[2011] UKFTT 116 (TC)

TC00992

Appeal number: TC/2009/13809

EXCISE DUTY – Duty suspension – Diversion from authorised warehouse – Liability of owner - Assessments to excise duty on movements of duty suspended alcohol – whether Appellant caused the occurrence of an excise duty point – Whether revocation of Appellant’s registration as a Registered Owner of Duty Suspended Goods was reasonable – Assessment to VAT arising from excise duty 

FIRST-TIER TRIBUNAL

TAX 

	EXPRESS FOOD AND DRINKS LIMITED	Appellant

	- and -

	THE COMMISSIONERS FOR HER MAJESTY’S
	REVENUE AND CUSTOMS	Respondents

				TRIBUNAL: Ms J. Blewitt (Judge)
						Mr P. Whitehead (Member)

					
Sitting in public at Manchester on 26th and 27th January 2011

Mr J. Noteman, Director of the Appellant Company was unrepresented 

Mr R. Chapman, Counsel instructed by the General Counsel and Solicitor to HM Revenue and Customs, for the Respondents

© CROWN COPYRIGHT 2011

DECISION

1.	This is an appeal by the Appellant against the following decisions of the Respondents:
(a)	Contained within a letter dated 10 July 2009, an assessment to duty made on 18 May 2009 in the sum of £12,346.63 in respect of excise duty on a movement of duty suspended alcohol from a UK warehouse to France on 27 November 2007.
(b)	Contained within a letter dated 18 January 2010, an assessment to duty made on 14 December 2009 in the sum of £622,986.06 in respect of excise duty on a movement of duty suspended alcohol from a UK warehouse to France, excluding that on 27 November 2007, for the period 7 November 2007 to 11 January 2008
(c)	Contained within a letter dated 30 March 2010, a decision made on 5 February 2010 to revoke the Appellant’s registration as a Registered Owner of Duty Suspended Goods
(d)	Contained within a Notice of Assessment dated 3 March 2010, a decision to issue the Appellant with a Notice of Assessment to VAT in the sum of £112,612.26 (plus interest) relating to the supplies the subject of the assessment to excise duty set out at paragraph 1 (b) above.

Grounds of Appeal
2.	Mr Noteman, Director of the Appellant Company, appealed against the assessment to duty made on 18 May 2009 in the sum of £12,346.63 by way of Notice of Appeal dated 27 July 2009 in which he stated: “I do not feel I should be liable for any duty whatsoever.”  The grounds of appeal annexed to the Notice stated:
(a)	That the Appellant was unaware that his customer, Primestore, had ceased trading in January 2007. The Appellant contended that he could not be expected to be aware of this information as he had been provided with evidence in August and December 2007 which purported to show that the Primestore was a legal company in France. Furthermore the Appellant had continued to receive purchase orders and payments from Primestore throughout 2007 and therefore had no reason to doubt the existence or legitimacy of the company. The Appellant contended that if Primestore was trading illegally and had received and paid for the goods, the liability to duty rests with them.
(b)	The Appellant provided a signed statement from Primestore showing that legal title of the goods passed from the Appellant to Primestore when the goods crossed the border into France. The Appellant submitted that, having received payment from Primestore, he could only assume that the goods had arrived in France; thereafter the goods were out of his control. The Appellant requested evidence from the Respondent to support their allegation that the goods did not arrive in France.
(c)	That once the goods left the Appellant’s account in Goldspot Bond in the UK, the Appellant received no documentation to confirm whether or not the goods arrived in France. The Appellant stated that he had not received copies of the AADs or CMRs and contended that he could do no more than due diligence checks on the customer and retain the relevant receipts.
(d)	The Appellant stated that there had been previous incidents where the Respondents had withdrawn his registration as a Registered Owner of Duty Suspended Goods by alleging goods had not arrived at the destination point, which later transpired to be untrue. The Appellant reiterated his lack of control over the goods once they left the UK and queried whether there could be an explanation, such as the bonded warehouse in France had refused to accept the goods. 
3.	The Appellant appealed against the assessment to duty made on 14 December 2009 in the sum of £622,986.06 by way of Notice of Appeal dated 12 January 2010 in which he stated:
(a)	That the original decision to impose the assessment for excise duty was unreasonable and not proportionate; and/or
(b)	In respect of the irregularities in movement as alleged by the Respondents, that the movements of the goods were not under the control of the Appellant. Furthermore, if (not admitted) there were irregularities in the movements of the goods, then the Appellant had no knowledge of such and cannot be held liable for the excise duty;
(c)	In the alternative, the Appellant submitted that there were no irregularities giving rise to an excise duty point; and/or
(d)	If  there were any irregularities in the movements of the goods giving rise to the excise duty assessment, then any irregularities did not occur within the UK; and/or
(e)	The Appellant was not the guarantor for the movement of the goods and therefore relies on community law rights as set out in EC Council Directive 92/12/EEC
4.	By Notice of Appeal dated 3 March 2010 the Appellant appealed against the Notice of Assessment to VAT dated 3 March 2010 in the sum of £112,612.26. The Appellant’s grounds of appeal state:
(a)	That the VAT assessment is based upon an excise duty assessment and therefore the validity of the VAT assessment rests wholly upon the validity of the excise duty assessment;
(b)	That the original decisions to impose the assessments for excise duty and VAT were unreasonable and not proportionate;
(c)	That the movements of the goods were not under the control of the Appellant and that if any irregularities did exist in the movements of the goods, the Appellant had no knowledge of such. The Appellant contended that he did not cause any irregularities and therefore cannot be held liable for excise duty and VAT;
(d)	The Appellant submits that there were no irregularities giving rise to an excise duty point and assessment for VAT; and/or
(e)	The Appellant did not act as guarantor for the movement of the goods and relies upon his community law rights. The Appellant submits that the excise duty and VAT assessments are not proportionate and/or lead to double taxation which is unlawful.
5.	By Notice of Appeal dated 30 March 2010 the Appellant appealed against a decision made on 5 February 2010 to revoke the Appellant’s registration as a Registered Owner of Duty Suspended Goods. The grounds of appeal state:
(a)	That the decision to revoke the Appellant’s registration is based upon an invalid assessment, thereby making the decision invalid;
(b)	That the decision to revoke the Appellant’s licence is unreasonable and not proportionate
6.	Further grounds of appeal are set out in the Notice which reiterate those at paragraphs 2, 3 and 4 above. 

