[2011] UKFTT 335 (TC)

TC01195

Appeal number: TC/2009/15449

Appeal against assessment to excise duty – whether assessment lawfully raised – whether review decision upholding assessment is reasonable

FIRST-TIER TRIBUNAL

TAX 

	NEIL EATOUGH	Appellant

	- and -

	THE COMMISSIONERS FOR HER MAJESTY’S
	REVENUE AND CUSTOMS	Respondents

				TRIBUNAL:  J. BLEWITT (Judge)
						G. N. BARRETT (Member)

Sitting in public at Manchester on 6 April 2011

Mr I. MacWhannell, Counsel, for the Appellant

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

© CROWN COPYRIGHT 2011

DECISION

1.	The Appellant appeals against an assessment to excise duty dated 8 April 2009 in the sum of £40,181 for the period 1 July 2008 to 10 October 2008. Following a statutory review dated 1 October 2009, HMRC upheld the assessment.
Undisputed Background Facts
2.	The Appellant was, at the relevant time, a Director of Dexter Paints Limited (“DPL”) which manufactured industrial paints, Dexter Biofuels Limited and Dexter Paint Holdings Limited. In 2008, DPL invested in plant and premises for the production of bio-diesel, which commenced in early 2008 and ceased in August 2008. The Company operated under the guidance of an insolvency practitioner from 23 September 2008 until 23 October 2008, following which it was placed into Administration which concluded in April 2010 when the Company was divided up and sold in respective parts.
3.	The returns for payment of excise duty on bio-diesel produced for the quarters ending September and December 2008 were not filed. As a result, HMRC officer Ms Havard met the Appellant and another former Director, Mr Alan Sharples, at the Company’s premises on 31 March 2009. Records relating to the Company’s production and sales of bio-diesel were produced by the former Directors as a result of which Ms Havard was able to calculate DPL’s liability to duty.
4.	Ms Havard’s enquiries showed that Dexter Biofuels Limited produced the fuel, but registration and payment of duty was made through DPL. An invoice dated 31 March 2007 in the sum of £320,000 revealed that the bio-fuel production plant and machinery had been transferred from DPL to Dexter Paint Holdings Limited.
5.	DPL, as a registered biofuel producer, was required to “make entry” of their premises. Form EX103A entitled “Excise Entry: Incorporated Company” is the document HMRC requires as evidence of entry being made and which was signed on behalf of DPL, a corporate body, by the Appellant on 11 September 2007. By letter dated 10 October 2007 HMRC acknowledged receipt of that entry.
6.	On 8 April 2009 HMRC notified the Appellant of an assessment to duty in the sum of £40,181 for the period 1 July 2008 to 10 October 2008; the latter date being the last date upon which the Company records showed biofuel being sold. The assessment was withdrawn and subsequently reissued on 31 July 2009.
7.	By letter dated 20 August 2009, the Appellant’s representatives, Alan Powell Associates, requested a review of the decision to issue an assessment to the Appellant.
8.	The review was carried out by HMRC Officer, Mr McCann, who by letter dated 1 October 2009 informed the Appellant that the assessment would be upheld.

