United Wholesale Grocers Limited v The Commissioners for HMRC

UWG operates a cash and carry business in Glasgow. In 2012 and 2013, HMRC identified that it had received supplies of alcohol from C&C Brands Ltd (“Brands”) and C&C (GB) Ltd (“GB”). No duty had been paid on that alcohol.

On 6 December 2012 and 8 May 2013, HMRC issued UWG with excise duty assessments totalling £639,743 in relation to those supplies, and subsequently issued UWG with excise wrongdoing penalties totalling £174,786.

UWG appealed the excise duty assessments on the basis that there had been an earlier duty point, so it was not liable to the duty. The burden of proof is on UWG, but HMRC holds information relating to Brands, GB and the earlier supply chains.

On 11 December 2024, Mr Thornton, on behalf of UWG, applied to the Tribunal for a direction that HMRC carry out a search as if the Civil Procedure Rules (“CPR”) 31.6 and 31.7 applied, and disclose the results to UWG (“the Application”). The Application went on to list various specific searches which HMRC were to be required to carry out.

However, during the hearing Mr Thornton said UWG would be content with a direction which required HMRC to disclose (a) documents which support UWG’s case, and (b) documents which are adverse to HMRC’s case, with the proviso that the disclosure encompass the documents he had already identified as not having been provided. HMRC objected to the Application for the reasons set out in the main body of this decision.

I allow the Application on the amended basis agreed by Mr Thornton, and issue the directions which are appended to this decision.

I first set out the relevant law relating to (a) liability to excise duty; (b) the burden of proof; (c) judicial review and (d) disclosure. All legislation and case law is cited only so far as relevant to the issue being considered.

The Excise Goods (Holding, Movement and Duty Point) Regulations 2010 (“the “Regulations”) implement Council Directive 2008/118/EC (“the 2008 Directive”). By Regulation 5, an excise duty point arises at the time when goods are released for consumption in the UK.

Regulation 6(1) provides (emphasis added):

“ Excise goods are released for consumption in the United Kingdom at the time when the goods -

(a)

…

(b)

are held outside a duty suspension arrangement and UK excise duty on those goods has not been paid, relieved, remitted or deferred under a duty deferment arrangement;…”

Regulation 10(1) provides:

“The person liable to pay the duty when excise goods are released for consumption by virtue of regulation 6(1)(b) (holding of excise goods outside a duty suspension arrangement) is the person holding the excise goods at that time.”

In B & M Retail Ltd v HMRC [2016] UKUT 429 (TCC) (“B&M”), the UT held that even though in principle an earlier release for consumption must have occurred, that did not preclude HMRC assessing a person holding goods in respect of which excise duty had not been paid, and went on to say that the decision as to which of the various holders should be subject to excise duty assessment was at the discretion of HMRC.

However, in Davison & Robinson Ltd v HMRC [2018] UKUT 0437 (TCC) (“Davison”) at [79], HMRC accepted that they were obliged to assess, as a matter of law against “the earliest point in time at which [HMRC] are able to establish, on the evidence before them, that excise goods have been held outside a duty suspension arrangement”. That concession was consistent with the UT’s own analysis that the 2008 Directive required an assessment to be made against the first established excise duty point. The UT also said that if HMRC assessed anyone other than the first holder they could identify, that person could challenge the assessment on appeal to the FTT, see [80] of the judgment. The UT observed at [67] that “clearly, HMRC cannot make an assessment until it has the necessary information on which to establish when, how, where and by whose acts the excise duty point occurred”.

In Dawson’s (Wales) Ltd v HMRC [2019] UKUT 0296 (TCC) (“Dawsons UT”) at [149], the UT set out the factors a person would have to show in order successfully to challenge an assessment on the basis that an earlier duty point could be established against which HMRC should have made an assessment (“the Factors”):

“(1)

Who had physical possession at the time that the alleged earlier excise duty point occurred. For example, the earlier excise duty point might be established immediately before the goods concerned were delivered to the premises of the subsequent holder, by reference to the physical possession of the courier delivering those goods.

