“7A Duty not to facilitate smuggling (1) A manufacturer of cigarettes or hand-rolling tobacco shall so far as is reasonably practicable avoid— (a) supplying cigarettes or hand-rolling tobacco to persons who are likely to smuggle them into the United Kingdom, (b) supplying cigarettes or hand-rolling tobacco where the nature or circumstances of the supply makes it likely that they will be resupplied to persons who are likely to smuggle them into the United Kingdom, or (c) otherwise facilitating the smuggling into the United Kingdom of cigarettes or hand-rolling tobacco.”
“(2) In particular, a manufacturer— (a) in supplying cigarettes or hand-rolling tobacco to persons carrying on business in or in relation to a country other than the United Kingdom, shall consider whether the size or nature of the supply suggests that the products may be required for smuggling into the United Kingdom, (b) shall maintain a written policy about steps to be taken for the purpose of complying with the duty under subsection (1), and (c) shall provide a copy of the policy to the Commissioners on request. (3) In this section a reference to smuggling products into the United Kingdom is a reference to importing them into the United Kingdom without payment of duty which is— (a) chargeable under section 2, and (b) payable by virtue ofsection 1(1) of the Finance (No 2) Act 1992 (c 48) (power to fix excise duty point).”
“(4) The Commissioners may notify a manufacturer in writing that they think the risk of smuggling into the United Kingdom is particularly great in relation to— (a) products marketed under a specified brand name; (b) products supplied to persons carrying on business in or in relation to a specified country or place. (5) The Commissioners may by notice in writing require a manufacturer of cigarettes or hand-rolling tobacco to provide, within a specified period of time, specified information about— (a) supply of products marketed under a brand name specified under subsection (4)(a); (b) supply to persons carrying on business in or in relation to a country or place specified under subsection (4)(b); (c) demand for cigarettes or hand-rolling tobacco in a country or place specified under subsection (4)(b). (6) The Commissioners may issue guidance about the content of policies under subsection (2)(b). (7) The Commissioners may make regulations— (a) under which they are required to notify manufacturers of cigarettes or hand-rolling tobacco where products of a kind specified in the regulations are seized undersection 139 of the Customs and Excise Management Act 1979 (c 2) in circumstances specified in the regulations, (b) specifying the procedure for notification, (c) including provision about access to seized products for the purpose of determining who manufactured them, and (d) requiring manufacturers to provide the Commissioners with information or documents, of a kind specified in the regulations or determined by the Commissioners, in relation to notified seizures.”
“7B Penalty for facilitating smuggling: initial notice (1) Where the Commissioners think that a manufacturer has without reasonable excuse failed to comply with the duty under section 7A(1) they may give him written notice that they are considering requiring him to pay a penalty. (2) In determining whether to give notice to a manufacturer under subsection (1) the Commissioners shall have regard to— (a) the content of the manufacturer's policy under section 7A(2)(b), (b) compliance with that policy, (c) action taken pursuant to any notice under section 7A(4), (d) compliance by the manufacturer with any notice under section 7A(5), (e) the number, size and nature of seizures of which the manufacturer has been given notice by virtue of section 7A(7)(a), (f) compliance by the manufacturer with any requirement by virtue of section 7A(7)(d), (g) evidence about the level of demand for the manufacturer's products for consumption outside the United Kingdom, and (h) any other matter that they think relevant. (3) A notice must specify the matters to which the Commissioners have had regard in determining to give it. (4) After the end of the period of six months beginning with the date on which a notice is given to a manufacturer, the Commissioners shall give him notice in writing either— (a) that they require payment of a penalty, or (b) that they do not require payment of a penalty. (5) The Commissioners shall comply with subsection (4) during the period of 45 days beginning with the end of the period specified in that subsection; and for that purpose they shall consider— (a) any representations made by the manufacturer during that period in such form and manner as the Commissioners may direct, and (b) action taken by the manufacturer during that period.”
“7C Penalty for facilitating evasion: penalty notice (1) A notice under section 7B(4)(a) (a “penalty notice”) must— (a) specify the amount of the penalty which the manufacturer is required to pay, and (b) state the grounds on which the Commissioners think that the manufacturer has failed to comply with the duty under section 7A(1). (2) The amount specified under subsection (1)(a) must not exceed£5 million ; and in determining the amount to specify the Commissioners shall have regard to— (a) the nature or extent of the manufacturer's failure to comply with the duty under section 7A(1), (b) action taken by the manufacturer to secure compliance with that duty, (c) the content of the manufacturer's policy under section 7A(2)(b), (d) compliance with that policy, (e) action taken pursuant to any notice under section 7A(4), (f) compliance by the manufacturer with any notice under section 7A(5), (g) the number, size and nature of seizures of which the manufacturer has been given notice by virtue of section 7A(7)(a), (h) the loss of revenue by way of duty under section 2, or VAT, in respect of the products seized, and (i) any other matter that they think relevant. (3) Sections 13A to 16 of theFinance Act 1994 apply to a decision to issue a penalty notice as they apply to the decisions mentioned in section 13A(2)(a) to (h) of that Act.”
“(4) In relation to any decision as to an ancillary matter, or any decision on the review of such a decision, the powers of an appeal tribunal on an appeal under this section shall be confined to a power, where the tribunal are satisfied that the Commissioners or other person making that decision could not reasonably have arrived at it, to do one or more of the following, that is to say— (a) to direct that the decision, so far as it remains in force, is to cease to have effect from such time as the tribunal may direct; (b) to require the Commissioners to conduct, in accordance with the directions of the tribunal, a review or further review as appropriate of the original decision; and (c) in the case of a decision which has already been acted on or taken effect and cannot be remedied by a review or further review as appropriate, to declare the decision to have been unreasonable and to give directions to the Commissioners as to the steps to be taken for securing that repetitions of the unreasonableness do not occur when comparable circumstances arise in future. (5) In relation to other decisions, the powers of an appeal tribunal on an appeal under this section shall also include power to quash or vary any decision and power to substitute their own decision for any decision quashed on appeal.”
