Zulal Dinler v The Commissioners for HMRC

With the consent of the parties, the form of the hearing was video using the Teams video platform.  A face to face hearing was not held because it was considered more expedient and cost effective to conduct the hearing remotely.

The Appellant did not attend. Ms Dinler informed us that the Appellant was not in attendance due to a recent family bereavement and that the Appellant was content for the hearing to proceed in her absence. We were satisfied that the Appellant had been notified of the hearing and that she had not made an application for a postponement of the hearing.

In the circumstances we decided that it was in the interests of justice to proceed with the hearing of the Appellant’s appeal in her absence pursuant to rule 33 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 and with representation from Ms Dinler.

Prior notice of the hearing had been published on the gov.uk website, with information about how representatives of the media or members of the public could apply to join the hearing remotely in order to observe the proceedings. As such, the hearing was held in public.

This is an appeal against a penalty of £1,566 issued pursuant to section 25(1) of the Finance Act 2003 (Section 25(1)) and a penalty of £4,864 issued pursuant to section 8(1) of the Finance Act 1994 (Section 8(1)). Both penalties were issued on 6 October 2023 and the total penalty in the sum of £6,430 is referred to collectively in this decision as the Civil Evasion Penalty.

We initially prepared a summary decision which was issued to the parties on 18 July 2025. The Appellant sought a full decision and in the process of preparing this full decision we noted that section 8(1) had been repealed by paragraph 21(d)(i) of Schedule 40 to the Finance Act 2008. We therefore sought further submissions from both parties on this point before finalising this full decision.

Having reviewed the submissions we find that section 8(1) remains in force and applicable for the purpose of raising penalties in relation to certain conduct which includes the alleged conduct in this appeal for the reasons set out in paragraph 11 below.

Both Section 25(1) and Section 8(1) provide that a penalty can only be issued if the Appellant engages in conduct for the purpose of evading the relevant duty and that conduct involves dishonesty.

Section 25(1) provides as follows:

“(1)

In any case where--

(a)

a person engages in any conduct for the purpose of evading any relevant tax or duty, and

(b)

his conduct involves dishonesty (whether or not such as to give rise to any criminal liability),

that person is liable to a penalty of an amount equal to the amount of the tax or duty evaded or, as the case may be, sought to be evaded.”

Section 8(1) provides as follows:

“(1)

Subject to the following provisions of this section, in any case where—

(a)

any person engages in any conduct for the purpose of evading any duty of excise, and

(b)

his conduct involves dishonesty. (whether or not such as to give rise to any criminal liability),

that person shall be liable to a penalty of an amount equal to the amount of duty evaded or, as the case may be, sought to be evaded.”

Section 8(1) was repealed by paragraph 21(d)(i) of Schedule 40 to the Finance Act 2008. Pursuant to article 2 of the Finance Act 2008, Schedule 40 (Appointed Day, Transitional Provisions and Consequential Amendments) Order 2009 (SI 2009/571) it was repealed from 1 April 2009. However article 6 of SI 2009/571 limits the repeal of section 8(1) so that it is only repealed with respect to conduct involving dishonesty that relates to an inaccuracy in a document, or a failure to notify HMRC of an under-assessment by HMRC. Whilst this appeal does concern conduct involving dishonesty it does not relate to an inaccuracy in a document or a failure to notify HMRC of an under-assessment by HMRC. Consequently section 8(1) remains in force and applicable to the alleged conduct in this appeal.

On an appeal to the Tribunal against a section 25(1) penalty, the burden of proof is set out in section 33(7) of the Finance Act 2003 (FA 2003) as follows:

“(7)

On an appeal under this section—

(a)

the burden of proof as to the matters mentioned in section 25(1) or 26(1) lies on HMRC; but

(b)

it is otherwise for the appellant to show that the grounds on which any such appeal is brought have been established.”

On an appeal to the Tribunal against a section 8(1) penalty, the burden of proof is set out in section 16(6) of the Finance Act 1994 (FA 1994) as follows:

“(6)

On an appeal under this section the burden of proof as to—

(a)

the matters mentioned in subsection (1)(a) and (b) of section 8 above,

….

shall lie upon the Commissioners; but it shall otherwise be for the appellant to show that the grounds on which any such appeal is brought have been established.”