(2)

Who is the person alleged to have de facto or legal control over the goods
who it is said should be assessed rather than the subsequent holder…and how that person is said to have such control and the basis on which it was being exercised. For example, the terms of supply to the person alleged to have de facto or legal control might mean that in fact that person never had control of the goods and did not direct their delivery. Control might have been exercised by another entity earlier in the chain of supply in compliance with a request by the person in question to deliver them to the subsequent holder. Alternatively, for example, the terms of supply to the subsequent holder, including where relevant the operation of the Sale of Goods Act or the Convention…might mean that the goods were already under the control of the subsequent holder while in transit to him.

(3)

The time at which the excise duty point arose. Whilst precise temporal
exactitude is not essential…in our view the date of an invoice is not sufficient in itself without establishing who was in possession of the goods at some identified point or points in time. In that context, and as already indicated, the terms of the relevant sale may be relevant, in particular as to when delivery is deemed to have occurred. Copies of CMRs, if they can be obtained, may be relevant.

(4)

Where the goods were being held at the relevant time. In the case of goods
being transported, that could be by reference to the means of transport or the location of that means of transport at some point in time, possibly immediately prior to the delivery of the goods at a particular location. We do not consider that the goods need necessarily to be shown to have been static at a particular place at a single fixed point in time...For example, in the case of means of transport the transport used, the start and/or end points of the
journey and a defined period of time within which it must have occurred might
be identified.”

That decision was appealed to the Court of Appeal. Asplin LJ gave the only judgment with which Arnold and Laing LJJ both agreed; it is published under reference [2023] EWCA Civ 332 (“Dawsons CoA”). Asplin LJ endorsed Factors (1), (3) and (4) at [77] and [94], and at [86] recorded that Factor (2) was not challenged.

Meanwhile, in 2019, a differently constituted Court of Appeal had considered HMRC’s appeal against the UT’s judgment in HMRC v Perfect [2017] UKUT 0476 (TC). The UT had agreed with the FTT that Mr Perfect, a haulier, was not liable to excise duty because he had no actual or constructive knowledge that the load he was carrying was liable to duty which had not been paid. The Court referred to the CJEU the question as to whether a person holding goods (such as a haulier) who had no actual or constructive knowledge that duty was unpaid was nevertheless liable for that duty; in other words, whether there was “strict liability”.

The CJEU anonymised the reference as “WR”, and the Advocate General’s Opinion and the judgment were published asHMRC v WR [2021] C- 279/19 (“WR”). Advocate General Tanchev issued his Opinion on 21 January 2021. At [29] he said (emphasis in original):

“As far as the aims of the Directive are concerned, as I will explain in the section below, the broad wording of the provisions at issue, which concern a series of persons potentially liable for the duties without any order of priority being established, and who are jointly liable, seeks to guarantee that the tax debt is paid effectively and for that purpose someone must be held responsible. The Court has endorsed this view in its case-law.”

At [33] of its judgment, the CJEU said:

“…as the Advocate General observed in point 29 of his Opinion, the intention of the EU legislature was to lay down a broad definition in Article 33(3) of Directive 2008/118 of the category of persons liable to pay excise duty in the event of a movement of excise goods already ‘released for consumption’ in another Member State in order to be delivered or used there, so as to ensure so far as possible, that such duty is collected.”

The CJEU went on to answer the question posed by the Court of Appeal, saying at [36] that Directive 2008/118/EC:

“…must be interpreted as meaning that a person who transports, on behalf of others, excise goods to another Member State, and who is in physical possession of those goods at the moment when they have become chargeable to the corresponding excise duty, is liable for that excise duty, under that provision, even if that person has no right to or interest in those goods and is not aware that they are subject to excise duty or, if so aware, is not aware that they have become chargeable to the corresponding excise duty.”

The Court of Appeal decided it was bound by the CJEU’s judgment. It allowed HMRC’s appeal, and concluded as follows, in HMRC v Perfect [2022] EWCA Civ 330 (“Perfect”):

“22.

…a person need not be aware that excise duty is being evaded to be “holding” or “making … delivery of” goods for the purposes of regulation 13 of the 2010 Regulations or article 33 of the 2008 Directive.

23.

It follows that the fact that Mr Perfect had neither actual nor constructive knowledge of the smuggling of the beer he was carrying cannot exempt him from liability from excise duty.”