“(6) On an appeal under this section the burden of proof as to— (a) the matters mentioned in subsection (1)(a) and (b) of section 8 above, (b) the question whether any person has acted knowingly in using any substance or liquor in contravention of section 114(2) of the Management Act, and (c) the question whether any person had such knowledge or reasonable cause for belief as is required for liability to a penalty to arise under section 22(1) or 23(1) of theHydrocarbon Oil Duties Act 1979 (use of fuel substitute or road fuel gas on which duty not paid), shall lie upon the Commissioners; but it shall otherwise be for the appellant to show that the grounds on which any such appeal is brought have been established. ” (Emphasis added)
“29 (1) The Commissioners shall provide written notification of a seizure of cigarettes or hand-rolling tobacco undersection 139 of the Customs and Excise Management Act 1979 (“the seized products”) to a manufacturer in the circumstances specified in paragraph (2). (2) The circumstances referred to in paragraph (1) are— (a) the seized products consist of at least 100,000 cigarettes or 50 kilogrammes of hand-rolling tobacco; and (b) the Commissioners believe that the seized products were manufactured by, or that manufacture was arranged by, the manufacturer on or after1st October 2006 . 30 (1) The written notification shall be accompanied by a sample of the seized products. (2) The remaining seized products shall be available for inspection by the manufacturer at any reasonable time for a period of one month beginning with the day on which written notification was given to that manufacturer. (3) A manufacturer who wishes to inspect the remaining seized products shall notify the Commissioners of that fact in such form and manner as the Commissioners may specify. 31 (1) A manufacturer shall provide the Commissioners with the information specified in the Schedule. (2) The information shall be provided— (a) before the end of the period of one month beginning with the day on which written notification was given to the manufacturer, or (b) at such other time as the Commissioners may allow. (3) The Commissioners may dispense with the requirement to provide any information specified in the Schedule where they are satisfied that a manufacturer is unable to provide that information despite taking reasonable steps to do so. Schedule 1. Where the seized products were— (a) manufactured by the manufacturer, or (b) manufactured by a person with whom the manufacturer had arranged to have cigarettes or hand-rolling tobacco manufactured, the manufacturer shall provide the information specified in paragraphs 4 to 10 below. 2. Where it appears the seized products were manufactured on premises occupied by— (a) the manufacturer, or (b) a person falling within paragraph 1(b), other than in accordance with instructions given by, or with the agreement of, the manufacturer the manufacturer shall provide the address of those premises, the name of the undertaking occupying those premises and, if that undertaking is a subsidiary undertaking, the name of the parent undertaking. 3. Where the seized products do not fall within paragraphs 1 or 2 the manufacturer shall notify the Commissioners of that fact. Information to be provided 4. The name of the undertaking who manufactured the seized products and, if that undertaking is a subsidiary undertaking, the name of the parent undertaking. 5. The address of the premises on which the seized products were manufactured. 6. The date the seized products were manufactured. 7. The total quantity of cigarettes or hand rolling tobacco bearing the same manufacturer's coding as the seized products. 8. The name of the country to which the seized products were, or were to be, supplied. 9. The name and address of the first customer to whom the seized products were, or were to be, supplied. 10. The date of the invoice issued to the first customer and the total invoiced quantity of cigarettes or hand-rolling tobacco.” (Emphasis added)
“Seizures will be considered material if they are of at least…50kg of hand-rolling tobacco.”
“the legislation will complement the Memoranda of Understanding…that [HMRC] have entered into with a number of tobacco manufacturers.”
"Although not explicitly mentioned in the legislation, it has been our intention to mirror the operational arrangements agreed under the MoUs, and encourage a free and open dialogue between tobacco manufacturers and HMRC"
"is based on and complements the memorandums of agreement that are currently in place with the three major UK-based tobacco companies, which supply the majority of the UK market."
"a substantial source of smuggled tobacco product into the UK."
“... As you are aware [the TPDA] has been in place for some time and whilst we have often discussed aspects of it with you, we have not taken the opportunity to test the overall effectiveness of your policies and associated controls. This audit will help us inform future HMRC policy in this area, as well as ensuring that you are complying with the obligations laid down in section 7A [TPDA]. It is our intention to audit all the major tobacco manufacturers in the UK to whom these obligations apply. The audit team will be led by Sue Green…. David Fowler, whom you already know, will also play a key role…. You will be aware that the [NAO] is conducting a review of HMRC’s Tobacco Strategy and there is a strong possibility that the Parliamentary Public Accounts Committee may wish to ask questions about the detail and effectiveness of that strategy. I see the audit as an essential component in supporting HMRC’s response to any such questions. I am sure you will agree that it is in both our interests to be able to present our findings and conclusions if that eventuality arises. I would, therefore, welcome your full co-operation in progressing this audit quickly.”
“On23 March 2013 , a HGV Freight Vehicle was stopped and controlled at Dover and 96 kg of Hand Rolling Tobacco was discovered in a concealment within the vehicle. 36 kg [but in the table above the narrative the quantity seized was referred to as 30 kg] of this tobacco was found to be the Cutters Choice Brand.”
“As you know I asked [Mr Duncan] at the end of his presentation if … his [AITIU] also investigated genuine product that was found smuggled into the UK. His response was that it was not within his remit and suggested BAT’s Security team would be responsible. You kindly explained that BAT’s security team is not responsible for investigating these incidents either. You said, I believe, that they are responsible if goods were stolen from one of your warehouses or stolen during transportation, essentially where in some form or another your security has been breached. Am I correct in my understanding of what was said? If I am not can you please correct me? If I am correct can you please explain to me who investigates seizures notified to you under s. 7A (7) TPDA 1979? Did I understand correctly that you said that no investigations are carried out?”
“As you are aware, we have plans to implement a Seizure Event Response Procedure which we have presented to you. Once this procedure has been implemented, actions taken pursuant to all seizures will be a matter for the AIT team working with the relevant end markets. However, the actions it [BAT] will take pursuant to any one seizure will depend upon the extent and nature of the information available to us. We are fully aware of our obligations under TPDA. We are also familiar with the associated guidance set out in Notice 477. In relation to seizures notified to us by HMRC pursuant to s 7A(7) TPDA, BAT diligently analyses the information provided to us by HMRC, as well as that available to us internally, BAT evaluates its supply chain controls, and considers whether such controls can be further improved to reduce the likelihood of similar events occurring in the future. Despite our best efforts, and as we previously set out in our letters to David Fowler dated21 November 2012 , we have, to some extent, been hampered in our ability to conduct as extensive evaluations as we would ideally carry out due to the lack of information from HMRC concerning respective seizures. In particular, we note that we have not always even been supplied with all the information envisaged by paragraph 4.5 of Notice 477, nor further information that would necessarily assist us such as evidence taken from the alleged smugglers. As you will no doubt appreciate, the types of investigations that could be carried out upon receipt of a seizure notice will differ depending on the place and nature of any individual seizure. It may be a security issue (for example if there has been an incidence of theft from within the supply chain), in which case it will be a matter for our Security team. It may be a matter for the BAT company in an end market to address with its customers. Alternatively, if there is evidence to suggest that a particular seizure is connected with a broader anti-illicit trade investigation, then that would be a matter for the Intelligence Unit to investigate. Matters are not therefore automatically referred to the Intelligence Unit and that was what Ewan Duncan was trying to convey. We apologise if that was not made clear.”
“…increase the Indicative Levels for tobacco from 800 to 3200 cigarettes and from 1 to 3 kg of hand rolling tobacco, representing around six months’ supply for an average smoker.”