Facts
7.	The Appellant is the sole Director of the Appellant Company, based at 26 The Fieldings, Fullwood, Preston. 
8.	In July 2007 information was received by Ms West, a Higher Officer of HMRC, from Mr Steele, an Officer of the HMRC Revenue Fraud Detection Team based at Dover, that a load despatched from an approved UK excise warehouse called Gold Spot Ltd on behalf of the Appellant Company had been scanned en route through Dover on its way to a tax warehouse in France called Global Negotium. The scan revealed that the wagon was travelling empty. Ms West, upon receiving this information confirmed that Gold Spot Ltd was in possession of 3 AAD (the abbreviation for administrative accompanying documents) from Global Negotium relating to the load, purporting to show that the load had reached Global Negotium. This consignment, although not the subject under appeal, led to enquiries into the trading between the Appellant Company and Gold Spot Ltd. 
9.	The enquiries revealed that on 3 August 2007 a consignment of 2080 cases of Guinness was despatched from Gold Spot Ltd to France. The Appellant held an account with Gold Spot Ltd and used their warehousing facilities as an owner registered under the Warehouse keepers and Owners of Warehoused Goods Regulations (“WOWGR”) 1999. The goods were then purported to be transferred to the account of a French company, Primestore, to be held at Global Negotium. 
10.	The goods travelled in duty suspension and were transported by General Sales Ltd GB, a haulier who provided the guarantee for the movement of goods. 
11.	Enquiries by the Respondent revealed that the goods had not arrived at Global Negotium in France and that the stamps used to authenticate the AAD confirming receipt of the goods were scanned images as opposed to genuine rubber stamps. There was no evidence as to what happened to this consignment. Further enquiries with the French authorities revealed that the Appellant’s customer Primestore had ceased trading on 30 December 2006. 
12.	Investigations by the Respondent showed that between November 2007 and January 2008, 29 movements of alcohol were dispatched in the same manner as described at paragraph 8 above. The owner of the goods on each occasion was the Appellant Company and the transporter was C P Warehouse, who also provided the guarantee for the movement of the goods. 
13.	It transpired that none of the goods had arrived at Global Negotium in France and that the stamps used to authenticate the AAD confirming receipt of the goods were false. Again, there was no evidence as to what happened to the consignments.
14.	As a result of their findings, the Respondent issued two assessments in respect of excise duty on movements of duty suspended alcohol on the basis that the Appellant “caused the occurrence of an excise duty point as prescribed by regulation 3 or 4” by under Regulation 7 (2) of the Excise Duty Points (Duty Suspended Movement of Excise Goods) Regulations 2001. An assessment to VAT was issued on the basis that the excise goods had been removed from Gold Spot Ltd without payment of VAT. The Respondent subsequently revoked the Appellant’s registration as a Registered Owner of Duty Suspended Goods on the basis of his involvement in the movement of goods and assessments issued. 

