[2011] UKFTT 38 (TC)

TC00915

Appeal number: LON/2009/7041

CUSTOMS DUTY – importation of goods and their entry by the Appellant under the simplified inward processing relief procedure (SIPR) – declarations contained inaccurate information and there was a failure to comply with all the obligations relating to the entry of the goods under the SIPR – a customs debt on importation incurred pursuant to article 204(1) of the Community Customs Code Regulation 2913/92/EEC – a finding that the inaccurate information included in the declarations resulted from an attempted fraud by a person or persons unknown importing the goods and using the Appellant’s services to make the declarations – whether the Appellant was the debtor in relation to that customs debt – the circumstances to be considered in identifying the debtor in accordance with article 204(3) included the circumstance that the Appellant stated that it was acting in the name of or on behalf of another person without being empowered to do so – in consequence the Appellant was to be deemed to have acted in its own name and on its own behalf pursuant to article 5(4) – therefore the Appellant was the person who was required, according to the circumstances, to fulfil the relevant obligations and to comply with the relevant conditions and was the debtor in relation to the customs debt pursuant to article 204(3) – appeal dismissed

FIRST-TIER TRIBUNAL

TAX

TNT (UK) LIMITEDAppellant

-and-

THE COMMISSIONERS FOR HER MAJESTY’S

REVENUE AND CUSTOMS (Customs Duties) Respondents

TRIBUNAL: JOHN WALTERS QC (TRIBUNAL JUDGE)

MS. REBECCA NEWNS

Sitting in public at 68, Lombard Street, London EC3 on 8 and 9 December 2010

Timothy Brown, Counsel, instructed by TNT (UK) Limited Legal Department, for the Appellant

Alan Bates, Counsel, instructed by the General Counsel and Solicitor to HM Revenue and Customs, for the Respondents

© CROWN COPYRIGHT 2011

1

DECISION

  1. This appeal, brought by TNT (UK) Limited (“the Appellant”) on 5 February 2009, is against a decision of the Respondents (“HMRC”) to issue a C18 Post Clearance Demand for £264,993.20 duty and VAT suspended on the importation of certain goods on their being entered by the Appellant under the Simplified Inward Processing Relief (“SIPR”), procedure but demanded by HMRC by reason of non-compliance with one of the conditions of SIPR, namely failure to submit a timely Bill of Discharge.
  2. The C18 Post Clearance Demand was issued on 26 September 2008 and confirmed on completion of a departmental review by a letter dated 16 December 2008 sent to Mr. Steven Blunt, UK Customs Operations Manager of the Appellant, by Review Officer Jan Pond on behalf of HMRC.