“…is to consider whether the size or nature of the supply suggests that the products may be required for smuggling into the United Kingdom. So, that is, we say, a very low level obligation which involves [BAT] simply considering size or nature of the supply. I initially said it was not directly engaged principally because of the word ‘consider’ because all [BAT] has to do is to have regard to it….”
“1.1 By implementing track and trace, BAT will be better able to identify where there is leakage of product from its supply chain into the illicit market. When product is seized, the track and trace technology will be able to show to which first customer BAT sold that product. When [ACT] is enabled, BAT will be able to track the product further down the supply chain to the other economic operators. 1.2 Where the volume of product falling into the illicit market might be higher than expected, this will assist BAT’s investigations in identifying economic operators within the relevant market, will enable BAT to decide whether action is justified in relation to specific economic operators, either directly (if a BAT first customer) or indirectly (for economic operators further down the supply chain). 1.3 BAT will be able to share its track and trace information with HMRC, which will assist HMRC’s independent enquiries or with any joint action conducted by HMRC with BAT. Relevant information passed from HMRC to UK Border Force may assist their enforcement activity also.”
“2.1 Given the terms of the Tobacco and Related Products Directive (“TPD”), requiring all economic operators involved in the trade of tobacco products before the first retail outlet to be involved with track and trace, and subject to any legal challenge to the TPD, it is envisaged that this question will only be relevant for a limited period. 2.2 In the meantime, whilst we cannot compel our first customers to take part in ACT, we will be engaging with them about the benefits of becoming involved as an “early-adopter” of ACT. In relation to certain key first customers, such as [name of wholesaler], we are also considering giving financial compensation in respect of the additional time and/or resources required by their ACT adoption. This will likely encourage their uptake.”
“3.1 We do not consider any changes are required to our supply chain and/or KYC policies to support track and trace. Those policies have been drafted to support BAT’s legal obligations under, among other things, the TPDA and EUCA. As such, those policies fully support track and trace implementation and, indeed, as you know, we have been implementing track and trace in line with our EUCA commitments since 2010. 3.2 When track and trace has been fully implemented, we will be able to use the information obtained upon seizures to support our supply chain compliance controls such as SERP.”
“We have committed to implement track and trace under our co-operation agreement with the EU from July 2014 in our Groningen factory which produces Cutters Choice.”
“… BAT's first tranche implementation of its track and trace system for certain tobacco products failed to take into account those countries identified by HMRC as high risk in relation to smuggling. HMRC understands that implementation of track and trace to these particular areas is not scheduled to be completed until 2016. This is too late and the track and trace system for these high risk areas needs to implemented as soon as possible.”
“BAT should consider urgently bringing forward the introduction of the track and trace system to those countries specified by HMRC as being of concern so that BAT are able to provide the information required. An interim solution should be devised until this the track and trace system is available.”
“BAT has also failed to show who the first customer outside the BAT corporate group to which the supply of the relevant products was made on 31 occasions in accordance with paragraph 9 of the Schedule to the TPR 2001. BAT did not provide the date of invoice and total invoiced quantity of cigarettes/HRT on any occasion in accordance with paragraph 10 of the Schedule to the TPR 2001. In HMRC’s view, BAT has not taken reasonable steps to provide all the information specified in paragraphs 4 – 10 of the Schedule to the TPR 2001.”
“ Our key concern is that BAT Holdings cannot trace specific products from its production factories to its first customer outside the BAT group . This is evident in that BAT Holdings has been unable to tell us to whom they supplied goods when these goods have subsequently been seized. We considered that this inability to trace specific BAT products to its first customer outside the BAT group demonstrates that the policy in operation has a fundamental weakness because it prevents BAT from identifying where those goods have or could have been transferred to persons who are likely to smuggle those goods into the United Kingdom.”
“To be clear, HMRC does not conclude that the TPDA necessarily requires the implementation of a track and trace system. The TPDA (in conjunction with the TPR 2001) require a tobacco manufacturer to have adequate controls in place to ensure that it does not facilitate smuggling, and where there are examples of the relevant TMs products being smuggled, to be able to identify who that products [sic] was supplied to, outside the corporate group.”
“ BAT does not provide the information about the seized product (s) in accordance with the Schedule of the TPR 2001. HMRC has provided BAT with all the information it sets out in its guidance (Public Notice 477) and the relevant legislation but no action is taken to establish where BAT’s supply chain has been compromised. Although BAT’s letter to me dated18 July 2013 asserts that HMRC has not provided all the necessary information for BAT to carry out its evaluation on its supply chain controls, HMRC’s view is that all the necessary information has been provided, and of course our guidance is simply indicative of what we would aim to supply if it is available to us.
“In the Initial Notice, BAT was made aware that HMRC believed BAT was failing in its obligation to have a robust supply chain policy. A number of concerns were raised in the Initial Notice. In summary, the most significant concerns were as follows: 1. The written policy (required under section 7A(2)(b)) was defective in that it employed no mechanism to enable BAT to trace the point at which their product had entered the illicit market and been smuggled into the United Kingdom nor did it contain a mechanism to adequately investigate seizures where HMRC had provided information on those seizures. 2. BAT was unable to comply with its obligations under the TPR 2001 to provide the information required to identify its first customer outside the BAT group of companies. ….”
“… without BAT being able to trace to their first customer, they would never stand any opportunity to identify where the goods eventually became [sic] into the hands of smugglers and therefore their policy could not be effective because they could not see what might have gone wrong and what they had to improve on.”
“All these things are future promises, and I am looking at a line in time, what was in place at that time, not what is going to happen going forward.”
“…we wouldn’t have a plan to inspect it as it is below the threshold set by both TPDA and EUCA which is 50 kg of HRT. In case you are in possession of any other valid information that would link this seizure to a matter of greater concern, please feel free to come back to us and we would be more than happy to look at it again.”
“I am disappointed with your response to this seizure. Whilst I acknowledge that this does not exceed the notifiable seizure threshold it is clear from the information we have shared with you that this is a significant seizure and one that is born out of criminal activity. The TPDA requires you to avoid smuggling to those who may smuggle or resupply to someone who may smuggle. It has no minimum limit. I would have thought that you would have wished to find out how this product came into the hands of smugglers. I have noted your response and will consider it to fall within section 7 B(2)(h) should it come to us issuing an initial notice of a penalty.”
“not filled out as comprehensively as BAT requires. This is the inevitable consequence of a pilot scheme, which Belux was part of.”
“It is a commercial matter for the tobacco manufacturers to decide what is in their contracts.”
“For material seizures of tobacco products bearing BAT Trademarks by [HMRC]…, in circumstances where it is identified as destined to be smuggled into the UK without payment of UK duty, BAT and [HMRC] will apply the procedures set out in this clause. Seizures will be considered material if they are of at least… 50 kg of hand-rolling tobacco.”