In Hartleb v HMRC [2024] UKUT 00034 (TCC) (“Hartleb”) (Footnote: ¹) the UT considered an appeal made by the owner of a lorry against an excise duty assessment charged on goods which had been seized from her employee, the lorry driver. The UT said this:

“59.

We accept that if the Appellant were found not to be the holder of the excise goods, revenue loss would be likely as employers might then be able to use their employees as ‘shields’ from liability.

60.

In a case where an employer has de facto and/or legal control over excise goods it would also seem an extraordinary result if it was prevented from being regarded as holder of those excise goods purely on the grounds that its employee was the person in physical possession.”

The UT continued:

“78.

We find the factors identified by the UT in Dawson to be a useful guide in determining who to regard as holder in circumstances where physical possession and de facto and/or legal control are separated as they are in our situation, noting in this regard that the second factor must now be seen in the context of Perfect and WR.

79.

This is notwithstanding the fact that in Dawson the factors were intended to aid identification of an earlier excise duty point in circumstances where an assessment was being challenged on the basis of there being an earlier excise duty point against which the assessment should have been made.

80.

We also take into account the fact that Dawson and the majority of cases considered in it, including Perfect, involve persons arguing that they should not be assessed to duty simply on the basis of having physical possession of excise goods. The Appellant’s position is, in effect, the reverse as she contends that she should not be assessed to duty as she did not have physical possession of the relevant excise goods. Although the situation is the reverse, we consider that the principle of physical possession not being determinative must apply equally.

81.

The approach of the UT and Court of Appeal in Dawson demonstrates that the determination of “holding” is a question of law and fact. Although the initial focus, given the scheme and wording of the legislation together with the case law, is necessarily on the physical location of goods so giving weight to physical possession – that is not the end of the matter and a more detailed consideration of the facts is needed.

82.

Although Asplin LJ was careful to not express a view on the question of whether de facto and/or legal control is sufficient for the purpose of holding, as that issue was not before the court (see [72] of the Court of Appeal judgment), her decision shows that physical possession alone is not necessarily sufficient.

83.

As the UT commented in Dawson it is consistent with the legislation and case law to adopt an approach that establishes first who has physical possession of the goods but then considers whether the circumstances of that possession are such that it is inappropriate for that person to be considered to be “holding” the goods...”

The UT went on to apply the Factors set out in Dawson in order to decide the issue in question, see [87] of the judgment, before saying at [88]:

“It is then necessary for us to consider the circumstances in respect of which the Respondents contend that the Appellant (the person in control) rather than the employee (the person with physical possession) should be regarded as holder and whether those circumstances outweigh the Appellant’s lack of physical possession.”

In Qais Majeed Ali v HMRC [2024] UKUT 176 (TCC) (“Ali”) at [38], the UT held, by reference to Davison, that the FTT had been wrong to decide that HMRC could refuse to assess an insolvent or impecunious holder and instead assess a subsequent holder, saying (emphasis in original) “the correct position is that, if there was someone who HMRC had sufficient information to assess, then HMRC had to assess that person irrespective of the prospects of recovery”.

The Customs and Excise Management Act 1979, s 154(2) provides as follows:

“Where in any proceedings relating to customs or excise any question arises as to the place from which any goods have been brought or as to whether or not—

(a)

any duty has been paid or secured in respect of any goods…

(b)

then, where those proceedings are brought by or against the Commissioners, a law officer of the Crown or an officer, or against any other person in respect of anything purporting to have been done in pursuance of any power or duty conferred or imposed on him by or under the customs and excise Acts, the burden of proof shall lie upon the other party to the proceedings.”

In Dawsons CA, Asplin LJ said at [94], by reference to the Factors identified by the UT:

“It seems to me, therefore, that the matters at (3) and (4) of [149] of the UT decision, being the time at which the excise point arose and where the goods were being held at that time, are factors to be taken into consideration where an assessment is challenged on the basis that an earlier excise duty point can be established. In the circumstances of this case, the burden of proof is on DWL [the Appellant]. ”

In B&M,the UT said this at [153]:

“B & M wish to be satisfied that there are not in fact earlier points in the supply chain where an excise duty point could clearly be established on the evidence, or might be if such an investigation were in their view more vigorously pursued. We would be inclined to agree that it would not be in the interests of justice that HMRC should simply be able to sit back and say that the burden is on the taxpayer to provide the evidence to displace its liability, when the evidence that HMRC do actually have is in fact sufficient to demonstrate, objectively, that an earlier excise duty point could be established. We are in no position, however, to say whether that is the position in the present case, and any concerns of that nature would anyway have to be pursued through the medium of judicial review.”

The Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 (“the Tribunal Rules”) provides by Rule 2 that:

“(1)

The overriding objective of these Rules is to enable the Tribunal to deal with cases fairly and justly.

(2)

Dealing with a case fairly and justly includes—

(a)

dealing with the case in ways which are proportionate to the importance of the case, the complexity of the issues, the anticipated costs and the resources of the parties;

(b)

avoiding unnecessary formality and seeking flexibility in the proceedings;

(c)

ensuring, so far as practicable, that the parties are able to participate fully in the proceedings;

(d)

using any special expertise of the Tribunal effectively; and

(e)

avoiding delay, so far as compatible with proper consideration of the issues.

(3)

The Tribunal must seek to give effect to the overriding objective when it—

(a)

exercises any power under these Rules; or

(b)

interprets any rule or practice direction.

(4)

Parties must—

(a)

help the Tribunal to further the overriding objective; and

(b)

co-operate with the Tribunal generally.”

Rule 5 is headed “case management powers” and includes the following provisions:

“(1)

Subject to the provisions of the 2007 Act and any other enactment, the Tribunal may regulate its own procedure.

(2)

…

(3)

In particular, and without restricting the general powers in paragraphs (1) and (2), the Tribunal may by direction

(a)-(c) …

(d)

permit or require a party or another person to provide documents, information or submissions to the Tribunal or a party;…”

Rule 16 is headed “Summoning or citation of witnesses and orders to answer questions or produce documents”, and paragraph (1) reads:

“On the application of a party or on its own initiative, the Tribunal may—

(a)

by summons (or, in Scotland, citation) require any person to attend as a witness at a hearing at the time and place specified in the summons or citation;

(b)

order any person to answer any questions or produce any documents in that person's possession or control which relate to any issue in the proceedings…”

Rule 27 is headed “Further steps in a Standard or Complex case” and reads:

“(1)

This rule applies to Standard and Complex cases.

(2)

Subject to any direction to the contrary, within 42 days after the date the respondent sent the statement of case (or, where there is more than one respondent, the date of the final statement of case) each party must send or deliver to the Tribunal and to each other party a list of documents—

(a)

of which the party providing the list has possession, the right to possession, or the right to take copies; and

(b)

which the party providing the list intends to rely upon or produce in the proceedings.

(3)

A party which has provided a list of documents under paragraph (2) must allow each other party to inspect or take copies of the documents on the list (except any documents which are privileged).”

CPR 31.7 is headed “standard disclosure – what documents are to be disclosed” and reads:

“Standard disclosure requires a party to disclose only–

(a)

the documents on which he relies; and

(b)

the documents which

(i)

adversely affect his own case;

(ii)

adversely affect another party’s case; or

(iii)

support another party’s case; and

(c)

the documents which he is required to disclose by a relevant practice direction.”

CPR 31.6 is headed “duty of search” and reads:

“(1)

When giving standard disclosure, a party is required to make a reasonable search for documents falling within rule 31.6(b) or (c).

(2)

The factors relevant in deciding the reasonableness of a search include the following

(a)

the number of documents involved;

(b)

the nature and complexity of the proceedings;

(c)

the ease and expense of retrieval of any particular document; and

(d)

the significance of any document which is likely to be located during the search.

(3)

Where a party has not searched for a category or class of document on the grounds that to do so would be unreasonable, he must state this in his disclosure statement and identify the category or class of document.”

CPR 31.10 sets out the procedure for standard disclosure, including the requirement that the list of documents “must include a disclosure statement” and what is to be included in such a statement.

