[2011] UKFTT 544 (TC)
TC01391
Appeal number: TC2010/06015
Excise
Duty – drawback – whether two clear business days Notice of Intention were
given – No – reasonableness of Commissioners’ decision not to waive compliance
with requirements – appeal dismissed
FIRST-TIER TRIBUNAL
TAX
HAMMONDS OF KNUTSFORD PLC Appellant
-
and -
THE
COMMISSIONERS FOR HER MAJESTY’S
REVENUE
AND CUSTOMS Respondents
TRIBUNAL:
LADY MITTING (TRIBUNAL JUDGE)
MICHAEL
ATKINSON (MEMBER)
Sitting in Manchester on 8
August 2011
Jonathan Hammond for the
Appellant
Richard Chapman instructed by
the General Counsel and Solicitor to HM Revenue and Customs, for the
Respondents
© CROWN COPYRIGHT
2010
DECISION
1. The
Appellant appeals against two decisions of the Commissioners, both dated 28
April 2010, to refuse claims to draw back of Excise Duty on consignments of
beer.
The Law
2. The
relevant regulations of the Excise Goods (Drawback) Regulations 1995 provide as
follows:
“7 General conditions
(1)
Subject to paragraph (2) below and without prejudice to any condition
imposed by, or in accordance with section 133 of the Act, every eligible
claimant shall –
(a)
save as the Commissioners may otherwise allow, comply with the
conditions imposed by these Regulations; and
(3)-(6) ….
8 Conditions to be complied
with before export
(1) ….
(2)
where an eligible claimant intends to claim drawback after export he shall,
before export, comply with the following conditions-
(a) he shall deliver to the
Commissioners at such address as they shall specify a notice in writing stating
that he intends to claim drawback and containing the following particulars –
(i)
his name and address,
(ii)
the address of the premises at which the goods may be inspected prior to their export,
(iii)
the description of the goods, including their nature and quantity,
(iv)
the amount of duty paid in respect of the goods, and
(v)
the address of the premises to which the goods are being exported;
(b) if
the export is a dispatch he shall complete an accompanying document;
(c) if
the export is not a dispatch he shall complete a single administrative
document; and
(d) the
goods and the accompanying document or single administrative document shall be
available for inspection by the Commissioners, at any reasonable time, for not
less than two clear business days following the day upon which the notice
mentioned in sub-paragraph (a) above was received by the Commissioners.
The
Facts
3. The facts
were largely not in dispute and we find to be as follows. The Appellant is a
wholesaler of beers; wines and spirits, trading within the UK market and abroad. When exporting, the company reclaims its Excise Duty under the
Drawback system.
4. On Friday
19 March 2010, the Appellant faxed to the Commissioners two Notices of Intention
to claim Excise Duty on consignments of beer destined for export from the
premises of Safe Cellars Ltd., each claim being in the sum of £20,554.56.
Copies of the Notices of Intention were sent by the Appellant to Safe Cellars
Ltd. with the instruction ‘Subject to the usual approvals these goods can be
exported on 24 March 2010.’
5. In fact,
and unknown to the Appellant at the time, the two consignments were dispatched
at 5.15pm and 5.25pm on Tuesday 23 March.
6. On 15
April 2010, the Appellant submitted two Claims for Drawback of Excise Duty
referable to the two Notices of Intention. The dispatch and delivery
documentation which accompanied the Drawback claims expressly referred to the
date of dispatch as being 23 March. The claims for Drawback had been completed
by the Appellant and dated 25 March 2010 and contained the declaration, inter
alia, that the claims complied with the conditions laid down in the
Regulations.
7. We accept
and find as a fact that the Appellant was unaware at the time of dispatch that
the consignments were dispatched on the 23 March. We also accept and find as a
fact that the declarations in the Claims for Drawback were signed carelessly
and without reference to the dispatch notes. There was not, in our view, an
intention by the Appellant to deceive the Commissioners.
8. Although
the Appellant’s local compliance officer recommended that the claims be paid,
it was the decision of Mrs Anne Fitzcharles of the National Drawback Centre
that the claims be refused and her decision was notified to the Appellant by
letters dated 28 April 2010. The letters were in similar terms and refused
repayment on the basis that two clear business days notice had not been given,
the date of the giving of notice being excluded, in accordance with the
Regulations.
9. The
Appellant then entered into correspondence with the Commissioners, seeking a
reversal of the decision to refuse repayment. In its correspondence, the
Appellant pleaded that it had given the instruction that the goods should not
be dispatched until 24 March and that it was not its fault but that of Safe Cellars
that the instruction had not been complied with. The point was also made that
the consignments were dispatched after the close of business hours and that the
Commissioners had had sufficient time to inspect the goods if they had wished
to but in fact they made no attempt to inspect either before or after dispatch.
The Commissioners refused to reverse their rejection.