“accurate and comprehensive responses to tracking and tracing requests and provide within 20 working days following the receipt of samples of these packs a written response stating whether the seized tobacco products are genuine or counterfeit. In the case of genuine BAT tobacco products the following information: (i) the place of manufacture of the seized product; (ii) the date of manufacture of the seized product; (iii) the country of intended destination for the seized product; (iv)… (v) the identity of the First Purchaser outside of the company, of the seized product, and related payment records. Where regular seizures are made where it is not possible to identify the First Purchaser outside of the company, BAT and [HMRC] will jointly identify alternative measures in order to identify the point of supply chain weakness; (vi) the identity of any known Subsequent Purchaser of the seized product; and (vii) information about codings and other pack markings.”
“ the legislation will complement the Memoranda of Understanding (MOUs) that [HMRC] have entered into with a number of tobacco manufacturers .”
“ The legislation is designed to complement the [MoUs] that HMRC has entered into with a number of leading UK tobacco manufacturers, and ensure that those manufacturers who support HMRC in their efforts to combat tobacco smuggling by doing so are not unfairly disadvantaged. Obligations will therefore be imposed on all tobacco manufacturers to control their supplies to non-UK markets, and ensure, as far as reasonably practicable that they do not facilitate smuggling. The [MoUs] are an important step towards dealing with the problem of tobacco smuggling and are representative of the co-operation of the manufacturers involved. However, the MoUs are voluntary agreements and only apply to the signatory manufacturers. By introducing legislation to complement and support the MoUs all tobacco manufacturers are placed under the same obligations….”
“ introduce legislation complementary to the existing MoUs ” where “ [t]he legislation is framed so as to mirror the main obligations of the MOUs and in doing so to extend those obligations to all manufacturers ”
“To amplify… the four types of contractual arrangements we previously discussed with our lawyers, and which formed the basis of our response to Question 4 in our4 April 2014 letter, were contractual measures: (a) requiring first customers to cease supplying retailers they reasonably suspect of selling to customers who are likely to smuggle our products into the UK; (b) requiring first customers to cease supplying retailers which they know sell large amounts of products (i.e. amount significantly in excess of UK indicative limits) to individual customers; (c) requiring first customers to “blacklist” retailers BAT considers selling to customers who are likely to smuggle our products into the UK (the consequence of this would be that the retailer would then cease to be supplied); and (d) requiring first customers to require retailers to restrict sales to UK indicative limits. As we noted in our letter, the advice we received was that in relation to each of the measures described above, there was a significant risk that such measures, if implemented in the EU, would infringe EU competition law, as well as, potentially other EU laws governing the free movement of goods. [W]e,...in conjunction with our lawyers, have been considering whether there are any further steps which BAT could implement, through its contractual arrangements with its first customers, that might assist BAT’s and HMRC’s mutual objectives and which would not infringe relevant domestic or EU legislation. We are currently considering to specific initiatives that potentially meet these criteria: (a) requiring first customers to implement enhanced KYC provisions with their customers/retailers, possibly with the requirement that such further customer/retailer submits sales plans and confirms that those plans are commensurate with legitimate demand for our products; and (b) requiring first customers supplying the Belgian market to implement measures requiring (ultimately) retailers to notify them when such retailers have made sales that they consider to have been made for commercial purposes rather than for private consumption. We understand, based on Belgian legal advice…, that Belgian retailers are required to make such an assessment under Belgian VAT rules.”
“a significant feature of BAT’s policies and procedures to take action against its contractors that it suspects of being involved with illicit trade. See, for example, paragraph 13 of Section A of our KYC Framework and Section B of the SERP Guidance Notes. Indeed, as I mentioned during the course of the meeting, for many years, predating even the TPDA, BAT group companies have terminated contractual relationships, across BAT’s global operations, on this basis.”
“However, from our meeting it is now clear that such provisions are not what HMRC was anticipating and those are not the type of provisions included in any other tobacco manufacturers’ contracts. Instead, HMRC is recommending the inclusion of a broader commitment by customers to avoid the facilitation of smuggling and identifying that BAT group companies will take steps against entities in their supply chains that they reasonably suspect of engaging in such activity. You also confirmed that HMRC recognise that any punitive action is likely only to be lawful if, in practice, there has been prior engagement with the relevant entity and warnings given in respect of the relevant issues, such that steps to cease or restrict supply can be justified as necessary and proportionate. Now that we understand what you suggest, we are in a position to add some wording along these lines into our customer contracts and we will work with our lawyers to achieve this diligently. As we discussed at the meeting, you are unable to provide us with language apparently used by other tobacco manufacturers in their contracts, nor any standard form wording that satisfies HMRC’s concerns. Instead, we will produce our own draft wording and will discuss this matter with our competitors through the TMA’s anti-illicit trade industry working group in order to confirm that our proposal accords with the equivalent approach used by our competitors, which HMRC has confirmed it is happy with. We will implement the resulting clauses into our business contracts as soon as reasonably practicable.”
“You will be aware that the National Audit Office is conducting a review of HMRC’s Tobacco Strategy and there is a strong possibility that the Parliamentary Public Accounts Committee may wish to ask questions about the detail and effectiveness of that strategy. I see the audit as an essential component in supporting HMRC’s response to any such questions. I am sure you will agree that it is in both our interests to be able to present our findings and conclusions if that eventuality arises. I would, therefore, welcome your full co-operation in progressing this audit quickly.”
“Once you have considered all of the points raised you may wish to make further comments or provide additional explanation or information. If this is the case please could you do so by22 November 2013 .”
“HMRC have concerns about the amount of genuine UK produced HRT being supplied to the near continent. Our own analysis of demand in particular Belgium and Luxembourg shows that the UK brands are not as popular as home-grown brands. These concerns were also heightened by the amount of genuine HRT being seized at UK ports that did not fit the qualifying criteria (50 kg), which appears to be a small and often business. HMRC has concerns that this trade is being exploited by organised crime.”
“to absorb and diffuse the impact of any preventative resource, allowing subsequent buses a clear passage through border controls.”
“- Baccy buses are being used by organised crime to facilitate tobacco smuggling. - We believe that the multi-receipt practice is geared specifically for tobacco smugglers. - Certain retailers are using this system to facilitate tobacco smuggling - The oversupply of genuine UK HRT is a credible risk to the UK exchequer and is being exploited by criminal groups based in the UK and overseas.”
“Receipts showed times down to the second, we have a variety of examples demonstrating this practice which also shows that more than one individual is buying well above the limit.”
“You may recall when we met that I extended an invitation to join us at Dover during the second phase of Falcon. I can now confirm this invitation. It is suggested that you join the exercise during the afternoon/evening of Saturday 20 April. Can you let me know if you would still like to attend and I’ll sort out the arrangements.”