Appeal
9.	By Notice of Appeal dated 27 October 2009, the Appellant appealed against the decision to uphold the assessment to excise duty. The grounds of appeal state that:
“HMRC’s decision to assess the appellant for duty is possibly unsafe on strict application of the law in relation to the liability for biofuel and, by reference to wider legal principles (human rights, equity of treatment, reasonableness), is manifestly unjust. The full grounds for contesting HMRC’s decision are contained within the full letter of 20 August 2009 to HMRC’s Reviewing Officer. HMRC has not replied to a single point made in support of the appellant’s case against their assessment decision at policy, local or “independent review” level.”
10.	The letter dated 20 August 2009 from the Appellant’s representatives to Ms Havard formally requests an independent review of the decision to assess the Appellant personally for excise duty, stating:
“I would like the Reviewing Officer to be aware that the liability may appear to be applicable (and this may not be certain, as will be examined below), but is undermined by fundamental principles of general and public law. It is extremely disappointing that the Commissioners have so far elected to ignore these factors.”
11.	The letter goes on to set out in detail the legislation applicable and the contentions on behalf of the Appellant as to why the assessment should be withdrawn. The factors relied upon can be summarised as follows; that the form EX103A which must be signed by the producer makes no mention of potential personal liability of a company director signing the form, that other duty regimes do not suffer the same requirement to make entry, that there are a number of technical arguments against the Appellant’s personal liability to duty, and that the assessment infringes a number of principles of community and public law such as non-discrimination, fairness, reasonableness and human rights. 
12.	Both parties provided helpful skeleton arguments. The skeleton argument provided by Mr MacWhannell on behalf of the Appellant summarised the Appellant’s case as being that 
“...the Commissioners’ exercise of their discretion within the review is unreasonable and/or that the assessment has been unlawfully raised...”
13.	With reference to the skeleton argument, Mr MacWhannell made submissions which expanded on the Appellant’s grounds of Appeal as set out at paragraphs 9 to 11 above and which will be examined in more detail in due course.
Issues
14.	The quantum of the assessment was not disputed by the Appellant.
15.	The issues for us to determine were agreed by both parties as being:
(a)	The legality of assessing the Appellant, as Director of Dexter Paints Limited at the relevant time, as personally liable for excise duty owed; and 
(b)	Whether, taking into account the principles of Wednesbury reasonableness, proportionality and protection of human rights, the review decision upholding the assessment raised against the Appellant is unlawful and/or so unreasonable that it should be set aside.
Law
16.	We were provided with the legislation applicable by both parties. 
17.	There was no issue between the parties as to the definition of bio-diesel as a type of hydrocarbon oil by virtue of Sections 1 and 2AA of the Hydrocarbon Oil Duties Act 1979 (as amended) (“HODA 1979”) or that Section 6AA provides that excise duty is chargeable on bio-diesel:
(1)A duty of excise shall be charged on the setting aside for a chargeable use by any person, or (where it has not already been charged under this section) on the chargeable use by any person, of biodiesel.
(2)In subsection (1) “chargeable use” means use—
(a) as fuel for any engine, motor or other machinery, or
(b) as an additive or extender in any substance so used. 
18.	Section 21 HODA 1979 gives power to HMRC to make regulations “with a view to the protection of the revenue:
(1)The Commissioners may, with a view to the protection of the revenue, make regulations—
(a) for any of the purposes specified in Part I of Schedule 3 to this Act (which relates to hydrocarbon oil);
 (b). . . . . . .
(c) for any of the purposes specified in Part III of that Schedule (which relates to road fuel gas).
(2)In the case of regulations made for the purposes mentioned in subsection (1)(a) above, different regulations may be made for different classes of hydrocarbon oil....
And Part 1, Schedule 3 of HODA 1979 contains the subject parameters for regulations relating to, inter alia hydrocarbon oil, made under Section 21. 
19.	Section 6AC HODA 1979 provides HMRC with the power to make regulations extending the application of the provisions relating to hydrocarbon oil to biodiesel:
(1)The Commissioners may by regulations provide for—
(a)references in this Act, or specified references in this Act, to hydrocarbon oil to be construed as including references to—
(i)biodiesel;...
20.	Regulation 3 of The Biofuels and Other Fuel Substitutes (Payment of Excise Duties etc) Regulations 2004 (as amended) (“the Regulations”) provides that references within HODA 1979 to hydrocarbon oil include references to biodiesel and that section 21 of HODA applies:
(1) The references to hydrocarbon oil in the following provisions of the Oil Act are to be construed as including references to biodiesel...—
(d) section 21(2) (regulations with respect to hydrocarbon oil);
21.	The Regulations set out two different duty arrangements; warehousing (under Part 3) and production premises (under Part 4).
22.	In respect of production premises, Regulation 8 applies:
(1) Regulation 8A applies to a producer of biofuel with respect to whom either the first condition or the second condition is satisfied.
(2) The first condition is that at the end of any calendar month the producer has produced 2,500 litres or more of biofuel in the previous 12 months.
(3) The second condition is that at any time there are reasonable grounds to believe that the producer will produce 2,500 litres or more of biofuel in the following 12 months.
8A.—(1) A producer to whom this regulation applies is liable to make entry of all premises at which he has produced or will produce biofuel, but this is subject to regulations 8B and 8C.
23.	Section 108 of The Customs and Excise Management Act 1979 provides for the making of entries:
(1)Where by or under the revenue trade provisions of the customs and excise Acts any person is required to make entry of any premises or article—
(a) the entry shall be made in such form and manner and contain such particulars; and
(b) the premises or article shall be, and be kept, marked in such manner, as the Commissioners may direct.
(3) Where any person required to make entry is a body corporate—
(a)the entry shall be signed by a director, general manager, secretary or other similar officer of the body and, except where authority for that person to sign has been given under the seal of the body, shall be made under that seal; and
(b) both the body corporate and the person by whom the entry is signed shall be liable for all duties charged in respect of the trade to which the entry relates.

