Hayat Estates Ltd v The Commissioners for HMRC

Mr Hayat (the Appellant’s director) confirmed that he was not expecting a legal representative to attend on the Appellant’s behalf. He added that a friend, who is a contract lawyer, had originally intended to attend the hearing as a Mackenzie friend, but could not do so due to domestic circumstances. Mr Hayat, nevertheless, confirmed that he was ready to proceed with the appeal hearing, having confirmed that he had received all of the documents referred to at para. 4 above, and that there were no variations to the Appellant’s Grounds of Appeal (as set out in the Notice of Appeal and amplified in the Further and Better Particulars).

At the commencement of the appeal hearing, Ms Brown handed up a copy of HMRC’s Disaster Relief Guidance, as it applied during the period when the Goods were imported. Mr Hayat indicated that he had no objection to this late piece of evidence being submitted by HMRC as a later version of guidance had already been included in the Hearing Bundle. Ms Brown explained that there had been further iterations of the guidance over a period of time. We were satisfied that the guidance was relevant to the issues before us and, therefore, admitted the late evidence having balanced the prejudice to both parties.

The Appellant’s Grounds of Appeal assert that there is an inconsistency in HMRC’s interpretation of the Disaster Relief as the guidance has been applied differently in relation to the Import Entries where relief was granted. Whilst this point was not pursued in the Appellant’s Skeleton Argument, Mr Hayat confirmed that he still wished to pursue the point concerning the inconsistency in HMRC’s decision-making during the appeal. We explained that the First-tier Tribunal (‘FtT’) does not have jurisdiction to review the reasonableness of HMRC’s decision, in light of the nature of the decision under appeal. We further explained that the FtT does not have any supervisory jurisdiction over HMRC. We will return to this issue later.

As Mr Hayat was unrepresented, we asked Ms Brown to open HMRC’s case. We have included the opening and closing submissions made by both parties in the following paragraphs:

Ms Brown adopted and amplified the submissions made in the Statement of Case, and in her Skeleton Argument. She submitted, in summary, that:

In reply, Mr Hayat submitted, in summary, that:

We heard oral evidence from Mr Hayat, Officer McKinnell and Officer Rankin.

Mr Hayat had not prepared a witness statement in support of the appeal. In his oral evidence, he adopted the contents of his Notice of Appeal, and the Further and Better Particulars, as being true and accurate. He then explained that he had become aware of the Disaster Relief via the Gov.uk website, whilst researching how to import the Goods. He added that he contacted NIRU to seek clarification about the process involved. He subsequently completed the NIRU application form. Prior to importing the Goods, Mr Hayat says that he had obtained purchase orders from Scooterpac, with details of the qualifying end users that the Goods would be supplied to as he wanted to ensure that the conditions for the Disaster Relief would be met. Mr Hayat’s position was that the imports were all based on the NIRU certificate, and that they are all eligible for relief.

Mr Hayat further explained that the reality of doing business during the pandemic, particularly with regard to products in high demand, globally, was that “things did not always go to plan”. This was because there was an upheaval in global supply chains and logistics, and the rules were constantly changing; not just in the United Kingdom, but also in the countries from which the Goods were being purchased. He added that: (i) prices and minimum quantity requirements were fluctuating daily as suppliers were experiencing rising costs in raw materials; (ii) there was an unprecedented demand for PPE; and (iii) deliveries were constantly delayed and, in some cases, the product quantities that arrived were not as expected, or agreed. In his opinion, these issues complicated the supply chain in some instances, and meant that orders were cancelled, or could not be honoured due to quality issues with the items.

Despite these challenges, he stated that the evidence provided showed that the Appellant did everything possible to ensure that the conditions of the Disaster Relief were met. His position was that in all instances, the Goods were either delivered to an Eligible Organisation, or the order was cancelled after import due to factors such as substandard quality, or delays in the supply chain; which he submitted was completely out of his control. He was of the view that the reasons why the imports did not go to an Eligible Organisation must be considered in the deciding whether or not relief should be granted.

Under cross-examination from Ms Brown, Mr Hayat said this:

We then heard from Officer McKinnell. Officer McKinnell has been employed by HMRC since December 1998. From April 2015 until 5 September 2021, she was employed as a Customs International Trade Higher Officer. She is currently employed as a senior officer in another directorate within HMRC. In her oral evidence, she adopted the contents of her witness statement, dated 22 December 2022, as being true and accurate. She was not asked any further questions in examination-in-chief by Ms Brown.

In her witness statement, Officer McKinnell states that she took over the case from Officer Forwood in December 2020. She explained that for Import Entries 3, 4, 10, 13, 14, 15, 17 and 19, the documents provided by the Appellant showed that the Goods were provided to organisations which were not Eligible Organisations. She added that in reaching this conclusion, she conducted internet searches on Gov.uk, Companies’ House and the Charities Commission pages. She explained that the searches confirmed that both IDC and RHP were private companies, and that RHP was not a registered charity.