“I am sorry for late respond [sic], I was out of the office for a few days and back only now catching up with a lot of things. Please note that one of the AIT [Anti-Illicit Trade] Intelligence Unit members will attend as they are more qualify [sic] for this type of operations then [sic] me. Would you be so kind to let us know timing and venue and what will occur during this particular operation.”
“This was a specific invitation for you so if you are not able to come (which I completely understand as it is us Saturday night!) then we will look to find something more suitable on another occasion.”
“ ‘If you go into a shop and you are going to buy crisps for your lunch, what are you going to buy?’ And we all came up with a different flavour. So, for me, it does not make sense for all these people [i.e. “baccy bus” passengers] to have bought exactly the same thing. That had been the nature of the conversations that had gone along.”
“‘Little and often’ really is only talking about the baccy buses.”
“BAT contends that it did not act unreasonably, such that there was no power to impose the penalty, and HMRC thus acted unreasonably. That contention is in part evidenced by the fact that HMRC has exercised that power for improper purposes, something which, as Judge Berner [in HT & Co (Drinks)Ltd[2015] UKFTT 663 (TC) ] has rightly recognised, is plainly relevant to the statutory assessment of reasonableness, and which is plainly a matter for the Tribunal.”
“There is nothing that a European body can do if our legislation is not effective. We did not design our legislation well enough. We have to accept that… We put into effect a piece of legislation that did not have the effect that we thought it would.”
“There is a legitimate criticism of us and the legislative fix we put in place to try to control the supply chain mechanisms better by undertaking test purchases…We have overcome the challenge we created for ourselves in the legislative fix we gave ourselves.”
“The way we have put the proposals into effect brings deterrents in if manufacturers don’t work cooperatively with us. Although it has taken a lot of combined effort from various people, the reality is that over this period the manufacturers have worked with us.”
“ HMRC estimated that the supply of some brands of hand-rolling tobacco to some countries exceeded legitimate demand by 240% in 2011. But HMRC has not fined any UK tobacco manufacturer for over-supplying products and failing to control its supply-chain and has issued only one letter of warning. HMRC is focussing on improving cooperation with manufacturers but it must also become more assertive in using its powers where necessary and consider whether it has the full range of powers and tools at its disposal to take action.”
“HMRC should apply the supply chain legislation to its full extent. It needs to identify and seek to correct any shortcomings in the legislation to put a stop to the abuse of exports by tobacco manufacturers. It should consider naming and shaming those manufacturers who fail to co-operate fully with the department.”
“SG [Mrs Green] confirmed that BAT were previously behind their competitors in adopting such measures but that the measures BAT is taking in response to the Warning Notice puts BAT on par with its competitors. JU[Ms Udicki] asked whether unilateral measures would be enough to prevent illicit trade. SG commented that it was unlikely that such actions would be enough to respond to the challenges posed but measures had to be taken to respond to the on-going political pressure. SG said that such pressure may result in Warning Notices or penalties being issued to all of the big tobacco companies.”
“SG said that, in her opinion, it was unlikely as other tobacco manufacturers would fill in the gap but that there is a significant political pressure on HMRC to exercise their rights under the TPDA and it may be the case that HMRC will need to issue penalty notices on the tobacco manufacturers to satisfy those applying the pressure. Ultimately, the issuance of penalty notices might highlight the inadequacy of the TPDA to address the problem of smuggling into the UK.”
“ Can I appeal against a notified seizure? No. The notification of the seizure is not a matter for appeal. However, where a notified seizure can be shown to our satisfaction to fall within one of the categories described below, we will disregard the seizure for the purposes of any subsequent action we may take regarding your duty not to facilitate smuggling: - the notified seizure does not meet the volume criteria as set out in section 4.1 [i.e. i.e. the volume of product in the seizure is equal to or exceeds 50 kg of HRT]; or - … - for any other reason deemed to be relevant by us. It is recognised that seizures may be disputed by you on grounds other than those set out above. Therefore, in the event that we issue you with a penalty for failing in your duty not to facilitate smuggling, and you wish to dispute the penalty, you may bring the matter of any seizures that you wish to dispute on other grounds to the attention of the reviewing officer or tribunal….”
“ What is an initial notice? An initial notice is a letter from us, advising you that we have concerns regarding the level of your compliance with your legal duty not to facilitate the smuggling of tobacco products, as set out in section 2.1. The initial notice acts as a warning, and provides you with an opportunity to take corrective action regarding the level of your compliance, and in so doing avoid being issued with a financial penalty.” (Emphasis added)
“ What should I do upon receipt of an initial notice? You should take appropriate action to address any specific matters raised in the initial notice , and thoroughly review your supply chain policy to ensure that you have included any reasonably practicable measures to improve your supply chain controls.” (Emphasis added)
“In deciding whether or not to issue a penalty notice we will consider: - any action you have taken during this period [i.e. the six-month period between the Initial Notice and the Penalty Notice] to ensure that you comply with your legal duties; and - any representations made by you since the initial notice was issued. In particular we will review whether or not you have satisfactorily addressed the reasons for the issuing of the initial notice , and any seizures notified to you in the six month period following the issue of the initial notice. These matters will be considered in the context of your duty not to facilitate smuggling, along with any other matters we believe to be relevant.” (Emphasis added)
“-Actions to be considered/taken where a problem with a customer is identified e.g. restriction of supply or termination of supply. - Procedures for the reporting to us of suspected wrongdoing by your customers in relation to supplies of tobacco products.”
“- Monitor the overall mix and volume of tobacco products supplied to individual markets to ensure your supplies are consistent with your understanding of the legitimate demand in those markets. - To undertake a risk assessment when… changing the level of supply to, or in, a specified country.”
“Internal measures to ensure that your supplies of tobacco products can be tracked to the first customer outside your own business/group where appropriate.” (Emphasis added)
“[a]ny pecuniary charge, however small and whatever its designation and mode of application which is imposed unilaterally on domestic or foreign goods by reason of the fact that they cross the frontier.”
“Where the Commissioners think that a manufacturer has without reasonable excuse failed to comply with the duty under section 7A(1) they may give him written notice that they are considering requiring him to pay a penalty.”
“(4) After the end of the period of six months beginning with the date on which a notice is given to a manufacturer, the Commissioners shall give him notice in writing either— (a) that they require payment of a penalty, or (b) that they do not require payment of a penalty.”
“(a) any representations made by the manufacturer during that period in such form and manner as the Commissioners may direct, and (b) action taken by the manufacturer during that period.”
“and in determining the amount to specify the Commissioners shall have regard to….”
“So far as it is possible to do so, primary legislation and subordinate legislation must be read and given effect in a way which is compatible with the Convention rights.”
“ In our view the authorities demonstrate that it is t he character or nature of the legislative provision that is said to be of a penal nature, which is the key determining factor. The key issue is whether the provision can be regarded as imposing a punishment to deter offending by those to whom it is directed. ”
“special supervision [restrictions involving a form of police parole] is not comparable to a criminal sanction because it is designed to prevent the commission of offences. It follows that proceedings concerning it did not involve … the determination of a criminal charge.”
