Shonna Elizabeth Grace Hickling v The Commissioners for HMRC

The appellant challenges the decision of the respondents (“HMRC”) dated 31 May 2024 to issue her with a joint Excise and Customs Civil Evasion Penalty in the total sum of £2,282 (“the Penalty”). The Penalty was issued in accordance with section 8(1) Finance Act 1994 (“FA94”) and section 25(1) Finance Act 2003 (“FA03”).

The Penalty was imposed in relation to the importation of 2,360 cigarettes and 3.2 kg of hand rolling tobacco.

With the consent of the parties, the hearing was conducted by video link using TEAMS. 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.

I heard evidence from Officers Bradley Nchanji and Neil Roberts and from the appellant. I had a hearing bundle extending to 358 pages.

On 23 July 2023, the appellant arrived at the Southampton International Port Ocean Cruise Terminal, having travelled on a cruise around Europe. She initially cleared the Customs area without making a declaration. She had travelled on the cruise with a companion, Mr Christie, who was stopped in the Green Channel by Border Force Officer Nchanji. He stated that he had travelled with the appellant and at the Officer’s request he asked her to return which she did. The officer inspected both of their passports and noted the details.

He posed a number of questions to them both. They confirmed that they had been in the Green Channel and that they knew what that meant.

On being asked if they had purchased or obtained anything whilst they were away which they were bringing back into the UK, the appellant initially said “Nothing really” and then having been prompted in regard to alcohol or tobacco, she said “We bought some cigarettes”.

Mr Christie then said “We only bought our allowance.” On being asked what the allowance was, the appellant said “200 cigarettes each and we have 400 between us”. They were asked if the two pull along cases which the appellant had taken through the Green Channel and the trolley with cases which Mr Christie had been pushing were all of their bags. Mr Christie confirmed that the bags which were present were all of the bags that belonged to them and they had packed them themselves.

In response to the question “Are you fully aware of the contents”, the appellant replied “Yes. We only have 400 fags”. She said that they were not carrying anything for anybody else saying “No, just our stuff”. Mr Christie answered two questions which were unrelated to alcohol or tobacco. He was asked to place the suitcases on the table which he did one at a time. As the search of each case was concluded he closed and removed each case from the table.

A search of the luggage found 1,400 cigarettes branded “Manchester” and 400 cigarettes branded “Kings” in one case. The officer said to the appellant that she had said that she had only had 400 cigarettes between the two of them and that was not 400. Her response was “Hmm, no”. The officer then asked if he would find anymore tobacco products and the appellant responded saying “I don’t know”.

The officer asked for the next case and Mr Christie said “OK”. In another case the officer found 200 Sterling cigarettes, 200 Lambert & Butler cigarettes, 160 Marlboro cigarettes and 3.2kg of Amber leaf handrolling tobacco.

The officer then seized the goods and issued a Seizure Information Notice (BOR 156).

That is headed “This is not a Notice of Seizure”. Underneath that it reads:

“This Notice provides details about the seizure of the things listed below. If they do not belong to you, please give this Notice to their owner as soon as possible”.

The goods are then scheduled. The appellant signed that and the time is noted as being 9.40am.

The officer’s notebook records that the original interception had occurred at 7.22am and his witness statement and notebook record that BOR 156 was issued at 7.40am. The Notice had circled on it the fact that Notice 1 issued, a warning letter issued and Notice 12A issued. The warning letter is signed by the officer but not by the appellant and it records that in the presence of Senior Officer Hickton the appellant had refused to sign or collect the warning letter (BOR 162).

Border Force then sent details of the seizure to HMRC.

On 5 April 2024, Officer Roberts wrote to the appellant notifying her of HMRC’s intention to investigate her conduct.

She was provided with relevant Public Notices and documentation. She was invited to make disclosures and to return a signed and dated copy of the letter as acknowledgement that she had read and understood the documentation.

