Introduction

Dawson's (Wales) Ltd v Revenue & Customs ([2023] EWCA Civ 332) addresses a pivotal issue concerning the interpretation of "holding" within the framework of Article 7(2)(b) of the EU Directive 2008/118 (the "Excise Directive") and Regulation 6 of the Excise Goods (Holding Movement and Duty Point) Regulations 2010 ("HMDP Regulations"). The appellant, Dawson's (Wales) Limited ("DWL"), challenges HMRC's assessment of excise duty, contending that DWL should not be deemed the first holder of certain excise goods, thereby avoiding the duty assessment. The case delves into the legal intricacies of defining "holding" and whether intent to control is a necessary criterion.

Summary of the Judgment

The Court of Appeal upheld HMRC's position that DWL was correctly identified as a "holder" under the Excise Directive. However, it found that the Upper Tribunal (UT) erred by introducing the additional requirement that a holder must "intend to assert that control against others." This requirement was deemed contrary to the established principles of the Excise Directive and the Court of Justice of the European Union (CJEU) rulings. Consequently, the appeal by DWL was partially allowed, emphasizing that the definition of "holding" should not hinge on the holder's intent to control over excise goods.

Analysis

Precedents Cited

The judgment extensively references several key cases that influenced the court's decision:

• Taylor & Wood [2013] EWCA Crim 1151: Established that "holding" involves legal or de facto control without necessitating awareness of excise duty evasion.
• Tatham [2014] EWCA Crim 226: Reinforced the notion that physical possession combined with control suffices to constitute "holding."
• HMRC v WR (Perfect case) [2021] EU:C:2021:473: The CJEU clarified that "holding" does not require the holder to be aware of the excise duty status of the goods.
• Van de Water [2001] C-325/99: Emphasized the importance of physical possession in determining the duty point.
• B&M Retail Limited v HMRC [2016] STC 2456: Highlighted HMRC's policy to assess the earliest identifiable holder when duty has not been paid.

Legal Reasoning

Central to the court's reasoning was the alignment of national regulations with EU law, particularly the Excise Directive. The UT's imposition of an additional intent requirement was scrutinized against the CJEU's judgment, which unequivocally stated that awareness of duty applicability is irrelevant in defining a "holder." The Court of Appeal emphasized that "holding" should primarily consider physical possession and control, without subjective intent. This interpretation ensures consistency with the Directive's objective to streamline duty collection and prevent evasion.

Impact

This judgment sets a significant precedent in excise duty law by clarifying that the definition of "holding" under the Excise Directive does not encompass an intent to control. This clarification reduces legal ambiguity, aiding both tax authorities and businesses in understanding their liabilities. Future cases involving excise goods will reference this decision to determine liability based on possession and control rather than intent, potentially simplifying duty assessments and enforcement.

Complex Concepts Simplified

Holding

In the context of excise duty, "holding" refers to having physical possession or the ability to control excise goods, irrespective of whether the holder intends to assert that control over others. This definition is crucial for determining who is liable to pay excise duty when goods are released for consumption.

Release for Consumption

"Release for consumption" occurs when excise goods are no longer under a duty suspension arrangement and excise duty has not been levied. This triggers the point at which duty becomes payable by the holder of the goods.

Duty Suspension Arrangement

A duty suspension arrangement allows for the movement and storage of excise goods without immediate payment of excise duty. It is typically used in the supply chain to facilitate the handling of goods subject to excise duty before they reach their final point of consumption.

Conclusion

The Court of Appeal's decision in Dawson's (Wales) Ltd v Revenue & Customs reinforces the principle that "holding" for excise duty purposes is defined by physical possession and control, devoid of any requirement for intent to assert that control against others. This aligns national regulations with EU law, ensuring a more straightforward and enforceable excise duty regime. Businesses engaged in the supply and handling of excisable goods can now better understand their liabilities, while HMRC is empowered with clearer guidelines for duty assessments. Overall, the judgment enhances legal certainty and supports the effective collection of excise duties.