In HMRC v Ingenious Games LLP and others [2014] UKUT 0062 (TCC) (“Ingenious”). Sales J (as he then was) said at [67] that:

“…in order for the main appeal to be determined fairly and justly, in accordance with the overriding objective, HMRC should have an equal opportunity to review the further relevant documents held by [the appellants] which they have not yet disclosed to HMRC and which they do not wish themselves to rely upon in the appeal…”

He continued at [68] by saying that it had been an error of law for the FTT judge to have held that the Tribunal Rules “are not intended to enable one party to make generalised requests for information from another party”, and then said:

“As rule 2 makes clear, the Rules are intended to be interpreted and applied so as to enable the FTT “to deal with cases fairly and justly”. If the circumstances of a case are such that comparatively wide or general orders for disclosure are necessary to enable the FTT to deal with that case fairly and justly, the Rules are intended to enable a party to make such generalised requests for disclosure. As explained above, this will be rare in tax cases, because usually HMRC will have seen the full documentation held by a taxpayer during the investigation stage, and the default disclosure provision in rule 27 of the Rules reflects this. But in the unusual circumstances of this case, the fair determination of the appeals did require the FTT to entertain and allow the request for further disclosure made by HMRC.”

Sales J also rejected the FTT’s finding that HMRC’s disclosure request was a “fishing expedition”, saying in the same paragraph:

“HMRC had to ask for disclosure of documents in relatively general terms, because they did not know what documents relevant to the issues pleaded in the Statements of Case the appellant partnerships might hold.”

In Addo v HMRC [2018] UKFTT 0530 (TC) (“Addo”), Judge Greenbank first considered [67]-[69] of Ingenious,and then said

“62.

From that passage, it is clear that the guiding principle for the Tribunal in exercising its powers to order or direct the disclosure of documents is to ask what is required to enable it to deal with the case “fairly and justly”, in accordance with the overriding objective in FTR rule 2(1).

63.

It is also clear that, subject to the matters to which I refer below, it should
ordinarily be regarded as fair and just for a party to be entitled to review documents held by the other party or to which the other party has access which are relevant to the issues in the case, even if those documents are not documents on which the other party itself intends to rely (and so the documents are not within FTR rule 27) and even if they are detrimental to the other party’s case.

64.

In this context, I also agree with comments of Judge Richards in Tower Bridge GP Limited v Revenue and Customs Commissioners [2016] UKFTT 0054 (at [23]) that the concept of “relevance” should not set “an unduly high bar” and should be taken, in principle, to include documents or information that might advance or hinder a party’s case or which may lead to “a train of enquiry” that might advance or hinder a party’s case.”

In Smart Price and others v HMRC [2019] EWCA Civ 841 (“Smart Price”), the appellants had been refused approval under the Alcohol Wholesaler Registration Regime (“AWRS”) on the basis that they were not fit and proper persons. The FTT had issued an order that HMRC disclose all documents considered by the officers who had made the decisions, including inter alia those on which they didn’t rely. HMRC appealed against that “global disclosure” direction to the UT and further appealed to the Court of Appeal. Rose LJ (as she then was) gave the only judgment, with which Newey and McCombe LJJ both agreed.

She referred at [43] to SOCA v Namli [2011] EWCA Civ 1411 (“Namli”), in which the Court had directed each party to disclose documents (i) on which it relied; (ii) adversely affected its own case; (iii) supported another party's case and (iv) was required to disclose by any relevant practice direction. In other words, SOCA did not have to disclose relevant documents which supported its own case, unless it chose to do so.

Rose LJ said at [53]:

“My conclusion is that disclosure from HMRC limited to that required by rule 27(2), would not be not sufficient in these AWRS appeals, even as a starting point…I agree with the conclusion of the FTT and Upper Tribunal in these appeals that where HMRC have access to many documents of which the applicant may be unaware, it is vital that the appellant trader have access to any exonerating material in the hands of HMRC. These cases are different from the more common appeals against a tax assessment where most if not all the material considered is provided to HMRC by the tax payer.”

At [56] she concluded:

“In my judgment, HMRC should give what corresponds to standard disclosure under the CPR but with the same qualification as the Court accepted in the Namli case, that is excluding documents which are not relied on and which are entirely adverse to the applicant's case.”

