Euro Trade and Finance Ltd v Revenue and Customs (EXCISE DUTY APPEALS : Other) [2016] UKFTT 279 (TC)

FTT-Tax
Euro Trade and Finance Ltd v Revenue and Customs (EXCISE DUTY APPEALS : Other)
[2016] UKFTT 279 (TC) · 2015-05-06
[37][37] …Proportionality as a ground of review of national measures, on the other hand, has been applied most frequently to measures interfering with the fundamental freedoms guaranteed by the EU Treaties. Although private interests may be engaged, the court is there concerned first and foremost with the question whether a member state can justify an interference with a freedom guaranteed in the interests of promoting the integration of the internal market, and the related social values, which lie at the heart of the EU project. In circumstances of that kind, the principle of proportionality generally functions as a means of preventing disguised discrimination and unnecessary barriers to market integration …. ex parte Lumsdon (below)176. What is meant by ‘proportionality’?177. The view of the Supreme Court in ex parte Lumsdon was that although the CJEU may formulate the test of proportionality in the same way, in reality its application is different dependant on context and in particular the different contexts are: (1) Measures of EU institutions (§§40-49 of Lumsdon) (2)National measures derogating from fundamental freedoms (§§50-72 of Lumsdon) (3) National measures implementing EU measures (§§73-74 of Lumsdon).178. In this case, the legality of the Directive is not challenged. If it was, it would fall within (1) as a measure of an institution. In such a case,[40]“the legality of a measure adopted in that sphere can be affected only if the measure is manifestly inappropriate having regard to the objective which the competent institution is seeking to pursue.” R v Secretary of State for Health, Ex p British American Tobacco (Investments) Ltd and Imperial Tobacco Ltd (Case C-491/01) at [123] There was no suggestion that the Directive was manifestly inappropriate in its objective of controlling trade in duty suspended goods, and we are not aware of any grounds on which such a challenge could be made. 179. The test of proportionality for national derogations (category (2)) is harder to meet. The Supreme Court in Lumsdon adopted Advocate General Sharpston’s views: ‘Whilst it is true that a member state seeking to justify a restriction on a fundamental Treaty freedom must establish both its appropriateness and its proportionality, that cannot mean, as regards appropriateness, that the member state must establish that the restriction is the most appropriate of all possible measures to ensure achievement of the aim pursued, but simply that it is not inappropriate for that purpose. As regards proportionality, however, it is necessary to establish that no other measures could have been equally effective but less restrictive of the freedom in question.’ 180. So what is the test appropriate to category (3)? The Supreme Court said at [73]:[73]‘Member states must also comply with the requirement of proportionality, and with other aspects of EU law, when applying EU measures such as directives. As when assessing the proportionality of EU measures, to the extent that the directive requires the national authority to exercise a discretion involving political, economic or social choices, especially where a complex assessment is required, the court will in general be slow to interfere with that evaluation. In applying the proportionality test in circumstances of that nature, the court has applied a "manifestly disproportionate" test: see, for example, R v Minister of Agriculture, Fisheries and Food, Ex p National Federation of Fishermen's Organisations and Others (Case C-44/94) , para 58. The court may nevertheless examine the underlying facts and reasoning: see, for example, Upjohn Ltd v Licensing Authority established by the Medicines Act 1968 (Case C-120/97), paras 34-35.’ In other words, the category (3) test is similar to the category(1) test and therefore much easier to meet than the category(2) test. 181. We note that it is for HMRC to establish the proportionality of the measures they implement. In ANNET the CJEU said: …it should be noted that it is for the national authorities, where they adopt a measure derogation from a principle enshrined by European Union law, to show in each individual case that measure is appropriate for securing the attainment of the objective relied upon and does not go beyond what is necessary to attain it. The reasons invoked by a Member State by way of justification must thus be accompanied by an analysis of the appropriateness and proportionality of the measure adopted by that State and by specific evidence substantiating its arguments…. We therefore have to decide if HMRC have to meet the test for cases within (2) or(3) above before we can decide whether they have established proportionality. And the two tests are very different. So which test is it? WOWGR registration 182. In so far as it was the appellant’s case that the registration of traders in duty suspended goods was not a proportionate means of controlling trade in duty suspended goods, we reject it. Firstly, we reject it as the appellants have never clearly articulated their case on this and occasionally expressly stated that it was not a part of their case. Secondly, we reject it as, even though HMRC have the burden of proving this and even if it is the most strict test which applies (the least restrictive measure of equal effectiveness possible), we think that registration of traders in duty suspended goods must meet that criteria. Without registration, it would be impossible to exert any meaningful control whatsoever over trade in duty suspended goods with a view to preventing inwards and outwards diversion fraud. The supplier condition 183. What was really challenged was the actual conditions imposed on Euro Trade by HMRC in implementation of s 100G(4) CEMA. As we have already effectively said in our findings of fact, we consider that the supplier condition was not the least restrictive of equally effective methods of control of trade in duty suspended goods: the due diligence condition was less restrictive (and probably more effective) at achieving the same result of discouraging inwards and outwards diversion fraud (see §§110-123. 184. If the appropriate test of proportionality is (2) then the test is whether HMRC have shown that ‘no other measures could have been equally effective but less restrictive of the freedom in question’ and clearly HMRC have failed to establish that with the supplier condition. 185. Test (3) is easier to establish. Which test applies depends, as we have said on whether the Member State is derogating from a Treaty freedom or implementing a Directive. The strict (2) test applies to derogation from a Treaty freedom, the easier to meet ‘not manifestly inappropriate’ test (3) applies to implementing a Directive. 186. We only have to decide whether Test (2) or (3) is the appropriate test if the supplier condition passes the ‘not manifestly inappropriate’ test. In other words, if the supplier condition failed both tests, it would not matter which test applied. So we need to consider whether the supplier condition passes the ‘not manifestly inappropriate’ test. Was the supplier condition manifestly inappropriate? 187. The appellants framed their complaint about the supplier condition in terms: (a) The conditions were not imposed on all WOWGR holders; (b) Notice 196 did not specify the type of conditions that might be imposed and Euro Trade was taken by surprise by the conditions and/or did not consent to them; (c) The conditions were ineffective to counter fraud and/or went further than necessary. We consider them in turn. 188. Discriminatory ? There was evidence that there was discrimination in the issue of WOWGRs: the most obvious discrimination was that not all applicants would be given a WOWGR registration (eg Drinks was refused). And there was discrimination between WOWGR holders in that some holders would be subject to conditions and others would not. And the conditions would not necessarily be the same. 189. The question however is not whether there is discrimination but whether it was unfair. We heard no evidence that satisfied us that there was any unfairness. Mr Charlton gave evidence that there was a new policy in 2011 to apply conditions on ‘clean skins’ (new applicants for WOWGR) limiting them to customers/suppliers pre-approved by HMRC on their WOWGR. This did not apply to existing WOWGR holders as such persons already had a track record with HMRC. This seems a rational policy and we do not see how Euro Trade can complain. Persons in relevantly different situations were treated differently. 