For Import Entries 1, 2, 5, 6, 7, 8, 11, 12 and 16, she formed the view that although the Appellant had indicated that the Goods were supplied to NHS NWCCG and Radcliffe (via Rutland), the Appellant had not provided a full audit trail confirming the supply to those organisations, or indeed any other Eligible Organisation. For Import Entry 9, she formed the view that although the Appellant had indicated that the Goods had been supplied to NCC via Scooterpac and Eastpoint, she still required further evidence of the full supply chain which could have included contracts, purchase orders, sales invoices, payment evidence and delivery evidence.

Under cross-examination from Mr Hayat, Officer McKinnell explained that officers have access to a senior officer in terms of how the Disaster Relief should be applied. She added that she reached her conclusions as to whether the conditions for the Disaster Relief were satisfied by looking at the information that had been originally been provided by Mr Hayat, as well as the additional information provided after the decision was made.

The last witness to be called was Officer Rankin, who adopted the contents of his witness statements dated 23 December 2022 and 21 April 2023, as being true and accurate. Officer Rankin has worked as an Intervention Officer for the Customs and International trade Team since 10 October 2014. In his witness statements, Officer Rankin stated that following ADR discussions, he accepted that Import Entry 2 satisfied the conditions for reliance on the Disaster Relief and, therefore, customs duty did not apply to that import. He also explained that he accepted that the Disaster Relief applied to some goods imported under Import Entry 16 and, as such, no customs duty is due on that proportion of goods; namely 9080 surgical gowns, and partially in relation to Import Entry 18. He, however, maintained that the eligibility criteria for the Disaster Relief were not satisfied in respect of the remainder of the imports which are the subject of the Assessment.

Under cross-examination from Mr Hayat, Officer Rankin stated that the imports that had been accepted were attributed to specific entries according to the information that had been provided by Mr Hayat and not randomly, as suggested.

During the appeal hearing, Mr Hayat placed reliance on alternative articles of the CSDR Regulations. He submitted that arts. 95 to 101 of the CSDR Regulations apply to the circumstances of this appeal as the Goods had to be examined before they could be released. In this respect, he submitted that this was a reasonable and prudent thing for him to do in order to see if they met the standards required. He further submitted that art. 23 of the CSDR Regulations is relevant on the basis that goods that were destroyed were of negligible value.

Ms Brown, on the other hand, submitted that arts. 95 to 101 of the CSDR Regulations do not apply to the circumstances of this appeal as those articles deal with goods that had been imported for medical examination. She further submitted that art. 23 is not relevant as the Goods were not of negligible value at the time of import.

A further issue arose during the hearing as to what the obligation was upon an importer in relation what use goods were put to after they had been delivered to an Eligible Organisation. We asked Ms Brown to shed further light on how an importer might monitor this. Ms Brown submitted that the obligation upon an importer is simply to satisfy itself that at the time that the supply was made, the conditions of eligibility for the Disaster Relief were met by providing a full audit trail to show that goods were received by an Eligible Organisation.

There was some discussion about the number of surgical gowns that had been accepted as qualifying for the Disaster Relief under Import Entry 16 (9080 gowns to East Sussex NHS Trust) as Mr Hayat was of the view that there was a balance of 280 gowns that had not been accounted for. Mr Hayat further highlighted that only 10,640 gowns were shown under Import Entry 16 when, in fact, 20,000 gowns had been accepted by East Sussex NHS Trust.

Ms Brown submitted that HMRC were willing to concede that a further 280 gowns should be attributed to Import Entry 16. This was not accepted by Mr Hayat in light of the order showing that a total of 20,000 gowns were ordered by East Sussex NHS Trust.

At the conclusion of the appeal hearing, we reserved our decision, which we now give with reasons.

The following facts were either proved, or accepted:

We will elaborate on these findings of fact later.

The Appellant appeals against HMRC’s decision to issue an Assessment to customs duty, in the sum of £71,594.95. The Assessment relates to consignments of PPE imported under the Disaster Relief. The Appellant imported the Goods using the COVID-19 Disaster Relief CPC code 40 00 C26. The document entitled “European Commission: COVID Disaster Import Relief: COVID-19 Questions and answers on the Commission Decision (Europa.eu)” (‘the Questions and Answers document”) included in the Hearing Bundle shows that the additional procedure code “C26” (Goods imported for the benefit of disaster victims) is required to be declared in the customs import declarations.