24.	Liability to duty is governed by Regulations 17, 18 and 19 of the Biofuels Regulations which set out excise duty points and persons liable to pay duty at the relevant excise duty point. 
Regulation 18 (a): “...The person liable to pay the biofuels duty at an excise point fixed by Regulation 17 is...in the case of biofuel that is charged to biofuels duty on production premises, the producer....
Regulation 19 (1): “The requirements in paragraph (1) (a) apply to a producer...in relation to-
(a)	Each of his entered premises, and
(b)	Any premises for which he is liable to make entry that have not been entered
Regulation 19 (1) (A): A producer to whom this paragraph applies must no later than the fifteenth day of each quarter –
(a) furnish a return...and
(b) pay the biofuels duty...”

HMRC Review
25.	In a review of HMRC’s decision to assess for under-declared excise duty dated 1 October 2009, Mr McCann upheld the assessment. 
26.	Mr McCann gave evidence to the Tribunal confirming that he had carried out an independent review following which the assessment was upheld. Mr McCann referred us to the review decision which set out the reasons for his conclusions. Mr McCann stated that the purpose of his review was to determine whether the assessment was lawfully raised against the correct person. Mr McCann confirmed that in considering these factors he believed that the issues as to reasonableness and proportionality raised on behalf of the Appellant were also addressed. Mr McCann did not accept in cross examination that he had not addressed the issues raised in the letter from the Appellant’s agent to HMRC dated 20 August 2009. He stated that his review was independent of the original decision maker and line management chain.
27.	It was put to Mr McCann in cross examination that his review decision did not specifically refer to the points raised on behalf of the Appellant in respect of European law and discrimination. Mr McCann stated that he had applied the relevant UK legislation and accepted that he had not referred to European law. It was accepted by Mr McCann that the Form EX103A makes no specific reference to liability to duty nor is there any mention of personal liability in the public notice. Mr McCann stated that the Form EX103A was relevant to his decision in ascertaining who had “entered” the premises for the purpose of production and thereafter the legislation under section 108(3) (b) CEMA 1979 was applicable, which allowed for the liability to duty of either the body corporate or the signatory. Mr McCann stated that he had followed advice sought from HMRC’s Solicitor’s Office and confirmed that once he had established that the assessment to duty was lawful and could be raised against the Appellant, he had no discretion to withdraw the assessment. 
Submissions on behalf of the Appellant
28.	Mr MacWhannell for the Appellant submitted that it is not disputed that DPL was the producer of biodiesel and that the Appellant was not the producer. It was submitted on behalf of the Appellant that there is a conflict between Section 108 (3) (b) CEMA 1979, the entry form EX103A and Regulations 17 and 18 of the Regulations. Mr MacWhannell submitted that the Form EX103A was completed by DPL via its Director, the Appellant, and that there was no reference within the form to either Section 108 CEMA 1970 or the Regulations. 
29.	Mr MacWhannell submitted that it is unreasonable to impose liability to duty on an officer of the Company simply because he signed the form. It is further contended on behalf of the Appellant that this would circumvent the principles of corporate personality and an automatic lifting of the corporate veil in circumstances that would otherwise be inappropriate. On behalf of the Appellant it is submitted that the contents of the form are consistent with the liability created by the Regulations; the producer is the entity which has completed the form thereby creating a link between the company and the production of biodiesel. It is submitted that the reference to Section 108 CEMA 1970 contained within Regulation 2 (2) is to the nature of making entry as opposed to the imposition of liability on the person who signed the form as liability to duty is provided for by Regulations 17 and 18.
30.	Mr MacWhannell referred us to a number of European cases; Administration Des Douanes v Gondrand Frères [1981] ECR 1931; Case T-115/94 Opel Austria v Council [1997] ECR in which the principle that rules imposing charges on a taxpayer must be clear and unequivocal arose. In reliance upon these cases, it was submitted that the conflict between Section 108 CEMA 1979 and the Regulations results in the law being insufficiently clear to justify the imposition of a charge to tax, particularly bearing in mind that Form EX103A makes no reference to liability incurred through its completion nor is any warning given within the Public Notice. Where such conflict arises, Mr MacWhannell submitted that the application of the legislation should be resolved in favour of the taxpayer (Case 78/77 Luhrs v Hauptzollant Hamburg-Jonas [1978] ECR 169).