Issues
15.	At the hearing, the parties narrowed the issues considerably. The Appellant accepted that there were irregularities; the goods had not arrived in France and that the AAD documents, which purported to verify receipt of the goods, were false. It was also accepted by the Appellant that Primestore had a substantial tax debt with the French authorities and that the Appellant’s only contact at Primestore, a male called Jean Darmon, was unknown to French authorities as a trader in alcohol. It was accepted by the Appellant that Primestore had ceased trading on 30 December 2006 and that the manager of Global Negotium had no commercial relationship with either Goldspot Ltd or Primestore.
16.	The Appellant also confirmed that he did not dispute the amounts of the assessments.
17.	The parties agreed that the sole issue before the Tribunal was causation; namely whether an excise duty point was created when the goods were released from Gold Spot Limited and whether the Appellant had caused the occurrence of that excise duty point. 
18.	It was agreed by both parties that the Tribunal’s findings in relation to the assessment to duty made on 18 May 2009 in the sum of £12,346.63 and the assessment to duty made on 14 December 2009 in the sum of £622,986.06 would dictate the outcome of the appeal against the decision to revoke the Appellant’s registration as a Registered Owner of Duty Suspended Goods and the appeal against the Notice of Assessment to VAT in the sum of £112,612.26, both of which rely on  a finding that the assessments to excise duty were valid.

Law
19.	The relevant legislation is found within the Excise Duty Points (Duty Suspended Movement of Excise Goods) Regulations 2001 (hereafter referred to as “the Regulations”).
20.	Regulation 4 provides that:
—(1) This regulation applies where:
(a) there is a duty suspended movement that started in the United Kingdom; and
(b) within four months of the date of removal, the duty suspended movement is not discharged by the arrival of the excise goods at their destination; and
(c) there is no excise duty point as prescribed by regulation 3 above; and
(d) there has been an irregularity.
(2) Where this regulation applies and subject to paragraph (3) below, the excise duty point shall be the time when the goods were removed from the tax warehouse in the United Kingdom.
(3) The excise duty point as prescribed by paragraph (2) above shall not apply where, within four months of the date of removal, the authorized warehousekeeper accounts for the excise goods to the satisfaction of the Commissioners.
21.	There was no dispute between the parties that, as a result of the failure of the goods to arrive at Global Negotium, the criteria of Regulation 4 is fulfilled and there is deemed to be an irregularity in the movement of the goods, thereby creating an excise duty point at the time when the goods were removed from Goldspot Ltd in the UK.
22.	The sole issue for the Tribunal to decide was whether, in respect of the Appellant, the requirement of Regulation 7 (2) was satisfied, namely:
Any other person who causes or has caused the occurrence of an excise duty point as prescribed by regulation 3 or 4 above, shall be jointly and severally liable to pay the duty...
23.	The test to be applied to the appeal against revocation of the Appellant’s registration as a Registered Owner of Duty Suspended Goods is whether the Tribunal are satisfied that the person making the decision could not reasonably have arrived at it. The jurisdiction of this Tribunal is set out in Section 16 (4) Finance Act 1994 which provides:
(4)In relation to any decision as to an ancillary matter, or any decision on the review of such a decision, the powers of an appeal tribunal on an appeal under this section shall be confined to a power, where the tribunal are satisfied that the Commissioners or other person making that decision could not reasonably have arrived at it, to do one or more of the following, that is to say—
(a)to direct that the decision, so far as it remains in force, is to cease to have effect from such time as the tribunal may direct;
(b)to require the Commissioners to conduct, in accordance with the directions of the tribunal, a further review of the original decision; and
(c)in the case of a decision which has already been acted on or taken effect and cannot be remedied by a further review, to declare the decision to have been unreasonable and to give directions to the Commissioners as to the steps to be taken for securing that repetitions of the unreasonableness do not occur when comparable circumstances arise in future.