Crucially that letter includes the following paragraph:-

“If you are going to co-operate with this check, please provide responses to each and every one of the following bullet points within 30 days of the date of this letter:

•

A copy of this letter (copy enclosed), signed and dated by you, as acknowledgement that you have read and understood Factsheet CC/FS9, Public Notice 160, and Public Notice 300. If you have any questions regarding any of these, please contact me on the above number

•

Confirmation of who was involved in the smuggling (attempt)

•

For each person involved, please state exactly what they did

•

For each person involved, please state why they did it

•

A full explanation as to how the smuggling (attempt) was carried out

•

Confirmation as to how many times and when (the dates) alcohol and tobacco products were smuggled (or attempts made to smuggle them) into the UK

•

For each occasion, please state the quantity of goods

•

Details of all international travel during 23 July 2022 to 5 April 2024, including the reasons for travel

•

Any documentation you think will support the information you are providing

•

Any other information or explanations you think may be of use to this check”.

Public Notice 160 explains that penalties might be imposed and explains how they are calculated. It also explains how any penalties might be reduced and the extent to which penalties might be reduced depending upon the level of cooperation.

Sections 2.4 and 3 of Public Notice 300, explain that a reduction, of up to 40% may be made for disclosure where an “early and truthful explanation as to why the arrears arose and the true extent of them” is provided, and/or a reduction of up to 40% may be made if the taxpayer co-operates fully. Examples of co-operation are given such as the attending all interviews where necessary, supplying information promptly, attending meetings and answering questions truthfully, giving the relevant information to establish their true liability and co-operating until the end of the investigation, such that the person has been “fully embracing and meeting responsibilities under the procedure”. Although in most cases the maximum reduction obtainable would therefore be 80%, the Notice indicates that further reductions may be made in “exceptional circumstances” such as a “complete and unprompted voluntary disclosure” by the person concerned.

The letter explained that if she did not reply by 5 May 2024 it would be assumed that she did not wish to cooperate and in that event she might be charged with the maximum penalty.

On 22 April 2024, a reminder letter was issued and asked for a reply by 5 May 2024. On the afternoon of the same day, the appellant emailed Officer Roberts stating that:

On 25 April 2024, Officer Roberts emailed Officer Nchanji seeking clarification as to whether:

Officer Nchanji replied the following day and confirmed that Mr Christie’s account of the interception was correct but that he had not commenced the baggage search until she had returned to the Green Channel. He went on to state “During Initial Questions, Ms Hickling stated the baggage belongs to her and took ownership of the Revenue goods that were found and seized as reflected in my Notebook and the BOR forms”.

She had refused to take the Warning Notice as she said that there was no need to appeal the decision as she had been above the permitted allowance.

On 31 May 2024, Officer Roberts issued the penalty which showed a 20% reduction awarded as to 10% for disclosure and 10% for co-operation.

On 6 June 2024, HMRC returned two missed calls from the appellant on the previous day and discussed the case with her. She again stated that all of the goods belonged to her companion and that she had only signed the Seizure Notice so that she could leave and be helpful to Customs. The officer explained that his decision had been based on the fact that she had been aware that she had tobacco goods in excess of her allowance and she had failed to declare them. He pointed out that that was still her responsibility even if someone else had purchased the goods as she was aware that they were in the luggage and in excess of the allowance. He advised her to provide any additional information in support of what she was saying.

On 9 June 2024, the appellant emailed HMRC requesting a review, arguing that she felt that she had not explained the situation very well to Officer Roberts and after speaking to him on the telephone she realised that further information was required.

She reiterated her argument that her companion had left whilst the bags were being searched and she had been left standing there with his luggage and tobacco. She explained that part of the way through the cruise there had been an argument and she had been pushed out of the cabin and had been forced to get her own cabin. She reiterated that she no longer had any association with her companion.

She sent a further email later that morning, stating that she had not wanted to name her companion previously because of the violence but she realised that she needed to give his name so she disclosed his name and address. She enclosed a copy of a bill from the cruise showing that Mr Christie was no longer paying her bills from 15 July 2023.

On 5 August 2024, HMRC issued the Review Conclusion Letter. That Letter confirmed that all of the facts that I have narrated above had been considered by the Review Officer.

The Review Officer accepted that the appellant and Mr Christie had separated whilst on the cruise but pointed out that in the appellant’s email of 22 April 2024, she had confirmed that Mr Christie had been carrying one of her bags when stopped. He argued that that seemed to demonstrate at least some ongoing contact between them just prior to the seizure of the goods.