The evidence

  1. The Appellant carries on a large international carrier and express delivery business. In relation to the importations with which this appeal is concerned it acted as freight agent on behalf of an importer who gave its name as Bola Travel and Freight Limited (“BTFL”). The Appellant’s business premises are at Stansted Airport. The importations with which this appeal is concerned consisted of 52 importation entries in relation to which the Appellant acted as declarant. In 41 of the entries the Appellant declared it had direct representation for BTFL. In the remaining 11 entries the Appellant declared it had indirect representation for BTFL, although the Appellant now claims that it had been mistaken to do so and that in fact it had direct representation for BTFL in relation to all 52 importations. The significance of direct, as opposed to indirect, representation will be explained later – see: paragraphs 31, 46 and 47.
  2. We received Witness Statements from Martin McDonald and Steven Blunt, on behalf of the Appellant. Mr. Blunt also gave oral evidence and was cross-examined. HMRC did not require to cross-examine Mr. McDonald and the evidence contained in his Witness Statement was not contested.
  3. That evidence was that he was employed by the Appellant as a shift manager, based at Stansted Airport. The program which the Appellant uses on its systems to record entries of freight imports and exports is known as “Datafreight”. When a customer engages the Appellant as its freight agent, the customer’s name, address and VAT number are entered onto the “Datafreight” program.
  4. The first consignment in the disputed importations with which this appeal is concerned was received by the Appellant from UPS SCS Cisco Systems, with a given address in the Netherlands, under consignment number 686554035 for clearance on 5 June 2007. A retrieved consignments report was in evidence, showing the receiver as ‘ITECO Nigeria Limited’ with a given address of ‘[BTFL] Unit 11, Eurolink Business Centre, London SW2 1BZ.
  5. Mr. McDonald’s evidence was that the contact person for the receiver was given as ‘Bola Adeniyi’ (“BA”) and that he telephoned and spoke to BA to obtain import clearance details for the import entries for BTFL. BA provided Mr. McDonald with the VAT number 6361775 to enable him to complete the entries according to the SIPR clearance procedure. Once these details had been entered onto the “Datafreight” program, they were effectively on the Appellant’s system and were used in relation to subsequent imports, dates, values and consignment numbers being entered accordingly.
  6. The consignment note for the first consignment, referred to above, number 686554035, was in evidence and its contents accorded with Mr. McDonald’s evidence. Other details were: the delivery terms were that ‘sender pays’, that the consignment was 1 carton of volume 0.436 cubic metres and gross weight 109.09 kilograms. The consignment note was produced by the sender, UPS SCS Cisco Systems.
  7. The C88 entry generated by the Appellant was effected electronically. A paper version was in evidence. The C88 is a declaration of the import to HMRC. The details obtained by Mr. McDonald from BA were entered onto the C88 entry, with the following additional information. A description of the goods imported as ‘computer software’ was entered under Box 31. Under Box 44 was entered inter alia the following information in code: the goods were being imported for repair, the relevant period for the repair, and the operation of SIPR was 6 months, the application to use SIPR was being made on behalf of BTFL, and the supervising office of HMRC would be that at Enniskillen.
  8. Also included on the C88 entry (in Box 33) was the tariff classification 8471800000. We were told this related to computer hardware. The entry to Box 37 on the C88 indicated that an application to use SIPR was being made. In Box B it was stated that the Appellant was making the entry as a direct representative.
  9. Also in evidence was the ‘entry acceptance advice’. This is a message generated by ‘CHIEF’ - the Customs Handling Import Export Freight computer system – informing the Appellant that the entry made on form C88 has been accepted. It records that the Appellant is the declarant (with the Appellant’s unique reference number given). It also records that no tax was due on the import.
  10. We also saw a copy of the commercial invoice issued by Cisco Systems International BV supporting the entry.
  11. We were told (and it is common ground) that the remaining 51 entries relevant to the appeal were in similar form, although on 11 of them the Appellant declared itself on the form C88 to have indirect representation.
  12. The given VAT number, 6361775, which the Appellant had included on the C88 entry and which had been given to Mr. McDonald for those purposes by BA, in fact was allocated not to BTFL but to another company ‘Afritrade’ – Afritrade (Europe) Limited.
  13. Following, we understand, the failure to submit a bill of discharge, one of the conditions for use of SIPR, HMRC investigated the matter and visited Afritrade on 12 March 2008. A post-clearance demand notice (C18) was issued to Afritrade. In response, Mr. K.P. Adams of Afritrade Europe Ltd. wrote to HMRC on 14 April 2008 indicating a wish to appeal against the post-clearance demand notice and stating that the Appellant had entered goods imported under SIPR using Afritrade’s VAT number but without Afritrade’s knowledge or authorisation. Mr. Adams stated further that BFTL was not part of Afritrade’s organization.
  14. On 12 June 2008, HMRC wrote to Mr. Adams informing him that HMRC had overturned its decision to proceed against Afritrade, because the review officer (Officer Jan Pond) was satisfied that the Appellant, as freight agent, had had no authority from Afritrade to declare the goods in Afritrade’s name using SIPR and was also satisfied that Afritrade was not the entity who required the goods or was going to process the goods. The letter concluded with an indication that HMRC would look to the Appellant to satisfy the customs debt arising.
  15. On 16 September 2008, HMRC wrote to the Appellant, for the attention of Mr. Steven Blunt, enclosing the C18 post-clearance demand in the Appellant’s name, against which this appeal is brought. The covering letter stated that the imports to SIPR had been incorrectly entered by the Appellant under the number of and in the name of Afritrade. The Appellant asserts correctly that the imports were not declared to Afritrade, but, of course, Afritrade’s VAT number was used in the C88 entries made by the Appellant as declarant.
  16. Mr. Blunt responded by a letter dated 7 November 2008 requesting a formal departmental review of the decision to raise the post-clearance demand notice (C18) on the Appellant. He made the case that authority and information (including the VAT number) had been given verbally to the Appellant by BA of ‘Bola Travels Ltd’ and that the Appellant had acted in good faith. Mr. Blunt enclosed copies of proof of delivery signatures to confirm that it was ‘Bola Travel’ who took responsibility for the goods in question. He argued that in view of the circumstances, the Appellant was entitled to act as the indirect representative of ‘Bola Travels Ltd.’ and that the demand should be addressed to that company.
  17. Review Officer Jan Pond wrote to the Appellant on 16 December 2008 upholding the original decision to issue the C18 post-clearance demand to the Appellant. Under the heading “My Decision” she wrote:

“I have looked at the evidence supplied and considered your arguments but must agree that the C18 has been issued to TNT correctly. The only concession that I can make in this matter is that the demand should also be issued to Bola Travel and Freight.

I do accept your argument that verbal authorisation may have been acceptable in this case if you had declared the goods using the correct VAT registration number and name and address of the importer. However as you used Afritrade’s details and they did not verbally or otherwise agree to this, the demand must stand.

I am unsure as to the type of representation declared on the import entries as I have not seen full copies of them, but if Direct Representation was declared then TNT would be liable because they were not authorised by Afritrade to declare goods in their name and if they declared Indirect Representation they would be liable because they were acting in their own name and on their own behalf. Also if nothing was declared they would be deemed to be acting in their own name. Therefore I am unable to remove the demand from TNT.”