Evidence
24.	As a result of the parties narrowing the issues under consideration, the Tribunal heard evidence from only 2 witnesses; Mrs West, an Officer of HMRC, and the Appellant. There were also a number of documents provided to the Tribunal containing, inter alia, witness statements of HMRC officers, confirmation of the agreed facts from the French authorities and documents produced by the Appellant in support of his case. All of the documents were considered carefully by the Tribunal.
25.	Mrs West gave evidence first. She confirmed the contents of her witness statement and exhibits annexed to it. Mrs West confirmed the agreed facts as set out at paragraphs 7 to 10 above and that she had been responsible for issuing the excise duty assessments under appeal on a joint and several liability basis to both the Appellant and the 2 companies responsible for providing the movement guarantees for the loads; CP Warehouse Limited and General Sales (GB) Limited.
26.	Mrs West referred to notes of a meeting with the Appellant at his business premises (which is also his private address) on 10 March 2009. Also present at the meeting was HMRC Officer Mr Lamb, from whom the Tribunal did not hear. Mrs West confirmed that the notes had been taken contemporaneously during the meeting and were then used to draw up a formal report of the meeting. The notes detailed the conversation between Mrs West and the Appellant on 10 March 2009 and are relevant to the issue in this appeal in that the Appellant describes the mechanisms of his business.
27.	Mrs West’s note details how the Appellant was paid in cash (sterling) by his customer, Primestore, who sent the money to the UK by courier. The Appellant would meet the courier at various locations, including bars and hotels where the cash, wrapped in a sealed bag and contained in holdalls or plastic bags. The Appellant arranged all haulage to take the goods to France on behalf of Primestore, and used General Sales (GB) Ltd for the majority of transport, and another haulage company, the name of which the Appellant could not recall at the meeting. The Appellant gave the hauliers instructions and he had used companies recommended to him. The hauliers were paid in cash by the Appellant on a weekly basis and the price negotiated between the Appellant and Primestore included haulage charges, which were usually in the region of £600. The Appellant used the same procedure for hauliers other than General Sales (GB) Ltd when arranging for the goods to be picked up and delivered to France. The Appellant did not receive any documentation from the hauliers either for the payment made to them or to prove the goods had reached their destination in France. 
28.	Mrs West explained that using best judgment, she had formed the view that an excise duty point arose when goods left Gold Spot Ltd, and that the Appellant, as owner of the goods who also had responsibility for arranging the haulage, was jointly and severally liable for the duty.
29.	Mrs West confirmed to the Tribunal that her assessments to excise duty were upheld after review and on the basis of the assessments, she had considered the Appellant’s registration as a registered owner of duty suspended goods. HMRC has power to revoke registration where there is “reasonable cause” by virtue of section 100 (G) (5) of Customs and Excise Management Act 1979. Mrs West confirmed that, in her view, the issuing of the assessments provided reasonable cause for revoking the Appellant’s registration.
30.	Under cross examination by the Appellant, Mrs West remained adamant that her notes accurately reflected the conversation which took place on 10th March 2009. Mrs West confirmed that she had made the notes contemporaneously and did not accept that the Appellant had been discussing his business in general terms as opposed to the movement of goods relating to the assessments to excise duty. Mrs West stated that her sole reason for meeting the Appellant related to her investigations into the alcohol supply chain from Gold Spot Ltd, and referred the Tribunal to her letter to the Appellant dated 26 February 2009 in which she outlines the nature of her enquiries and invites the Appellant to provide any evidence held by the Appellant for all movement of goods from Gold Spot Ltd to Global Negotium at the meeting on 10 March 2009. Mrs West accepted that although there had been some general discussion about the Appellant’s business, the meeting related, in the main, to the movement of goods from Gold Spot Ltd to Primestore’s account in France. Mrs West confirmed that she had interpreted the Appellant’s use of the word “arrange” in respect of the transport as meaning he had organised the hauliers and stated that the Appellant had not appeared confused at any point during the meeting. Mrs West confirmed that the Appellant had not, during the course of the meeting, specifically stated that he arranged transport with C P Warehouse, as at the time he could not recall the names of any hauliers used other than General Sales (GB) Ltd.
31.	The Appellant explained in his evidence how he had been contacted by Primestore through a business to business website called “Alibaba.com.” He stated that he had carried out due diligence checks on the company with the French authorities in December 2006, obtained the Company Certificate of Incorporation and identification. The Appellant stated that due to the potential risks involved he was not responsible for arranging transport of the goods. The Appellant referred the Tribunal to a letter from the Appellant Company to Primestore dated December 2006 in which it is stated:
“It was good to speak with you again, and I hope our business relationship continues to flourish.
As discussed, Express Food and Drinks will only invoice Primestore once the goods have crossed the border into France and Primestore take legal title of the goods.
Please could you sign below and send back to me to agree acceptance.”
The Appellant stated that this document was the only evidence of a contractual agreement between the Appellant and Primestore. He stated that it was implied within the document that he would not be responsible for arranging transport of the goods, but that this had also been agreed verbally.
