[2009] UKFTT 81 (TC)

TC00049
Appeal number EDN/09/8002

Excise Duty; Incorrect excise duty calculation; duty underdeclared; assessment based on correct calculation; assessment upheld; Appeal refused.

FIRST-TIER TRIBUNAL

TAX 

	STRATHSPEY MUSHROOMS LTD	Appellants

	- and -

	THE COMMISSIONERS FOR HER MAJESTY’S
	REVENUE AND CUSTOMS (Excise Duty)	Respondents

			TRIBUNAL: 	Mrs G Pritchard, BL., MBA., WS – Tribunal Judge

Sitting in public in Edinburgh on Tuesday 14 April 2009

No Appearance for the Appellants

Mr Russell Harrison instructed by the General Counsel and Solicitor to HM Revenue and Customs for the Respondents

© CROWN COPYRIGHT 2009

DECISION

1.	This is an appeal against assessments to excise duty dated 13 and 23 October 2008 reference EXB535/08 and EXB563/08 in respect of the miscalculation of excise duty on the import of goods bottled in alcoholic liquor from the EU (the goods), on the ground the Appellants were misdirected as to the calculation of excise duty on the goods, when they commenced importing as an Occasional Importer, under the Occasional Importer EU Traders Excise Goods Provisions.  Mr Duncan Riley, the principal Director of the Appellants, had explained the problem which arose in his letter of appeal dated 13th February 2009, which contained a copy of his letter to HMRC dated 13th November 2008, referred to below in more detail.  Mr Riley was not required to attend the hearing.  He had consented to the hearing proceeding in his absence.  Had I considered it necessary to hear him on this matter I would have adjourned the tribunal for this purpose.  Mr Russell Harrison appeared for HMRC.
2.	I find the Appellants imported the goods to sell on their premises.  They imported these from France from October 2005 onwards.  They were subject to HMRC Notice 204 for Occasional Importers, firstly the June 2003 issue and secondly the July 2006 issue.  These are similar in their terms so far as the Appellants are concerned.  The Notice contains the instructions to Occasional Importers who are not subject to the full rigour of the Excise Goods (Holding, Movement, and REDS) Regulations 1992.
3.	There was no dispute about the liability of the goods to duty.  The dispute lay in the matter of the calculation of the duty.  It was accepted and I find that both parties agree that the goods purchased had a content of 37cl of alcoholic liquor to 1 litre of content with 15% volume of alcohol (the percentage proof).  This means that the alcoholic liquor quantity imported must be calculated then the volume of alcohol percentage is applied to establish the amount on which excise duty is due at the relevant rate as follows:-
(1)	No. of litre bottles imported x .37 = Alcoholic liquor in litres (the bulk litres);
(2)	Bulk litres x percentage volume of alcohol = Alcohol imported;
(3)	Alcohol imported x duty = duty on bottles imported.
4.	Mr Riley submitted that when he was finding out how to import these goods he made enquiry of the then HM Customs and Excise in Liverpool and was given a calculation to use.  He states that the calculation was as follows:-
“Purchase of 65 cases x 6 jars = 390 litres x 15% = 58.5 litres pure alcohol x 15% volume = 8.78 x duty rate”.
This calculation is contained in his letter of 13 November 2008.  He also states in the letter he “commenced importing Griottines (the goods) in 1 litre jars containing 37cl of alcohol”.
5.	I find this calculation clearly has some glaring errors even to the untutored eye.  Duty is borne on alcohol.  The calculation varies according to the type.  So the information needed would include whether the alcoholic content was spirits.  According to his own calculation the duty should have been borne on 58.5 litres.  Again that produces the result that the fruit is in pure alcohol.  Obviously that cannot be.  15% is the percentage volume of alcohol in the alcoholic liquor content of the bottles.  So the only real calculation required by the importer and HMRC is the volume of alcoholic liquor in each bottle, as compared to other contents.  It will vary from importer to importer depending on the import in question and since it is a variable then it appears inherently unlikely that the person contacted in Liverpool would give a percentage figure for that calculation.  There is a record of a call having been made to the National Helpline by the Appellant but the reply did not contain the information the Appellant says he was given.
6.	In any event it is for the trader to establish his liability.  It is not difficult to find the information needed to conduct occasional imports and account for the duty.  Mr Riley’s certainty that he was doing the correct calculation appears to me to be quite surprising considering he knew the proportion of alcoholic liquor was 37cl per litre of contents.  I cannot consider that he could not understand the calculation which was necessary.  It is an obvious assumption to make that he erroneously used the 15% figure twice by accident but he does not suggest that and therefore I do not make that assumption here.  I just do not believe he implemented his instructions properly, particularly relating to the calculation of the “bulk litres” before applying the percentage proof.
7.	I find that the Appellants simply did not follow the necessary instructions so clearly laid out in HMRC Notice 204 to which they were subject when importing the goods as an Occasional Importer.  The Appellants are subject to the law controlling the import of the goods, which is set out in the REDS Regulations already referred to.
8.	Misdirection by HMRC is not a ground of appeal contained in Schedule 5 of the Finance Act 1994.  Only actual decisions made by HMRC are appealable.  In respect of an appeal against the assessment, I find the correct criteria have been applied by Carol Kunderan the review officer of HMRC in her letter dated 1 December 2008.  She has used the correct terms of the provisions of Notice 204.  She has also commented that she has referred Mr Riley’s complaint of misdirection to the Local Compliance Unit.  Mr Riley is also free to complain to the Tax Adjudicator on this matter.
9.	Misdirection has been offered before in tax matters and has been found to be of no protection when the responsibility is the taxpayers.  Vetplus Ltd (UTD 19850) (TVC 2.109) followed.

MRS G PRITCHARD, BL., MBA., WS
TRIBUNAL JUDGE

RELEASE DATE:  30 APRIL 2009