31.	It was submitted on behalf of the Appellant that the manner in which Mr McCann exercised his discretion is both manifestly unfair and unreasonable. Mr MacWhannell submitted that the Review Officer failed to consider whether the assessment should be raised against the Appellant by reference to the facts, as opposed to reaching conclusions based wholly on the collection of tax from the entity in the best position to pay. We were referred to internal correspondence disclosed by HMRC which, it was submitted, showed the uncertainty on the part of the Respondent as to whether the assessment was lawful. 
32.	Mr MacWhannell submitted that it was unreasonable to assess the Appellant as personally liable to duty on the basis that two returns were not filed. The Appellant relied upon the Form EX103A, which bears no reference to the potential liability as a result of completion or Section 108 CEMA 1979, and submitted that the fact that the form warns that the signatory must be authorised to complete the form is a “powerful indication” that the consequences of completion are directed only at the company. It is further submitted that the connection between signing the form and liability is beyond contemplation on the face of the document. It was submitted that the Appellant was unaware of his potential liability to duty incurred by signing the form.
33.	Mr MacWhannell referred to the Public Notice 179 and submitted that the rights and obligations created by completion of Form EX103A are not clarified; although Section 108 CEMA 1979 is referred to at paragraph 3.3.1 of the Notice, there is no reference to the consequences of making entry nor that the two factors are linked and therefore any reference to Section 108 is made in a wholly different context to that of any potential liability to duty. 
34.	It was submitted on behalf of the Appellant that the combination of the Form EX103A and the Public Notice create a legitimate expectation that a director is not personally liable to tax by completing the form and that the imposition of tax must be sufficiently clear and certain; it is therefore reasonable to infer that any liability would be upon the company as “producer” and not the Appellant as a director.
35.	Mr MacWhannell relied upon Council Directive 92/12/EEC, which provided for the Community law rules that harmonise the chargeability of excise goods to duties, and the principle of equal treatment in support of his contentions. It was submitted that the requirement to make entry does not exist in respect of warehouse keepers who only import and export biodiesel and therefore there is unequal treatment of operators within the biodiesel market and a potential distortion of competition between importers and domestic producers.
36.	It was submitted by Mr MacWhannell that Section 108 CEMA 1979 creates joint liability as opposed to joint and several liability to tax with the consequence that both the Appellant and DPL ought to have been assessed and the liabilities would be proportionate. The Appellant contended that the advice received by Mr McCann from HMRC’s Solicitor’s Office that the Appellant should be pursued because “it is doubtful we will get more than a few pence...pursuing the company...” was a misunderstanding of the purpose of Administration, which was to save the company, and was applied without consideration of the merits of assessing the company to tax. Mr MacWhannell also noted that the insolvency practitioners for the company had advised HMRC to send an assessment to the company.
37.	As a result of this course of action, Mr MacWhannell submitted that HMRC circumvented the purpose of Administration and the principles of corporate personality. Section 108 CEMA 1979, it was submitted, goes further than is necessary to achieve the objective of the legislation and is therefore disproportionate.
38.	It was submitted on behalf of the Appellant that the power existed to take a security from DPL and having chosen not to exercise this power, it is unreasonable for HMRC to use Section 108 CEMA 1979 to secure the collection of tax by any means.
Submissions on behalf of HMRC 
39.	Mr Redpath on behalf of HMRC submitted that there is no failure to harmonise or implement EC law by the requirement to make entry or the liability imposed by Section 108 CEMA 1979. It was submitted on behalf of HMRC that the European jurisprudence relied upon by the Appellant is predicated on duty suspended warehousing regimes and therefore is of no relevance to this appeal.
40.	Mr Redpath submitted that the principle of non-discrimination does not apply in the circumstances of this case. In response to the Appellant’s contention that there is unequal treatment between operators within the biodiesel market, Mr Redpath submitted that there can be no proper comparison made between the two different regimes of “production” and “warehousing.” 
41.	Mr Redpath contended that the entry requirements and consequential liability imposed by Section 108 CEMA represent a just and proportionate measure by reference to the need for supervision and the protection of revenues derived from excise duties. For that reason, HMRC submitted that there could be therefore be no merit in the issues of natural justice and Human Rights raised by the Appellant.