190. The appellants do complain. They say that they should have been granted unrestricted WOWGRS because Euro Trade and PPL were close companies with a common management, common premises, common employees etc. If PPL had an unrestricted WOWGR it made no sense, says the appellant, to restrict Euro Trade’s. This case is, of course, inconsistent with their case that Richard Hercules was not managing Euro Trade, but as we have rejected that case, we need to consider this discrimination point. 191. We consider there is nothing in it. If Euro Trade truly was carrying on exactly the same business as PPL under exactly the same management, there was no sense in it having a WOWGR at all if PPL had one. But by the time the Euro Trade’s WOWGR was reinstated with the conditions complained of, PPL no longer had a WOWGR and Euro Trade’s was only reinstated on the basis it had different management to PPL. Therefore, it was reasonable for HMRC to treat Euro Trade as a new company and impose conditions. Had HMRC known it had the same management (ie Richard Hercules) the WOWGR ought not have been reinstated at all, and for the reasons given at §97-98, we consider that that would have been the only reasonable decision HMRC could have reached. 192. Taken by surprise? Mr Shelley frequently complained that Euro Trade was taken by surprise by the conditions; PPL had no conditions on its WOWGR so Euro Trade did not expect conditions. While Notice 196 said that HMRC could impose conditions, it did not set out their new 2011 policy of imposing conditions on new applicants restricting the persons with whom they could trade. 193. Notice 196 provided at 2.1 that:
“Only persons who can demonstrate that they are fit and proper to carry out an excise business will be authorised or registered.” 194. Section 5 dealt with registration as an owner of excise goods in an excise warehouse. It stated that the guidance at 3.2 for warehousekeepers would be applied to applicants to be a registered owner as well. That guidance was: “Reasons for refusing an application my include circumstances where: · The legal entity (this includes the directors or any of its key employees) has been involved in revenue non-compliance or fraud; · The application is incomplete or inaccurate; · You (the directors in the case of a limited company) have unspent convictions; · There are proven links between the legal entity or key employees with other known non-compliant or fraudulent businesses; · The business is not commercially viable; · You have not been able to demonstrate the business is genuine; · The legal entity applying for authorisation has been involved in significant revenue non-compliance; · You are unable to provide adequate financial security as required; · You do not have an accounting system that satisfies us; · [irrelevant] The above list is not exhaustive….We will notify you of the reason or reasons for the refusal.”
The Notice also contained the following statements: “ 5.4 Conditions that may be applied to a registration All owners and duty representatives must comply with the conditions and restrictions detailed in this notice. In addition, we may apply specific conditions (for example, restrictions on the type of goods that can be warehoused) which we will list on your certificate of registration.” 5.6 Cancellation of registration We may cancel your registration at any time. If we do so, then we will inform you in writing and give our reasons for the cancellation….. 195. So far as the question of ‘fit and proper’ Euro Trade was clearly warned that directors and key employees must be fit and proper persons. It was warned that proven links with non-compliant businesses could lead to a refusal. 196. It was warned HMRC might impose conditions on a WOWGR. It was not warned in January 2012 of the specific type of conditions that might be imposed. However, it is difficult to see why the Euro Trade needed advance warning of the conditions, and, if it had been given it, how the company would have behaved differently as a result. 197. In closing Mr Shelley said that because the imposition of such conditions was not anticipated it had affected the business plan submitted. What we understood him to mean was that had Euro Trade anticipated HMRC would use its business plan as the basis for conditions, it would have ensured more suppliers were listed in the business plan. However, there are two answers to this. Firstly, Mr Shelley’s submission did not reflect the evidence in the case: there was no evidence that had Euro Trade anticipated the conditions it would have submitted a different business plan. Secondly, even if this were true, Euro Trade would only have itself to blame for submitting a business plan that did not in fact reflect its intended trading partners. 198. We reject any contention that the lack of warning of the imposition of the conditions was unlawful; in EU law terms we do not consider that that made the imposition of the conditions manifestly inappropriate. 199. We also note in a practical sense, that the breach of the conditions for which Euro Trade was penalised took place well after the grant of the original WOWGR with the original conditions back in January 2012; so there was nothing unexpected about the conditions at the time they were breached (late 2012/early 2013); moreover the conditions were in line with its business plan so any surprise that they were restricted to trading in accordance with their business plan should not have caused them difficulties. 200. It seems it was also part of the appellants’ case that the revocation was unlawful as unexpected. Mr Shelley relied on [47] of CC and C (above) . This was a case where a holder of a WOWGR which was revoked applied to the administrative court for interim relief (reinstatement of the WOWGR) pending an appeal to the tribunal against the decision revoking it. The Court refused to grant the relief but stated in [47] that HMRC’s practice of revoking WOWGR registrations without warning might in some cases amount to such unfairness that interim reinstatement of the WOWGR could be granted. The Court recommended HMRC consider issuing precursor letters indicating an intention to withdraw a WOWGR giving the appellant a chance to persuade them otherwise. 201. As we understand it, whatever HMRC’s practice after CC&C Ltd, it was not its practice to issue precursor letters before that case, and the facts in this appeal all took place before those in CC&C. If it is the appellant’s position that a precursor letter ought to have been issued and in lieu of such they were entitled to interim relief, then this is the wrong court in which to raise the matter. Only the administrative court has the jurisdiction to grant such relief. It is difficult to see whatever relevance [47] of CC&C has to this appeal as the Court of Appeal did not suggest the lack of a precursor letter could make the decision to revoke itself unreasonable. Indeed, that would be illogical. If the decision to revoke was otherwise unimpeachable, the fact it was imposed without warning could not make it impeachable. In any event, we find that HMRC did issue a warning that the WOWGR itself was under review in a letter to Euro Trade. 202. Conditions ineffective?: The appellant seemed to complain that the conditions per se would be ineffective to prevent fraud and that, in its particular circumstances, the conditions did not prevent fraud as HMRC had never even suggested that its trade with the additional 44 unauthorised suppliers would have led to excise duty evasion. There was no suggestion that the goods which were seized were part of a fraudulent supply chain. 