The burden of proof as to whether the Appellant engaged in conduct involving dishonesty therefore lies with the Respondents (HMRC) and the standard of proof is the ordinary civil standard of a balance of probabilities. If HMRC satisfy that burden, the burden then moves to the Appellant to show that any other grounds in her appeal have been established and again it is the ordinary civil standard of a balance of probabilities.

Schedule 1 to the Travellers’ Allowances Order 1994 provides that the duty-free allowance is 200 cigarettes. Any cigarettes in excess of this are subject to duty.

Where duty has not been paid when it should have been, the goods in question are liable to forfeiture pursuant to regulation 88 of the Excise Goods (Holding, Movement and Duty Point) Regulations 2010. Goods which are liable to forfeiture may be seized pursuant to section 139 of the Customs & Excise Management Act 1979 (“CEMA 1979”). A person can challenge the seizure within 30 days pursuant to paragraph 3 of Schedule 3 to CEMA 1979. If the seizure is not challenged, paragraph 5 of Schedule 3 to CEMA 1979 deems the seizure to be lawful.

The test for dishonesty was explained in the Privy Council decision in Barlow Clowes International Ltd (in liquidation) and others v Eurotrust International Ltd and others [2005] UKPC 37 by Lord Hoffmann, at [10] as follows:

“Although a dishonest state of mind is a subjective mental state, the standard by which the law determines whether it is dishonest is objective. If by ordinary standards a defendant’s mental state would be characterised as dishonest, it is irrelevant that the defendant judges by different standards. The Court of Appeal held this to be a correct state of the law and their Lordships agree.”

The Supreme Court in the decision of Ivey v Genting Casinos (UK) ltd T/A Crockford [2017] UKSC 67 at [74] confirmed that the role of the fact-finding tribunal when determining dishonesty has two stages as follows:

“When dishonesty is in question the fact-finding tribunal must first ascertain (subjectively) the actual state of the individual’s knowledge or belief as to the facts. The reasonableness or otherwise of his belief is a matter of evidence (often in practice determinative) going to whether he held the belief, but it is not an additional requirement that his belief must be reasonable; the question is whether it is genuinely held. When once his actual state of mind as to knowledge or belief as to facts is established, the question whether his conduct was honest or dishonest is to be determined by the fact-finder by applying the (objective) standards of ordinary decent people. There is no requirement that the defendant must appreciate that what he has done is, by those standards, dishonest."

The first stage is therefore to determine (subjectively) the actual state of the Appellant’s knowledge or belief of the relevant facts. There is no requirement that the Appellant’s belief must be reasonable, but the reasonableness of the belief is a factor to be considered, which can be determinative, in deciding whether that belief is genuinely held.

The second stage is to determine (objectively) whether, based on the Appellant’s subjective state of mind as to knowledge or belief of the facts, her conduct was honest or dishonest applying the standards of ordinary decent people.

The maximum penalty under sections 8(1) and 25(1) is equal to the amount of the duty in question. Both HMRC and this Tribunal have the power to reduce the Civil Evasion Penalty to such amount (including nil) as they think proper pursuant to sections 8(4) of FA 1994 and 29(1) of FA 2003.

Section 8(4) and (5) provides as follows:

“(4)

Where a person is liable to a penalty under this section—

(a)

the Commissioners or, on appeal, an appeal tribunal may reduce the penalty to such amount (including nil) as they think proper; and

(b)

an appeal tribunal, on an appeal relating to a penalty reduced by the Commissioners under this subsection may cancel the whole or any part of the reduction made by the Commissioners.

(5)

Neither of the following matters shall be a matter which the Commissioners or any appeal tribunal shall be entitled to take into account in exercising their powers under subsection (4) above, that is to say—

(a)

the insufficiency of the funds available to any person for paying any duty of excise or for paying the amount of the penalty;

(b)

the fact that there has, in the case in question or in that case taken with any other cases, been no or no significant loss of duty.”