42.	In respect of the Appellant’s arguments relating to the Form EX103A, HMRC submitted that the significance of the form lies in the fact that it provides an evidential basis for determining the person who shall be liable with reference to section 108 (3) (b) CEMA 1979. There is a basic requirement at Regulation 3 of the Regulations that anyone beginning oil production must first make entry of the premises intended to be used for that purpose. This requirement does not differentiate between subsequent duty regimes; whether the producer chooses the “warehousing” route or remains under “production premises” arrangements. 
43.	As regards Public Notice 179, HMRC submitted that the full text at paragraph 3.7.1 refers to the requirement to make entry under the Regulations and Section 108 CEMA 1979.
44.	Mr Redpath submitted that there is no conflict between the Regulations (which give excise duty points which distinguish between duty suspension and production premises) and Section 108 CEMA 1979. By virtue of Regulation 18, the liability to duty falls principally on the producer at the time when the biofuel becomes charged with duty. Section 108 CEMA 1979 concerns liability for all duties charged. It was submitted by HMRC that the reference point for liability arising under Section 108 (3) (b) CEMA 1979 is the excise duty point as defined by Regulations 17 and 18. 
45.	Mr Redpath contended that the purpose of Section 108 CEMA 1979 is to impose liability on separate persons; the corporate entity and the individual signatory so that liability may be joint or several.
46.	HMRC submitted that the Tribunal has no jurisdiction to consider the issue of whether the assessment was fair or reasonable once it is established that the assessment was lawful.
47.	As to the issue of legal certainty and legitimate expectation, HMRC contended that the Appellant’s ignorance as to the potential liability to duty created by Section 108 CEMA 1979 could not excuse him from the joint and several liability.
48.	Mr Redpath submitted that the imposition of liability and the power to assess is clear and cannot therefore circumvent any principles of corporate insolvency or the purpose of Administration.
Decision
49.	We carefully considered the submissions made by both parties both orally during the hearing and in their respective skeleton arguments. 
European Jurisprudence
50.	We found that Article 4 of Council Directive 92/12/EEC entitled “On the general arrangements for products subject to excise duty and on the holding, movement and monitoring of such products” related principally to warehousing and duty suspended regimes as distinct from the “production premises” arrangement which is the subject of this appeal. 
51.	We noted that Article 6 makes reference to “any manufacture...outside a suspension arrangement” however it is clear from reading Article 6 that the context of this reference is to the point where “excise duty shall become chargeable at the time of release for consumption” which we found distinguishable from “production premises”. Article 11 states that “each Member State shall determine its rules concerning the production, processing and holding of products subject to excise duty, subject to the provisions of this Directive” and that “production, processing and holding of products subject to excise duty, where the latter has not been paid, shall take place in a tax warehouse.” We found that domestic legislation applicable in this case does not contravene the Directive should it be deemed to apply to the circumstances of this particular case. We were referred to Article 13 which states that the requirements set out therein must respect the principle of non-discrimination between national and intra-Community transactions and noted that the Article specifically refers to “an authorized warehousekeeper.” We concluded that the Directive has little or no impact on the issue in this case which relates to the personal liability of the Appellant as a person who has made entry of the premises used for the production of biodiesel.
Equal Treatment/Non Discrimination
52.	Having concluded that that there is no contravention of principles set by European Community Law, we considered the Appellant’s submissions as to the fact that the requirement to make entry gives rise to unequal treatment between those subject to the “production premises” regime and those subject to “warehousing” rules. We found as a fact that the legislation provides for two very separate regimes and that no meaningful comparison can be drawn between the two arrangements and we therefore rejected the submission on behalf of the Appellant that the provisions setting out his liability to duty are discriminatory.
Conflict
53.	We considered the European case law cited and accepted that the principles established were that rules imposing charges on a taxpayer must be clear and unequivocal. We went on to consider whether any conflict exists between Section 108 CEMA 1979 and the Regulations.
54.	We found that there is a clear link between the liability to duty and the point at which duty becomes payable. The Regulations state (emphasis added):
Regulation 18 (a) “...The person liable to pay the biofuels duty at an excise point fixed by Regulation 17 is...in the case of biofuel that is charged to biofuels duty on production premises, the producer....
Regulation 19 (1): “The requirements in paragraph (1) (a) apply to a producer...in relation to-
(a)	Each of his entered premises, and