In Tideswell v HMRC [2024] UKFTT 00054 (“Tideswell”), the FTT (Judge Baldwin and Mrs Myerscough) held at [102]:

“…although this Tribunal has no supervisory role in relation to HMRC’s investigations, it does have power under rule 5(3)(d) of the FTT Rules to make a direction to require a person to provide “documents, information or submissions”, and under rule 16(1) to require a person to attend as a witness or to answer questions or produce documents. As Mr Watkinson fairly volunteered on behalf of HMRC, it is difficult to see circumstances in which a Tribunal would refuse an application for disclosure of evidence in HMRC’s possession that might help to establish an earlier duty point where it was properly made. Where an appellant believes that, despite requests, HMRC has not disclosed such material, that would be an obvious application for an appellant to make.”

In Charlene Hughes v HMRC [2024] UKUT 00108 (TCC) (“Hughes”) (Footnote: ²), the UT considered Ms Hughes’ appeal against an excise duty assessment. This had been issued in relation to cigarettes seized from the industrial unit on her property, where they had been stored by a third party. The UT accepted at [47] that an earlier release for consumption had occurred before the cigarettes had been stored there (ie, that the person who stored the goods was a previous holder). However, the UT went on to dismiss Ms Hughes’s appeal for four reasons, the first of which was that she had failed to meet her burden of proving who the previous holder(s) had been. The next reason was set out at [51] of the judgment, and reads:

“Second, a complaint by the Appellant that HMRC possessed or might have possessed information which would have been sufficient to identify the four factors relevant to an earlier duty point could have been dealt with by an application for disclosure before the FTT hearing. The FTT has power under Rule 5(3)(d) of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules to make a direction requiring a person to provide documents, information or submissions, and under Rule 16(1) to require a person to attend as a witness or to answer questions or produce documents. If the Appellant believed that HMRC was failing to disclose relevant information, an application to the tribunal could have been made under these Rules.”

The UT also said, at [53], that:

“the obligation to assess the first duty point for which sufficient information is available is an obligation on HMRC as a body, not on the HMRC officer who issues the duty assessment. It follows that what mattered was not what Ms Cox [the investigating officer] knew personally about the investigations into a potential suspect, but what HMRC as a body knew.”

By the Application, UWG asked for a direction that HMRC provide, in relation to Brands/GB and “those persons identified by HMRC as forming part of the backwards supply chains”: details of seizures, premises known or suspected to be occupied; assessments to excise duty; copies of meeting notes and visit reports; progress reports and/or other contact logs; copies of internal meeting notes, and details of any criminal prosecutions. During the hearing, Mr Thornton amended the Application to include VAT assessments as well as excise duty assessments.

As recorded at the beginning of this decision, Mr Thornton said that UWG would instead be content with a direction similar to that given in Smart Price, ie for HMRC to give what corresponds to standard disclosure under the CPR but with the Namli qualification. However, he drew attention to various documents he had already identified from the HMRC material already supplied, which had not as yet been disclosed to UWG.

I asked Mr Mciver if HMRC would be content with a direction similar to that in Smart Price, but was informed that HMRC remained opposed to any direction.

Mr Thornton accepted that UWG faced the burden of proving that HMRC had not assessed an earlier holder, but said that much of the evidence relevant to that issue was held by HMRC. He submitted that granting the Application was in the interests of justice, so as to allow the Tribunal fairly to adjudicate the case, and relied on the case law on disclosure set out above.

I agree with Mr Thornton for the reasons he gave, and have incorporated his main submissions in the next following part of this judgment.

Mr Thornton also pointed out that the principles established by the case law had changed over time, so it was important for UWG to see the evidence on which HMRC had relied in 2012 and 2013 when making the assessments. In particular, those assessments were issued:

Mr Mciver put forward numerous reasons why the Application should not be granted, either in its original form or in line with Smart Price, each of which is considered below.

In his skeleton argument, Mr Mciver said that “there was no necessity for disclosure”, as the case law showed that it was for each party to put forward its evidence. HMRC took the same approach in a letter to Mr Thornton on 2 July 2025, saying that it was for UWG to establish its defence based on the facts it can establish.

However, Mr Mciver’s skeleton did not include any reference to Hughes, and he rightly conceded in the hearing that the UT had there endorsed the approach now taken by Mr Thornton, namely applying to the Tribunal for a direction that HMRC carry out a search and then disclose documents and/or information.

