The revenue investigated purchases of wine by supermarkets from two suppliers who, in turn, had purchased the wine from the taxpayer. Since the revenue was unable to establish that any of the companies in the supply chain prior to the taxpayer had taken physical possession of the goods, and it was assumed that the taxpayer’s suppliers had not receive the goods but were responsible for arranging for them to be shipped to the taxpayer, the revenue exercised its powers of assessment under section 12(1A) Finance Act 1994 and raised a notice of assessment against the taxpayer in the sum of £3,729,381. The assessment was made on the basis that the goods were physically held outside a duty suspension arrangement and UK excise duty on those goods had not been paid with the consequence that a duty point had arisen under regulation 6(1)(b) of the Excise Goods (Holding, Movement and Duty Point) Regulations 2010. The revenue considered that the taxpayer was the first known person to hold the goods in the sense of having been in physical possession of them and was thus liable to pay the excise duty under regulation 10(1) of the 2010 Regulations. The taxpayer appealed to the First-tier Tribunal (Tax Chamber), which determined preliminary issues on assumed facts in relation to the test for “holding” excise goods under article 7(2)(b) of the Council Directive 2008/118/EC (the “Excise Directive”) and regulation 6 of the 2010 Regulations against the taxpayer. The Upper Tribunal (Tax and Chancery Chamber) dismissed the taxpayers appeal, concluding (i) that a person who was able to exercise “legal or de facto” control of excise goods in respect of which duty remained unpaid, “and intended to assert that control against others” was to be regarded as “holding” those goods for the purposes of the Excise Directive, but (ii) the “holding” point could not be determined in favour of the taxpayer on a preliminary issue as there had been insufficient fact-finding.
On the taxpayer’s further appeal—
Held, it was inevitable that, in circumstances which a person in physical possession of excise goods upon which duty had not been paid sought to contend that the revenue should have assessed a person earlier in the chain of supply who did not have physical possession of the goods, a detailed consideration of the facts would be necessary to determine whether that person was “holding” the goods within the meaning of article 7(2)(b) of the Council Directive 2008/118/EC and the Excise Goods (Holding, Movement and Duty Point) Regulations 2010. It followed that he Upper Tribunal (Tax and Chancery Chamber) had been right to conclude that such a question was not suitable for consideration just as a preliminary issue on the basis of assumed facts but instead would have to be determined following extensive fact-finding (para 95, 97, 98).
Per curiam. (i) The concept of “holding” arises in Council Directive 2008/118/EC and so falls to be interpreted taking into account its context and aims and its autonomous EU law meaning. It is clear form the jurisprudence of the Court of Justice of the European Union that subjective intention is irrelevant to the question whether a person is “holding” excise goods. It follows that an intention to “assert control over excise goods against others” is not a requirement to demonstrate that a person is “holding” excise goods within the meaning of article 7(1) of the Directive (paras 67, 68, 70, 71, 97, 98).
(ii) The scheme of Council Directive 2008/118/EC focuses on the physical location of the excise goods and on whether or not a release for consumption has occurred by virtue of the goods having physically left an authorised tax warehouse, or otherwise having left a duty suspension arrangement. It follows that the time at which the excise point arises and where the goods are being held at that time, are factors to be taken into consideration where an assessment is challenged on the basis that an earlier excise duty point can be established (paras 92, 94, 97, 98).
Quaere. Whether the Court of Appeal (Civil Division) is bound by a decision of the Court of Appeal (Criminal Division) (para 73).
Michael Firth (instructed by Morr & Co LLP) for the taxpayer.
Kieron Beal KC and Natasha Barnes (instructed by Solicitor, Revenue and Customs) for the revenue.