203. But the question of the appropriateness of the supplier condition in combating fraud is not whether the particular transactions undertaken would have led to fraud, but whether the policy overall led to a decrease in fraud. Clearly a system of regulation where a breach of it could only be punished where fraud was proved would be no system of regulation at all. 204. And so far as we understand it, whether a measure is manifestly inappropriate has to be measured prospectively. It is no good looking back and saying with the benefit of hindsight that it didn’t work. The question is whether it was reasonable to expect that it would work. 205. In any event, Mr Charlton’s evidence was that the policy was successful. The concern addressed was persons who sought and gained WOWGR registration on the basis of a business plan which showed they would not be trading in risk areas; but who, once registered, commenced trading in risk areas. Restricting trade to suppliers/customers stated in the business plan was not a manifestly inappropriate method of dealing with this problem, particularly as traders were able to apply to increase the list of intended suppliers/customers. 206. We are in any event bound by authority, from the Court of Appeal in CC&C and the High Court in R (oao HT & Co (Drinks) & Anor) v HMRC [2015] EWHC 659 (admin) that registration for WOWGR is a privilege to be afforded only to those HMRC can trust not to abuse the privilege; in particular to be afforded only to those HMRC can trust not to use the privilege in such a way to risk evasion of excise duty by others.[50][50]….More significantly it misses the mark of recognising that maintenance of a 'privilege' (for that is what it is) requires the HMRC to repose in a trader a high degree of trust to ensure that trade is carried on in a way which minimises exposure to the Revenue of unlawful trade practice. A flawed understanding of the purpose of effective due diligence (see [27] above) may to some extent have wrongly fed the Claimants' sense that revocation of authorisation was, and is, disproportionate. HT “[42] ….The statue describes the right to trade in duty suspended goods as a privilege and the nature of the business is such that it is a privilege that should only be accorded to those whom HMRC believe they can trust….” C C and C In view of the unchallenged evidence from Mr Charlton of the scale of excise duty fraud, such an approach to regulation of trade in duty suspense does not appear to us to be manifestly inappropriate.207. Conclusion: We are satisfied for the above reasons that the supplier condition imposed on Euro Trade was not manifestly inappropriate for the purpose of implementing the public policy of decreasing excise duty fraud and in particular inwards diversion.208. As, however, we have found that it was not the least restrictive measure of equivalent effect, we must decide whether the supplier condition was implemented by the UK in implementing a Directive or was a derogation from a fundamental freedom, as the test for proportionality is different in these two different circumstances. In other words, the supplier condition fails test (2) but passes test (3) so we do have to decide which test is applicable. So does UK law under which the supplier condition was imposed implement a directive? The only directive suggested to us as relevant was the 2008 Directive and we move on to consider it. The 2008 Directive Was the 2008 Directive a breach of Art 34?209. It was not really a part of the appellant’s case that the 2008 Directive was unlawful. We see no grounds on which such a case could be advanced: even if the 2008 Directive involves a restriction on trade, its public policy (set out in its recitals and referred to at §170 above) gave justification within Article 36 and the test for proportionality, as set out in ex parte Lumsden (see above at §177) would look at whether the provisions were manifestly inappropriate. The appellant did not suggest that they were and we see no grounds on which such a suggestion could be made. Are traders in duty suspended goods regulated in the 2008 Directive?210. What regulation of traders in duty suspended goods was required or authorised by the 2008 Directive? Euro Trade did not operate a warehouse. It dealt in duty suspended goods and stored them in premises belonging to third party warehousekeepers with the appropriate licences.211. The recitals provide so far as relevant: Recitals - Excise Directive 2008/118/EC (5) In order to ensure free movement, taxation of goods other than excise goods should not give rise to formalities connected with the crossing of frontiers. …. (15) Since checks need to be carried out in production and storage facilities in order to ensure that the tax debt is collected , it is necessary to retain a system of warehouses, subject to authorisation by the competent authorities, for the purpose of facilitating such checks. (16) It is also necessary to lay down requirements to be complied with by authorised warehousekeepers and traders without authorised warehousekeeper status . (our emphasis)212. It would be odd for legislation to mention a purpose in the recital which was not then reflected in the active provisions. So, for instance, having mentioned authorised warehousekeepers in the recitals, the 2008 Directive then went on to lay down general rules for authorised warehousekeepers, such as Article 16 which provided, The opening and operation of a tax warehouse by an authorised warehousekeeper shall be subject to authorisation by the competent authorities of the Member State where the tax warehouse is situated. Such authorisation shall be subject to the conditions that the authorities are entitled to lay down for the purposes of preventing any possible evasion or abuse.213. But there is no mention in the body of the 2008 Directive of ‘traders without authorised warehousekeeper status’ other than in Recital (16). It seems to us that this is not a mistake; rather it reflects the later active provisions relating to movement of goods and consignors and consignees (Chapter IV Articles 17-31). Both parties were agreed that the appellants did not act as consignees and consignors. The definition of both (in Article 4) made it clear that consignors actually despatched goods moving in duty suspense and consignees actually received goods moving in duty suspense. Euro Trade never physically held the duty suspense alcohol it owned.214. So under what provisions of the 2008 Directive did the UK regulate traders in duty suspended goods, who simply bought and sold goods in duty suspense, holding them in tax warehouses? HMRC’s case (set out eventually in its third submissions post hearing) was that the 2008 Directive permitted member states to regulate traders in duty suspended goods in article 15. HMRC did not suggest any other article of the directive permitted or required regulation of traders in duty suspended goods. That article provided as follows: Article 15 1. Each Member State shall determine its rules concerning the production, processing and holding of excise goods , subject to this Directive. 