He went on to point out that in the interview with Officer Nchanji, she had confirmed that she knew the allowance for tobacco goods. However, in her email of 22 April 2024 she had stated:

“I wasn’t a hundred per cent sure on the rules as I am new to travelling. The customs explained about buying things on the boat like jewellery and designer clothes as they don’t tell you on the ship and my companion bought tobacco that he wasn’t told on the boat he couldn’t buy (sic)”.

The Review Officer stated that given the available evidence, he did not find it credible that the appellant was unaware of the cigarettes and tobacco allowances or that the tobacco goods were present in the baggage. Therefore, the appellant had displayed dishonest conduct by first leaving the Customs area without making a declaration and then making a dishonest declaration to the effect that only the allowance had been utilised.

As far as the reductions were concerned, the Review Officer upheld the level of reduction pointing out that she had repeatedly said that she was not aware of the allowance levels. He had concerns about the credibility of her account of Mr Christies’ whereabouts during the Border Force interview.

On 24 August 2024, the appellant appealed to the Tribunal reiterating the previous arguments and stating that she had only owned 200 cigarettes. She argued that she had been coerced into signing the Seizure Notice.

Sections 78 and 139 of the Customs and Excise Management Act 1978 provide that a person entering the UK may be required to answer questions about their baggage and produce items for examination. In circumstances where items chargeable with duty or tax are found concealed, they are liable to forfeiture, and as such may be seized or detained. 

Sections 8(1) and (4) of the FA94 provide as follows:

“8 Penalty for evasion of excise duty

(1)

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

(a)

any person engages in 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.

…

(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.”

Section 8 of FA94 was repealed by paragraph 21(d)(i) of Schedule 40 of the Finance Act 2008 with the exception of the dishonesty penalty, which was preserved by the Schedule 41 (Appointed Day and Transitional Provisions) Order 2009.

Sections 25(1) and 29(1)(a) of FA03 provide as follows:

“25  Penalty for evasion

(1)

In any case where –

(a)

a person engages in any conduct for the purposes 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.

…

29   Reduction of penalty under section 25 or 26

(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 or 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.”

Section 31(2) FA03 provides that a demand notice under section 25 may not be given more than two years after HMRC have identified the evasion of duty.

The Travellers’ Allowance Order 1994, as amended, provides for the limits for the importation of relevant goods from third countries (whereby a “third country” is defined in relation to relief from excise duties as a place to which Council Directive 92/12/EEC of 25 February 1992 does not apply). The limit for cigarettes is 200.

The test for dishonesty has been clarified by the Supreme Court in Ivey v Genting Casinos (UK) Ltd t/a Crockfords [2017] UKSC 67 (“Ivey), unifying the principles for civil and criminal cases. Lord Hughes (with whom Lord Neuberger, Lady Hale, Lord Kerr and Lord Thomas agreed) stated as follows at [74]:

“[74] These several considerations provide convincing grounds for holding that the second leg of the test propounded in Ghosh does not correctly represent the law and that directions based upon it ought no longer to be given. The test of dishonesty is as set out by Lord Nicholls in Royal Brunei Airlines Sdn Bhd v Tan and by Lord Hoffmann in Barlow Clowes: see para 62 above. 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 primary issue in this appeal is that there is a fundamental disagreement between the appellant and Officer Nchanji about what happened when the appellant was interviewed by Border Force.

The starting point for the Tribunal is to decide whether the appellant has engaged in dishonest conduct in trying to evade excise duty and her credibility is at the heart of that issue.

A key part of that is her assertion that Mr Christie had run off whilst the bags were being searched.

Unfortunately for her, as the Review Officer had observed there were a number of discrepancies in her disclosures to HMRC and there were also conflicts with the record in Officer Nchanji’s notebook.

There is one slight discrepancy between Officer Nchanji’s notebook and the Seizure Notice. As can be seen, the timing of the seizure in the notebook was 7.40am whereas it was 9.40am on the Seizure Notice. I only noted that when writing this decision, so did not have an opportunity to put that to the officer.