  1. In Mr. Blunt’s Witness Statement he sought to ‘clarify’ his letter of 7 November 2008. He produced an analysis of the 51 declarations which showed that 13 of the 51 were declared under indirect representation, with the remaining 38 declared as direct representation. He explained that until December 2007 the Appellant had declared the ‘Bola Travel’ declarations as direct representation and from January 2008 they were declared as indirect representation, with the exception of two entries, 686806713 and 686788826, which were declared as direct representation in error. He stated that until December 2007 the Appellant had believed that it had acted with direct representation based on the instructions given by ‘Bola Travel’. In around December 2007, Mr. Blunt was present at a regular monthly meeting with HMRC when he was informed by the officers present that ‘in future written confirmation would be required in order for [the Appellant] to claim direct representation’. As the Appellant had had no ‘formal written authority’ from ‘Bola Travel’, ‘the remainder of the importations were claimed as indirect (with the exception of the two errors listed above)’. He added that the Appellant’s procedures and information had remained the same throughout and that if HMRC had not said that the Appellant needed written authority to claim direct representation, the Appellant would have continued to claim it.
  2. Mr. Blunt accepted that it was unlikely that there had been any discussion with BA (or anyone else) on the subject of whether the Appellant’s representation was direct or indirect. He explained that the position was that if the Appellant receives instructions from the importer, then its representation is direct. If it receives no instructions from the importer then its representation is indirect.
  3. Mr. Blunt said that Mr. McDonald had not asked whose VAT number it was that BA had given him. He had assumed that it was the VAT number of BTFL. He knew it was not the VAT number of ITECO Nigeria Limited, because that company was evidently established in Nigeria. He did not know it was Afritrade’s VAT number. He said that the Appellant could not have taken any steps to confirm that the VAT number which they were given was correct for their customer – he did not know about the possibility of calling HMRC’s National Advice Service to check a VAT number. All that the CHIEF system would do was to confirm that a given VAT number was valid. He confirmed that the Appellant had not checked with Companies House to confirm that BTFL was an existing company. It was not part of the Appellant’s procedures to make such a check. He was aware at the time of the hearing – as he had not been aware in 2007 – that BTFL was not an existing company at the time(s) of the imports. (BTFL had been dissolved in January 2006.) However a company with the name Bola Travels Limited did exist until 2010. He had been aware when he wrote his letter to HMRC dated 7 November 2008 that BTFL had not existed at the time of the imports, but that Bola Travels Limited had then existed and he had assumed that the references to BTFL in the import documentation had referred to Bola Travels Limited. That was why he mentioned Bola Travels Ltd. in the letter dated 7 November 2008.
  4. We also received Witness Statements sworn on the day before the hearing started (7 December 2010) respectively by two officers of HMRC, Philip John Burkett and Vivienne Ide. Neither of these officers was available for cross-examination at the hearing. Mr. Bates, for HMRC, said that the contents of the Witness Statements did not include any facts which he relied on, and were there only to provide additional background information. Mr. Brown, for the Appellant, objected to their late service. Mr. Bates indicated that he was content to withdraw the Statements but, given the choice, Mr. Brown preferred us to look at them, and, in doing so, to bear in mind that the officers were not available for cross-examination.
  5. Officer Burkett’s Witness Statement recounted an attempted visit on 28 September 2010 to the given address of BTFL, Unit 11, Eurolink Business Centre, London SW2 1BZ. Unit 11 was visited but found to be locked and apparently out of use. The door of unit 4 was tried and found to be open. Enquiries were made of Bola Adeniyi (BA) and a female present answered to that name.
  6. That person (the interviewee) stated that BTFL had ceased trading ‘two years ago’ and that its business had been assumed by another company AB Cargo Express. The interviewee was evasive about the connection with Afritrade and Officer Burkett noticed that Afritrade’s contact details were prominently displayed on lists affixed to the walls of the office. The interviewee said that the Appellant had never been in contact regarding import consignments ultimately destined for ITECO nor had authority been given to use the VAT number belonging to Afritrade.
  7. Officer Ide’s Witness Statement recounted a visit by her on 30 September 2010 to different premises, Unit 11, Ashford Business Complex, 166 Feltham Road, Ashford, Middlesex. The name ‘Bola Travel’ was not recognised, but when she asked for Afritrade, she was redirected to Unit 11/12, the premises of Juspaq Ltd., and spoke to Kevin Adams, whom she recognised from a previous visit to Afritrade on 12 March 2008. Mr. Adams told her that after that previous visit he had told ‘Bola’ that she was not authorised to use Afritrade’s VAT number and that thereafter she had ceased to use it in connection with export movements to Nigeria.
  8. We accept the evidence insofar as we do not indicate to the contrary below.

The legislation

  1. The relevant legislative provisions to which our attention was drawn were as follows.
  2. The following articles (and paragraphs) from Council Regulation 2913/92/EEC of 12 October 1992, establishing the Community Customs Code (“the Community Customs Code Regulation”).
  3. Article 4:

“(17) ‘Customs declaration’ means the act whereby a person indicates in the prescribed form and manner a wish to place goods under a given customs procedure.