2. The production, processing and holding of excise goods, where the excise duty has not been paid, shall take place in a tax warehouse. (our emphasis) HMRC’s case was that the use of the word ‘holding’ enabled the UK to regulate traders in duty suspended goods in that they were the persons who ‘held’ the goods in a tax warehouse.215. It is not obvious to us that the word ‘holding’ in this context was meant to authorise Member States to regulate traders in duty suspended goods.216. Firstly, having expressly mentioned ‘traders without authorised warehousekeeper status’ in the recitals, it would seem odd that drafters of the Directive would then intend the mere word ‘holding’ in the active clauses to set out the regulation of such traders, particularly as it was used in an article dealing specifically with regulation of tax warehouses. And as we have said, the later detailed provisions on consignees and consignors were probably those intended to reflect the reference to ‘traders without authorised warehousekeeper status’ in the recitals. The word ‘holding’ was not obviously intended to require or permit regulation of traders duty suspended goods.217. Secondly, even more significantly, the word ‘holding’ is the third in a sequence being ‘production, processing and holding’. These words appear to refer to physical actions rather than legal actions. So ‘holding’ is, it seems to us, likely to be concerned with the physical possession of the goods rather than the legal ownership of them. That fits with Art 15(2) which requires duty suspended goods in effect to be physically located in a warehouse. Art 15(2) would make no sense if it was to be read as saying legal ownership of duty suspended goods ‘shall take place in a tax warehouse’.218. And if ‘holding’ refers to physical possession rather than legal ownership, then it is inapposite to refer to traders in duty suspended goods. Such traders legally own the goods: they do not physically hold them as such goods must (as per Art 15(2)) be held in a tax warehouse.219. Weighed against this interpretation, we have accepted the evidence (XXX) that there is a real risk of some traders in duty suspended goods being complicit in excise diversion fraud because inwards or outwards diversion would normally require the complicity of such a trader. It may therefore be seen as surprising if the 2008 Directive did not give Member States a mandate to regulate such traders. Certainly HMRC’s submissions were that it would be absurd if the 2008 Directive was read as not authorising the UK to regulate such traders.220. UK case law on the issue? Moreover, we are bound to consider the recent case of R (oao HT & Co (Drinks) & Anor) where Cobb J said:[54][54] Article 15(1) of the 2008 Directive provides for each Member State to determine its own rules concerning the "production, processing and holding of excise goods" subject to the Directive. It is therefore for national systems of Member States to make judgements about the precise structures and systems that should be put in place to serve the objective of protecting the public revenue by detecting and controlling fraud under the 2008 Directive . The 2010 Regulations have introduced a penalty system enabling HMRC to seize goods, assess for excise duty and issue a penalty where there is evidence of wrongdoing.[55][55] For the purposes of this application, I reject the Claimants argument that the 1999 Regulations are ultra vires the 2008 Directive . It seems to me that the 1999 Regulations contain a regulatory regime which is entirely consonant with the objectives of the 2008 Directive ; … 221. That case was factually similar to the CC&C case (above) in that it was a judicial review action in which WOWGR holders which had their WOWGR revoked applied for injunctive relief and for permission to judicially review HMRC’s decision to remove their WOWGR status. It had some similarity to these appeals in that the WOWGRs were revoked for failure to adhere to conditions imposed on the WOWGRs. 222. The judge refused interim relief and refused permission for judicial review; applying CC&C, he appeared to be of the opinion that there had to be something fundamentally unlawful in HMRC’s actions before a judicial review action could be successful because Parliament had provided the FTT with supervisory jurisdiction over HMRC’s decisions in these sorts of cases. 223. Putting that aside, and although he only referred to the Warehousekeeper etc Regulations 1999 at this point, it seems that the Judge’s view was that UK law which permitted the imposition of conditions on WOWGR holders was not ultra vires the 2008 Directive. 224. Analysed carefully, we think that what the judge said here is not strictly on the point we have to decide. He concluded that the UK legislation controlling traders in duty suspended goods was not ultra vires the 2008 Directive but ‘consonant’ with its objectives. We have independently reached the same conclusion, see §219. What the Judge was not asked to address was whether the UK legislation controlling traders in duty suspended goods implemented the 2008 Directive. So we do not think the Judge expressed a view, binding or otherwise, that the UK legislation on traders in duty suspended goods implemented the 2008 Directive. 225. In any event, as this decision was one on an application for permission to bring a judicial review action, rather than on a judicial review itself, we think that the decision is not binding on us as the Judge did not purport to actually decide the points of law: rather he decided whether the appellant had an arguable case. This explains why the view stated was stated without reasons. 226. Can the question be referred? We note in passing that even if we had concluded that the Judge had decided that UK legislation implemented the 2008 Directive, we could nevertheless refer the question to the CJEU. The effect of the European Communities Act 1972 is that this Tribunal is bound to give effect to EU law as explained by the CJEU. EU law is that national laws, even the doctrine of stare decisis and precedent (the law that means this tribunal is bound by the decisions of courts of record, such as the Administrative Division of the High court in which the HT & Co application was decided) are themselves subordinate to EU law. The CJEU said in Elchhinov C-173/09: [25]…the existence of a rule of national procedure such as that applicable in the case in the proceedings cannot call into question the discretion of national courts not ruling at final instance to make a reference to the court for a preliminary ruling where they have doubts, as in the present case, as to the interpretation of European Union law. [26] It is settled case law that art 267 TFEU gives national courts the widest discretion in referring matters to the court if they consider that a case pending before them raises questions involving interpretation of provisions of EU law, or consideration of their validity, which are necessary for the resolution of the case…National courts are free to exercise that discretion at whatever stage of the proceedings they consider appropriate… … [31] In addition, it is appropriate to point out that in accordance with settled case law, a national court which is called upon, within the exercise of its jurisdiction, to apply provisions of European Union law, is under a duty to give full effect to those provisions, if necessary refusing of its own motion to apply any conflicting provision of national legislation, that is to say, in the present case, the national procedural rule set out in para 24 of this judgement, and it is not necessary for the court to request or await the prior setting aside of that national provision by legislative or other constitutional means… Nevertheless, this Tribunal is bound by the interpretation of CJEU judgments given by courts of record and the Upper Tribunal in S & I Electronics [2012] UKUT 87 (TCC) said that what Chadwick LJ said in the earlier Conde Nast case [2006] EWCA Civ 976 is good law even though it preceded what the CJEU said in Elchinov: [17] Mr Patchett-Joyce observed that Chadwick LJ did not have available to him the subsequent decisions of the ECJ in cases such as Skatteverket v Gourmet Classic Ltd (Case C-458/06), Kücükdeveci v Swedex Gmbh & Co KG (Case C- 555/07), and Elchinov v Natsionalna zdravnoosiguritelna kasa (Case C- 173/09). We do not think, however, that these cases undermine what Chadwick LJ said in the Condé Nast case. 227. And in the Conde Nast case Chadwick LJ had said: “[44] I am content to assume that there may be circumstances in which the obligation imposed on courts by s 3(1) of the European Communities Act 1972 would require this court to refuse to follow its own earlier decision as to the meaning and effect of a Community instrument—including, in the present context, the effect of a judgment