The imports made by the Appellant were ordered and facilitated by Scooterpac, the Appellant’s intermediary, from the suppliers listed in the table at para. 15 above. A letter, dated 9 June 2021, from Scooterpac, says this concerning the orders:

Prior to making the imports, Mr Hayat contacted NIRU and he obtained a NIRU certificate. Mr Hayat submits that all of the organisations identified in this appeal were specified in the Appellant’s NIRU application. This is not correct as the NIRU application, dated 1 May 2020, only referred to NHS NWCCG, East Anglian Air Ambulance and NCC. This is the starting point.

The notes attached to the Appellant’s NIRU certificate provide that:

If there is a nil rate of duty and VAT on these goods under the Customs Tariff, an application is unnecessary. To determine the duty and VAT rate, please email our Tariff Classification helpdesk…

A copy of your order and other supporting documents to support this application may be requested by Customs.

Any certificate issued by this office will grant relief from Customs duty and VAT.

The goods and their use may be subject to verification by Customs at any time after the import.

If the goods are sold on, duty and VAT may be due on the value of the goods at the time of the sale.

The goods must not be lent, hired out or transferred whether for payment or free of charge except with the prior consent of this office.

If application is to be sent electronically via e-mail to NIRU, the declaration in box 5 does not have to be signed.

This application must be sent to: ...”

The Goods were subject to verification by HMRC when the compliance check was opened.

Mr Hayat submits that the Goods satisfy the eligibility criteria for the Disaster Relief and, as such, customs duty is not due on the Goods. Ms Brown submits that the Appellant has not discharged the burden of proof it to show that the Goods were supplied to an Eligible Organisation either because: (i) a full audit trail is lacking; (ii) the end user is not an Eligible Organisation (in the cases of RHP, IDC and KCS); (iii) some goods were returned to the supplier or destroyed and/or: (iv) there is a lack of evidence that the supplies made to Edhi and Phoenix were distributed in the United Kingdom.

The Appellant imported some of the goods from Turkey. The UCC applies to imports of non-EU goods (i.e., goods which are imported from outside the EU) and customs duty applies to such goods if they do not fall within the conditions of entitlement to the Disaster Relief.

This appeal concerns the conditions for entitlement to the Disaster Relief. The Disaster Relief granted by the CSDR Regulations requires goods to have been imported by State organisations, or other charitable or philanthropic organisations (i.e., an Eligible Organisation) approved by the competent authorities of the Member State in question. The competent authorities in the circumstances of this appeal are HMRC as the imports were made to the United Kingdom during 2020 (before IP-completion day). In accordance with art. 74(1)(a) of the CSDR Regulations, goods are required to have been imported by an Eligible Organisation “for distribution, free of charge, to victims of disasters affecting the territory of one of more Member State”, and “made available free of charge to the victims of such disasters” (art. 74(1)(b)). This is the specific/intended use condition of the system established by the Disaster Relief.

Article 76 of the CSDR Regulations specifies that customs duty relief is subject to a decision by the Commission. That decision is the Commission Decision dated 3 April 2020. The Commission Decision laid down the scope and conditions of the relief referred to in art. 74 of the CSDR Regulations, and specifies that goods must satisfy the requirements laid down in arts. 75, 78, 79 and 80 of the CSDR Regulations. The Commission Decision further broadened the condition set out in art. 74 of the CSDR Regulations by providing that goods must be imported by or on behalf of an Eligible Organisation approved by the competent authorities of the Member State in question.

Articles 78 and 79 of the CSDR Regulations can be described as the “change of use” or “change of circumstances” conditions.

Article 78 provides that organisations benefitting from the goods are prohibited from lending, hiring out or transferring the Goods – whether for consideration or free of charge – without first notifying the competent authorities. If the organisation to which the goods were lent, hired out or transferred to is also entitled to benefit from the relief granted by reg. 74, the relief will continue to be granted unless that organisation used the goods for purposes other than those specified by the CSDR Regulations.

Article 79 provides that organisations referred to in art. 74 which cease to fulfil the conditions giving entitlement to relief, or which are proposing to use the goods admitted duty -free for purposes other than those provided for by that Article, shall inform the competent authorities. Should goods be lent, hired out or transferred to an organisation itself entitled to benefit from relief pursuant to art. 74, the relief shall continue to be granted, provided such organisations use them for purposes which confer the right to such relief.

Article 123 of the CSDR Regulations provides that where relief granted is conditional upon the goods being put to a particular use by the recipient, only the competent authorities of the Member State in whose territory the goods are to be put to use may grant the relief. This provides for the situation where goods are distributed outside of the Member State to which the goods were originally imported. In these circumstances, the competent authorities in the Member State cannot grant relief as the goods will no longer be in that Member State. This is the relevance of HMRC’s submission that the Goods were required to be distributed within the United Kingdom as this is the only situation where HMRC will have the power to grant relief.