(b)	Any premises for which he is liable to make entry that have not been entered
Regulation 19 (1) (A): A producer to whom this paragraph applies must no later than the fifteenth day of each quarter –
(a) furnish a return...and
(b) pay the biofuels duty...”
55.	Section 108 CEMA 1979 states:
(1)Where by or under the revenue trade provisions of the customs and excise Acts any person is required to make entry of any premises or article—
 (3) Where any person required to make entry is a body corporate—
(b)both the body corporate and the person by whom the entry is signed shall be liable for all duties charged in respect of the trade to which the entry relates.
56.	We found that there was no conflict between these provisions and that there is a clear link between the person who must make entry and the person who is, as a result, liable to duty.
Form EX103A
57.	We considered the fact that Form EX103A makes no reference to liability incurred through its completion. We noted that the form is specific as to status of the signatory who must be authorised by the company to sign on its behalf. We found that this was a clear indication that the signatory must hold sufficient responsibility within the company and it would be expected, as a result, that the consequences of signing the form would be known to the signatory. We found as a fact that the ignorance of the Appellant as to the consequences of signing the form does not negate the liability he incurred nor does the fact that the form does not contain specific reference to section 108 CEMA 1979. 
58.	We rejected the Appellant’s argument that the imposition of tax as a result of signing the form is not sufficiently clear; in signing the form, we found it was reasonable to expect that a taxpayer understood the reasons for signing the form, i.e. to make entry, and the consequences, including liability to tax, as a result.
Public Notice 179
59.	Mr MacWhannell, on behalf of the Appellant, relied in support of his submissions on the fact that the Public Notice does not clarify the rights and obligations created by Form EX103A, and in particular makes no reference to liability to tax of the body corporate and signatory. We were referred to paragraph 3.3.1 of the Public Notice which refers to section 108 CEMA 1979. It was submitted that the context of the reference is solely to making entry of premises and contains no reference to liability.
60.	We considered this Notice carefully and found that there were a number of references to Section 108 CEMA 1979 within the Notice. We accept that that the references are made in respect of making entry, however we found that this was a clear indication of the link between making entry and the liability arising under CEMA 1979. We found that the references are to the whole of Section 108 CEMA 1979, thereby including the subsection in respect of liability, and consequently it must follow that the person referring to the Notice must be taken as having read and understood Section 108 CEMA 1979. We noted that references are made within the Notice to duties; under the heading “what is this notice about” it states “It also provides guidance on accounting for excise duty and VAT charged upon these fuels in the UK”. Guidance is also given throughout the Notice as to where to find additional assistance if required. We found as a fact that the Notice makes a clear and sufficient link between the making of entry, the fact that duties arise as a result and the relevant section of CEMA, which clearly states the person/body liable.
Principle of Corporate Personality
61.	We did not accept that in pursuing the Appellant for the excise duties owed, that HMRC were piercing the corporate veil or circumventing the purpose of Administration, nor did we accept that there had been a mistake on the part of HMRC as to Administration or the winding up of a company. 
62.	It is a well established principle that HMRC are entitled to use the means available to them to protect the collection of revenue. We found that there was no doubt that tax from the production of biodiesel was due, and that Section 108 CEMA makes clear that the liability for such tax can fall on the company and the signatory. We found that it was a relevant and proper consideration for HMRC as to whether the company was in a position to pay the tax. On the information known to HMRC at the time, it appeared that the company would be unable to meet its tax obligation and therefore the decision was made by HMRC to pursue the Appellant for the tax owing.
63.	Even if the company had been in a position to pay the tax owing, it would still have been open to HMRC to raise an assessment against the Appellant personally, by virtue of Section 108 (3) (b) CEMA 1979.
64.	We did not accept that the justification for the decision taken by HMRC is limited; the objective of the legislation is to protect the revenue and the imposition of liability upon the Appellant is clear. The collection of tax is a legitimate and lawful aim and we did not accept that the assessment interfered with the Appellant’s human rights. 
Legitimate Expectation, Reasonableness and Proportionality