The FTT had taken a similar approach in Tideswell, saying it was “difficult to see circumstances in which a Tribunal would refuse an application for disclosure of evidence in HMRC’s possession that might help to establish an earlier duty point where it was properly made”, and continuing:

“Where an appellant believes that, despite requests, HMRC has not disclosed such material, that would be an obvious application for an appellant to make.”

The final part of the Application makes it clear that UWG has already sought to obtain disclosure by making more informal requests, and only applied to the Tribunal because, in as Mr Thornton put it, that process had been “unsatisfactory”.

Mr Mciver also submitted that the problem facing UWG was of its own making: had it carried out appropriate checks on Brands/GB before entering into those deals, it would have received information about whether the goods had previously been released for consumption. He said that UWG was now improperly seeking to fill that information gap through use of the disclosure process.

When I asked what checks HMRC considered would have allowed UWG to fill their information gap, Mr Mciver took instructions and then said that UWG should have asked HMRC whether Brands/GB had completed a W5, which is a form used to declare payment of excise duties. If no duty had been paid (as happened here), HMRC would then have told UWG that no W5 had been filed, and UWG would have known not to enter the transactions.

Mr Thornton’s response was that had UWG asked for W5s, there would have been no transactions and the current dispute would not have arisen. He submitted that it cannot be correct for the Tribunal to refuse disclosure on the basis that an appellant could have prevented the liability arising in the first place by taking an entirely different course of action. I agree with Mr Thornton. Had UWG asked HMRC for W5s, there would have been no assessments and no appeal. But those are not our facts.

In Mr Mciver’s submission, UWG ought instead to have taken steps, at the time it was issued with the assessments, to challenge HMRC’s investigation by way of judicial review. He drew attention to the tight timescale for such a challenge, and said it was “not proper” for UWG now to use the disclosure process “to fill that gap”.

Mr Thornton confirmed that UWG were not seeking to challenge HMRC’s investigation process. He added, entirely correctly, that it was clear from Hughes and Tideswell that judicial review was not the only option, and that the recipient of a duty assessment could ask for disclosure.

Mr Mciver took exception to the fact that the Application did not relate only to Brands and GB, but also to “other suppliers to those persons identified by HMRC as forming part of the backwards supply chains”; he submitted that its scope was too wide. He compared UWG’s position with the facts of other cases, saying that in Hughes the issue was with the identity of one person who had stored the goods, and in another case, Essex Trading Ltd (Footnote: ³), the missing piece of the jigsaw was whether a specific company, Hi-Line Ltd, was the holder. In contrast, said Mr Mciver, UWG was not looking for a missing piece, but for “the whole jigsaw” and was on a “fishing expedition” to see what it could find in order to build a defence.

That is an unfair characterisation of UWG’s position. It is clear from Dawson UT (approved by the Court of Appeal) that in order to succeed in proving it was not liable for the duty, UWG must satisfy each of the Factors set out at §13. Factor 2 requires UWG to identify “the person alleged to have de facto or legal control over the goods who it is said should be assessed rather than the subsequent holder…and how that person is said to have such control and the basis on which it was being exercised”. In Hartleb,the UT endorsed and followed the approach in Dawson, confirming that physical possession “is not the end of the matter and a more detailed consideration of the facts is needed”. Thus, it is not sufficient for UWG to identify a person, such as Brands or BG, who supplied the goods; UWG must also prove that the person in question had de facto or de jure control over the goods after they were released from consumption. As the UT say in the same passage, “control might have been exercised by another entity earlier in the chain of supply in compliance with a request by the person in question to deliver them to the subsequent holder”. Factor 3 requires the time the duty point arose to be identified, and Factor 4 requires UWG to prove where the goods were held at that time. In casting the Application in wide terms, Mr Thornton was doing no more than reflecting the Factors which UWG have to prove.

While it is true that the issues in Hughes and Essex Trading were narrower, that is simply a consequence of the particular fact patterns. As Sales J said in Ingenious: “If the circumstances of a case are such that comparatively wide or general orders for disclosure are necessary to enable the FTT to deal with that case fairly and justly, the Rules are intended to enable a party to make such generalised requests for disclosure”.