“It follows that a punitive or attributive purpose no more marks an order as a penalty than a protective order serves to take it out of such a category. That being so the court is, as it seems to me, likely to be assisted by considering whether, in the statutory scheme before it, the predominant purpose of the measure under scrutiny is punitive, or for the protection of the public at large or a section of it.”
“[W]e can see no principled distinction between mere encouragement towards compliance and deterrence from non-compliance. They are essentially two sides of the same coin. Any difference depends on the process adopted to encourage or deter; a warning or guidance might be regarded as falling on the side of encouragement, whereas in our judgment a penalty is clearly on the side of deterrence.”
"…decisions taken by administrative authorities which do not themselves satisfy the requirements of Article 6.1 of the Convention… must be subject to control by a 'judicial body that has full jurisdiction' ."
“The reference to "full jurisdiction" has been frequently cited in subsequent cases and sometimes relied upon in argument as if it were authority for saying that a policy decision affecting civil rights by an administrator who does not comply with article 6(1) has to be reviewable on its merits by an independent and impartial tribunal. It was certainly so relied upon by counsel for the respondents in these appeals. But subsequent European authority shows that "full jurisdiction" does not mean full decision-making power. It means full jurisdiction to deal with the case as the nature of the decision requires.”
“…in assessing the sufficiency of the review available to Mr Bryan on appeal to the High Court, it is necessary to have regard to matters such as the subject-matter of the decision appealed against, the manner in which that decision was arrived at, and the content of the dispute, including the desired and actual grounds of appeal.”
“Such an approach by an appeal tribunal on questions of fact can reasonably be expected in specialised areas of the law such as the one at issue, particularly where the facts have already been established in the course of a quasi-judicial procedure governed by many of the safeguards required by Article 6 para. 1 (art. 6-1). It is also frequently a feature in the systems of judicial control of administrative decisions found throughout the Council of Europe member States. Indeed, in the instant case, the subject-matter of the contested decision by the inspector was a typical example of the exercise of discretionary judgment in the regulation of citizens' conduct in the sphere of town and country planning.”
“52. In this case the subject matter of the decision was the suitability of accommodation for occupation by Runa Begum; the kind of decision which the Strasbourg court has on several occasions called a "classic exercise of an administrative discretion". The manner in which the decision was arrived at was by the review process, at a senior level in the authority's administration and subject to rules designed to promote fair decision-making. The content of the dispute is that the authority made its decision on the basis of findings of fact which Runa Begum says were mistaken. 53. In my opinion the Strasbourg court has accepted, on the basis of general state practice and for the reasons of good administration which I have discussed, that in such cases a limited right of review on questions of fact is sufficient.”
“75. The Court recalls that even where an adjudicatory body determining disputes over “civil rights and obligations” does not comply with Article 6 § 1 in some respect, no violation of the Convention can be found if the proceedings before that body are subject to subsequent control by a judicial body that has “full jurisdiction” and does provide the guarantees of Article 6 § 1 ( Albert and Le Compte v. Belgium ,10 February 1983 , § 29, Series A no. 58 and Sigma Radio Television Ltd , cited above, § 151). 76. Both the Commission and the Court have acknowledged in their case-law that the requirement that a court or tribunal should have “full jurisdiction” (“pleine juridiction” in French) will be satisfied where it is found that the judicial body in question has exercised “sufficient jurisdiction” or provided “sufficient review” in the proceedings before it (see, amongst many authorities, Zumtobel v. Austria ,21 September 1993 , §§ 31-32, Series A no. 268-A; Bryan , cited above, §§ 43-47; Müller and others v. Austria (dec.), no. 26507/95,23 November 1999 ; and Crompton v. the United Kingdom , no. 42509/05, §§ 71 and 79,27 October 2009 ). 77. In adopting this approach the Convention organs have had regard to the fact that in administrative-law appeals in the Member States of the Council of Europe it is often the case that the scope of judicial review over the facts of a case is limited and that it is the nature of review proceedings that the reviewing authority reviews the previous proceedings rather than taking factual decisions. It can be derived from the relevant case-law that it is not the role ofArticle 6 of the Convention to give access to a level of jurisdiction which can substitute its opinion for that of the administrative authorities. In this regard, particular emphasis has been placed on the respect which must be accorded to decisions taken by the administrative authorities on grounds of “expediency” and which often involve specialised areas of law (for example, planning - Zumtobel , §§ 31 and 32, and Bryan , § 47, both cited above; environmental protection - Alatulkkila and Others v. Finland , no. 33538/9 6 , § 52,28 July 2005 ; regulation of gaming - Kingsley v. the United Kingdom [GC], no. 35605/97 , § 32, ECHR 2002-IV). 78. As has been explained in previous case-law (for example, Sigma Radio Television Ltd , cited above, § 154), in assessing the sufficiency of a judicial review available to an applicant, the Court will have regard to the powers of the judicial body in question (see for example, Gradinger v. Austria ,23 October 1995 , § 44, Series A no. 328-C; Bryan , §§ 44-45, cited above; Potocka and Others v. Poland , no. 33776/96, § 55, ECHR 2001-X; and Kingsley , § 32, cited above), and to such factors as (a) the subject-matter of the decision appealed against, in particular, whether or not it concerned a specialised issue requiring professional knowledge or experience and whether it involved the exercise of administrative discretion and if so, to what extent; (b) the manner in which that decision was arrived at, in particular, the procedural guarantees available in the proceedings before the adjudicatory body; and (c) the content of the dispute, including the desired and actual grounds of appeal (see, inter alia, Bryan , §§ 44, 45 and 47, and Crompton §§ 71 - 73 and 77, both cited above).”