As mentioned earlier, further issues arose during the appeal hearing in respect of goods that had been destroyed by Scooterpac, following testing by the BSI. Mr Hayat sought to rely on alternative articles of the CSDR Regulations to establish that the conditions for entitlement to customs duty relief still applied, even if the conditions of entitlement to the Disaster Relief were not met.

Mr Hayat submits that arts. 95 to 101 of the CSDR Regulations apply in respect of goods which were destroyed following testing by the BSI. The relevant provision he relies on is as follows:

We find that this submission by Mr Hayat, and his reliance on art. 95 of the CSDR Regulations, is misconceived. This is because the Goods were not imported for examination, analysis or test purposes, which is what is specifically required by the provisions set out in arts. 95 to 101. The Appellant’s case has always been that the Goods were imported under the Disaster Relief and we have set out the conditions that had to be met under art. 74 of the CSDR Regulations, and art. 1 of the Commission Decision. Prior to importing the Goods, Mr Hayat had completed a NIRU certificate for the purposes of relying on the Disaster Relief. The conditions of entitlement to the Disaster Relief are that at the time of import, goods are imported by or on behalf of an Eligible Organisation for distribution free of charge to victims of disasters (in this case COVID-19). The fact that some goods had to be destroyed because they did not meet the standards required for PPE does not change the purpose for which the Goods were imported in the first place.

Mr Hayat alternatively submits that art. 23 of the CSDR Regulations is relevant on the basis that goods that were subsequently destroyed following testing by the BSI were of negligible value. In this respect, he relies upon art. 23 of the CSDR Regulations, which provides that:

Subject to Article 24, any consignments made up of goods of negligible value dispatched direct from a third country to a consignee in the Community shall be admitted free of import duties.

For the purposes of paragraph 1, ‘goods of negligible value’ means goods the intrinsic value of which does not exceed a total of EUR 150 per consignment.”

We find that Mr Hayat’s submissions in this respect are also misconceived. This is because whilst the consignments may have been of negligible value once they were tested and destroyed, the consignments were not of negligible value at the time of import under the Disaster Relief, as shown by the invoices submitted prior to their examination by the BSI.

Mr Hayat’s overall submission in respect of the goods which were examined and destroyed is with reference to art. 125 of the CSDR Regulations, which provides that:

We have found that art. 23 and arts. 95 to 101 are not relevant to the circumstances of this appeal for the reasons given above. Therefore, art. 125 is not relevant as the Appellant does not simultaneously fulfil the conditions for the grant or relief under different provisions of the CSDR Regulations, in light of the purpose for which the Goods were imported.

A further issue which arose during the hearing was that concerning supplies made to care homes. Mr Hayat’s position was that there was an urgent need to get PPE to care homes during the pandemic and that care homes are included in the definition of an Eligible Organisation. He relies on HMRC’s Disaster Relief Guidance, which includes “homes and hostels for the aged” as being organisations approved by HMRC. As we set out in greater detail later, the Appellant made supplies to RHP (a care home operator) and IDC (who were said to have then made supplies of the Goods to care homes), after the orders that were originally intended to go to NHS NWCCG, East Anglian Air Ambulance and NCC were cancelled.

Ms Brown’s position, on behalf of HMRC, is that RHP and IDC are private companies and commercial enterprises. They are not, therefore, considered by HMRC to be Eligible Organisations. In this respect, Ms Brown submits that a fee is charged by RHP as an organisation with commercial interests, and that there is no audit trail to show that IDC made onward supplies to care homes as claimed by Mr Hayat. We accept that Ms Brown’s submission that RHP was a fee-paying organisation was in the context of the fact that residents of care homes operated by RHP would be required to pay a fee for residence, out of which supplies would be made available to residents, and not because an additional fee would have been applied to the distribution of supplies such as PPE.

As Mr Hayat places significant reliance on HMRC’s Disaster Relief Guidance, we have considered the terms of the guidance, as follows:

Whilst relevant to a different area of domestic law, at [10] to [11] of his judgment in Mahad (Ethiopia) v Entry Clearance Officer [2010] 1 WLR 48, Lord Brown disapproved the use of guidance documents as an aid. The judgment of Dyson LJ in MD (Jamaica) v Secretary of State for the Home Department [2010] EWCA Civ 213, at [23], is to the same effect. We bear in mind that the HMRC’s guidance is not an exhaustive code, or a comprehensive edict. Guidance documents and kindred instruments do not have the status of law and, thus, are subservient to legislation. The duty is to take into account all material considerations, weighing them in the round (against the relevant legislative scheme).

