[2011] UKFTT 326 (TC)

TC01186
Appeal number: LON/2008/8100

PRACTICE – Reinstatement application – Whether no prospect of appeal succeeding – Tribunal Procedure (First-tier Tribunal)(Tax Chamber) Rules 2009, r.2 and 8(5) – Appeal reinstated

FIRST-TIER TRIBUNAL

TAX 

	TRANS-INT SRL	Appellant

	- and -

	THE COMMISSIONERS FOR HER MAJESTY’S
	REVENUE AND CUSTOMS	Respondents

			TRIBUNAL:   JUDGE THEODORE WALLACE

					
Sitting in public in London on 5 May 2011

Francesco Bottero, a director, for the Appellant company

Sarabjit Singh, instructed by the Solicitor for HM Revenue and Customs, for the Respondents

Interpreter, Silvia Lombardo

© CROWN COPYRIGHT 2011

DECISION

1.	This decision concerns an application to reinstate an appeal which was dismissed on the basis that the Appellant failed to comply with a direction to serve witness statements.

2.	The appeal was against a review decision confirming assessments to excise duty totalling £112,132 on the Appellant on four duty suspended movements of still wine from Italy to the United Kingdom for which the Appellant was guarantor.

3.	The liability on the guarantor arises under Article 20 of the European Excise Directive (92/12/EEC) when an irregularity is committed in a Member State.  The relevant UK legislation is contained in the Excise Duty Points (Duty Suspended Movements of Excise Goods) Regulations 2001.

4.	The Appellant accepts that the goods arrived at Dover and does not dispute the fact that they did not arrive at the warehouse to which they were consigned, EMD London No. 1 Bond Ltd.

5.	It is not contended by Customs that the Appellant was in any way involved in the diversion, however.  Liability of the guarantor is strict and does not require any participation in the irregularity.

6.	Although the Appellant received stamped AAD3s following the movements, the Appellant now accepted that these were falsified.

7.	The notice of appeal dated 15 September 2008 challenged the assertion by Customs that an irregularity occurred or was detected in the United Kingdom and contended that the movements had been properly discharged by the AAD3s.

8.	Direction 1 given on 13 October 2009 on a joint application required the Appellant to serve witness statements by 16 November 2009; this was extended to 15 January 2010.  When statements were not served, a hearing for non-compliance was listed for 2 March 2010.

9.	Meanwhile on 9 February 2010 the Appellant’s advisers who had settled the notice of appeal and had agreed the directions notified the Tribunal that they were no longer acting.

10.	On 2 March 2010 the Appellant did not appear and was not represented.  The Tribunal directed that unless the Appellant complied with Direction 1 of the directions of 4 January 2010 (which repeated the earlier Direction 1) the appeal would be struck out.

11.	Pausing here, it is unclear whether the notice of the hearing on 2 March had been passed on to the Appellant by the previous representative.

12.	The Appellant clearly did receive the Direction released on 3 March because it responded by asking in a letter of 9 March for an extension of 21 days to serve witness statements.  The letter asked various questions as to the form the statements should take.

13.	On 23 March 2010, the day before the time limit under the Direction released on 3 March expired, the Appellant wrote asking for a stay in the proceedings of not less than 6 months for the Public Prosecutor’s Office at the Court of Alba in Italy to complete investigations or to enable the Appellant to acquire more evidence.

14.	The Appellant enclosed 40 pages in Italian and English relating to the inquiries by the Public Prosecutor’s Office, including reports of witness statements signed by Senor Virginio Bottero which covered among other matters the movements which are the subject of the assessments. The Tribunal did not copy these to Customs.

15.	On 31 March 2010 Customs objected to a 6 month extension asserting that the criminal investigation in Italy had no bearing on the appeal.

16.	On 9 April 2010 the Tribunal in a direction without a hearing dismissed the application for a stay but gave the Appellant 14 days to apply for a hearing of its application.

17.	On 21 April 2010 the Appellant wrote that further information about the investigation could only be sent by the Italian authorities following a request by the Tribunal.

18.	On 9 June 2010 the Tribunal directed that the appeal stood dismissed because of the Appellant’s failure to serve witness statements as directed.