of the Court of Justice. Those circumstances would, I think, include a case in which the judgment of the Court of Justice under consideration by this court in the earlier case had been the subject of further consideration—and consequent interpretation, explanation or qualification—by the Court of Justice in a later judgment. But, as it seems to me, one constitution in this court should not substitute its own view as to the effect of a judgment of the Court of Justice for the view which has been reached by another constitution in this court in an earlier case on consideration of the same judgment in circumstances in which there has been no opportunity for the Court of Justice to review that judgment. In those circumstances, if persuaded that there are strong grounds for thinking that the earlier decision is wrong (as a matter of Community law) this court may think it right to refer the point to the Court of Justice for a preliminary ruling. Or it may follow the earlier decision and give permission to appeal. But it should not refuse to follow the earlier decision merely because, on the same material and the same arguments, it is satisfied that a different conclusion should have been reached. [45] The need for a disciplined adherence to precedent in a comparable (but not precisely analogous) field was emphasised by Lord Bingham of Cornhill (with whom the other six members of the House expressly agreed on this point) in his speech in Lambeth London Borough Council v Kay; Price v Leeds City Council [2006] UKHL 10 at [40]–[45], [2006] 2 WLR 570 at [40]–[45]. After referring to the observation of Lord Hailsham of St Marylebone LC in Broome v Cassell & Co Ltd [1972] AC 1027 at 1054, that ‘in legal matters, some degree of certainty is at least as valuable a part of justice as perfection’, Lord Bingham said this (see [2006] 2 WLR 570 at [43]): ‘[43] ... That degree of certainty is best achieved by adhering, even in the Convention context, to our rules of precedent. It will of course be the duty of judges to review Convention arguments addressed to them, and if they consider a binding precedent to be, or possibly to be, inconsistent with Strasbourg authority, they may express their views and give leave to appeal, as the Court of Appeal did here. Leap-frog appeals may be appropriate. In this way, in my opinion, they discharge their duty under the 1998 Act. But they should follow the binding precedent, as again the Court of Appeal did here.’” 228. The effect of all this is that if what Cobb J had said in HT & Co was a binding ruling that UK legislation implemented the 2008 Directive, then (bearing in mind that that is not the view we would have taken otherwise) we would have two options:(a) Refer the matter to the CJEU(b) Follow Cobb J but give permission to appeal. 229. However, as we have said, that is all by the way, as we do not consider that Cobb J did make a binding ruling to that effect. So we do have a third option of deciding the matter against HMRC. We consider whether the issue should be referred to the CJEU. 230. Should the question be referred? Both parties considered that a reference was unnecessary as the law was clear, but of course took diametrically opposing views on what the law was. 231. Neither party addressed us on the rules on when to make a referral but they are well known. Whether an EU point of law should be referred depends on Art 267 of the Treaty which provides: “Where such a question is raised before any…tribunal of a Member State, that ...tribunal may, if it considers that a decision on the question is necessary to enable it to give judgment, request the Court to give a ruling thereon.” 232. Not all questions of European law should be referred. In the well-known case of Ex parte Else [1993] QB 534 the Court of Appeal ruled: “if the facts have been found and the Community Law issue is critical to the court’s final decision, the appropriate course is ordinarily to refer the issue to the Court of Justice unless the national court can with complete confidence resolve the issue itself….If the national court has any real doubt, it should ordinarily refer.” 233. What is meant by ‘complete confidence’ and ‘any real doubt’? The Court of Appeal in the later case of Littlewoods Organisation plc [2001] EWCA Civ 1542 said: “…A measure of self-restraint is required on the part of the national courts, if the Court of Justice is not to become overwhelmed…. …[a] development which is unquestionably significant is the emergence in recent years of a body of case-law developed by this court to which national courts and tribunal can resort in resolving new questions of Community law. Experience has shown that, in particular in many technical fields, such as customs and value added tax, national courts and tribunals are able to extrapolate from the principles developed in this court’s case law. Experience has shown that the case-law now provides sufficient guidance to enable national courts and tribunals – and in particular specialised courts and tribunals – to decide many cases for themselves without the need for a reference…” 234. We were referred to many cases by the appellants and HMRC in their submissions not all of which we have referred to in this decision on the basis that they were of no assistance: we are unaware of an authority (apart from HT & Co) in which the question of whether the 2008 Directive authorises or requires Member States to regulate traders in duty suspended goods was even considered. While we are inclined to agree with the appellants that it does not, we do not think the matter acte clair and we do consider it essential to at least a part of our decision because the appropriate test for proportionality is critical to this appeal and depends on whether the UK rules are a derogation from the Treaty or an implementation of a Directive. We cannot resolve it with complete confidence, and while we recognise the need for self-restraint in making referrals, this point is a fairly fundamental one of importance to this appellant. 235. So we consider the question of whether the UK legislation imposing a registration regime with conditions on traders in duty suspended goods was in derogation from the Treaty or in implementation of the 2008 Directive ought to be referred; as that is being referred it seems right at the same time to leave it open to the CJEU to consider also (a) whether the supplier condition was a breach of Art 34 and if it was whether it was justified under Art 36 (although our preliminary conclusion as we have said is ‘yes’ to both); and (b) what is the correct test of proportionality for this Tribunal to apply. 236. The exact terms of the reference will need to be determined and we will issue directions separately on this. How does the decision to refer leave this appeal? Conclusions on Euro Trade’s and Drinks’ appeals The Commissioners’ Direction 237. There were two Commissioners Directions, one issued to Seabrooks and one issued to BWA. The effect of the Directions were that the warehouses were unable to allow any of the goods stored by Euro Trade to be removed in duty suspense without HMRC’s written permission. 238. The officer who took the decision was Ms Sue Holmes. The appellants did not challenge her evidence and she was not therefore called; we have relied on the factual matters stated in her witness statement. In particular, it was her evidence that she imposed the Commissioners’ Directions because she had been informed by other HMRC officers that Euro Trade had operated outside the terms of the conditions on its WOWGR. 239. It remained open to the appellants to challenge her decision on the law and that is what they did: it was their case that the conditions were unlawful. 