Revenue And Customs v Perfect

Factual and Procedural Background

On 6 September 2013, the Plaintiff, a lorry driver, collected a lorry loaded with 26 pallets of beer from Calais. The documentation accompanying the goods referenced an "Administrative Reference Code" ("ARC"). Upon arrival in Dover, UK Border Force officers stopped the Plaintiff and discovered that the ARC had been allocated to a prior consignment and that excise duty on the goods had not been paid. Consequently, both the beer and the lorry were seized. The Defendant, HM Revenue and Customs ("HMRC"), assessed the Plaintiff to excise duty amounting to £22,779 pursuant to regulation 13 of the Excise Goods (Holding Movement and Duty Point) Regulations 2010 ("the 2010 Regulations") and also imposed a penalty.

The Plaintiff appealed to the First-tier Tribunal ("FTT"), which allowed the appeal, discharging both the excise duty assessment and the penalty. The FTT found that the Plaintiff had no proprietary interest in the beer, was not involved in any conspiracy, had only the information contained in the documentation, which appeared consistent with a valid duty-suspended movement, and had no means to verify whether the ARC had been previously used.

The Defendant appealed to the Upper Tribunal ("UT"), which dismissed the appeal. The Defendant then appealed to the Court of Appeal. On 19 March 2019, the Court of Appeal dismissed the appeal concerning the penalty but determined that the excise duty issue raised a question of European Union ("EU") law that was not acte clair and referred it to the Court of Justice of the European Union ("CJEU").

The CJEU received the reference on 3 April 2019, with Advocate General Tanchev delivering an opinion on 21 January 2021 and judgment on 10 June 2021. Subsequently, a further hearing was held before this Court on 23 February 2022, where the Plaintiff was neither present nor represented. The Plaintiff’s counsel had submitted a skeleton argument addressing the binding nature of the CJEU decision post-Brexit and whether the Court should adopt a different approach. However, shortly before the hearing, the Plaintiff’s solicitors informed the Court that the Plaintiff no longer sought to resist the Defendant’s appeal on the excise duty issue, following a related first instance decision.

This judgment supplements the Court of Appeal’s 2019 decision, which provides a fuller history of the case.

Legal Issues Presented

1. Whether a person physically holding excise goods on behalf of others is liable for excise duty even if unaware that the goods are subject to excise duty or that the duty has become chargeable.
2. Whether decisions of the Court of Justice of the European Union remain binding on United Kingdom courts post-withdrawal from the EU where the reference was made before the end of 2020.

Arguments of the Parties

Defendant's Arguments

• Liability for excise duty is strict and does not depend on the knowledge or interest of the person holding the goods.
• A driver physically in possession of excise goods should be liable for duty to prevent smuggling and tax evasion, even if unaware of the duty status of the goods.
• The legislative scheme, including the 2008 Directive and the 2010 Regulations, supports strict liability for excise duty at the point of physical possession.
• Decisions of the CJEU on references made before the end of 2020 remain binding in the UK under the Withdrawal Agreement and domestic legislation (notably section 7A of the European Union (Withdrawal) Act 2018).

Plaintiff's Arguments

• The Plaintiff had no proprietary interest or knowledge regarding the excise duty status of the goods.
• The Plaintiff relied on documentation which appeared consistent with a valid duty-suspended movement.
• It was argued whether the Court should follow the CJEU decision post-Brexit or adopt a different approach.
• The Plaintiff ultimately withdrew opposition to the Defendant’s appeal concerning excise duty liability.

Table of Precedents Cited

Court's Reasoning and Analysis

The Court began by considering the legislative framework, focusing on regulation 13 of the 2010 Regulations and Article 33 of the 2008 Directive, which establish that excise duty becomes chargeable when goods already released for consumption in one Member State are held for commercial purposes in another.

The Court accepted the factual findings of the FTT and UT that the Plaintiff had no knowledge or interest in the goods beyond physical possession. However, the Defendant argued, and the Court agreed, that liability under the Regulations and Directive is strict and does not depend on the holder’s knowledge or intent.

The Court reviewed its own 2019 judgment, which had expressed an inclination towards strict liability, emphasizing the policy objective of preventing tax evasion and ensuring the proper functioning of the internal market.

The CJEU’s 2021 judgment was pivotal, unequivocally holding that a person physically holding excise goods on behalf of others is liable for excise duty even without an interest in or awareness of the duty status of the goods.

Regarding the binding nature of the CJEU decision post-Brexit, the Court analyzed the Withdrawal Agreement and relevant domestic legislation, notably section 7A of the European Union (Withdrawal) Act 2018. It concluded that judgments of the CJEU on references made before the end of 2020 remain binding in the United Kingdom. The Court rejected arguments that domestic legislation limited the binding effect of the CJEU’s judgment.

Consequently, the Court held that the Plaintiff’s lack of knowledge or interest in the goods does not exempt him from excise duty liability under the applicable law.

Holding and Implications

The Court ALLOWED the Defendant’s appeal regarding the excise duty assessment.

The holding establishes that strict liability applies to persons physically holding excise goods, regardless of their knowledge or interest in the goods. This decision enforces the objective of the excise duty regime to prevent tax evasion and maintain the integrity of the internal market. The Court also confirmed that CJEU decisions on references made before the end of 2020 remain binding in the UK despite Brexit, reinforcing the continuing legal effect of the Withdrawal Agreement and domestic implementing legislation.

No new precedent beyond the application of the CJEU judgment and the interpretation of the Withdrawal Agreement was set by this decision.