by it. HMRC traced the supply chain back from Dawson’s supplies to missing, de-registered or hijacked companies. Dawson’s was assessed because HMRC had no evidence that excise duty was paid on the goods and could not establish that any of the companies appearing further back in the supply chain took physical possession of the goods. The Upper Tribunal held that the starting point in determining who is ‘holding’ the goods at the relevant time must be the person who has physical possession of them. Once the physical holder of the goods is identified, the correct approach is to then consider whether the circumstances of that possession are such that it is inappropriate for that person to be considered to be holding the goods. The Court of Appeal held, at [76], that:

The Upper Tribunal, therefore, held that it is possible for a person with control over the goods, as opposed to physical possession, to be treated as ‘holding’ them. This is as a result of an absence of an earlier duty point. The Upper Tribunal however found that it was up to the person assessed to establish that a person earlier in the supply chain had been holding the goods and should be assessed instead. The Upper Tribunal stated that in the absence of any evidence that establishes an earlier duty point, the person holding the goods at the time that it is established that the goods are being held at a specific location, but are no longer held pursuant to a duty suspension arrangement, is chargeable to the unpaid duty.

The Upper Tribunal had earlier ruled, in Davison & Robinson, that HMRC has no discretion as to who to assess where there have been multiple holders of the goods and excise duty has not been paid. All that HMRC are required to do is to assess the person they find to be holding the goods in question, if that is the only excise duty point which can be established. The case presented on behalf of the Appellant in Davison & Robinson was that B & M Retail was wrongly decided. Further, and alternatively, the appellant argued that the issue of whether there could be more than one excise duty point should be referred to the Court of Justice of the European Union (‘CJEU’).

In Perfect v HMRC [2020] STC 705 (‘Perfect’), Mr Perfect was stopped by UK Border Force at Dover Docks driving a lorry containing pallets of beer, in respect of which excise duty had not been paid. Mr Perfect knew that he was carrying beer, but did not know (i) who owned the lorry; (ii) that duty had not been paid; and (iii) that the documentation which accompanied the load related to a previous consignment. The lorry and the goods were seized. Although HMRC accepted that the evidence did not show that Mr Perfect was actively involved in the attempts to smuggle goods into the UK, or that he deliberately attempted to evade excise duty, he was assessed for excise duty on the basis that he was holding the goods.

Both the FtT and the Upper Tribunal had found that Mr Perfect could not be held liable for the unpaid excise duty on the goods. On appeal to the Court of Appeal, the court accepted that where the driver is the only identifiable person who can be assessed, the opportunity for smuggling and fraud would be manifestly greater if the courts and tribunals conclude that he cannot be assessed if he was unaware that the goods were liable to duty. The court further held that the natural meaning of the words “holding” or “making delivery” do not impute any requirement for the person to be aware of the tax status of the goods. At [22] (Newey LJ with whom Baker and Snowden LJJ agreed), the court found that ‘knowledge’ or ‘means of knowledge’ is irrelevant to liability. The court, therefore, approved the conclusions of the Upper Tribunal, in Davison & Robinson Ltd. The court further commented that the EU principles of proportionality and fairness do not exclude the imposition of strict liability. The Court of Appeal in Perfect concluded thus:

The case was referred to the CJEU’, given the fundamental importance of proportionality in EU law. In WR, the CJEU considered the concept of who ‘holds’ goods. The court held, at [24], that:

And at [27] to [31]:

And also, at [34]:

The agreement between the United Kingdom and the EU setting out the arrangements for the UK’s withdrawal from the EU (‘the Withdrawal Agreement’) Treaty Series No. 3 (2020) provides for judgments of the CJEU handed down after 31 December 2020 to have “binding force in their entirety on and in the United Kingdom if given in respect of references made by the United Kingdom before the end of 2020.

In the context of excise assessments, the Court of Appeal noted in Perfect, at [66] – [67], (and repeated at [10] of the Court of Appeal’s further judgment in the case following a CJEU reference at [2022] 1 WLR 3180) that:

The objective (legitimate aim) of the HMRC’s powers to issue assessments is to secure the payment of excise duty which is owed. The use of such powers is appropriate to achieving that aim where a person holding goods is assessed at the first assessable duty point. The evidence obtained from the third-party hauliers was that on 3 August 2012, Wayne Bentley, working for Bassett & Sons Ltd., collected 26 pallets of alcohol from the Appellant. On 15 August 2012, Dean West, employed by Custom Haulage Ltd, collected 26 pallets of mixed beer from the Appellant’s premises. Over and above the documentation provided from the hauliers was vehicle tracking information, which supported the claimed collection at the Appellant’s premises on that date. We accept that the reasonable inference that can be drawn from the evidence was that the Appellant had involvement/held excise goods.

