Introduction

The case of Davison & Robinson Ltd v Revenue and Customs (Tax) ([2018] UKUT 437 (TCC)), adjudicated by the Upper Tribunal (Tax and Chancery Chamber) on January 15, 2019, represents a pivotal moment in the interpretation of excise duty liability within the United Kingdom's legal framework. The appellant, Davison & Robinson Ltd (D&R), challenged HM Revenue and Customs' (HMRC) assessment of £400,068 for unpaid excise duty and a subsequent penalty of £80,013.60. The central issue revolved around whether D&R, as the holder of excise goods in a nominated warehouse, could be held jointly and severally liable for duties purportedly unpaid by prior holders.

This commentary delves into the intricacies of the judgment, unpacking the legal principles established, the precedents cited, the tribunal's reasoning, and the broader implications for excise duty law and future cases.

Summary of the Judgment

The Upper Tribunal upheld the First-tier Tribunal's (FTT) decision in favor of HMRC, affirming the assessment of D&R for unpaid excise duty. The FTT had previously determined that D&R, by holding excise goods in a warehouse not under a duty suspension arrangement, assumed liability for the duty due unless an earlier duty point could be established. Since HMRC could not ascertain the specifics of any prior release for consumption, the responsibility fell on D&R.

D&R contended that only one excise duty point could occur per set of goods and that this point must have been established before their purchase and storage of the goods. They argued that without evidence of an earlier duty point, HMRC's assessment was unfounded. However, the Upper Tribunal dismissed these arguments, reinforcing the precedent set in B & M Retail Limited v HMRC [2016], thereby solidifying HMRC's stance on liability in similar contexts.

Analysis

Precedents Cited

The judgment extensively referenced several key cases that shaped the Tribunal's interpretation of excise duty laws:

• Case C-325/99 G van de Water v Staatsecretaris van Financien [2001]: Addressed whether mere holding of excise goods outside a duty suspension arrangement constitutes a release for consumption, thereby triggering duty liability.
• BP Europa SE [2016] ECLI: EU:C:2016:62: Reinforced the interpretation of "release for consumption" in contexts of irregular departures from duty suspension arrangements.
• Gross v Hauptzollamt Braunschweig [2014] ECLI: EU:C:2014:2042: Clarified liability in cases where goods released for consumption in one Member State are held for commercial purposes in another.
• B & M Retail Limited v HMRC [2016] UKUT 429 (TCC): Established that HMRC can assess duties on goods held outside duty suspension arrangements when no earlier duty point is identified.
• Perfect [2017] UKUT 0476: Highlighted that entities like the Royal Mail, acting as bailees, are not typically liable unless they have control over the disposal of goods.

Legal Reasoning

The Tribunal's legal reasoning centered on the interpretation of Article 7 of EU Directive 2008/118/EC and its implementation through the Excise Goods (Holding, Movement and Duty Point) Regulations 2010. The key points include:

• Single Excise Duty Point Principle: The Tribunal affirmed that only one excise duty point can arise for specific goods within a Member State. This duty point is established upon the goods' release for consumption, which can occur through various events such as production, importation, or irregular departures.
• Joint and Several Liability: Under Regulation 6(1)(b), any person holding excise goods outside a duty suspension arrangement where duty has not been paid can be held liable. This liability is both joint and several, meaning multiple parties can be held responsible simultaneously.
• Evidence of Prior Duty Points: The burden of establishing an earlier duty point lies with HMRC. In the absence of such evidence, liability defaults to the current holder of the goods.
• Consistency with EU Law: The judgment emphasized compliance with EU directives aimed at preventing duty-free goods from circulating alongside duty-paid goods, thereby safeguarding the internal market.

Impact

This judgment has significant implications for businesses operating within the UK and the broader EU context:

• Enhanced HMRC Authority: Reinforces HMRC's ability to assess excise duties on holders of goods outside duty suspension arrangements without needing to prove an earlier duty point.
• Risk Management for Businesses: Companies must ensure rigorous due diligence when procuring and storing excise goods to avoid unintended liabilities. This may involve securing contractual protections from suppliers regarding duty compliance.
• Legal Clarity: Provides clearer guidelines on excise duty liability, reducing ambiguity in assessments and appeals processes.
• Potential for Increased Assessments: Businesses may face more frequent assessments if HMRC cannot establish prior duty points, emphasizing the need for strong evidence of duty payment.

Complex Concepts Simplified

Conclusion

The Davison & Robinson Ltd v Revenue and Customs judgment underscores the judiciary's commitment to upholding the integrity of excise duty regulations within the EU framework. By affirming that only one excise duty point can be established per set of goods and placing the onus on HMRC to identify prior duty points, the Tribunal has provided businesses with a clearer understanding of their liabilities and the stringent standards HMRC upholds in duty assessments.

This decision not only reinforces HMRC's authority in tax enforcement but also serves as a cautionary tale for businesses to maintain meticulous records and ensure compliance at every stage of their supply chain. As excise duty laws continue to evolve, this precedent will guide future cases, fostering a more transparent and accountable tax environment.