19.	On 21 and 28 June 2010 the Appellant wrote to the Tribunal asking for a hearing.  On 12 July 2010 the Appellant applied under Rule 8(5) of the Tribunal Procedure (First-tier Tribunal)(Tax Chamber) Rules 2009 for the appeal to be reinstated.

20.	The Tribunal has a discretion as to whether to reinstate the appeal.  As with any powers this must be exercised in accordance with the overriding objectives in Rule 2 of the Rules which include,

“to deal with cases fairly and justly.”

21.	I accept the submission of Mr Singh that if there is no prospect of the appeal succeeding this is an important factor.  

22.	In the circumstances if there is a real possibility of success I would reinstate the appeal.  It is not clear that the Appellant (as opposed to its previous representative) received notice of the hearing on 2 March 2010.  The “unless” direction was draconian particularly given that the Appellant was an overseas company whose representative had just ceased to act; furthermore the material sent on 23 March was capable of constituting compliance with the direction.

23.	I turn therefore to consider whether there is any reasonable prospect of the appeal succeeding, noting that this is the test for striking out an appeal under Rule 8(3)(c) although this was not the reason for the appeal being dismissed.  This does not involve considering whether an appeal is likely to succeed but rather whether that is a reasonable possibility.

24.	Under Article 20 of the Excise Directive where an irregularity has been committed in the course of a movement excise duty is due in the Member State where the irregularity was committed from the person who guaranteed the payment.  The UK legislation must be interpreted in compliance with the Directive.

25.	The Appellant does not dispute that the wine arrived at Dover and that the consignments did not arrive at the warehouse to which they were consigned. If the irregularities occurred after arriving in the UK, duty is due here and the Appellant is liable on the guarantee.

26.	However the fact that the wine arrived at Dover does not mean that the irregularities did not occur before.  

27.	Article 6 of the Excise Directive requires Member States to harmonise the time at which duty becomes payable to avoid a situation in which duty could be levied on the same goods in different countries, see Greenalls Management Ltd v Customs and Excise Commissioners [2005] 1 WLR 1754, a decision of the House of Lords, per Lord Hoffman at [4].

28.	At [12] Lord Hoffman said,

“Article 6(1) was plainly intended to impose excise duty at the time when the goods were unlawfully diverted.  The diversion was an ‘irregular departure’ from a suspension arrangement and therefore a ‘release for consumption’ which should have triggered a change for duty.”

29.	Paragraph 4 of the Statement of Case for the present appeal stated that inquiries by an officer with the destination warehouse “revealed that none of the consignments were expected at the destination warehouse.”  It appears from what I was told at the application hearing that the purchasers shown on the AADs had no account at the warehouse and said that they had nothing to do with the consignment.

30.	The AADs were issued by the Appellant. Mr Bottero said that the Appellant had verified that EMD was an authorised warehouse and had trusted its customer in Italy for the details on the AADs.

31.	A statement by Virginio Bottero, the father of Francesco Bottero, made to the Carabinieri on 3 November 2009, and included in the documents sent to the Tribunal on 23 March 2010, said that the managers of the transport company, Ambra Transit, had been arrested as members of a mafia clan.

32.	If the Appellant establishes on appeal that the original AADs contained false information albeit unknown to the Appellant at the time it is clearly arguable that the irregularities occurred when the consignments left the warehouse in Italy with false documentation and that the duty is chargeable in Italy and not the United Kingdom.  That will of course be a matter of evidence and may indeed give rise to questions of law.

33.	It is sufficient in the present application for the Tribunal to conclude that I am not satisfied that there is no prospect of the appeal succeeding.

34.	I accordingly direct that the appeal be reinstated.

35.	Having read the material sent by the Appellant on 23 March 2010 I am satisfied that the criminal investigation in Italy does encompass matters relevant to this appeal including the four consignments covered by the Appellant’s guarantee.

36.	I therefore direct that the appeal be stood over for six months.  It may well be that it will be easier for the Respondents to obtain information as to the progress of the investigation than it is for the Appellant.

37.	Meanwhile the Appellant would be well advised to seek professional legal representation for this appeal.

THEODORE WALLACE
TRIBUNAL JUDGE

RELEASE DATE: 17 May 2011