Mosson v Revenue & Customs (EXCISE DUTY TOBACCO : Hand rolling)

Factual and Procedural Background

This appeal concerns an Excise Duty Assessment and a wrongdoing penalty issued to the Appellant following the seizure of tobacco products at a UK border point. On 2 December 2017, the Appellant arrived at a UK port after travelling from Belgium and was stopped by a Border Force Officer who questioned him about tobacco and alcohol purchases. The Appellant disclosed purchasing 4 kg of hand rolling tobacco for his wife and some wine for himself, providing receipts and explaining the tobacco was for personal use over several months.

The Border Force Officer read a commerciality statement to the Appellant and requested a further interview to determine whether the goods were for personal or commercial use. The Appellant declined the further interview due to feeling unwell and needing medication. Shortly after the Appellant left the interview room, the Officer seized the tobacco goods concluding they were held for commercial purposes under relevant customs legislation.

The Appellant did not receive the statutory Notice of Seizure because he declined to wait for the paperwork and the Officer did not have his address at the time. Consequently, the Appellant did not challenge the seizure within the one-month period allowed by law, resulting in the goods being deemed forfeited. HMRC then issued an Excise Duty Assessment of £884 and a wrongdoing penalty of £176.

The Appellant requested an independent review, which upheld the assessment and penalty. He subsequently appealed to the First-tier Tribunal challenging the assessment and penalty on the basis that the tobacco was for personal use and citing his poor health and financial hardship.

Legal Issues Presented

1. Whether HMRC’s failure to give the Appellant notice of seizure under Schedule 3 of the Customs and Excise Management Act 1979 (CEMA) permitted the Tribunal to consider the Appellant’s grounds of appeal that the seized goods were for personal use.
2. Whether the seized tobacco was held for personal use or a commercial purpose.
3. Whether the Excise Duty Assessment issued by HMRC was correct.
4. Whether there were special circumstances warranting discharge of the wrongdoing penalty.

Arguments of the Parties

Appellant's Arguments

• The tobacco was purchased solely for his wife's personal use, not for commercial purposes.
• He had previously travelled with the same quantity of tobacco without penalty, indicating inconsistency in enforcement.
• He suffers from serious health conditions, including prostate cancer and heart problems, which caused him to leave the interview early and contributed to his inability to comply fully with the process.
• The amount of tobacco exceeded guidelines only because he travelled infrequently and intended the tobacco to last several months.
• The process and reasons for seizure were not clearly explained to him, and he was not given an opportunity to explain his position before the assessment and penalty were issued.
• The penalty imposed was disproportionate given his health and financial situation.

HMRC's Arguments

• The Appellant did not challenge the legality of the seizure within the statutory one-month period, so the goods are deemed forfeited under Schedule 3 CEMA, establishing the goods were held for commercial purposes.
• The Tribunal has no jurisdiction to reconsider the legality of the seizure or whether the goods were for personal use because that issue has been conclusively determined.
• The Appellant was liable to pay the Excise Duty Assessment because he was holding the goods intended for commercial use under the relevant regulations.
• The wrongdoing penalty was correctly calculated as non-deliberate with prompted disclosure, reflecting the Appellant’s partial cooperation.
• HMRC did not find a reasonable excuse in relation to the Appellant’s health conditions as they were not shown to contribute to the wrongdoing.
• The penalty was appropriate and no special circumstances existed to justify its reduction or cancellation.

Table of Precedents Cited

No precedents were cited in the provided opinion.

Court's Reasoning and Analysis

The Tribunal acknowledged that, ordinarily, the failure to challenge the seizure within the statutory timeframe results in the goods being deemed forfeited and the legality of seizure conclusively determined. This would preclude the Tribunal from considering whether the goods were for personal use.

However, the Tribunal found that HMRC failed to comply with the procedural requirements under Schedule 3 CEMA to give proper notice of seizure to the Appellant. The seizure occurred after the Appellant had left the control area and no seizure notices were served or posted, nor was there any publication of notice as an alternative.

Because of this procedural failure, the Tribunal concluded that the deeming provisions did not apply and the Appellant retained the right to challenge the lawfulness of the seizure and the nature of the goods. The Tribunal examined the evidence and found that the Border Force Officer had not adequately explained or justified the conclusion that the goods were held for commercial purposes, nor had he asked sufficient questions about the quantity or intended use.

The Tribunal accepted the Appellant’s evidence that the tobacco was for personal use, given the infrequent travel and consumption pattern described. It also accepted the Appellant’s health difficulties as a reasonable explanation for declining further interview.

Accordingly, the Tribunal discharged the Excise Duty Assessment as incorrectly imposed.

Regarding the wrongdoing penalty, the Tribunal found no wrongdoing on the Appellant’s part, given the circumstances and the procedural defects. Even if the assessment had been correct, the Tribunal considered that special circumstances existed to justify cancellation of the penalty. The Appellant’s health issues, the short time before seizure after he left, and the lack of explanation or opportunity to respond contributed to this conclusion.

The Tribunal therefore allowed the appeal and discharged both the assessment and the penalty.

Holding and Implications

The Tribunal ALLOWED the appeal, discharging both the Excise Duty Assessment of £884 and the wrongdoing penalty of £176.

The direct effect of this decision is that the Appellant is not liable to pay the assessment or penalty. The Tribunal’s decision was based on HMRC’s failure to comply with statutory notice requirements and procedural fairness rather than a substantive challenge to the seizure itself. No new precedent was established; the ruling underscores the importance of HMRC following proper notice procedures under Schedule 3 CEMA to preserve the legal effect of seizure and forfeiture.