Relevant facts in this case were that:

Mr Mciver explained the references to “missing traders” in the above passages by saying that as the traders were “missing”, it followed that HMRC could not obtain sufficient information to establish that they were prior holders. However, he accepted that HMRC could not refuse to assess an impecunious or absent previous holder, including a missing trader, if there was sufficient information to make the assessment, see Ali.

Given the facts of this case, it is not a “fishing expedition” for UWG to ask the Tribunal to direct that HMRC provide the information it holds about the supply chains, the missing traders, the role of the entities in the supply chains and the delivery arrangements. All that information was available when HMRC decided UWG was liable to excise duty as the first holder of the goods, and it is entirely reasonable and in the interests of justice for it to be disclosed to UWG.

Mr Mciver also submitted that it would be disproportionate to give the disclosure sought by UWG, because it would require HMRC to search not only their electronic files, but also paper files in various locations.

I disagree, for the following reasons:

As noted at §45, the Application was not limited to documents and information about the particular supplies in question. Mr Mciver said that restricting the Application so that it related only to the particular supplies for which duty had been charged would make it more proportionate. However, Mr Thornton’s position, with which I again agree, was that this would unduly narrow the scope – there could, for example, be uncertainties as to exactly which goods in the supply chains ended up at UWG.

Mr Mciver also submitted that it would not be fair and just to grant the Application, because it placed on HMRC the obligation of looking for evidence to support UWG’s case, when it was UWG that had the burden of proof.

However, for the reasons already set out, I find it to be fair and just for HMRC to disclose the information it holds, as long as it is within the scope of the direction set out in the Appendix to this decision. More generally, I agree with Judge Greenbank, who said in Addo at [63] that:

“…it should ordinarily be regarded as fair and just for a party to be entitled to review documents held by the other party or to which the other party has access which are relevant to the issues in the case, even if those documents are not documents on which the other party itself intends to rely (and so the documents are not within FTR rule 27) and even if they are detrimental to the other party’s case.”

Like Judge Greenbank, I also agree with Judge Richards (as he then was), who said in Tower Bridge that:

“the concept of ‘relevance’ should not set ‘an unduly high bar’ and should be taken, in principle to include documents or information that might advance…a party’s case or which may lead to ‘a train of enquiry’ that might advance…a party’s case.”

It was part of HMRC’s case that the Application was “flawed” for two reasons:

I reject those submissions. In relation to the first point, it was plain from the Application that Mr Thornton was asking the Tribunal to issue directions “as if” CPR 31.7 applied. He was not asking the Tribunal to apply the CPR. In relation to the second point, an application is not flawed simply because it does not cite particular provisions of the Tribunal Rules. Such an approach would not be in accordance with the overriding objective, and in particular would breach Rule 2(2)(b), which requires the Tribunal to avoid unnecessary formality.

Mr Mciver accepted that, if the Application was not procedurally flawed, Rule 5(3)(d) provides the Tribunal with the jurisdiction to issue a disclosure direction, either in the form sought, or in accordance with the approach in Smart Price. He was correct to take that position: in Hughes the UT refers explicitly to the use of Rule 5(3)(d) for that purpose. Mr Mciver also accepted that a direction issued under that Rule, or under Rule 16, would be binding on HMRC in relation to an appellant in Scotland such as UWG.

As to whether I should use the CPR as a guide, I agree with Judge Greenbank when he said in Addo at [70]:

“…the CPRs provide useful guidance as to the extent of disclosure that should be ordered by the Tribunal having due regard, of course, to the nature of the proceedings before it.”

I also note that in Smart Price the Court of Appeal replaced the “global disclosure” directions issued by the FTT with a direction for disclosure as if CPR 31.6 applied, with the Namli exception. The same approach has been taken in subsequent FTT cases, including Rafiq v HMRC [2021] UKFTT 0361 (TC) (Judge Citron and Mr Howard) and Essex Trading.

I direct that HMRC disclose the information and documents which complies with the direction attached as an Appendix to this Decision. This is in the same form as that given in Smart Price, but with the addition of particular specific matters identified by Mr Thornton from HMRC documents already disclosed. The directions are made under Tribunal Rules 5(1) and 5(3)(d) and are in accordance with the overriding objective at Rule 2.

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.