Submissions
10. Mr Hammond submitted that the
purpose of this particular Regulation was to allow the Commissioners the
opportunity to inspect the goods before export. The mere fact here that as it
turned out insufficient notice had been given did not prevent the Commissioners
from inspecting because they had made no attempt to inspect on either day. The
purpose of the Regulation therefore had not been breached. He stressed that
the error was not the fault of his company and that Safe Cellars had acted in
breach of a clear instruction given to them. Mr Hammond also highlighted
previous occasions when the company had technically been in breach but payment
had on each of these occasions been allowed. One such occasion was in March
2010 and this particular occasion was in fact specifically referred to also by
the review officer. We were not given very much information about what had
happened but it appears that there had been a clerical error by the warehouse
(not the Appellant) and the Commissioners accepted this and allowed repayment.
The letter from the Commissioners however which had been dated 3 March 2010
specifically set out the two day rule and concluded that ‘Any further claims
submitted with incorrect information will be rejected.’ We were also referred
to an occasion in July 2009 when an inexperienced employee made an identical
mistake in a number of claims which resulted in numerous dispatches not meeting
the two day requirement. Again these claims were all refused initially but for
reasons which are not apparent on the face of the correspondence were then allowed
by letter dated 5 February 2010.
11. Mr Chapman’s submission was
that two clear business days notice has to be given and it was not. There had
therefore been a clear breach of the Regulations. Given that breach, the
decision of the Commissioners to refuse payment of the Excise Duty was not
unreasonable. We were referred by Mr Chapman to the following cases:
The Vintry v HMRC E00969
Charles Cooper Ltd v HMRC E01168
Pierhead Purchasing Ltd v HMRC TC00433
Conclusions
12. Regulations 7 and 8 allow
the Commissioners a degree of discretion. Regulation 7 (1)(a) requires every
eligible claimant to meet certain stipulated conditions ‘save as the
Commissioners may otherwise allow…’ The Commissioners are therefore empowered
to waive a breach and permit payment, as indeed they had done at least twice
before in respect of this particular Appellant. In this case however, the
Commissioners declined to exercise their discretion to permit payment and
refused the payment as the Appellant had failed to meet one of the stipulated
conditions. The jurisdiction of the tribunal requires us to examine the
reasonableness of that decision. In so doing we have to be satisfied that the
Commissioners took into account all relevant matters and did not consider any
that were not relevant; that they did not make any error of law and that the
decision was not one which no reasonable body of Commissioners could have
reached.
13. Regulation 8(2)(d) requires
the goods to be available for inspection ‘for not less than two clear business
days following the day upon which the notice…’ was given. By cross reference
to the Bills of Exchange Act 1882, a business day is defined, by way of
exclusion, as any day other than Saturdays, Sundays or Bank Holidays. We
accept Mr Chapman’s contention that a ‘clear business day’ is one complete 24
hour period. What is being designated is the nature of the day, not a
limitation on the hours within the day. The fact that dispatch took place
after Safe Cellars’ normal business hours is immaterial. The regulatory
requirement, as notice was given on Friday 19, was that the goods should not be
removed until Wednesday 24 March. This indeed was recognised by the Appellant
in its letter of instruction to Safe Cellars. There was therefore a clear
breach of that condition.
14. The Commissioners had a
discretion to waive that breach but decided not to. Mrs Fitzcharles in her
unchallenged witness statement, sets out the matters which she took into
consideration. She clearly considered first that there had been a breach. She
did not suggest or imply or believe that the Appellant was complicit in the
early dispatch. She took into account the written instruction given by the
Appellant but considered this to be a commercial issue between the two
companies and that the Commissioners should not be expected to repay duty for
what had been a commercial error by Safe Cellars. She did make reference to
the signed declaration which was in fact an incorrect declaration as the
conditions had not been fully complied with. She also considered the most
recent incident where despite a breach, based on a clerical error, repayment
had been made. All these factors are relevant. We were not alerted to any
other factors which ought to have been taken into account which were not.
Further, Mrs Fitzcharles was correct in her interpretation of the Regulations
and made no error in law. Given all of these factors, the Appellant has not
succeeded in satisfying us that the decision to refuse repayment was one which
could not reasonably have been arrived at and we find that the decision not to
waive non compliance was not unreasonable. The appeal is therefore dismissed.
15. As we set out in paragraph
12, Tribunal jurisdiction is limited to considering the reasonableness of the Commissioners’
decision. Once we have found the decision meets the test we have to apply and
is not one which no reasonable body of Commissioners could have reached, it is
not open to us to allow the appeal or to substitute our own view for that of
the Commissioners. We should say that we have every sympathy with the Appellant
company and the fact that we have had to reach this decision does not mean that
we have any doubts as to the Company’s integrity. As we stated previously, we
fully accept that the consignments were dispatched in breach of an express
instruction by the Appellant and without the Appellant’s knowledge. It may
well be that this is a matter which can be resolved between the two companies.
16. 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.
TRIBUNAL JUDGE:
RELEASE DATE:11 August 2011