“46. [The Court] notes that points are deducted when it has been established that one of the offences listed in Article L. 11-1 of the Road Traffic Code … has been committed, by means of either a final conviction or payment of a fixed fine by the offender, which implies admission of the offence and tacit acceptance of the deduction of points. 47. At the time when the details of an offence are recorded, the driver is informed by the administrative authority that he is liable to lose points on account of the offence he has committed and that there is an automatic system for the deduction and restoration of points …. He is thus given the opportunity to contest the constituent elements of the offence which might be used as the basis for a deduction of points. 48. The Court observes that the applicant did not pay the fixed fine and that the partial loss of points thus depended on the criminal courts finding him guilty. As the Commission pointed out, in the Versailles Police Court and the Versailles Court of Appeal, criminal courts which satisfy the requirements of Article 6 § 1, the applicant was able to deny that he had committed the criminal offence of exceeding the speed limit and to submit all the factual and legal arguments which he considered helpful to his case, knowing that his conviction would in addition entail the docking of a number of points. … 50. Like the Commission, the Court accordingly considers that a review sufficient to satisfy the requirements of Article 6 § 1 of the Convention was incorporated in the criminal decision convicting [the motorist], and that it is not necessary to have a separate, additional review by a court having full jurisdiction concerning the deduction of points. Moreover, it is open to the applicant to seek judicial review in the administrative courts, in order to ascertain whether the administrative authority acted after following a lawful procedure. 51. The Court concludes, like the Commission, that domestic law afforded the applicant a review by the courts of the measure in issue which was sufficient for the purposes of Article 6 § 1.” (Emphasis added)
“27. Parmi les caractéristiques d'un organe judiciaire de pleine juridiction figure le pouvoir de réformer en tous points, en fait comme en droit, la décision entreprise, rendue par l'organe inférieur. Il doit notamment avoir compétence pour se pencher sur toutes les questions de fait et de droit pertinentes pour le litige dont il se trouve saisi ( Chevrol v France , arrêt du 13 février 2003, § 77). ”
"La Cour doit constater qu'en l'espèce, la société requérante n'eut pas la possibilité de soumettre la décision prise à son encontre à un tel contrôle de pleine juridiction. Dans son arrêt rendu le 3 octobre 1996 suite à l'opposition à contrainte formée par la société requérante, la cour d'appel de Bruxelles estima en effet qu'elle était uniquement appelée à examiner la réalité des infractions au code de la TVA et à contrôler la légalité des amendes fiscales réclamées sans être compétente pour apprécier l'opportunité ou accorder une remise complète ou partielle de celles-ci ."
“54. The Court reiterates that a system of administrative fines, such as the tax penalties in the present case, is not incompatible with Article 6 § 1 of the Convention so long as the taxpayer can bring any such decision affecting him before a court that affords the safeguards of that provision (see Bendenoun v. France ,24 February 1994 , § 46, Series A no. 284, and Silvester’s Horeca Service v. Belgium , no. 47650/99, § 25,4 March 2004 ). 55. Respect for Article 6 § 1 of the Convention means that decisions taken by administrative authorities which do not themselves satisfy the requirements of Article 6 § 1 of the Convention must be subject to subsequent control by a judicial body that has full jurisdiction (see Schmautzer , cited above, § 34; Umlauft v. Austria ,23 October 1995 , § 37, Series A no. 328‑B; Gradinger v. Austria ,23 October 1995 , § 42, Series A no. 328‑C; Pramstaller v. Austria ,23 October 1995 , § 39, Series A no. 329‑A; Palaoro v. Austria ,23 October 1995 , § 41, Series A no. 329‑B; and Pfarrmeier v. Austria ,23 October 1995 , § 38, Series A no. 329‑C). The characteristics of a judicial body with full jurisdiction include the power to quash in all respects, on questions of fact and law, the decision of the body below. It must have jurisdiction to examine all questions of fact and law relevant to the dispute before it (see Chevrol v. France , no. 49636/99, § 77, ECHR 2003-III; Silvester’s Horeca Service , cited above, § 27; and A. Menarini Diagnostics S.R.L. v. Italy , no. 43509/08, § 59,27 September 2011 ). 56. The Court notes that in the present case the applicant company was able to lodge an application with the Administrative Court to be exempted from paying the additional tax and the fines, and then an appeal with the Administrative Court of Appeal and an appeal for judicial review with the Conseil d’Etat . The Administrative Court concerned had broad powers and full jurisdiction in this case to assess all the elements of fact and law and could not only quash or uphold an administrative decision, but also change it or replace it with its own decision and rule on the rights of the interested party; in fiscal matters it could exempt the taxpayer from the disputed taxes and penalties or modify the amount thereof within the limits prescribed by law, and where penalties were concerned, it could lower the rate within the limits of the applicable legal provisions (see paragraphs 29-30 above; and contrast Silvester’s Horeca Service , cited above, § 28). 57. Thus, the applicant company was able to submit to the Administrative Court and the Administrative Court of Appeal – both of which courts met the requirements of Article 6 § 1 – all the factual and legal arguments which it considered helpful to its application for exemption from the revised tax assessment and the related penalties (see, mutatis mutandis , Malige , cited above, § 48), including challenging the compatibility of the tax with Community law and discussing the base used to calculate the tax, which it persuaded the Administrative Court of Appeal to reduce (see paragraph 17 above).”
"Therefore, in administrative proceedings, the obligation to comply withArticle 6 of the Convention does not preclude a “penalty” being imposed by an administrative authority in the first instance. For this to be possible, however, decisions taken by administrative authorities which do not themselves satisfy the requirements of Article 6 § 1 of the Convention must be subject to subsequent control by a judicial body that has full jurisdiction (see Schmautzer , Umlauft , Gradinger , Pramstaller , Palaoro and Pfarrmeier v. Austria ,23 October 1995 , §§ 34, 37, 42, 39, 41 and 38 respectively, Series A nos. 328 A-C and 329 A-C). The characteristics of a judicial body with full jurisdiction include the power to quash in all respects, on questions of fact and law, the decision of the body below. It must in particular have jurisdiction to examine all questions of fact and law relevant to the dispute before it (see Chevrol v. France , no. 49636/99, § 77, ECHR 2003-III, and Silvester’s Horeca Service v. Belgium , no. 47650/99, § 27,4 March 2004 )."
“The Court further observes that the [Turin] court of appeal had jurisdiction to rule, in respect of both law and fact, on whether the offence set out in Article 187 ter of Legislative Decree no. 58 of 1998 had been committed, and was authorised to set aside the decision taken by the CONSOB. It was also called upon to assess the proportionality of the imposed penalties to the seriousness of the alleged conduct. In fact, it reduced the amount of the fines and the length of the ban on exercising their profession imposed on certain of the applicants (see paragraphs 30 and 31 above) and examined their various factual or legal allegations (see paragraphs 32-36 above). Thus, its jurisdiction was not merely confined to reviewing lawfulness.”
“It is true that a public hearing was held before the Court of Cassation. However, the latter did not have jurisdiction to examine the merits of the case, to establish the facts and to assess the evidence; indeed, the Government do no contest this. It could not therefore be considered as a court with full jurisdiction within the meaning of the Court’s case-law.”
"Since s.2(1) of the HRA requires the court or tribunal to take into account the Strasbourg case law of the European Court of Human Rights ("
“Everyone charged with a criminal offence shall be presumed innocent until proved guilty according to law.”
“…it shall … be for the appellant to show that the grounds on which any such appeal is brought have been established.”
“Article 6(2) does not … regard presumptions of fact or of law provided for in the criminal law with indifference. It requires States to confine them within reasonable limits which take into account the importance of what is at stake and maintain the rights of the defence.”
“… the question in any case must be whether, on the facts, the reasonable limits to which a presumption must be subject have been exceeded.”