65.	We rejected the Appellant’s submissions in respect of legitimate expectation; Mr MacWhannell on behalf of the Appellant accepted that ignorance is no excuse and we found, given the clear wording of Section 108 (3) (b) CEMA 1979 that there could be no doubt or confusion on the part of the Appellant as to his liability for duty. 
66.	We did not accept that there was a legitimate expectation that a director would not be personally liable as a result of Form EX103A and the Public Notice. The Form makes clear that the signatory must be authorised, inferring responsibility upon that person. Public Notice 179 makes reference to the section of CEMA 1979 under which personal liability can arise. We did not accept that the reference to “producer” within the Regulations, Form EX103A and Public Notice provides any basis upon which the Appellant could assume that only the company can be deemed the “producer”. We found that this amounted to a lack of knowledge and understanding by the Appellant, which does not negate his liability.
67.	We found as a fact that the wording of Section 108 (3) (b) imposes a clear liability to duty on both the company and the Appellant. There is no dispute as to the fact that duty is owed. As a result, the assessment was lawfully raised against the Appellant. In such circumstances we do not accept that this Tribunal has any jurisdiction to consider the reasonableness of the decision to raise an assessment against the Appellant. 
68.	We found as a fact, there being no issue as to the amounts due as a result of the production of biodiesel, that the assessments are not disproportionate. 
HMRC’s Review
69.	We considered the Review undertaken by Mr McCann. We found that the officer had taken the correct approach to the Review, namely determining whether the assessment had been raised against the correct person and whether the assessment was lawful.
70.	We read the internal correspondence between the Officer and his colleague at HMRC’s Solicitor’s Office which it may be helpful to set out:
Email from Mr McCann to Lisa Bentley-Thornburn
“Issue 
whether the director of a limited company, who has made entry as a biofuel producer using form EX103A on behalf of that company and has signed the excise Entry on its behalf, can be personally liable for the excise duty charged in the course of its business if that company is placed into administration owing excise duty...”
Email from Lisa Bentley-Thornburn to Mr McCann:
“1. The wording of CEMA means that both the body corporate and the person who signs the EX103A have prime liability.
2. It would appear that from the guidance note both parties should be assessed although I am doubtful of the complete enforceability of this as this is “guidance” and not written in statute.
3. Clearly both parties cannot pay. My feeling is that such provisions are put in place in order to give HMRC the flexibility as to who to pursue especially in situations of administration/liquidation. The logical answer/interpretation would be that HMRC would ordinarily pursue the company unless it was in administration whereby it would pursue the director...
4. In this scenario the director should be pursued. You may wish to notify the administrators/liquidators of the company and send an assessment to them. However, given that we will rank pari passu with the other creditors it’s unlikely that we will get more than a few pence in the pound pursuing the company for the liability.”
71.	We did not accept that in taking advice, the Officer’s decision could be doubted. We found that this showed the care taken by the Officer to ensure that he had addressed the relevant issues.
72.	We found the Appellant’s submission that to assess the Appellant is unreasonable to be misconceived; there is no discretion where tax is due and an assessment lawfully raised. We found that there could be no basis upon which the decision of HMRC could be said to be unreasonable and we found that as a fact that the Reviewing Officer had taken into account all relevant matters.
Liability
73.	We found that the wording of Section 108 (3) (b) CEMA 1979 is clear in imposing a liability on separate persons:
“both the body corporate and the person by whom the entry is signed shall be liable for all duties charged in respect of the trade to which the entry relates”
74.	We accepted the submission on behalf of the Respondents that joint and several liability is a just and proportionate means by which HMRC can ensure the protection and collection of revenues derived from excise duties. We found that Section 108 (3) (b) imposes a liability on both the corporate entity and the signatory, which does not preclude its application as joint and several liability. In such circumstances we found that the assessment raised against the Appellant is lawful and that to find otherwise would leave HMRC without the protection clearly intended by the legislation. 
75.	We did not accept the Appellant’s submission that the imposition of such tax amounts to a penalty on the basis that excise duty is owed and the Appellant, as signatory on the Form EX103A, entered premises and is liable for payment of that duty. We did not accept that any power held by HMRC to take a security from DPL had any bearing on the lawfulness of the assessment raised against the Appellant.
76.	The appeal is dismissed.
77.	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: 19 May 2011