Neil Griffin v The Commissioners for HMRC

The appellant challenges the decision of the respondents (“HMRC”) dated 14 May 2024 to issue him with a joint Excise and Customs Civil Evasion Penalty in the total sum of £2,940 (“the Penalty”) being an Excise Penalty of £2,293 and a Customs Penalty of £647. The Penalty was issued in accordance with section 8(1) Finance Act 1994 (“FA 94”) and section 25(1) Finance Act 2003 (“FA 03”).

The Penalty was imposed in relation to the importation of 6,000 cigarettes.

With the consent of the parties, the hearing was conducted by MS 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.

The first hearing in this matter was on 17 October 2025 but the appellant did not appear. As there had been problems with the hearing link, HMRC had very fairly asked that the hearing be adjourned in order to give the appellant a final chance to decide whether or not he wished to attend. I issued Directions to that effect and on 8 November 2025, the appellant emailed the Tribunal confirming that he did wish to attend a hearing and he would be available up until 30 January 2026 but he would be leaving the UK thereafter. The hearing was therefore arranged to suit his availability.

On 20 November 2025, he was notified of the date and time of the hearing on 27 January 2026 but he did not attend. I had regard to Rule 2 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 (as amended) (“the Rules”) and granted HMRC’s application to proceed in his absence.

I heard evidence from Officers Dangerfield and Smith. I had a hearing bundle extending to 297 pages.

On 25 June 2023, the appellant travelled from the Philippines via Kuwait to London Heathrow Airport.

Officer Dangerfield intercepted the appellant in the green “nothing to declare” channel. She asked the appellant if he had any goods to declare to Customs and his response was that he had some tobacco. He conceded that it was in excess of the allowance. He had with him a duty free bag and two small holdalls. A search of the luggage disclosed the 6,000 cigarettes of mixed brands.

Officer Dangerfield seized the cigarettes and issued a Seizure Information Notice (BOR156), a Warning Letter about Seized Goods (BOR162) and the appellant signed both of those. She also provided him with Customs Notices 1 (Customs Information) and 12A (Rights for Passenger upon goods seizure).

The Warning Letter indicated that Border Force might share information with HMRC “who may take action against you such as issuing you with an assessment for any evaded tax or duty and a wrongdoing penalty …”.

Border Force did then send details of the seizure to HMRC.

On 15 March 2024, Officer Smith wrote to the appellant explaining that HMRC had received information from Border Force which gave them reason to believe that conduct involving dishonesty may have occurred. HMRC’s concern was in relation to the appellant’s involvement in the smuggling, or attempted smuggling, of tobacco products which did not have the appropriate duty paid on them. The appellant was invited to cooperate with HMRC and was advised that cooperation could significantly reduce any penalties that might become due. The appellant was asked to make representations within 30 days.

On 3 April 2024, Officer Smith sent a reminder asking for a response by 17 April 2024.

On 14 May 2024, having received no reply from the appellant, Officer Smith wrote to the appellant issuing the Penalty. The Penalty had not been reduced in any way since the appellant had not cooperated with HMRC.

On 10 June 2024, the appellant emailed HMRC stating:-

“I would like to request acceptance to review of my case.

Can I please seek assitance (sic) in the steps in which I need to provide information as to the unfair nature of the assessment to which I have only just come to my attention in returning from abroad on June 8^th.

I am hopeful the case can be resolved without the need for appeal to an independant (sic) Tribunal”.

On 1 July 2024, having had no response from HMRC, the appellant again emailed HMRC stating:-

“I have not heard back from June 10^th, requesting a review to my case. Could you confirm, that this review process is in the system.”

On 9 July 2024, Excise Review Officer Hayley Baxter contacted the appellant on his mobile telephone number which had been furnished in the original request for a review. The appellant explained to the officer that he had gone to the Philippines in April 2024 but he had not been living at the address to which the letter had been sent in March 2024 as there had been a fire.

Officer Baxter then emailed the appellant referring to the telephone conversation and stating that “As agreed, you have until 16 July 2024 in which to provide your response to the enquiry points listed in Officer Smith’s initial letter dated 15 March 2024”.

There was no response and on 24 July 2024, Officer Baxter upheld Officer Smith’s decision to issue the Penalty.

On 23 August 2024, the appellant lodged his Notice of Appeal with the Tribunal. He argued that:

No further correspondence was received from him.

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 FA 94 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 FA 94 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 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.”

Section 31(2) FA 03 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 burden on proof lies on HMRC to show on the balance of probabilities that the conduct of the appellant involved dishonesty.

Officer Dangerfield confirmed that when he was stopped in the green channel and asked if he had anything to declare, the appellant had immediately confirmed that he did have cigarettes to declare. In her words, he had been “compliant”. As can be seen from his Notice of Appeal the appellant was aware of the duty-free limits. In the words of Lord Hughes, “ordinary decent people” would have known that the duty-free limits exist for a reason. I find that HMRC have established that the appellant imported the cigarettes dishonestly.

Section 8(5) FA 94 means that neither HMRC nor the Tribunal can take into account the fact that the appellant cannot afford the penalty.

It is trite law that the Tribunal has no jurisdiction to consider whether the law is fair or not.

The issue then for the Tribunal is whether or not there should be any reduction of the penalty. I observe that Officer Baxter confirmed that the calculation of the excise duty that had been evaded had been on the basis of using the lowest UK recommended retail price at the time of the seizure and applying it to all of the cigarettes (which were mixed brands). That was in the appellant’s favour. Furthermore, that produced a total for excise duty of £2,293 which was lower than the minimum excise duty (for that number of cigarettes) of £2,360. That is also in the appellant’s favour.

Under section 29(1) of the FA 03 (in respect of customs duty) and section 8 (4) of FA 94 (in respect of excise duty) HMRC and on appeal, the Tribunal “may reduce any penalty to such amount (including nil) as they think proper”. HMRC accept that there is no statutory guidance on what principles should be applied in determining any reduction.

HMRC’s policy on mitigation is set out in HMRC Notice 300 which provides that HMRC will reduce such penalties by up to 80 percent as follows:

In this case, HMRC have not awarded any reduction because the appellant had failed to supply a written response either to the initial enquiry letter of 15 March 2024 or to the review request on 9 July 2024.

The appellant argues that he did cooperate in so far as he did give Officer Baxter information by telephone and he has explained that he had not received Officer Smith’s letters until 8 June 2024.

As I explained to Mr Williams in the course of the hearing I take the view that HMRC’s approach to mitigation is somewhat harsh given that:

It would appear that Officer Baxter never received a written reply to the questions which had been posed albeit in his Grounds of Appeal the appellant suggests that a letter was sent. The review conclusion letter makes it clear that no letter had been received within the agreed timescale of 16 July 2024 and nor had a letter been received by 22 July 2024. It did not assist the Tribunal that the appellant chose not to appear at either hearing and therefore he did not give evidence or provide information about any letter.

Overall. I find that there should be some mitigation for both disclosure and co-operation and that the proper level of penalty in the present case is of the tax and duty dishonestly evaded giving a total penalty due of £2,352.

 For the reasons given above the Tribunal allows the appeal in part.

The Penalty is upheld in the sum of £2,252.

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.