32.	The Appellant stated that once Gold Spot Ltd supplied him with the goods, he would send a letter to Gold Spot Ltd releasing the goods to Primestore and that was the end of his involvement in the supply chain. 
33.	The Appellant highlighted the fact that the Respondent had produced no documentary evidence from C P Warehouse to support the assertion that he had arranged transport or made any payment to them for such services. The Appellant referred the Tribunal to a letter from Mr Green, Managing Director of C P Warehouse to Primestore Ltd dated 23 October 2007 in which C P Warehouse offers their services. The Appellant stated that he had received this letter by fax on 28 November 2007 (that date shown at the top of the document) and that C P Warehouse had simply forgotten to change the name of the intended recipient and date. The Appellant stated that had he used C P Warehouse, then the blank forms accompanying the fax, which required completion if C P Warehouse were engaged, would have been completed.
34.	As regards the issue as to whether the Appellant had any involvement with arranging transport with General Sales (GB) Ltd, the Appellant referred the Tribunal to a letter from the Appellant to Mr Lamb, an Officer of HMRC, dated 7th January 2008 in which the Appellant confirms he did not arrange any transport for goods leaving Gold Spot Ltd for delivery to Primestore. The Appellant explained that Mr Lamb of HMRC had made enquiries into his business activities prior to, and wholly unrelated to Mrs West’s involvement and submitted that the Appellant’s letter confirming he did not arrange transport, which pre-dated the meeting on 10 March 2009, must prove that Mrs West had misinterpreted the Appellant’s terminology. In support of this assertion, the Appellant referred the Tribunal to unrelated letter to HMRC in which he had used the wrong terminology of “bond” rather than “duty suspension”. 
35.	In cross examination the Appellant confirmed that he began trading with Primestore in late 2006 or early 2007. He conceded he had never met Mr Darmen, his contact at Primestore, but stated they had spoken on the telephone. The Appellant stated that he had carried out due diligence checks in order to comply with money laundering regulations, but that he had no specific concerns which caused him to undertake such checks. The Appellant stated that contact with Primestore had only ceased when he requested a clearer fax from the company as proof of their identity, as required by HMRC. During the period of trading, the Appellant stated he had been paid on time and had no indication that the goods had not reached France. 
36.	The Appellant stated that cash payments were typical in his industry and that he would arrange to meet the courier sent with payment from Primestore at hotels and once at a service station. The Appellant stated the cash was contained in a bag/holdall and that he considered it a proper business relationship with Primestore. The Appellant stated that he had adhered to regulations when paid in cash and that he would have incurred bank charges if the money was transferred which, in turn, would affect his profit. 
37.	The Appellant confirmed that the only contractual agreement between himself and Primestore was contained within the letter dated December 2006 as set out at paragraph 30 and explained that his sole participation was releasing the goods from Gold Spot Ltd to Primestore. The Appellant accepted that the letter refers to the Appellant retaining ownership until the goods reach France but stated that as far as he was concerned Primestore were liable for the goods once they left Gold Spot Ltd and that this was what he had intended the contract to say, and how both he and Mr Darmen of Primestore interpreted it.
38.	The Appellant accepted that he was solely responsible for the goods whilst at Gold Spot Ltd and responsible for their release. The Appellant acknowledged that if he had not received payment from Primestore he would have taken legal action however he maintained that Primestore took ownership when the goods left the warehouse.
39.	The Appellant accepted that he was responsible for directing Gold Spot Ltd as to what to do with the goods and that Primestore had no authority to instruct Gold Spot Ltd. The Appellant explained that he would then expect the goods to leave Gold Spot Ltd within two days but did not know the specific details of any such arrangement.
40.	The Appellant maintained that although he may have used the term “arrange” in relation to transport during the meeting with Mrs West on 10 March 2009, he had intended a different meaning to that given by Mrs West and that he had been referring to his business practice generally, not just the consignments relating to the assessments. The Appellant stated he could not recall his exact words from 2 years ago and highlighted the fact that the document was not written or signed by him. The Appellant accepted that he had attempted to clarify his use of the word “arrange” in a letter to HMRC dated 8 December 2009 in which it was stated:
“During our meeting you asked the question who arranged to transport for goods and I answered Express Food and Drinks (EFD) did. What I meant by this is that once the goods had arrived in my account with Goldspot bond, I called the transport to let them know the goods had arrived and it was free to pick them up on behalf of my customer. I also contacted Primestore to let them know the same.”
The Appellant accepted writing the letter but explained in evidence that he had used the term “arrange” to describe his act of sending a release note to Gold Spot Ltd and making Primestore aware that the goods were ready. The Appellant stated he had only contacted the hauliers on approximately two or three occasions, when he was unable to contact Primestore. The Appellant stated he had paid cash to General Sales (GB) Ltd on approximately two occasions when asked to do so on behalf of Primestore.