240. We are therefore unable to resolve this aspect of the appeal without a reply from the CJEU to the referral. It follows that if the CJEU rule that the correct test for proportionality is whether the supplier condition was manifestly inappropriate, or that the supplier condition was not a breach of Art 34, in our view the appeal against the Commissioners Directions must be dismissed. But if the CJEU rule that the supplier condition was not justified, or the test for proportionality is the ‘least restrictive measure’ then the appeal against the Commissioners Directions must be allowed because the officer’s decision would have been erroneous in law as it is not unlawful to breach unlawful conditions. The refusal to restore 241. We note in passing that this Tribunal only has jurisdiction to consider a refusal to restore where that decision has been reviewed by HMRC: in this case there appears to have been no review, but a review was requested, and therefore there is by statute a deemed review, upholding the original refusal. The decision to refuse to restore was taken by an officer Blackburn. He did not give evidence. 242. We find the seizure and refusal to restore were made on the grounds that the suppliers of all the goods held stored at the two warehouses were purchased from suppliers not authorised by Euro Trade’s WOWGR. It is accepted by the appellants that all the goods seized had been purchased by them in breach of the conditions on Euro Trade’s WOWGR due to the purchases being from suppliers with whom Euro Trade was not authorised to trade. 243. The appellants’ case was that the conditions were unlawful and therefore the seizure unlawful. The position is the same as with the Commissioners Directions in that we cannot resolve that aspect without a ruling of the CJEU. 244. However, the appellants also put the case that seizure amounted to a £58,000 penalty for breaching conditions. This was on the basis of evidence that the seized goods were worth about £58,000. The appellants consider that, even if the conditions were lawful, HMRC ought to have offered restoration subject to payment of duty. Euro Trade had indeed made this offer to HMRC at the time of the seizure and was aggrieved HMRC did not accept it. 245. On the assumption that the conditions were lawfully imposed and unlawfully breached, we consider that in view of the fact that the goods were purchased in duty suspense without any authority to do so (as it was outside the WOWGR conditions) that it would have been unreasonable for HMRC to have restored the goods per se. We also agree that it was reasonable to refuse to restore the goods even subject to payment of the duty on them. This is because seizure is intended to be a penalty: the rules do not provide that persons who have not paid proper excise duty (such as bringing in goods in duty suspense without authority to do so) can keep their goods as long as the duty is paid. On the contrary, the rules provide for the goods to be seized. The purpose of that rule is not that proper excise duty is paid on that particular importation but to ensure that excise duty is paid on other importations: it is a penalty imposed to encourage obedience to the law. It would lose all force as such if this Tribunal regarded it as unreasonable to refuse restoration if the appellant offered to pay the duty. It would, in fact, encourage bringing in goods without payment of proper duty as such a ruling would mean no risk would be run by the taxpayer as the worst that would happen is the taxpayer, if caught, would have to pay the duty he was liable to pay anyway. 246. So if the conditions were lawfully imposed, we would find that it was reasonable to refuse to restore even though the appellant offered to pay the duty. 247. Secondly, even if the conditions were lawfully imposed, Mr Shelley relied on the case of Rogers [2004] UK E 00773 to suggest that HMRC’s actions so extreme that they lacked proportionality and were unreasonable. The facts in that case were very different; in that case the Tribunal considered the refusal to restore not merely harsh but plainly unfair and applied Roth [2002] EWCA Civ 158 . We cannot accept that the same criticism can be levied here: on the assumption that the conditions were lawfully imposed, the goods were knowingly purchased in breach of Euro Trade’s WOWGR. No sensible explanation has been given for this. A system of regulation cannot work if the flouting of regulations is not punished. Indeed, in view of the wholesale nature of the breaches in that every purchase was in breach of the conditions, it would be fair to say that the company knowingly flouted the conditions. HMRC’s decision to refuse to restore, if the conditions were lawfully imposed, was in our view entirely reasonable. 248. So that leaves us in the same situation with the Commissioners Directions: the outcome of the appeal against the refusal to restore depends entirely on the point of law we are referring to the CJEU. Were the conditions lawfully imposed and unlawfully breached or lawfully imposed and unlawfully breached? If the latter, the appeal on the restoration must be dismissed; if the former, the appeal must be allowed on the basis HMRC’s decision not to restore was vitiated by a fundamental error of law (even though the seizure must be deemed lawful). HMRC would have to reconsider their decision. The refusal to amend the conditions on the WOWGR 249. Mr Charlton took the decision to refuse Euro Trade’s application for an extra 44 or so suppliers to be added to its WOWGR as approved suppliers. The ground on which he made this decision was that Euro Trade was in breach of its existing conditions. 250. Again, this decision would be unreasonable in the sense based on an error of law if the condition Euro Trade had breached was unlawful. We need the decision of the CJEU to finally determine this issue. 251. Are there any other grounds on which it could be said Mr Charlton’s decision was unreasonable so that the appeal should be allowed even if the supplier condition was lawful? 252. During the hearing, the appellants formulated a case that Mr Charlton’s decision was unreasonable because he was not an officer previously involved in Euro Trade’s interactions with HMRC and was not familiar with the case. In particular, Mr Charlton admitted that he had not seen all the correspondence between Euro Trade and HMRC on the matter of the WOWGR at the time he took the decision. Mr Charlton was shown the correspondence previously unseen by him and stated that he would not have reached a different conclusion had he known of it at the time. We have reviewed the unseen correspondence and also consider that there was nothing in it which could reasonably have caused the officer to reach a different conclusion (on the assumption that the condition had been lawfully imposed). 253. Mr Shelley was asked in closing to state what factor he thought would have caused Mr Charlton to reach a different conclusion had he known of it. Mr Shelley did not give us a precise answer other than to indicate the ‘situation’ in general and that (in his view) the application to amend to add additional suppliers had been outstanding for 18 months. 254. On the assumption that the conditions were lawful, we do not consider that there was anything in Euro Trade’s situation that justified a breach of its WOWGR conditions , nor justified the granting of the extended conditions despite the breach of its WOWGR conditions. In particular, while Euro Trade had made earlier applications to extend its conditions, these were overtaken by the first revocation of its WOWGR. The new WOWGR was granted on 15 th October 2012 but with effect from 29 August 2012, the day on which it was removed. Shortly thereafter, in November 2012 Ian Hercules applied to HMRC for more authorised suppliers to be added, and then in January it applied for another 44 suppliers to be authorised. Euro Trade was told that it needed to supply evidence of intent to trade. It found it difficult to provide this but agreed with Ms Ames that its application should be held pending it supplying this for all 44 proposed suppliers. The credibility visit to Euro Trade was made on 1 March. 