Whilst HMRC’s Disaster Relief Guidance does not have the status of law, it is clear that the guidance specifically focuses on State bodies/organisations, and excludes profit-making organisations. Furthermore, there is absolutely no reference to a private organisation or a commercial enterprise. The guidance further focuses on the conditions specified in the Disaster Relief. As we set out earlier, under the Disaster Relief, an Eligible Organisation is clearly defined as “State” organisations, or other “charitable” or “philanthropic” organisations.

The Questions and Answers document (supra) shows that “State organisations” includes State bodies, public bodies and other bodies governed by the public law including hospitals, governmental organisations and local governments (as repeated in HMRCs Disaster Relief Guidance. Under the Disaster Relief, the competent authorities (i.e., HMRC) will then take the necessary measures to ensure that the goods imported are, in fact, being delivered to organisations that are eligible for exemption.

Having considered the Disaster Relief, we are satisfied that private organisations and commercial enterprises are not included in the definition of an Eligible Organisation, whether or not such organisations have care homes as a business model. The clear requirement is that the organisations must not be profit-making organisations.

We now turn to the circumstances of this appeal. A number of questions need to be answered to determine whether the issues referred to at para. 5 above are discharged in this appeal:

HMRC accept that the Goods imported by the Appellant were of a kind which can benefit from the Disaster Relief. This question can, therefore, be answered in the affirmative and this matter is not in issue between the parties. The Disaster Relief applies to medical supplies, equipment and protective garments following the outbreak of COVID-19.

This question is answered in the affirmative as the Appellant originally imported the Goods on behalf of NHS NWCCG, East Anglian Air Ambulance and NCC (all of which meet the definition of an Eligible Organisation), for free circulation. This was on the basis of the NIRU certificate and the invoices from Scooterpac that were provided by Mr Hayat. The Goods were, however, subsequently supplied to RHP, IDC, Edhi and Phoenix - with some going to Mr Hayat’s family and friends - after the orders for NHS NWGGC, East Anglian Air Ambulance and NCC were cancelled. Orders for Radcliffe (which is also an Eligible Organisation) were also cancelled. Relief has been applied in respect of supplies made to the NHS (East Sussex NHS Trust and West Sussex NHS Trust).

We are satisfied that the Goods were originally imported for free circulation on behalf of an Eligible Organisation but, as we set out later, not all of the Goods were actually supplied to an Eligible Organisation and full audit trails are lacking in respect of whether the Goods were distributed free of charge.

This question is answered in the affirmative for the same reasons as the answer to the preceding question. Once again, however, there was a change in relation to the organisations that actually received the Goods.

The parties had diametrically opposed views about whether all of the Goods were, in fact, supplied to an Eligible Organisation after the orders were cancelled by the NHS NWCCG, East Anglian Air Ambulance and NCC. Radcliffe (a hospital) also cancelled its order.

As noted earlier, supplies were made to RHP and IDC by the Appellant. In respect of RHP and IDC, HMRC’s conclusion was that these are private companies and do not, therefore, meet the definition of an Eligible Organisation. In respect of KCS, whilst HMRC concluded that KCS was a commercial enterprise, the supplies that were intended to be made to KCS were not made as the orders were cancelled.

The supplies made to Edhi and Phoenix were not accepted by HMRC as meeting the conditions of entitlement to the Disaster Relief, despite HMRC’s acceptance that Edhi and Phoenix were charitable organisations and, therefore, Eligible Organisations. This was because a full audit trail was lacking in respect of the supplies made to Edhi in relation to who the end-users of the Goods were. The Disaster Relief provides that the Goods must be distributed for circulation free of charge to victims of disasters. The Disaster Relief further provides that the competent authorities must be not only be notified of any change of use and approve the new organisation, they must also be in a position to grant relief; which is only possible if goods are distributed in the territory of the State in question (hence HMRC’s reference to art. 123 of the CSDR Regulations).

In respect of Eligible Organisations, whilst we accept that it would be an onerous task for an importer to monitor the use to which the organisation puts the goods, it is clearly the duty of the importer to ensure that the supply is made, in the first instance, to an Eligible Organisation, and that the change of use provisions of the CSDR Regulations (arts. 78 and 79) are observed as it is the importer who has imported the Goods, and not the Eligible Organisation.

For the reasons set out below, we are satisfied that the Goods in question in this appeal were not supplied to an Eligible Organisation. We accept that the reasons for this were outside of the Appellant’s control. This does not, however, change the incontrovertible facts that: (i) the organisations which ultimately received the Goods either did not meet the definition of an Eligible Organisation; or (ii) a full audit trail was lacking in respect of some of the end-users (the change of use provisions of the CSDR Regulations). We are further satisfied that the requirement to satisfy the conditions of the Disaster Relief is one that cannot be circumvented, or overcome.