Submissions
41.	Both parties made helpful and concise closing speeches. To summarise, the Respondent invited the Tribunal to apply a wide definition to Regulation 7 (2) in determining whether the Appellant “causes or has caused the occurrence of an excise duty point.” Mr. Chapman, for the Respondent, submitted that there is no requirement for knowledge on the part of the Appellant, nor must he have caused the irregularity in the movement of goods; it is sufficient that the Appellant caused the movement of the goods, which in turn caused the creation of an excise duty point. The Respondent submitted that the Appellant had legal title and responsibility for the goods at the time of the irregularity and that the excise duty point was created when the goods left Gold Spot Ltd. The Respondent sought to persuade the Tribunal that there were three illustrations of the Appellant causing the excise duty point; each one sufficient on its own to satisfy the requirement of Regulation 7 (2). First, the Appellant’s direction of Gold Spot Ltd as to what to do with the goods, second the Appellant’s arrangement of transport for the goods and third, the existence of the Appellant within the trading relationship and the assistance he provides as a consequence of his participation to the trading structure, either by negligence or deliberately closing his eyes to the intended irregularity. Mr. Chapman for the Respondent accepted that the assessments to excise duty stand or fall on the issue of causation and that the Tribunal’s decision as to the assessment to VAT follows as a direct consequence. In respect of the appeal against revocation of the Appellant’s registration as a Registered Owner of Duty Suspended Goods, Mr Chapman accepted that the sole ground relied upon by HMRC in support of their case is the issuing of assessments to the Appellant. Mr Chapman invited the Tribunal to find that the decision to revoke the Appellant’s registration was reasonable should there be a finding of causation against the Appellant.
42.	The Appellant confirmed in closing submissions to the Tribunal that there was no dispute as to the regulations which apply in this case as outlined by the Respondent. In assessing whether he had “caused the occurrence of an excise duty point” the Appellant invited the Tribunal to consider and draw the distinction as to whether it was alleged that he had called the haulage companies when the goods were ready for supply to his customer Primestore, or whether he had commissioned the hauliers to work on his behalf. The Appellant submitted that whether or not he had “commissioned” such work was the basis of his appeal. The Appellant highlighted the weaknesses in the Respondent’s case; those being the reliance placed on the method and type of payments made by Primestore and the lack of any documentary evidence to support the Respondent’s case. The Appellant submitted that approximately 80% of his customers paid in cash and the fact that the Respondent could not point to any breach of regulations or procedure in the cash payments by Primestore was an indication supporting the legitimacy of his business and business practice. 
43.	The Appellant submitted that the lack of correspondence between himself and both General Sales (GB) Ltd and C P Warehouse further pointed to the limited role played by the Appellant in the supply trade and the fact that he was not responsible for arranging transport for the goods. The Appellant referred the Tribunal to two release notes contained within the bundle, from CP Warehouse, acting on behalf of Primestore, to Gold Spot Ltd and from Primestore to Gold Spot Ltd instructing the goods to be released to C P Warehouse Ltd and submitted that both documents showed the lack of participation by the Appellant in arranging transport for the goods. The Appellant submitted that his limited role in releasing the goods to Primestore and their guarantor was the only method by which the goods could leave Gold Spot Ltd, and invited the Tribunal to find that the scope of the Regulations is not so far reaching as to include such actions within the definition of Regulation 7 (2) “causes or has caused the occurrence of an excise duty point.” The Appellant submitted that the Tribunal should have regard to the date of the first load, namely 4 November 2007 and the fact that he was not contacted by C P Warehouse until the fax received on 28 November 2007. 
44.	The Appellant submitted that he disputed the terminology recorded in Mrs West of HMRC’s notes of their meeting on 10 March 2009 and confirmed that on two or three occasions only he had paid General Sales (GB) Ltd on behalf of Primestore and made telephone calls to them to speed up the supply process. The Appellant submitted that while he did not dispute the dubious actions of Primestore, on the basis that he had carried out due diligence checks and had no indication of anything untoward, the appeal should be allowed. 
Decision
45.	The Tribunal carefully considered all of the evidence and in assessing whether the Appellant fell within the scope of Regulation 7 (2) the Tribunal considered the three principle submissions relied upon by the Respondents and the Appellant’s contentions.
