TNT UK Ltd v HMRC

Factual and Procedural Background

This appeal concerns a post-clearance demand issued to the Appellant by the Respondents for customs duty and VAT totaling £264,993.20, relating to goods imported under the Simplified Inward Processing Relief ("SIPR") procedure in 2007 and 2008. The SIPR procedure relieves importers from paying customs duty and VAT at importation, subject to certain conditions, including the submission of timely bills of discharge. The demand arose due to the Appellant's failure to submit such bills.

The Appellant, primarily an express carrier but also acting as a freight agent, made 52 import declarations for computer components manufactured in the USA and imported via the Netherlands. The declarations identified the consignee as a Nigerian company with a UK address linked to a company that had been dissolved before the imports. The Appellant's employee accepted information from an individual purporting to represent this non-existent company, including a VAT number that belonged to an unrelated company. The goods were delivered to the address provided and signed for.

HMRC issued demands to the company whose VAT number was used, which led to an investigation revealing that the VAT number had been fraudulently used and that the goods had disappeared, presumably sold within the UK. The tribunal found the Appellant to be an innocent but careless victim of deception. However, HMRC contended that the Appellant was liable for the duty and VAT due to submitting incorrect import declarations. The First-tier Tribunal dismissed the Appellant's appeal, holding the Appellant liable on the basis that it was not empowered to act as a representative of the true importer.

Legal Issues Presented

1. Whether the Appellant, acting as an importer's agent, was liable for customs duty and VAT due to submitting incorrect import declarations caused by the provision of false importer identity.
2. Whether the Appellant was properly authorised to act as a representative under the Community Customs Code, specifically under article 5(4).
3. Whether the failure to submit timely bills of discharge under the Simplified Inward Processing Relief procedure triggered liability for the customs debt under article 204 of the Customs Code.
4. Whether the Appellant's good faith belief in its authority or reliance on information provided absolved it from liability for the incorrect declarations.

Arguments of the Parties

Appellant's Arguments

• The Appellant accepted the tribunal's findings of fact but challenged the conclusion that it lacked empowerment to act as representative of the true importer.
• Argued that the Appellant had authority to act on behalf of someone connected with the goods, as the goods were delivered to the address provided by the purported representative.
• Contended that the Customs Code does not define "importer" and only requires authority to make the declaration, not necessarily from the named consignee.
• Maintained that it acted on reasonable grounds and in good faith, relying on information provided and that there was no obligation to exercise due diligence to verify the truthfulness of the information.
• Asserted that the obligation to comply with the inward processing relief conditions, such as physical control of goods, rested with the importer, not the agent.

Respondents' Arguments

• Submitted that failure to comply with article 5(4) of the Customs Code means the person is deemed to act in their own name and is liable for the declaration's accuracy.
• Rejected the notion that the representative could avoid liability by uncritically repeating false information given to them.
• Emphasised that the Customs Code grants customs authorities the power to demand evidence of the representative's appointment, reinforcing responsibility.
• Argued that the purpose of article 5 is to ensure customs authorities know who is liable for duties and VAT, and no implied exceptions exist relieving representatives from liability for false declarations.
• Contended that the Appellant's handing over of goods to another party does not relieve it of responsibility for compliance with customs obligations.

Table of Precedents Cited

No precedents were cited in the provided opinion.

Court's Reasoning and Analysis

The court analysed the application of article 5 of the Community Customs Code, which requires a representative to state their authority and whether representation is direct or indirect. The Appellant declared itself as representative of a non-existent company and failed to provide evidence of authority, thus under article 5(4) it was deemed to have acted in its own name and on its own behalf. The court rejected the argument that the Appellant could rely on information provided by a third party without verification, affirming that the accuracy of the declaration is a strict, objective responsibility.

The court noted that the distinction between direct and indirect representation was immaterial to the outcome. The Appellant's failure to submit timely bills of discharge constituted non-compliance with the SIPR conditions, triggering a customs debt under article 204 of the Code. The Appellant's argument that physical control of the goods and compliance obligations rested solely with the importer was rejected, as the representative who fails to meet article 5 requirements assumes those obligations personally.

The court found no merit in the Appellant's contention that good faith or lack of knowledge of the false information absolved it from liability. The decision was supported by article 199 of the Implementing Regulation, which holds the declarant or representative objectively responsible for the accuracy of the declaration and compliance with customs obligations.

Accordingly, the tribunal's conclusion that the Appellant was liable for the customs debt was upheld.

Holding and Implications

The court's final decision was to DISMISS THE APPEAL, affirming that the Appellant is liable for the payment of customs duty and VAT due to the submission of incorrect import declarations and failure to comply with the conditions of the SIPR procedure.

The direct effect is that the Appellant must satisfy the post-clearance demand issued by the Respondents. No new legal precedent was established; the decision reinforces the strict liability of representatives under the Customs Code for the accuracy of declarations and compliance with customs procedures, regardless of good faith or reliance on third-party information.