We now turn to consider the separate Import Entries in this appeal:

The imports made under Import Entry 1 were supplied by Lokumal, in an order facilitated by Scooterpac. The end users of the “FFP3 masks” in relation to this Import Entry were intended to be NHS NWCCG, East Anglian Air Ambulance and NCC. The end users of the “disposable face masks” were intended to be NCC. The Goods arrived in the United Kingdom on 10 May 2020. However, there were concerns with the quality of the masks and the masks were submitted to the BSI for testing. A certificate was issued by the BSI on 8 October 2020 and the masks were rejected as they did not meet the standards. NHS NWCCG and NCC, therefore, cancelled the order. This is accepted by Mr Hayat.

Mr Hayat further accepts that Scooterpac instead disposed of 50,000 masks. It is clear that the masks that were destroyed cannot be deemed to have been distributed free of charge. We accept that Mr Hayat was exercising prudence by having the masks tested, in order to avoid supplying substandard PPE to the intended end-users. We find, however, that the conditions for entitlement to the Disaster Relief would not have been met once the masks were destroyed. We have earlier found that goods that were destroyed were not imported for medical examination, but were imported under the Disaster Relief and unfortunately had to be destroyed.

Mr Hayat submits that a further 50,000 masks imported under Import Entry 1 were supplied to RHP. In this respect, Mr Hayat relies upon an invoice issued to RHP. The invoice records RHP’s address as ‘Brook House, Brook Garden, Norwich, Norfolk, NR15 1JH’. The website for the care home registered at this address indicates that it is owned and operated by Kingsley Healthcare. The website for Kingsley Healthcare shows that it is a privately owned, profit making company which owns and operates care homes on a commercial basis. The available information also indicates that RHP provides commercial services “for profit”. Furthermore, there was no evidence that RHP was registered with the Charities Commission. This was accepted by Mr Hayat.

Whilst the remaining masks under Import Entry 1 were supplied to RHP, we are satisfied that RHP is a private company that provides commercial services. Accordingly, therefore, RHP is not an Eligible Organisation. As RHP is a private company, we are satisfied that the Disaster Relief does not apply.

HMRC have applied relief to this Import Entry on the basis that a full audit trail had been provided by the Appellant to show that the supplies were made to an Eligible Organisation. This matter is not, therefore, in issue between the parties.

The imports made under Import Entry 3 were also supplied by Lokumal, in an order facilitated by Scooterpac. The Goods were intended to go to NCC, but NCC cancelled its order. The Appellant supplied 50,000 masks to RHP and 20,000 masks to IDC. Mr Hayat submits that IDC made onward supplies of the masks to care homes. We have found that RHP is a private company and IDC is also a private company, as accepted by Mr Hayat. Furthermore, there is no evidence before us to support a finding that IDC made an onward supply of the Goods to care homes as a full audit trail is lacking in this respect.

We are satisfied that the Disaster Relief ceased to apply once the Goods were transferred to IDC for the same reasons that the Disaster Relief ceased to apply in respect of the transfers made to RHP (as considered earlier).

The imports made under Import Entry 4, 14 and 19 were facilitated by Scooterpac. The orders were placed with Lokumal. The Goods were intended to go to NHS NWCCG, Radcliffe and NCC., but the orders were cancelled. The Goods were, instead, supplied to IDC and Edhi.

Mr Hayat submits that 3,175 boxes of gloves were supplied to IDC, who were then said to have supplied the Goods on to care homes. We have found that IDC is not an Eligible Organisation. We have further found that there is no evidence before us to support a finding that IDC made any supplies to care homes as a full audit trail is lacking.

Mr Hayat submits that 1,705 boxes of gloves were supplied to Edhi. Ms Brown submits that HMRC accept that Edhi is an Eligible Organisation as it is registered with the Charities Commission. HMRC’s position is, however, that Edhi supports international projects, and that there is no evidence that the supplies made to Edhi were distributed in the United Kingdom. Once again, no audit trail has been provided by Mr Hayat in respect of the end-use of the supplies made to Edhi, which would have been of probative value to the Appellant’s case.

These imports were ordered by Scooterpac on 24 April 2020. The suppliers were PIGA, Elsa Pharma and Heng Dong. The imports arrived in seven consignments between 11 May 2020 and 22 June 2020. The Appellant intended to supply 50,000 gowns to Radcliffe (from Import Entries 5, 6, 7 and 8), but Radcliffe cancelled the order. The Appellant also intended to supply: (i) 50,050 gowns to KCS - as shown in an invoice from Scooterpac to Eastpoint and a despatch note; (ii) 20,000 gowns to East Sussex NHS Trust (9,080 have been accepted by HMRC); and (iii) 6000 gowns to West Yorkshire NHS Trust (HMRC have also applied relief to this supply).