“36. The commentary offered by Lord Bingham in Sheldrake on the decision of the ECtHR in Janosevic is particularly illuminating. At [20], Lord Bingham noted that in Janosevic the Court had rejected a complaint that the imposition of the surcharges in that case was incompatible with Article 6(2) because “an almost insurmountable burden of proof” was imposed on the taxpayer ( Janosevic , at [99]). The surcharges in that case were, as we have noted earlier, imposed on objective grounds, in other words without any requirement of intent or negligence on the part of the taxpayer. The starting point for the tax authorities and the courts was that the inaccuracies found during the tax assessment were due to an inexcusable act attributable to the taxpayer and that it was not manifestly unreasonable to impose a tax surcharge as a penalty for that act. The Swedish tax system thus operated with a presumption, which it was up to the taxpayer to rebut ( Janosevic , at [100]). 37. As Lord Bingham observed, the Court in Janosevic acknowledged that it was difficult for the taxpayer to rebut the presumption in question, but he was not without means of defence ( Janosevic , at [102]). The ECtHR had regard to the financial interests of the state in tax matters and its dependence on the provision of correct and complete information by taxpayers ([103]). On that basis, the Court had concluded, at [104], that the presumption was confined within reasonable limits. 38. At [21], Lord Bingham summarised the principles to be derived from the case law of the ECtHR. He said: “From this body of authority certain principles may be derived. The overriding concern is that a trial should be fair, and the presumption of innocence is a fundamental right directed to that end. The Convention does not outlaw presumptions of fact or law but requires that these should be kept within reasonable limits and should not be arbitrary. It is open to states to define the constituent elements of a criminal offence, excluding the requirement of mens rea . But the substance and effect of any presumption adverse to a defendant must be examined, and must be reasonable. Relevant to any judgment on reasonableness or proportionality will be the opportunity given to the defendant to rebut the presumption, maintenance of the rights of the defence, flexibility in application of the presumption, retention by the court of a power to assess the evidence, the importance of what is at stake and the difficulty which a prosecutor may face in the absence of a presumption. Security concerns do not absolve member states from their duty to observe basic standards of fairness. The justifiability of any infringement of the presumption of innocence cannot be resolved by any rule of thumb, but on examination of all the facts and circumstances of the particular provision as applied in the particular case.””
“39. In this case…there is… an effective requirement, having regard to the sanction of the penalty, for the recipient of goods to take reasonable steps to check that those goods are duty paid. That is reinforced by the defence of reasonable excuse. As well as that defence, there is an opportunity, according to the express terms of s 154 CEMA, for the person concerned to rebut the presumption that duty has not been paid. The penalty is also subject to reasonable mitigation, reflecting the “quality of the disclosure”, namely whether the disclosure was prompted or unprompted, and the timing, nature and extent of the disclosure (see FA 2008, Sch 41, paras 12 and 13).”
“41. Mr Bedenham [counsel for Euro Wines] sought to contrast the facts of this case with those in Sheldrake , where the question was as to the absence of likelihood of the defendant driving a vehicle whilst over the alcohol limit. There, as Lord Bingham described it at [41], the House of Lords found that it was not objectionable to criminalise a defendant's conduct without requiring a prosecutor to prove criminal intent. The likelihood of the defendant driving was “a matter so closely conditioned by his own knowledge and state of mind at the material time as to make it much more appropriate for him to prove on the balance of probabilities that he would not have been likely to drive than for the prosecutor to prove, beyond reasonable doubt, that he would.” 42. It is not in every case that the question resolves itself into which of the parties is best placed to prove a particular fact. The whole scheme of the relevant provisions must be considered. It is not possible, in our judgment, to conclude with the clarity that was available in Sheldrake , which out of HMRC or a trader in the position of Euro Wines, would be the appropriate party to prove the question of duty payment. It might in some cases be HMRC, and in others the trader. Nevertheless, it is the trader who is in the best position, when carrying out its own trade, to know the circumstances of that trade. In every case a trader who is at the point of acquiring dutiable goods has the opportunity to take steps in order to satisfy itself about whether duty has been paid before going ahead. A trader who goes ahead without being satisfied knows or ought to know it is at risk. A trader in that situation can avoid the risk entirely by refusing to take such goods. 43. Parliament has determined that in all cases the burden should be on the relevant person and not on HMRC. It has done so whilst at the same time enabling the relevant person to rebut the presumption of non-payment of duty, and to raise defences of reasonable excuse, in particular, and special circumstances. This, we consider, strikes an appropriate balance in the circumstances. In our judgment, the penalty provisions as a whole represent a proportionate scheme and accordingly the imposition in that context of the burden of proof on the relevant person as to payment of duty does not go beyond what is necessary for the protection of the revenue. We find accordingly that the reverse burden of proof in s 154 CEMA is not incompatible withArticle 6 of the Convention . There is accordingly no need for a conforming construction of s 154.”
“The Warning Notice will state the grounds for believing that the manufacturer has failed to exercise adequate control over his supply chains. Failure to take reasonable and effective steps to improve his control over those supply chains could lead to the issuing of a Penalty Notice .” (Emphasis added)
“The Commissioners would cancel the Warning Notice if they were convinced that it should not have been issued or if they were satisfied that the manufacturer had adequately addressed the problem . The decision not to issue a Penalty Notice would be the Commissioners’ final judgement. Any subsequent concerns would be expressed in a subsequent Warning Notice .” (Emphasis added)
“An initial notice is a letter from us, advising you that we have concerns regarding the level of your compliance with your legal duty not to facilitate the smuggling of tobacco products… The initial notice acts as a warning, and provides you with an opportunity to take corrective action regarding the level of your compliance, and in so doing avoid being issued with a financial penalty .” (Emphasis added)
“In particular we will review whether or not you have satisfactorily addressed the reasons for the issuing of the initial notice, and any seizures notified to you in the six month period following the issue of the initial notice.”
“ This initial notice gives warning that in six months from the date of this notice, HMRC will review the actions BAT has taken following the issue of this notice and make its decision whether or not to issue a penalty notice under section 7C… ”
“ I have no doubt that you will wish to reflect on the contents of this initial notice and implement the points that have been outlined. ”
“Whilst I am happy to have been able to provide answers to your questions, I would respectfully remind you that the purpose of the Initial Notice is to give BAT adequate time to make improvements to their processes in order to meet the requirements of the TPDA and to avert the necessity of issuing a penalty. The six month period for these improvements ends on22 April 2014 .”
“There are currently no additional matters HMRC consider relevant. If other matters do arise, HMRC will write to BAT and set these out in detail and, if necessary, issue another initial notice under section 7B (1).”
“ Section 7B(2) (a) & (b) – content of, and compliance with, BAT’s written policy of steps taken to ensure compliance with section 7A (1) … (i) BAT is unable to tell HMRC who the name and address of the first customer to whom it has supplied the cigarettes/HRT that have been manufactured by BAT.”