Section 29(1) – (3) provide as follows:

“(1)

Where a person is liable to a penalty under section 25 or 26—

(a)

the Commissioners (whether originally or on review) or, on appeal, an appeal tribunal may reduce the penalty to such amount (including nil) as they think proper; and

(b)

the Commissioners on a review, or an appeal tribunal on an appeal, relating to a penalty reduced by the Commissioners under this subsection may cancel the whole or any part of the reduction previously made by the Commissioners.

(2)

In exercising their powers under subsection (1), neither the Commissioners nor an appeal tribunal are entitled to take into account any of the matters specified in subsection (3).

(3)

Those matters are—

(a)

the insufficiency of the funds available to any person for paying any relevant tax or duty or the amount of the penalty,

(b)

the fact that there has, in the case in question or in that case taken with any other cases, been no or no significant loss of any relevant tax or duty,

(c)

the fact that the person liable to the penalty, or a person acting on his behalf, has acted in good faith.

HMRC has set out the basis on which it will exercise its discretion to reduce such penalties in part 3 of HMRC Notice 300: customs civil investigation of suspected evasion and part 2 of Notice 160: compliance checks into indirect tax matter where it explains that a reduction of up to 80% of the penalty is possible where the person charged with the penalty provides an “early and truthful explanation” and supplies “information promptly…. attending meetings and answering questions”

The Appellant’s grounds of appeal as outlined in her Notice of Appeal are summarised as follows:

The Appellant does not dispute that the amount of cigarettes found in her luggage was in excess of the relevant allowance, that duty had not been paid on them and that the cigarettes were therefore liable to forfeiture. She did not contest the seizure of the cigarettes and does not challenge the calculation of the penalty, in the event that a penalty is due.

The Appellant asserts however that she did not engage in any conduct for the purpose of evading the relevant duty and that her conduct did not involve dishonesty.

The Appellant further asserts that she did cooperate with HMRC during its investigation and therefore, if she is liable to the Civil Evasion Penalty, she should have received a reduction in the penalty for her co-operation.

The three questions that we need to determine therefore are:

The documents to which we were referred are included in a documents and authorities bundle of 315 pages. The bundle included written witness statements of Officer Simon Smith of Border Force (Officer Smith) and Officer Jacqueline Aynsley of HMRC (Officer Aynsley), both of whom gave oral evidence at the hearing and answered questions from Ms Dinler and the panel. Ms Dinler also gave oral evidence at the hearing and answered questions from Officer Brown and the panel.

The Appellant does not dispute that on 26 January 2023, she was stopped by Officer Smith at Stansted Airport at 22:52 on her return to the UK from Turkey.

Officer Smith’s contemporaneous note of the events were contained in his notebook which was exhibited to his witness statement. Officer Smith’s interpretation of his notebook entry is that it states that he stopped the Appellant in the Green, Nothing to Declare Channel.

The Appellant disputes this as she states in her written grounds of appeal that she was pushed in a wheelchair by a member of airport staff from the airplane to the exit and was stopped by the BF Officer at the luggage belt. The BF Officer then escorted her to the Green Channel, where he checked her case.

Officer Smith was an honest and credible witness but unsurprisingly, after a gap of over two years, it was clear from his oral evidence that he had little recollection of the specific events, and was reliant on what he had recorded in his notebook. Officer Smith quite rightly made no attempt to conceal this fact.

When cross examined by Ms Dinler, Officer Smith conceded that it is possible that he had made an error in his notebook and that he may have in fact stopped the Appellant at the luggage belt. He acknowledged that he sometimes did stop passengers at the luggage belt, before they had entered the Red or Green Channel. He stated however that when this happened he would ask the passenger to make a declaration as to whether or not they had anything to declare, before escorting them to the chosen channel.

The only reference in Officer Smith’s notebook to asking the Appellant to make any such declaration was the following exchange:

“SS Hi. Where have you arrived from?

ZD Turkey.

SS Travelling alone?

ZD Yes.