The appellant’s evidence was that she was waiting in the Green Channel for half an hour whilst a search was made for Mr Christie. Even if I accepted that, the total time involved in the interception would not then have amounted to more than two hours. Accordingly, on the balance of probabilities, I find that the timing on the Seizure Notice is a clerical error.

The appellant’s evidence was to the effect that Officer Nchanji was lying “to save his own skin” and his witness statement was not “the reality”.

She insisted that Mr Christie had run off with his passport and the passports had never been checked. When faced with the officer’s notebook which had details of both passports and the names and the dates of birth of the appellant and Mr Christie, she argued that it had been altered.

I do not accept that and pointed out to her the lines in the otherwise blank spaces.

In oral evidence, she said that Mr Christie had left with his rucksack before her bags were searched.

The account given in the email of 22 April 2024 was that Mr Christie had called her over to the desk where he was being searched. He explained to Customs that she was travelling with him and her bags were searched. He had left her with all of the bags and Customs could not find him.

Firstly, although it might just be a loose use of language on her part, there is no other suggestion that anyone was searched.

Secondly, I accept the officer’s explanation that when 5000 or 6000 passengers disembark at the same time to go through Customs they are regularly split up so that would not be recorded in a notebook. I also accept that seeing a single man with a large amount of luggage on a trolley, the officer would have asked if he was travelling with someone.

I find the officer’s account that having asked that, the appellant having been identified by Mr Christie and she having been called back by Mr Christie, no bags were searched until she was present.

I also accept the officer’s account that both were present whilst the bags were being searched. As I have indicated, the notebook clearly records answers to questions being given by both the appellant and Mr Christie. It is clear that Mr Christie was present when the first bag containing the goods was opened.

As I have indicated, the appellant argued that she was kept waiting in the Green Channel for 30 minutes while a search was made for Mr Christie. However, I am well aware that because of the large numbers of passengers passing through customs and the limited space (which the officer did give evidence about) customs officers have at their disposal other interview rooms where they can take passengers if matters are likely to take a longer period of time.

I consider it very unlikely that she would have been allowed to take up precious space in the way that she describes and for 30 minutes.

The appellant states that Mr Christie was waiting for her outside and she gave him his belongings.

There are a number of challenges in the appellant’s evidence. It was put to her that in the email of 22 April 2024 she had said that Mr Christie had been carrying one of her bags and she explained that saying that he had kept that when they spilt up on the cruise. However, the officer’s clear evidence was that they did not have “his and her” bags and clothing belonging to both of them was included in all of the bags. She conceded that some of her clothing was in “his” bags.

A bigger problem was that her oral evidence was that the three counterfeit Chanel bags (which the officer allowed her to retain) were in her bag. The Officer was clear that they had been found in the second of the bags containing tobacco. The appellant again says he was lying.

I do not propose to address every conflict in the evidence but looking at the totality of the evidence, I accept that the officer’s contemporaneous written notes are an accurate account.

I also accept his oral evidence and specifically his evidence that:

The appellant had previously travelled abroad more than once. It is clear from the notebook that the appellant knew the amount of the duty free allowance and she conceded as much in cross-examination.

The appellant had said that she was aware of the contents of the bags. It was only after the luggage was searched that goods, very substantially in excess of the permitted allowance, were found.

In all these circumstances we find that HMRC have discharged the burden of proof and have established that the appellant’s conduct was dishonest if one applies the objective standards of ordinary honest, decent people which is the standard specified in Ivey.

I have considered the level of mitigation and consider it to be appropriate and reasonable. I agree with HMRC that the appellant did not provide sufficient information to address who was involved in the smuggling attempt, what she did, why she did it, or how the smuggling attempt was carried out. She did not provide the signed declaration requested in the letter of 5 April 2024. She gave very little information, and only belatedly, about Mr Christie who had been her partner for approximately a year.

The penalties were imposed well within the statutory two year time limit.

Section 29 FA03 makes it clear that not having the money to pay a penalty cannot be taken into account.

In part, the appellant argues that it is not fair that the penalty was imposed on her and not Mr Christie. Since we have found that the penalty was timeously and competently issued, as is made explicit in HMRC v Hok [2012] UKUT 363 (TCC), the Tribunal has no jurisdiction to consider whether or not the law is fair.

For all these reasons, 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.