Donations were also made to Edhi (2,800 gowns) and to Phoenix, and some orders were returned to Elsa Pharma (18,550 gowns).

In respect of the 50,000 gowns intended to be supplied to Radcliffe, Mr Hayat relies upon an email from the head of supply at Radcliffe, which confirms that the hospital placed an order for 50,000 gowns with an organisation referred to as SE Workwear (supplied by Rutland as shown by a purchase order from Scooterpac). Having considered the documentation, we find that Radcliffe pulled out of the order due to supply chain and suitability issues. In this respect, the email from Amos Thomas, dated 5 October 2021, says this:

Therefore, no supplies were actually made to Radcliffe.

HMRC submit that KCS is a commercial entity and not an Eligible Organisation. Mr Hayat’s position is that KCS is part of KCS and, therefore, an Eligible Organisation. Having considered the documentary evidence, we note that the email, dated 31 March 2022, from Phil Morgan (Director) states that:

This suggests that KCS would qualify to be considered an Eligible Organisation. Whilst there was disagreement as to whether KCS was an Eligible Organisation, we have not gone on to consider this in light of the fact that the order relating to KCS was destroyed, as accepted by Mr Hayat. Any discussion about whether KCS was an Eligible Organisation would, therefore, be academic.

It is not disputed by HMRC that East Sussex NHS Trust is an Eligible Organisation. HMRC have further accepted that 9080 gowns went to East Sussex NHS Trust under the relief granted. Officer Rankin acknowledged in his evidence that the invoices showed that 10,920 gowns were supplied to East Sussex NHS Trust, and not 10,640, as considered by HMRC. HMRC were, therefore, willing concede that a further 280 gowns had been supplied to East Sussex NHS Trust.

Mr Hayat submits that the Appellant supplied 20,000 gowns to East Sussex NHS Trust. He relies upon a purchase order enclosed in an email dated 31 March 2022 from East Sussex NHS Trust. The purchase order records that East Sussex NHS Trust made an order of 20,000 gowns from Praxis Medical Limited, and the covering email advises that the order was fully invoiced. We find that further relief may be applicable in respect of the supplies made to East Sussex NHS Trust and will return to this point in our conclusions, later.

The supplies made to West Sussex NHS Trust have been accepted (Import Entry 18 –partial relief in relation to 6,000 gowns).

By his own oral evidence, Mr Hayat agreed that he could not be certain that the supplies made to Edhi were, in fact, distributed in the United Kingdom. As earlier considered, distribution in the United Kingdom would enable HMRC to grant relief as the competent authorities in the United Kingdom. We find that the Appellant was already undergoing a compliance check at the time that the supplies were made to Edhi and Mr Hayat would have been on greater notice of the requirements that had to be satisfied under the Disaster Relief. It is, therefore, reasonable to expect that there would be a full audit trail in respect of who the end-user would be following the transfer of the supplies by the Appellant to Edhi.

In relation to Phoenix, the despatch note, and the correspondence included in the Hearing Bundle, shows that the donation made to Phoenix was transported on to Romania. The email from Andy Richardson (Trustee/Director) says this:

It is clear that the Goods supplied to Phoenix were shipped to Romania a matter of days after the supply by the Appellant. This was also at a time when the compliance check by HMRC had already commenced and there was clearly an obligation on the Appellant to ascertain how the Goods were to be used by Phoenix, in order for the eligibility requirements of the Disaster Relief to apply. We find that there is considerable force in Ms Brown’s submission that HMRC cannot grant relief in circumstances where goods are released outside of the United Kingdom. It is difficult to see how HMRC would have any power to grant relief for goods which are distributed outside of the United Kingdom. We hold that art. 123 of the CSDR Regulations is applicable in these circumstances and the Disaster Relief cannot apply.

A total of 18,550 gowns were returned to the supplier, Elsa Pharma. An undated letter from the Managing Director of Elsa Pharma is set out in the following terms:

We find that goods retuned to Elsa Pharma’s UK representatives would not qualify for the Disaster Relief as the Goods were not supplied to, and accepted by, an Eligible Organisation, but rather returned to a commercial entity.

These imports were facilitated by Scooterpac and supplied by Lokumal. The intended recipients of the supplies were NCC, via Eastpoint (a private company). In this respect, Mr Hayat relies upon;

HMRC’s position is that NCC is not recorded as being a party, or signatory, to either purchase order. Furthermore, HMRC were not satisfied that there was any evidence that either purchase order was copied, or communicated, to NCC. As such, it is HMRC’s position that the Appellant has failed to provide sufficient evidence that there were arrangements in place prior to import to supply, either directly or indirectly, any of the goods imported under Import Entry 9 to NCC (or any other Eligible Organisation).