255. While Mr Shelley’s point might be that Euro Trade had been consistently seeking to add more suppliers to its authorisation, we consider that the above history of events explain why some 16 months elapsed between the original application in January 2012 and the refusal in May 2013 of the one made in January 2013. In any event, we agree with HMRC that an application to amend the WOWGR conditions immediately after the grant would rightly cause concern as it would indicate that applicant was not operating as stated in its business plan. 256. In short, there is nothing in the history which would have been really relevant to Mr Charlton’s decision; his failure to consider the entire history did not therefore make his decision flawed. 257. It was also Euro Trade’s contention that if the additional 44 suppliers had formed a part of its original business plan, HMRC would have been content to include them on its WOWGR. We accept that that might be true but we do not know: presumably it would depend on whether HMRC were satisfied with this hypothetical business plan, with the due diligence on the 44, with the evidence of intent to trade and so on. But the submission misses the point. And that is that the 44 suppliers were not on the business plan, were not on the WOWGR and Euro Trade knowingly traded with them in breach of its WOWGR. 258. As has been said, a grant of a WOWGR is a privilege granted to those whom HMRC trust to trade in such a manner that the risk of excise evasion is minimised. Trading in breach of the conditions on its WOWGR inevitably erodes HMRC’s trust; a refusal to extend the trader’s WOWGR in such circumstances is a reasonable decision. 259. Mr Charlton mentioned in his evidence that Euro Trade had agreed to the conditions that it had later breached; part of the appellants’ challenge was that (a) Euro Trade had not agreed to the conditions and that (b) had Mr Charlton known this he would have reached a different conclusion. 260. We agree that Mr Charlton’s statement that Euro Trade had agreed to the conditions may be putting the matter a little high; but it was clear that the conditions were in line with the business plan put forward by Euro Trade and that at the pre-credibility meeting the plan would have been discussed with Euro Trade. Bearing in mind Euro Trade’s systematic flouting of conditions which were well known to it, even if Mr Charlton had thought that Euro Trade was originally entirely taken by surprise by the imposition of the conditions, he must reasonably he must have come to the same conclusion not to extend the WOWGR. Even if Euro Trade was taken by surprise by the imposition of conditions, it never appealed them. A company which did not abide by lawful conditions imposed on it was not a company, it seems to us, that HMRC could reasonably trust with a WOWGR registration. 261. Therefore on the assumption that the supplier condition was lawfully imposed and unlawfully breached, we consider Mr Charlton’s decision not to extend the WOWGR to additional suppliers was reasonable at the time it was taken, and accept that his decision would have been the same even if he had seen the unseen correspondence. 262. Whether it was erroneous in law depends on the answer from the CJEU. The revocation of Euro Trade’s WOWGR 263. The decision to revoke Euro Trade’s WOWGR was made by Mr Singh on 13 December 2013. 264. The basis of the decision was the breach of the conditions. As has been said, a grant of a WOWGR is a privilege granted to those whom HMRC trust to trade in such a manner that the risk of excise evasion is minimised. Trading in breach of the conditions on its WOWGR inevitably erodes HMRC’s trust; a revocation of the WOWGR in such circumstances is a reasonable decision. 265. Moreover, even if the supplier conditions was unlawfully imposed, we would not overturn this decision as it seems to us, were HMRC to consider the decision again, even if the CJEU rules the supplier condition unlawful, then HMRC must come to the same conclusion. And this is because they ought to take all relevant matters into account, and those matters are those that we have found they should have taken into account in respect of Drinks, as the position of the two companies was effectively the same. In particular: (1) Ian Hercules was the director of Euro Trade and he was not a fit and proper person to be a director of a company holding a WOWGR for the reasons stated at §91-93; (2) Euro Trade was to a significant extent influenced and controlled by Richard Hercules (see §§51-58). We find for the reasons given at §58 more likely than not he was the guiding mind of the company, although he had ceased to be a director, and for the reasons given at §§65-98 he was not a fit and proper person to be the equivalent of a director or key employee of a company holding a WOWGR. We further explain our conclusions below in relation to Drinks. 266. In other words, whatever the outcome of the reference to the CJEU, it would make no difference to our conclusion that the appeal against the revocation of Euro Trade’s WOWGR must be dismissed. The refusal to grant Drinks a WOWGR 267. The letter refusing to grant Drinks a WOWGR was dated 13 December 2013. It was rather long. The officer who took the decision was Mr Singh. He explained in detail his reasons for the refusal which we summarise as follows: (1) The involvement of Richard and Ian Hercules and Amanda Nokes in Cellars. Mr Singh’s letter listed the matters of non-compliance which we have discussed at §§91-93. (2) He considered that Richard Hercules was the ‘guiding mind’ behind Drinks and that he was not a fit and proper person to be in such a position to a company with a WOWGR. (3) Mr Ian Hercules was the director of Euro Trade which had traded in breach of its WOWGR 268. Whether the third reason listed above was right in law depends on the answer from the CJEU. But as with Euro Trade’s revocation, we consider that even if Mr Singh’s decision was in part based on an error of law, that the appeal should not be allowed because HMRC must inevitably make the same decision if required to reconsider the matter taking into account that error if that is what the CJEU determine it to be. 269. This is because of the matters listed at (1) and (2) above. We explain this in detail. 270. So far as point (2) is concerned, we do not consider there to be anything in the main wrong with Mr Singh’s decision. The reasons he gave for considering Mr Richard Hercules to be the guiding mind were in summary: (1) Richard Hercules was funding the business with his £50,000 loan and Ian Hercules was not putting any funds into the business; (2) Richard Hercules was an authorised signatory on the bank account; (3) Richard Hercules attended the meetings with HMRC and answered the ‘difficult’ questions; (4) Richard Hercules owns PPL which employs Ian Hercules and Amanda Nokes and provides any other employees to Drinks; Richard Hercules owns the premises occupied by Drinks. (5) Retained profits in Drinks would go to Richard Hercules; Drinks’ director takes no dividend or income from Drinks. (6) Drinks was intended to continue the business of PPL, owned by Richard Hercules. 271. Our views on these matters are as follows: (1) We agree that Richard Hercules was the only person who was to invest in Drinks, via his loan which would only pay interest out of profits and the provision of staff (via PPL) and premises; (2) We agree with HMRC that Richard Hercules being a signatory was a factor which could be taken into account for reasons stated at §63; (3) We agree that the evidence shows that Richard Hercules answered most of the significant questions about the business and its excise compliance; (4) The appellants’ position was that retained profits would not go to PPL; however, we do not accept that. The way in which the business was established meant that Drinks would owe an unspecified amount in management charge to PPL and rent to Richard Hercules. Bearing in mind the loan was to pay interest dependant on the amount of profit made, it seems more likely than not that that was what would happen with the management charge and rent. Most significantly we are unable to accept the appellants’ case that Richard Hercules was handing over control of the business to his son, for the reasons explained at §§59-64. (5) As above. (6) This was not in dispute. 