Alcohol and tobacco duty fraud

Alcohol and tobacco duty fraud - important developments

There have been a number of new developments involving the transportation and retailing of alcohol and tobacco products.

Most recently, Simon Ellis and Alex Smith of Hill Dickinson’s commercial litigation team, have succeeded in persuading Her Majesty’s Revenue and Customs (HMRC) to withdraw assessments and penalty notices against two organisations in the logistics sector.

Background

The HMRC assessments and penalties arose from the transportation and delivery of alcohol and tobacco for which HMRC alleged that excise duty had not been paid. The goods in question in both cases had originated in Europe and had been imported into the UK.

Our clients – both hauliers - had been deemed to be ‘holding’ the goods pursuant to the Excise Goods (Holding, Movement and Duty Point) Regulations 2010 after they had been transported into the UK. HMRC sought to hold them responsible for paying the excise duty, even though they lacked any knowledge that the duty had not been paid.

Legal argument

Recently, HMRC has enjoyed increasing success in recovering excise duty against hauliers under the Regulations. However, by a thorough investigation of the circumstances surrounding the movement of the goods and a detailed understanding and application of the law, Simon and Alex were able to demonstrate that HMRC were vulnerable in both cases to claims of abuse of process in its application of the Regulations.

Result

Against that background, HMRC withdrew duty assessments of over £1 million against our clients, rather than risk proceedings in the First Tier Tax Tribunal.

These were significant victories for our clients, and for businesses operating in the logistics sector, and represent a serious setback for HMRC’s attempts to recover excise duty from companies involved in the legitimate transportation of alcohol and tobacco.

Following on from a successful round of seminars earlier this year, we will be running a further series of seminars on HMRC’s evolving strategy in this area along with guidance on the new ‘Alcohol Wholesaler Registration Scheme’, which is mandatory for wholesalers in the alcohol sector who must be registered with HMRC in order to trade in this area.

If you are likely to be affected by any of these issues or would like to attend the forthcoming seminars, for further information please contact:

Legal Director

Simon EllisTelephone+44 (0)161 817 7338Emailsimon.ellis@hilldickinson.com

Associate

Alex SmithTelephone+44 (0)161 817 7268Emailalex.smith@hilldickinson.com

Source: http://www.hilldickinson.com/publications/commercial/2015/Alcohol_and_tobacco_duty_fraud.aspx

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