We find that NCC cancelled the order and the issue concerning the audit trail is, therefore, irrelevant. Mr Hayat submits that after the order to NCC was cancelled, Scooterpac supplied the goods to NHS NWCCG. However, there is no audit trail in respect of this transfer.

The imports relating to these Import Entries were ordered by Scooterpac. The suppliers were Lokumal, Pegasus and TNT Plastik. The supplies were intended to be made to NCC. Once again, NCC cancelled their order. Import Entry 10 was for 1,000 KN95/FFP2 face masks Import Entry 11 was for 500 hooded coveralls (gowns), of which 300 were then supplied to IDC. Import Entry 15 was for 200,000 face masks, of which 63,000 were then supplied to IDC. Import Entry 17 was for 2,100 face shields, which were donated to Phoenix.

We have already found that a full audit trail is lacking in respect of IDC who do not, in any event, meet the definition of an Eligible Organisation. We have further found that Phoenix made onward supplies to Romania.

Of the remaining goods imported under Import Entry 15, an amount was given to family, friends, neighbours and the local community. It is clear that this does not satisfy the requirements of the Disaster Relief as family, friends, neighbours and the local community (in general) do not meet the definition of an Eligible Organisation.

Mr Hayat, ultimately, submits that HMRC are making a presumption that they cannot prove in respect of some supplies being distributed outside of the United Kingdom, and that HMRC have failed to show that there is no audit trail in relation to NHS NWCCG. The burden of proof, however, rests firmly on the Appellant. As to the burden of proof, and the absence of a clear audit trail in relation to some of the imports, we have considered the circumstances in which a court or tribunal is entitled to determine a disputed issue of fact by resort to the burden of proof, as considered in Stephens v Cannon [2005] EWCA Civ 222. There, Wilson J (as he then was and with whom Auld and Arden LJJ agreed) held, at [46], that:

These principles were refined in Verlander v Devon Waste Management & Anor [2007] EWCA Civ 835 (Auld LJ with whom Rix and Moses LJJ agreed), at [19] and [24]:

It is clear from our considerations above that a considerable amount of documentary evidence was provided in this appeal, including in relation to goods that were destroyed, or never accepted; and goods that went to organisations that did not meet the definition of an Eligible Organisation. Indeed, the factual matrix to this appeal has not been uncomplicated. This resulted in a need to focus on the end users in relation to all of the imports to ascertain whether the Goods were actually received by an Eligible Organisation.

We accept that Mr Hayat had no control over the number of consignments received, how those consignments were separated, or indeed the supply chain issues. The fact of the matter is, however, that the conditions of the Disaster Relief were not met. We further find that whilst an Eligible Organisation would have rights of ownership of the Goods once they were delivered, an Eligible Organisation was not the recipient of the Goods in respect of the Import Entries under appeal. Furthermore, we are satisfied that the burden of proof falls firmly on the Appellant, or indeed any importer who seeks to rely on the Disaster Relief in order to obtain relief from customs duty. Such evidence will then allow HMRC to trace the goods from their initial import through to their ultimate end use.

We hold that the evidence does not establish the Appellant’s case that the conditions for entitlement to the Disaster Relief have been met in relation to the Goods in this appeal.

We are satisfied that:

Returning to the nature of the FtT’s jurisdiction, Mr Hayat contends that HMRC have demonstrated an inconsistent approach to their interpretation and application of their guidance on the Disaster Relief. In addition, he contends that HMRC have failed to adequately review all evidence relied upon by the Appellant in support of its claim for Disaster Relief.

In Rotberg v R & C Comrs [2014] UKFTT 657 (TC), the Upper Tribunal held, at [109], that the FtT has no general supervisory jurisdiction. Applying Aspin v Estill [1987] STC 723, the Upper Tribunal found, at [116], that the jurisdiction of the FtT was limited to considering the application of the tax provisions themselves. Similarly, in Marks & Spencer plc v Customs & Excise Comrs [1999] STC 205, at 247, Moses J said this:

This principle was applied by Warren J in HMRC v Abdul Noor [2013] UKUT 071, at [28].

We hold that:

Accordingly, therefore, the appeal must fail.

It is essential to note that HMRC do not suggest that there was any wrongdoing by the Appellant. The main issue is in relation to whether the conditions for entitlement to the Disaster Relief were met by the Appellant. On the basis of our findings of fact, the Disaster Relief has not been met in relation to the Goods in issue in this appeal. However, in light of HMRC’s concession concerning the supplies made to East Sussex NHS Trust and the relief already applied, we remit that particular aspect of the appeal back to HMRC in order for adjustments to be made to the relief granted (with the consequence that the Assessment is adjusted), with leave to apply to the Tribunal if an agreement on the exact figures cannot be reached. This is only in respect of the supplies made to East Sussex NHS Trust.

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.