SS How long have you been away for?

ZD No English.

SS Are these your bags?

ZD Yes.

SS Are you carrying anything for anyone else?

ZD No.

SS Are you aware of your customs allowances regards to cigarettes and tobacco?

ZD No cigarettes, my daughter.”

Other than the above exchange, the notebook simply indicates that the interview and inspection took place in the Green Channel.

Officer Smith also conceded in cross examination that he could not be sure that the Appellant was not in a wheelchair when he stopped her, only that he had not recorded that she was in a wheelchair in his notebook.

In her oral evidence, Ms Dinler stated that the Appellant had telephoned her while she was with the BF Officer and that Ms Dinler had spoken on the telephone to a BF Officer and explained to him that her mother had a language barrier.

Officer Smith had no recollection of this and there was no reference to it in his notebook. He informed us that it was unusual for a person who had been stopped by Border Force to be allowed to make a telephone call due to the risk that they may alert accomplices who had not yet gone through customs. However, he conceded that it was possible that the Appellant had been allowed to make a phone call. He considered it unlikely that he had spoken to Ms Dinler because, if he had, he would have made a note of it in his notebook. He acknowledged however that it was possible that another BF Officer may have spoken to her.

On 25 August 2023, HMRC wrote to the Appellant to inform her of HMRC’s enquiry into the evasion of Customs and Excise duties and invited the Appellant to disclose any relevant information and documents. The Appellant was advised that co-operation with the enquiry could significantly reduce any penalties that may become due. A response was requested within 30 days of the date of the letter.

On 11 September 2023, HMRC issued a reminder letter to the Appellant.

Officer Aynsley stated in her witness statement that the Appellant did not respond to either of these letters or cooperate with her enquiry and that the only communication that HMRC received from the Appellant was sent by the Appellant and received by HMRC after Officer Aynsley had issued the Civil Evasion Penalty on 6 October 2023.

The Appellant states in her notice of appeal that;

“contrary to the assertion made in the report, we have diligently cooperated with all inquiries and provided responses as requested. This is evidenced by our correspondence and compliance with requests”.

However there is no documentary evidence to support this assertion, other than a reference in Ms Dinler’s email to HMRC dated 16 January 2024 in which she states:

“Despite raising concerns with both the airline and the airport, a resolution remains elusive…….

Despite our prompt response to the form from HMRC, unfortunately, we have received no reply.”

When giving oral evidence at the hearing Officer Aynsley stated that when she received the 16 January 2024 email and saw the reference to earlier communication she had checked HMRC’s case management system to see if there was any other communication from the Appellant that had not been released to her but she had not found any other correspondence.

Neither the Appellant nor Ms Dinler provided a copy of the alleged earlier response to HMRC and did not state the date on which this earlier communication had allegedly been sent. More specifically Ms Dinler did not state whether it had been sent prior to the Civil Evasion Penalty being issued on 6 October 2023 or in the 3 month period between 6 October 2023 and 16 January 2024.

In oral evidence Ms Dinler stated that she had received a failure to send notification when she had tried to send an email previously to Officer Aynsley but she did not inform us of the date of this failed email communication or provide a copy of the failure to send notification. Nor did she inform us what, if any action she took to contact Officer Aynsley after receiving the failure to send notification.

In Ms Dinler’s email to HMRC dated 16 January 2024, she provides the following explanation of why the Appellant failed to declare the 14,000 cigarettes in her suitcase as follows:

“Before check-in in Turkey, there was a mix-up of luggage, exacerbated by the fact that her suitcase is an ordinary and affordable one from Turkey. An old neighbour, who shared a similar suitcase, tried to help but whether it was unintentionally/intentionally have exchanged their luggage with my mother's, assuming she could be a good shout as she is vulnerable and as she has a language barrier maybe thought it was a good idea.”