Whilst we have considered Mr Boyle’s evidence that the third-party hauliers are not recorded in the Appellant’s visitor log, we find that the Appellant has not been able to point to any other entities higher up in any supply-chain in relation to the duty point. More importantly, despite referring to other tenants on site, and the failure of HMRC to speak to those tenants, the Appellant has not conducted any enquiries of its own in this respect. We accept that a conversation relating to excise goods would have been a sensitive one to have with the tenants. However, the incontrovertible fact in this appeal is that the Appellant’s premises have been identified by separate entities as the place from which excise goods were collected, and this has resulted in the Assessments.

We find that the Appellant’s entire case rested on the business model being contrary to the suggestion that the Appellant would have any involvement in alcohol. There was no suggestion, on behalf of the Appellant, that CJM could be regarded as holding the excise goods as CJM’s involvement appears to have predated the arrival of the Goods at Freedom Farm (even if only for a matter of hours). The issue of whether CJM had control of the Goods, in the sense that they were able to direct where the Goods were going to be collected and delivered, was not one that was explored, or suggested, before us. We are satisfied that supply-chain investigations were conducted by HMRC and the third-party hauliers (including CJM) pointed to the Appellant’s premises as being where the Goods were delivered/collected, and that is the duty point that has been identified by HMRC.

We acknowledge that what the Appellant has been required to prove is a negative, as the Goods were never found in the Appellant’s physical possession and the holding/movement of alcohol is contrary to the Appellant’s business model. The Appellant however has control over its premises. We find that despite referring to various employees who worked for the Appellant at the relevant time of HMRC’s enquiries/investigation, the Appellant has not called any evidence from its employees in relation to the events that took place on site on the dates that alcohol was said to be collected from its premises. Mr Boyle explained that he spends time working from his office on site. Whilst the entrance to the Appellant’s premises is visible from the office window, his desk faces away from that window and he would not have had any way of knowing everything that was taking place outside at all times.

We accept that the Appellant’s environmental permit regulates waste operations on its site and requires records to be kept of the acceptance and despatch of waste. We, however, find that there is considerable force in Mr Carey’s submission that it is not to be expected that such records would document the entry and despatch of vehicles which were not transporting waste to the Appellant’s site. The weighbridge tickets and the environmental permit are, therefore, irrelevant to the assessments under appeal, which relate to consignments of alcohol which may have been destined for various cash and carries.

Having considered the authorities and the evidence, we hold that the Appellant is liable for the unpaid duty because it was holding (within the meaning of the Excise Duty Regulations) the Goods collected from its premises. Furthermore, we find that the Appellant was able to control access to its premises, upon which the collections took place.

The Assessment was made under s 12(1A) FA 94, which provides that an assessment may be made where it appears (to the Commissioners) that the amount due can be ascertained (by the Commissioners). No goods have ever been found and the exact quantity of those goods has not been ascertained. Mr Boyle submits that duty cannot be calculated because the Goods, and quantity, have not been identified.

Mr Carey submits that all that is required is that an assessment is made to the best of their ability, and that HMRC have taken into account the handwritten logs that the Appellant has provided. The conclusion reached, however, is that these do very little to suggest the Assessment is wrong given that there are multiple entities who identified the Appellant’s address as the collection address. He adds that there has been no attempt by the Appellant to make enquiries of its own, or any attempt to call any witnesses who may have been working on the relevant dates to give evidence. Mr Carey submits that best judgment only arises if the Assessment was made randomly, arbitrarily, capriciously or maliciously. In Van Boeckel, Woolf J (as he then was) said this in respect of assessments, at p. 296:

Woolf J drew three conclusions in relation to the obligation that is upon HMRC. Firstly, there must be some material before HMRC on which they can base their judgment. Secondly, HMRC are not required to do the work for the taxpayer in order to form a conclusion as to the amount of tax due. Thirdly, HMRC are required to exercise their powers in such a way that they make a value judgment on the material which is before them. Carnwath LJ cited the same passages in Rahman where he said this, at p 835:

The threshold for making a “best judgment” assessment is therefore a low one. The correct test is whether there has been an honest and genuine attempt to make a reasoned assessment: Pegasus Birds, at [22] (per Carnwath LJ). This does not translate to meaning that whether an assessment could be said to be “wholly unreasonable” is irrelevant to determining that question: Pegasus Birds, at [77] (per Chadwick LJ). HMRC only need to consider the information before them in a fair way and come to a decision which is reasonable (and not arbitrary) as to the amount of tax due. In Corneill v HMRC [2007] EWHC 715 (Ch), at [32] and [33], Mann J found, in respect of a similar provision requiring the liability to be ascertained, that it was appropriate to draw inferences from the available evidence.

