Customs & Excise Commissioners v Anglo Overseas Ltd (2004)
A petition by Customs to wind up a company on the basis of assessments to excise duty arising under the Excise Duty Points (Duty Suspended Movements of Excise Goods) Regulations 2001 would not be granted where the alleged debt was disputed on substantial grounds that, arguably, the Regulations did not apply in the circumstances.
Customs petitioned to wind up the defendant company (D) on the basis of assessments to £4.5 million of excise duty arising under the Excise Duty Points (Duty Suspended Movements of Excise Goods) Regulations 2001. In 2001 D had arranged a number of shipments of alcoholic drinks as the contracting party with the putative consignee. The goods were to be exported from the UK from bonded warehouses. D had subcontracted the transportation and had received apparently completed administrative documents in relation to the consignments recording receipt of the goods at a bonded warehouse in another Member State. The documents were false and the goods had disappeared. D had no reason to suspect any irregularity. Under Council Directive 92/12/EEC, implemented by the 2001 Regulations, D guaranteed any loss which might be suffered by the relevant excise authority for loss of excise duty within the EU. The relevant excise duty had not been paid and Customs assessed D to excise duty under the Finance Act 1994 s.12 on the basis that because the goods had not arrived at their destination an excise duty point had arisen within the meaning of reg.4 of the 2001 Regulations and D was liable as guarantor under reg.7. D appealed against the assessments which had been made in two tranches. Before the VAT tribunal hearing, Customs presented a winding-up petition to recover the debt. D submitted that (1) it was an abuse of process for Customs to issue a winding-up petition while the appeal to the tribunal was pending; (2) it was arguable that for a number of reasons reg.4 of the 2001 Regulations did not apply so that the liability thereunder was disputed and a winding-up order should not be made.
(1) Customs' decision to petition for winding up while the appeal to the VAT tribunal was pending was not an abuse of process but was a factor that the court was entitled to take into account in exercising the discretion whether or not to make a winding-up order under the Insolvency Act 1986. (2) There were difficulties in interpreting the Directive and the 2001 Regulations. It was arguable that if a movement of goods never was intended to arrive at a tax warehouse in another Member State, there would not have been a duty suspended movement of goods. So far as the consignor of the goods was concerned that might mean that his liability arose as soon as the goods left the warehouse. But so far as a guarantor like D was concerned his liability only arose by virtue of reg.7 which only applied where an excise duty point arose under reg.3 or reg.4 and those regulations only applied where there was a duty suspended movement of goods. If there was no such movement, reg.7 could not apply and the guarantor could not be liable. D also had a substantial argument that reg.4 did not apply or was invalid as against D. Customs sought to rely on reg.3 if it could not rely on reg.4 but it would not be fair to make a winding-up order on a changed case. It was also arguable that part of the second tranche of assessments was out of time under s.12 of the 1994 Act since they had been issued after the end of the period of one year beginning with the day on which evidence of facts sufficient in the opinion of the commissioners to justify the making of the assessments came to their knowledge. D was entitled to dispute the debt on substantial grounds, but in any event the court would not have exercised its discretion to make a winding-up order because D was not complicit in the fraud and the assessment created a debt simply because Customs asserted that it was due without that assertion having been tested and because a winding-up order would close down D's business by imposing on it a debt a substantial part of which might not be due. The petition should not be adjourned but dismissed.