Ms Dinler expanded on this in her oral evidence at the hearing. She explained that on the day of the flight she drove her mother to Istanbul airport and took her into the airport. She unexpectedly met someone (“the Neighbour”) at the airport who she and her mother had lived near to in London about 18 years earlier. The Neighbour had offered to take the Appellant to the check in desk and help her to check in. Ms Dinler had accepted the offer because she was not parked properly and so could not leave her car for long. Ms Dinler therefore entrusted her mother, the Appellant, to the Neighbour to help her mother to check in and Ms Dinler left the airport.

Ms Dinler assumes that the Neighbour’s case must have been similar to the Appellant’s and that it must have had 14,000 cigarettes in it. She further assumes that at check in the Neighbour must have checked her own luggage in under the Appellant’s name and the Appellant’s luggage under her name.

In response to questions from Officer Brown and the panel, Ms Dinler explained that, prior to seeing the Neighbour at Istanbul airport on 26 January 2023, she could not recall whether she had seen the Neighbour in the 18 years since she and her mother had moved. Subsequent to the incident with her mother at Stansted Airport on 26 January 2023, Ms Dinler informed the Tribunal that she had tried to make contact with the Neighbour and had obtained a contact telephone number through mutual friends but the Neighbour had not answered any of her calls. Mr Dinler stated that the Neighbour had however returned the Appellant’s suitcase to the Appellant, via mutual friends.

Ms Dinler further stated that the Appellant’s suitcase did not have a personal label or any other identification on it that would distinguish it from other similar suitcases.

We consider it unlikely that Ms Dinler would not park her car in a proper car parking space at Istanbul airport, when she knew that it would take time for her to assist her mother with checking in and securing a wheelchair and escort for her to get her onto her flight. We also consider it unlikely that Ms Dinler would entrust her mother to someone at the airport who she did not know very well and had not seen for 18 years.

Neither the Appellant nor Ms Dinler has provided a name or contact details for the Neighbour.

For the reasons set out above we do not accept Ms Dinler’s evidence regarding the Neighbour.

We accept the Appellant’s assertion and Ms Dinler’s oral evidence in support that the Appellant was transported in a wheelchair through Stansted Airport and that Officer Smith questioned her at the luggage belt and then escorted her and her luggage to the Green “Nothing to Declare” Channel. Officer Smith could not recall and his notebook made no reference to the Appellant making a declaration that she had nothing to declare before she entered the Green Channel. However when questioned in the Green Channel whether she was aware of her customs allowance for cigarettes and tobacco, she stated “No cigarettes”.

The fact that the Appellant may not have voluntarily entered the Green “Nothing to Declare” Channel and may not have given a declaration that she had nothing to declare to Officer Smith is not determinative in this appeal because, on the Appellant’s own submission and the oral evidence of Ms Dinler, the Appellant did not intend to declare the cigarettes to BF.

We also accept that Ms Dinler spoke to a BF Officer on the telephone, and informed him that the Appellant had language barriers. From Ms Dinler’s oral evidence it was clear that she was aware at the time of this telephone call that her mother had been found carrying cigarettes in excess of her allowance, but on her own evidence, she only informed the BF Officer that her mother had a language barrier, she did not inform him that the cigarettes were not her mothers.

Ms Dinler did not provide any documentary evidence to support her assertion in her email of 16 January 2024 that she had already communicated with the airline, airport and HMRC about the matter and on a balance of probabilities we therefore find that no such communications occurred.

Based on all the documentary and oral evidence before us and our findings set out above, we therefore find that on a balance of probabilities the Appellant knew that she was carrying cigarettes in her suitcase that were well in excess of her duty free allowance when she arrived at Stansted Airport from Turkey on 26 January 2023 and that she intended to evade paying duty on those cigarettes.

We find therefore that, subjectively, the Appellant knew that she was carrying cigarettes in excess of her duty free allowance and she did not intend to declare them on arrival in the UK. We have no doubt that this conduct was dishonest by the standards of ordinary decent people.

We further find that the Appellant did not cooperate with HMRC during their enquiry nor did she provide any disclosure to HMRC. The Appellant is therefore not entitled to any reduction of the Civil Evasion Penalty pursuant to sections 8(4) of FA1994 and 29(1) of FA 2003.

For all the reasons set out above 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.