Garrett Trading Ltd v Revenue & Customs Commissioners (E01061) (2007)


Where alcohol removed from a tax warehouse had never left the United Kingdom excise duty was payable by the owner of the goods as the person who had guaranteed payment of the duty. In the circumstances the owner had not caused the occurrence of the excise duty point or the irregularity and was not involved in the fraud.


The appellant company (G) appealed against a decision on review upholding assessments to excise duty and against an assessment to VAT made on the same date on goods removed from a warehouse. G’s case in relation to the three assessed transactions was that it had bought vodka and whisky stored in a tax warehouse from an English company and sold them to a Portuguese company, which had requested G to ship the alcohol to a tax warehouse in Germany under a duty suspended movement. The transport was provided by an Austrian company, which subcontracted it to an English company whose director (M) drove two of the loads, the third being driven by an employee. M's evidence was that they had swapped trailers with another lorry in Calais that took the alcohol to Germany while he returned with a different trailer carrying bottled water under a contract with a French company; normally he travelled out to France to collect the water with an empty trailer, but on these occasions he had taken G’s goods, although for security reasons he declared the trailer as being empty to the ferry company. The respondent commissioners’ case was that the goods never left the UK and were split up into smaller loads and sold on the black market in the UK. G contended that the documentary evidence in the form of the receipted accompanying administrative documents showed that the goods had been received and that the decision to assess constituted an interference with G's rights under the European Convention on Human Rights 1950 Protocol 1 Art.1. The commissioners submitted that G's case about the manner in which the goods were transported and its pattern of trading were implausible and that G, by arranging for goods it owned to be taken away from the UK tax warehouse, loaded onto a lorry and driven away, had caused the occurrence of the duty point, namely the departure of the goods from the suspension arrangement, by, at the lowest, making goods available for diversion and acquiescing in that diversion.


1) The tribunal did not accept M’s evidence that he parted with the trailer to an unnamed driver in Calais. The story was improbable without any evidence of the identity of the driver or the lorry that took over the trailer or of mobile telephone records of his contacting the driver. The Austrian transport company did not give details of the change of vehicle either. The tribunal preferred the ferry company's records that the trailer went to France empty on each occasion. No satisfactory explanation had been given about why the trailers were collected 12 miles from the UK warehouse. On the evidence the excise goods in the three assessed transactions did not leave the UK. (2) For the purposes of Council Directive 92/12, on the basis of the finding of fact that the goods did not leave the UK, there had been an irregular departure from a suspension arrangement, which was accordingly a release for consumption in the UK within Art.6(1)(a) of the Directive, Greenalls Management Ltd v Customs and Excise Commissioners (2005) UKHL 34, (2005) 1 WLR 1754 applied. Accordingly, there had been an irregularity within Art.20 of the Directive that must have occurred in the UK. Duty was accordingly payable in accordance with Art.20 by the person who guaranteed payment of the duty in accordance with Art.15, which in the instant case was G as owner. The result was the same in domestic law. Under the Excise Duty Points (Duty Suspended Movements of Excise Goods) Regulations 2001 reg.3 an irregularity occurred in the UK and the excise duty point was the time the irregularity occurred or when it first came to the commissioners' attention. By reg.7 the person liable to pay was the person who was shown in box 10 of the accompanying administrative document as having arranged the guarantee, which was G. G was jointly and severally liable with the person who caused the occurrence of the excise duty point, if that person could be identified. The liability of the guarantor to excise duty was strict unless the exception in Art.14 of the Directive applied, which it did not. (3) G's guarantee was limited to £50,000 and the tribunal was prepared to assume that the liability of a person, liable solely on the basis that it arranged the guarantee, was limited to the guarantee amount. G had not caused the occurrence of the excise duty point or the irregularity. G was not involved in the fraud and had not been negligent. (4) The liability to VAT followed the excise duty liability and was payable by G as the person by whom the goods were removed from the warehouse. (5) In respect of the claim under the Human Rights Convention the exception for "conditions provided by law" was applicable.

Appeals dismissed