46.	As regards his direction of Gold Spot Ltd, the Appellant accepted that he was responsible for the goods leaving the warehouse and that without such direction the goods would not be released to Primestore or a haulage company acting on their behalf. The Tribunal noted the Appellant’s surprise at the release note contained within the documents from Primestore to Gold Spot Ltd dated 14 November 2007 which authorised release of the goods to C P Warehouse Ltd but could provide no further explanation for it. The Tribunal considered the document dated December 2006, set out at paragraph 30 above, and found as a fact that the terms of the document make clear that the ownership of the goods is retained by the Appellant until they cross the border to France. The Tribunal rejected the Appellant’s explanation that the interpretation to be applied to the document was understood by himself and Mr Darmon as such an interpretation contradicted the clear language of the document and was at odds with the Appellant’s evidence to the Tribunal that he was responsible for the goods, although he did not accept he held the legal title, until they reached the border with France. 
47.	The Tribunal found as a fact that the Appellant, as owner and company director responsible for the goods throughout the time they remained in the UK, must as a consequence be responsible for the irregularity and that the excise duty point arose when the goods were removed from the Gold Spot Ltd under the direction of the Appellant.
48.	The Tribunal found as a fact that it therefore follows that the Appellant was caught within the scope of Regulation 7 (2) as the person “who causes or has caused the occurrence of an excise duty point” and having made such a finding there is no discretion within the Regulations which state that such a person “...shall be jointly and severally liable to pay the duty...”
49.	While the Tribunal found as a fact that the issue of causation was made out on this point, it nevertheless went on to consider the remaining submissions made by both parties.
50.	On the issue as to who arranged transport for the goods the Tribunal had contradictory evidence before it. The notes of the meeting between Mrs West and the Appellant on 10 March 2009 were, in the Tribunal’s view, clear on the point and referred to the Appellant calling hauliers to arrange transport and paying them in cash for their services. Mrs West was a credible witness and the Tribunal found as a fact that she had not falsified the record she had made. That said, the Tribunal balanced against the notes of the meeting, evidence which pre-dated Mrs West’s enquiries, most notably the letter to Mr Lamb at HMRC from the Appellant dated 7 January 2008 in which it is clearly stated that the Appellant did not arrange transport for the goods. The Tribunal did not find this letter to be decisive of the issue, noting that Mr Lamb’s inquiries were unrelated to those of Mrs West and there being limited information before the Tribunal as to the nature and findings of Mr Lamb’s investigations. The Tribunal found as a fact that while the Appellant may not have been responsible for paying the cost of the transport of the goods on each occasion, having found as a fact that the Appellant retained legal ownership and responsibility for the goods until they reached France, the Tribunal did not accept the position to be as limited as stated by the Appellant. The Tribunal did not accept that the Appellant simply faxed a release note to Gold Spot Ltd and thereafter had no knowledge of when, by whom or how the goods were to be transported. The Appellant appeared to the Tribunal to be an astute and experienced trader and the Tribunal found as a fact that his evidence as to playing no part at all in the transport of the goods and that once the goods left the warehouse he did not retain legal ownership was untenable for a trader who, if such evidence was correct, would be left without any recourse, should anything happen to the goods while in the UK. 
51.	In the alternative (although not pursued by the Appellant), even if the Appellant did not retain ownership of the goods once they left the warehouse, then as Primestore (who did not hold an account in the UK) could not be deemed to have taken legal ownership, then in applying Regulation 21 (1) and 21 (3) (b) of The Warehousekeepers and Owners of Warehoused Goods Regulations 1999:
21.—(1) Subject to paragraph (2) below, if at any time after relevant goods are deposited in an excise warehouse either–
(a)those goods cease to be owned by a registered owner, or
(b)there is no duty representative acting as the owner’s agent,
the time when those goods ceased to be owned by a registered owner or there ceased to be a duty representative acting as the owner’s agent shall be the excise duty point for those goods.
(3) The persons jointly and severally liable to pay the duty at the excise duty point shall be–
(b)the owner of the goods immediately before the excise duty point,