When considering circumstantial evidence, the Tribunal is required to assess the evidence as a whole: Davis & Dan Ltd v HMRC [2016] EWCA Civ 142; [2016] STC 1236 (Arden LJ at [57] to [60]). We have found that the documents relied on by HMRC name the collection point as the Appellant’s premises, and the delivery or end user are cash and carries. Whilst Mr Boyle challenged the documents, the challenge did not extend to the descriptions contained in the documents. One of the documents states: “26 Pallets Lager”. The documentary evidence was coupled with statements obtained from the drivers of the hauliers in question, which supported the conclusion that the Appellant’s premises had been used as a collection point. The evidence, when taken as a whole, strongly suggested that the duty point first arose when goods were collected from the Appellant’s premises.

The calculation of the Assessment was, ultimately, based on the conclusion that there were two full loads of beer (26 pallets) collected from the Appellant’s premises. In this case, the best evidence available is from the hauliers who noted the collection address as being from the Appellant. Officer Idowu’s calculation was based on a standard load of an average quantity and strength of beer, which provided the Appellant with the benefit of the doubt, given that the proportion of wine (which attracts a higher rate of duty) in the load collected on 3 August 2012 was unknown. We are satisfied that Officer Idowu made a reasonable calculation of the amount of duty due. The duty due has, therefore, been ascertained for the purposes of s 12(1A) FA 94, and paras. 9 and 10 of Schedule 41.

Under Schedule 41, a penalty is payable if, when “P acquires possession of the goods or is so concerned, a payment of duty on the goods is outstanding and has not been deferred”. In the event that para. 4 of Schedule 41 is satisfied, a person is liable to a penalty. Reductions are available when disclosures are made to HMRC.

Mr Boyle submits that a non-deliberate penalty cannot be sustained. He further submits, that the Penalty cannot be applied because the Goods have been destroyed. Mr Boyle submits that, since access to its site is secure and controlled, the alleged wrongdoing could not possibly have been non-deliberate.

Mr Carey submits that if the criteria set out in para. 4 of Schedule 41 are met, liability to a penalty arises, and that: (i) there is no evidence to suggest that the Goods were destroyed or irretrievably lost as opposed to being used on the open market - the excise fraud having been successful; (ii) the Appellant has not adduced any evidence to show that the Goods were “unusable”; and (iii) the Goods were liable to forfeiture as excise duty had not been paid while the Goods were being held outside of duty suspense. In those circumstances, he submits, a penalty can be charged.

In Euro Wines, the Court of Appeal said this, at [3]:

The Penalty calculated is a percentage of the PLR. The first stage is to consider the penalty range. The penalty range depends on behaviour (the behaviour that led to the wrongdoing) and disclosure (whether this was prompted or unprompted). The penalty range in this appeal is 35% to 70%.

The second stage is that relating to reductions for the quality of any disclosure. In relation to “Telling”, the conclusion reached by HMRC was that there was a total denial of any activities having taken place. In relation to “Helping”, the conclusion reached was that there was a total denial of any activities having taken place. In relation to “Giving”, the conclusion reached was that, once again, there was a total denial of any activities having taken place. No reductions were, therefore, given.

The third stage is that relating to calculation of the penalty percentage. HMRC worked out the difference between the minimum and maximum penalty percentages, then multiplied that figure by the total reduction to get the percentage reduction. HMRC then reduced the percentage reduction from the maximum penalty percentage that could be charge, giving the penalty percentage. Based on the information HMRC had, they did not consider there are any special circumstances which would lead them to further reduce the Penalty.

As considered earlier, following the Visit to the Appellant’s premises on the 21 March 2014, the Appellant was considered to have been instrumental in facilitating the movement of two loads of alcohol from its premises to addresses in Liverpool and Doncaster, in August 2012. Mr Boyle was shown three invoices from third-party hauliers, each stating that they picked up full loads of alcohol from the site. The collections were done over a two-week period in August 2012. The Appellant was afforded an opportunity to put forward any evidence in support of its position. HMRC have concluded that there was no deliberate action on the Appellant’s part. This reduced the penalty from £32,724.30 to £14,024.70. We find that the Penalty was properly applied.

On the basis of our findings above, we hold that:

This document contains full findings of fact and reasons for the decision. Any party dissatisfied with this decision has a right to apply for permission to appeal against it pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009. The application must be received by this Tribunal not later than 56 days after this decision is sent to that party. The parties are referred to “Guidance to accompany a Decision from the First-tier Tribunal (Tax Chamber)” which accompanies and forms part of this decision notice.