This appeals concerns a civil evasion penalty in the sum of £1,139, issued on 18 May 2021, pursuant to sections 8(1) of the Finance Act (‘FA’) 1994 and 25(1) FA 2003, as a result of the Appellant’s dishonest attempt to evade customs and excise duties on 16 January 2020.

The following facts were not in dispute.

On 16 January 2020, the Appellant arrived at Manchester Airport having travelled from Turkey. He proceeded through the ‘green channel’ following which he was intercepted and questioned.

The Appellant’s luggage was searched. Officers found 6 kilograms of Al Fakher Shisha Tobacco (‘tobacco’) and 1,200 Bon Gold KSF cigarettes (‘cigarettes’). The goods were seized on the grounds that they exceeded the personal allowance of either 250g tobacco or 200 cigarettes.

HMRC notified the Appellant on 18 May 2021 to advise that it considered his actions dishonest and a penalty of £1,139 had been imposed.

The amount of duty evaded was £1,424.

There was no dispute that the following provisions are those relevant to this appeal.

Section 8 FA 1994 provides:

The provisions in relation to customs duties are in materially identical terms and are set out in sections 25 and 29 FA 2003.

The Travellers’ Allowance Order 1994 provides limits for the importation of relevant goods from third countries (effectively a non-EU country). As set out above, the limit for tobacco products is 200 cigarettes or 250 grams of smoking tobacco.

In Ivey v Genting Casinos (UK) Ltd t/a Crockfords [2017] UKSC 67, the Supreme Court held that the test of dishonesty is a two-stage test considering subjective and objective elements, at [74]:

In Royal Brunei Airlines Sdn Bhd v Tan [1995] 3 All ER 97, Lord Nicholls stated, at [106]:

The Appellant’s grounds of appeal can be summarised as follows:

HMRC submit that the Appellant’s conduct was dishonest such that the penalty should be upheld. HMRC rely on, inter alia, the following:

Mr Loader, an officer of HMRC, provided evidence that he had considered all of the information available to him and concluded that the penalty, which represents 80% of the revenue sought to be evaded is appropriate. No challenge has been made to the quantum. A reduction was applied to reflect the limited cooperation and disclosure provided by the Appellant.

Mr Loader clarified in cross-examination that the signage at the airport regarding allowances is substantial. He could not guess at how likely someone would be to miss the signs. He confirmed that as Turkey is not in the EU, the personal allowance limits is fixed.

He stated that the letter dated 19 March 2021 contained 10 bullet point questions which required answers in order that he was given the full picture by the Appellant. The Appellant’s response was “threadbare” and failed to answer all of the questions. Based on the answers provided, Mr Loader concluded that the Appellant’s actions were dishonest.

Mr Patel stated he was unaware of any allowances. He was unwell at the time and wanted to get home. He stated he had followed other people to the exit and had not seen any signs. He believed once the goods were seized that that was the end of the matter.

Mr Patel confirmed he had travelled in the past, a couple of times per year, to various places including Europe and the Middle East. He had contacted HMRC upon receiving the letter 19 March 2021 to check it was genuine and believed he had answered the questions raised therein. He agreed that he had still not replied to the letter by the deadline of 20 April 2021, explaining that he had made a request for information which had caused delay, although it may also have been caused by personal issues but due to the passage of time he was unable to recall.

Mr Patel agreed that his response to the letter had stated the goods were for personal use and he believed he had covered all relevant information. He agreed that he had not mentioned feeling unwell at the airport nor did he provide details of the trip as requested in HMRC’s letter.

A record of a telephone call made by Mr Patel to HMRC on 21 May 2021 noted that Mr Patel had stated he was not aware that there were different channels at the airport. He disagreed that this was a different account to his explanation that the goods were for personal use, stating that these were responses to different questions.

He agreed that a letter from him (undated but in response to a letter dated 17 June 2021) did not mention personal use, illness at the airport or his lack of knowledge about the green/red channels. He explained that he had already raised these issues in his earlier communications. In relation to his failure to produce a witness statement, Mr Patel explained that he had responded to everything as well as he could and had not deliberately ignored the Tribunal’s directions. He reiterated that he had not seen any signs at the airport as he was ill and that he was oblivious to the different channels which he had never noticed on previous occasions at the airport.

One ground of appeal relied upon stated:

The Appellant did not agree that the ground above suggests that he considered seeking advice but decided against it. He reiterated that he was oblivious to any signs, he did not have any doubts about the goods he was importing and did not want to confront anyone for advice as he was anxious.

On behalf of the Appellant, Mr Zakirhusen highlighted that the Appellant arrived at the airport late at night, he was unwell and did not see any signs. He noted that there was no evidence of any previous seizures and many of the questions asked by HMRC in the letter dated 19 March 2021 were irrelevant to the Appellant and HMRC could have sought more information from the Appellant if required.

We considered all of the evidence, both oral and documentary and we were grateful to Mr Zakirhusen and Mr Barth for their helpful submissions.

We found Mr Loader to be a credible witness who had reached his decision on the basis of the limited information before him. We found Mr Patel’s evidence inconsistent, and we concluded that it was unreliable.

In reaching this decision we noted that Mr Patel had failed to fully respond to HMRC’s letter dated 19 March 2021, despite being advised to do so both in the letter and in a telephone call to HMRC on 26 March 2021. The letter clearly set out the information sought as follows:

The only information provided by Mr Patel in response was as follows:

We considered Mr Patel’s evidence that he believed he had provided all necessary information. However, there was no mention of feeling unwell or his ignorance of the personal allowance limits in his response and we consider that this undermined his evidence as a whole.

There were also a number of inconsistencies in Mr Patel’s evidence. The grounds of appeal assert that he had no knowledge of allowances or duty/excise taxes, yet he also stated that:

In evidence Mr Patel could not explain what he had meant by the comparison with airmiles or why he had stated this and in our view the statement was inconsistent with the assertion that he was wholly unaware of customs and excise duty.

Similarly, Mr Patel asserted that he had not asked advice from Border Force officers due to his anxiety brought about by “my preconceptions of Border Force agents after what the Home Office has done to the wind rush generation”. In our view, this implies that he had given some consideration to the matter and is at odds with his assertion that he was ignorant of any such matters.

We considered Mr Patel’s evidence that he did not see any signs about the limits on importation of goods and that he was unaware of the different channels as he had felt unwell and simply followed other passengers to the exit. Even if we were to accept that Mr Patel was unwell on this occasion, the evidence was that he had travelled regularly in the past and we found it implausible that he would not have seen the substantial signage in the airport or the clearly marked channels over the many years of travelling. We note that Mr Patel raised the issue of feeling unwell for the first time at the hearing. We consider that there was no credible evidence as to why this matter had not been mentioned by Mr Patel in earlier communications with HMRC given that this was the reason he relied on for his failure to observe any signs and in those circumstances, we rejected it.

In applying the relevant test (see [11] and [12] above), we are satisfied that Mr Patel’s actions were dishonest. We are satisfied that Mr Patel was aware of the limits and deliberately sought to evade the duties due, or at the very least closed his eyes to the fact.

We consider that the level of mitigation was appropriate and we see no basis for interfering with it.

The appeal is dismissed.

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.