The Appellant still remains joint and severally liable for payment of the excise duty.
52.	The Tribunal considered the Appellant’s evidence that he had contacted the haulier on a limited number of occasions and found as a fact that the Appellant must have had more involvement than he accepted in the arrangement of transport in order to be aware of which haulage company was to be used and to have the authority to act and instruct that haulier on behalf of Primestore. The Tribunal found as a fact that the Appellant had sought to minimise his role in his evidence to the Tribunal. 
53.	The Tribunal considered the content of a fax dated 8 February 2010 to the Appellant from Barry Sadler, on paper headed General Sales Ltd which stated: “it appears from our records that the transport for the transactions we discussed from Gold Spot Ltd for delivery to Global Negotium was initiated by your customer primestore”. The Tribunal found as a fact that this evidence was insufficient to be satisfied that the Appellant did not have any involvement with transport arrangement. There is no further explanation given as to the procedure, and whether it involved the Appellant, after transport was “initiated” by Primestore. The Tribunal was also concerned as to the lack of information as to the role Mr Sadler played at General Stores, the records referred to in the fax (which were not produced to the Tribunal) and in what circumstances the information was given bearing in mind the Respondent’s submission (unchallenged by the Appellant) that both haulage companies involved in this case are now insolvent. In the absence of any evidence from the Appellant or Mr Sadler to verify the information, the Tribunal found as a fact that it provided limited support for the Appellant.
54.	The Tribunal concluded that the Appellant retained a sufficient degree of control over the goods in releasing them for transport and retaining legal ownership/responsibility that he fell within the scope of Regulation 7 (2).
55.	In respect of the Appellant’s general involvement in the trading relationship with Primestore, the Tribunal considered the submissions of the Respondent that such were the irregularities in the business practices that the Appellant was either negligent or closed his eyes to the fact he was, by his involvement, allowing the irregularities to occur. The Tribunal considered the Appellant’s evidence as to due diligence checks undertaken and found as a fact that his concern was to ensure money laundering regulations were adhered to as opposed to providing any realistic safeguards for himself against any potential risk. The Tribunal found as a fact that the due diligence undertaken was, at best, limited. The Appellant had not visited the premises of Primestore in France and enquiries with the French authorities would have revealed the facts that Primestore had ceased trading in December 2006, owing a substantial tax debt and that the Appellant’s only contact at Primestore, Mr Darmon, was unknown to French authorities as a trader in alcohol, as now accepted by the Appellant. 
56.	The Tribunal considered the Appellant’s submissions that his business regularly received cash payments but had not breached money laundering regulations in so doing. The Tribunal found as a fact that the payments by the Appellant from Primestore, noted by the Tribunal to always be paid in round figures, which required exchange into sterling and to be couriered to the Appellant from France and which were then paid at hotels, bars and service stations was an indication as to the dubious nature of the trading relationship with Primestore. The Tribunal considered the case of Cleanco Ltd and The Commissioners for Her Majesty’s Revenue and Customs, EO1012, referred to by the Respondent, which states at paragraph 83:
“We do not consider that regulation 7 (2) limits the liability of a company to situations where the directors were privy to the irregularity...”
This Tribunal respectfully agrees with the approach taken in the case and while it was borne in mind that the facts differ, the principle that knowledge is not a limitation to the scope of Regulation 7 (2) is clear. 
57.	The Respondents do not allege dishonesty or fraudulent activities on behalf of the Appellant in this case but submit that there were suspicious aspects of the trading relationship sufficient to infer that the Appellant had chosen to continue trading and ignore the indications that all was not as it appeared. The Tribunal concluded that there were a number of concerning features of the trading relationship with Primestore, such as the lack of any meaningful due diligence, the lack of any proper contractual agreement between the Appellant and Primestore and cash payments made in sterling by courier. The Tribunal found as a fact that the Appellant had, at the very least, closed his eyes to these. The Tribunal found some, albeit limited, force in the contention that the Appellant caused the occurrence of excise duty points by participating in a trading structure, having chosen to ignore the suspicious circumstances and in doing so he had assisted in creating irregularities. The Tribunal did not accept that this element of itself was sufficient, in the particular circumstances of this case, to place the Appellant within the scope of Regulation 7 (2), however when taken together with the presence of control, ownership and direction of the goods the Tribunal found that the Appellant fell within the definition of a person “who causes or has caused the occurrence of an excise duty point.”
58.	The Tribunal considered the documents referred to by the Appellant in support of his contentions. As regards the letter from Mr Green, Managing Director of C P Warehouse to Primestore Ltd dated 23 October 2007, the Tribunal found as a fact that the explanation given by the Appellant that he had received this letter by fax on 28 November 2007 and that C P Warehouse had simply forgotten to change the name of the intended recipient and date was not credible. The Tribunal formed the view that a company writing specifically to invite new business would not fax a copy of a letter to another company without regard to the name and date. The Tribunal therefore found as a fact that it could not be sure that the first contact between the Appellant and CP Warehouse post dated the release of the first consignment of goods. The Tribunal found the fact that the Appellant produced blank forms which required completion if C P Warehouse were engaged, was not a decisive indication that the Appellant had not engaged C P Warehouse.
59.	The Appellant did not make any submissions to the Tribunal on the issue of proportionality. On the basis that the Appellant agreed the amounts of the assessments at the start of the hearing, the Tribunal found that there was no evidence before it upon which it could conclude that the assessments were disproportionate or not best judgment. The Tribunal found as a fact that the decisions to impose the assessments for excise duty were reasonable and lawful.
60.	The Appellant made no oral representations on the issue of Community law which was raised in the Notice of Appeal dated 12 January 2010. The Tribunal found that as there was no dispute over the fact that the Appellant was not the guarantor for the movement of the goods and the community law rights referred to in the Notice of Appeal were not a relevant consideration for the Tribunal. 
61.	No submissions were made by the Appellant on the issue of double taxation as relied upon in the Notice of Appeal dated 3 March 2010. There was no challenge by the Appellant to the Respondent’s submission that the hauliers involved were insolvent and therefore the issue does not arise, and that irrespective of the insolvency of the hauliers, the Regulations clearly state that liability is joint and several. The Tribunal accepted the submission of the Respondent and found that the issue of double taxation has no bearing on the Tribunal’s findings in this appeal.  
62.	The Tribunal upholds the assessments and dismisses the appeals against the assessment to duty made on 18 May 2009 in the sum of £12,346.63 in respect of excise duty on a movement of duty suspended alcohol from a UK warehouse to France on 27 November 2007 and the assessment to duty made on 14 December 2009 in the sum of £622,986.06 in respect of excise duty on a movement of duty suspended alcohol from a UK warehouse to France, excluding that on 27 November 2007, for the period 7 November 2007 to 11 January 2008
63.	As a direct consequence, it follows that the appeal against the decision to issue the Appellant with a Notice of Assessment to VAT in the sum of £112,612.26 (plus interest) relating to the supplies the subject of the assessment to excise duty set out at paragraph 1 (b) is valid and must also be dismissed.
64.	In dismissing the Appellant’s appeals against the assessments to excise duty and assessment to VAT, the Tribunal found that the decision made on 5 February 2010 to revoke the Appellant’s registration as a Registered Owner of Duty Suspended Goods as a result of the assessments, was entirely reasonable and the Appellant’s appeal against the decision is dismissed.
65.	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:15 February 2011