272. Fundamentally, it was the appellants’ case that Richard Hercules had built up the business of PPL over many years, and now, approaching 70 years of age, was ready to hand over the business to his son Ian and retire. Messrs Hercules were entirely open about the intention for Euro Trade and Drinks to take over the business of PPL, once PPL lost its WOWGR. In that sense, Drinks was intended to be a ‘phoenix’ company. 273. They saw nothing wrong in trying to preserve the profitable duty suspended business of PPL in another company once PPL was unable to continue with it due to the loss of its WOWGR, and they are of course right in that. The concern surrounds the question of who would be operating the new company: was that person suitable to trade in duty suspended goods? 274. Richard Hercules was not a fit and proper person (see §§65-98) and we concur with Mr Singh’s conclusion that he would have been the controlling mind behind Drinks for all the reasons given above. Added to what Mr Singh said in his December 2013 letter, we found from the evidence at the hearing that, despite Ian Hercules being the sole director of Euro Trade, he permitted his father to make the decisions on what to purchase, which he agreed was the heart and soul of the business. He permitted Richard Hercules to be at the heart of Euro Trade and it is only reasonable to suppose that the same situation would have existed with Drinks, especially as in reality Richard Hercules was the major investor in it. 275. We would also add that we have found that Ian Hercules was not a fit and proper person to hold a WOWGR so even if Mr Singh had concluded that Richard Hercules’ involvement was less than it was, we do not consider that his conclusion could reasonably have been any different. 276. These considerations at point (2) alone dictate that the only reasonable course of action for HMRC was to refuse Drinks’ application for WOWGR status. 277. We now deal with Mr Singh’s first reason for refusing the WOWGR, which was the involvement with Cellars. As we have already said, Mr Singh took some incorrect considerations into account in reaching this part of the decision (§93(1)). So far as Cellars was concerned, Ian Hercules, we find, had no responsibility for the various breaches. Moreover, in so far as Richard Hercules and Amanda Nokes were concerned, the breaches were not anywhere near as serious as represented. In particular, Cellars did not owe HMRC over half a million pounds in unpaid assessments. And while we have accepted there was an assessment to some £18,000 in VAT (§93(2)), there was no claim by HMRC that this was unpaid. 278. Mr Singh’s evidence was that he would have come to the same conclusion even if he had known the matters in the previous paragraph: we do not need to consider whether the Cellars’ compliance record by itself was enough to disqualify Richard Hercules and/or Amanda Nokes from being a directing mind/key employee with a company with a WOWGR nearly a decade later because it seems to us that point (2) alone meant that HMRC ought to have refused Drinks’ WOWGR status. The non-compliance by Cellars may well have been an additional reason: whether it would have justified it alone is not relevant. 279. The appellants are aggrieved; they say PPL’s profitable business is effectively destroyed as HMRC will not permit it to be transferred to another company; but that is wrong. PPL’s business could have been transferred to another company, but for that company to obtain a WOWGR it needed to be a company that which not controlled by Richard Hercules or Ian Hercules and instead was controlled by someone who was fit and proper to be in control of a company with a WOWGR. Overall conclusion 280. The appeals against the revocation of Euro Trade’s WOWGR and the refusal to grant Drinks a WOWGR are dismissed, irrespective of the outcome of the referral to the CJEU. That means Drinks’ appeal is dismissed in its entirety. The status of other three appeals by Euro Trade depend on the outcome of the reference to the CJEU. Footnote - Admissibility of certain witness statements in evidence 281. At the outset of the hearing, the appellants objected to HMRC’s reliance on two witness statements. In neither case did HMRC intend to call the witnesses. 282. The first witness statement was a statement served by Mr Shelley in PPL’s MITC appeal. Mr Shelley was the appellants’ long standing adviser and was their representative in this appeal. It was relied on by HMRC as evidence that the witness evidence contained certain statements. 283. The second witness statement was a statement served by an HMRC officer, Mr White, also in the PPL MTIC. It was relied on for the truth of what was stated in it. It was relied on because it was HMRC’s contention it was the cause of or at least a factor in the withdrawal of the PPL MTIC appeal. It was Mr McGurk’s position that Mr White, now retired, did not need to be called because the appellants did not dispute the truth of it. 284. The appellants objected to both being admitted. We were referred to CPR 31.22. Our decision was that this CPR was not binding in this Tribunal but we should have regard to the underlying purpose of the rule. We considered that the purpose of the rule was to protect witnesses against unanticipated use of their evidence and documents in proceedings other than those in which they were served. 285. However, whilst the current proceedings were different proceedings than those in which the two statements were served, in practice the parties were the same; HMRC on one side and companies which were or had been controlled by Mr R Hercules on the other. Moreover, Mr White’s statement was originally served in support of HMRC’s case and was still being used in support of HMRC’s case, just in different proceedings. In any event, in so far as the two statements were relied on as a fact of what was said in support of the earlier proceedings, rather than the truth of it, there was no reason to keep the statements out. It was a fact that they had been served in the other proceedings and excluding that evidence would effectively deny that fact, which was not justice. 286. For this reason, as Mr Shelley’s statement was only relied on by HMRC to prove the fact that it was served in the form it took, we saw no reason to keep it out. In the event, HMRC relied on Mr Shelley’s statement to show that passages in it were identical to passages in Mr Richard Hercules’ statement made some years later in this appeal. The appellants did not deny this: Mr Shelley agreed that he had cut and pasted a section from his earlier statement into Mr Richard Hercules’ statement, and Mr Richard Hercules agreed that that had been done and he had signed it. We understood Mr Hercules considered the passages to be accurate and we make no adverse findings against the appellants on the basis that these paragraphs were taken verbatim from Mr Shelley’s earlier statement. 287. Mr White’s statement was relied on as evidence of the truth of what it contained, and in the absence of Mr White, we saw no reason to admit his evidence. So we said HMC could rely on it as evidence of the fact his statement was served but not as evidence of the truth it contained. If they had wanted to do that they ought to have called Mr White. However, they were entitled to put the contents of the statement to the appellants’ witnesses in cross examination to see if it was denied or accepted. This was done and our findings are recorded at §§80-87. 288. This document contains full findings of fact and reasons for the decision. Any party dissatisfied with this decision has a right to apply for permission to appeal against it pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009. The application must be received by this Tribunal not later than 56 days after this decision is sent to that party. The parties are referred to “Guidance to accompany a Decision from the First-tier Tribunal (Tax Chamber)” which accompanies and forms part of this decision notice. BARBARA MOSEDALE TRIBUNAL JUDGE RELEASE DATE: 25 APRIL 2016

Cited in 5 later judgments