“You said that you were asked if you were interested in earning some extra cash delivering as you had access to a van. You stated that you were approached by a man in a pub about the job but cannot remember which pub or the name of the man. You also said you were contacted by a man whom you had never met about a delivering job, you have also said that you did not know this man’s name either. You received instructions of where to pick up boxes and where to deliver them through a mobile phone, which was posted through your letterbox. You claimed that you did not know that there were cigarettes in the boxes and that you thought the boxes contained washing up liquid. You have claimed that you had no idea what you were involved in. I consider that the circumstances surrounding the procurement of the delivery job are not credible and should be called into question. Given the clandestine nature of the job that you were undertaking, I believe that you must have known that you were involved in criminal activity and that you were delivering illicit goods, certainly not washing up liquid.”
“1. Excise duty shall become chargeable at the time, and in the Member State, of release for consumption. 2. For the purposes of this Directive, “release for consumption” shall mean any of the following: …; (b) the holding of excise goods outside a duty suspension arrangement where excise duty has not been levied pursuant to the applicable provisions of Community law and national legislation;”
“1. The person liable to pay the excise duty that has become chargeable shall be: … (b) in relation to the holding of excise goods as referred to in Article 7(2)(b): the person holding the excise goods and any other person involved in the holding of the excise goods; … 2. Where several persons are liable for payment of one excise duty debt, they shall be jointly and severally liable for such debt.”
“(1) Excise goods are released for consumption in the United Kingdom at the time when they: … (b) are held outside a duty suspension arrangement and UK excise duty on those goods has not been paid, relieved, remitted or deferred under a duty deferment arrangement; ….”
“[79] In this regard, Mr Beal accepted in argument that, as a matter of law and not merely as a matter of HMRC’s discretion, HMRC were obliged to assess against the earliest point in time at which they are able to establish, on the evidence before them, that excise goods have been held outside a duty suspension arrangement. In B&M the Upper Tribunal appeared to have proceeded on the basis that the question as to who should be assessed where there had been a series of circumstances which could have led to an assessment was purely a matter of HMRC’s discretion, which could only be challenged through the medium of judicial review: see [150] to [153] of the decision. [80] We accept that the position is as accepted by Mr Beal. It is consistent with our analysis that the Directive requires an assessment to be made against the first established excise duty point.”
“Clearly, HMRC cannot make an assessment until it has the necessary information on which to establish when, how, where and by whose acts the excise duty point occurred. Therefore, in the absence of any relevant information in relation to any prior release for consumption, HMRC must assess the person who it finds to be holding the goods in question, since that is the only excise duty point which HMRC is able to establish.”
“In summary, in circumstances where HMRC seek to assess the person found to be holding excise duty goods in respect of which duty has not been paid pursuant to regulation 10(1) of the Regulations and that person challenges the assessment on the basis that an earlier excise duty point can be established against which the assessment should be made, for that challenge to be successful it will be necessary to establish: (1) Who had physical possession at the time that the alleged earlier excise duty point occurred. For example, the earlier excise duty point might be established immediately before the goods concerned were delivered to the premises of the subsequent holder, by reference to the physical possession of the courier delivering those goods. (2) Who is the person alleged to have de facto or legal control over the goods who it is said should be assessed rather than the subsequent holder (if it is the case that the courier was an innocent agent and it is not appropriate to assess the courier), and how that person is said to have such control and the basis on which it was being exercised. For example, the terms of supply to the person alleged to have de facto or legal control might mean that in fact that person never had control of the goods and did not direct their delivery. Control might have been exercised by another entity earlier in the chain of supply in compliance with a request by the person in question to deliver them to the subsequent holder. Alternatively, for example, the terms of supply to the subsequent holder, including where relevant the operation of the Sale of Goods Act or the Convention (see para 124 above) might mean that the goods were already under the control of the subsequent holder while in transit to him. (3) The time at which the excise duty point arose. Whilst precise temporal exactitude is not essential (see, for example, Revenue and Customs Comrs v Jacobson[2018] UKUT 18 (TCC) at [46]), in our view the date of an invoice is not sufficient in itself without establishing who was in possession of the goods at some identified point or points in time. In that context, and as already indicated, the terms of the relevant sale may be relevant, in particular as to when delivery is deemed to have occurred. Copies of CMRs, if they can be obtained, may be relevant. (4) Where the goods were being held at the relevant time. In the case of goods being transported, that could be by reference to the means of transport or the location of that means of transport at some point in time, possibly immediately prior to the delivery of the goods at a particular location. We do not consider that the goods need necessarily to be shown to have been static at a particular place at a single fixed point in time (again, see Jacobson). For example, in the case of means of transport the transport used, the start and/or end points of the journey and a defined period of time within which it must have occurred might be identified.”
“B & M are, it appears, troubled in this case that HMRC are not following their own stated policy in certain respects: … B&M wish to be satisfied that there are not in fact earlier points in the supply chain where an excise duty point could clearly be established on the evidence, or might be if such an investigation were in their view more vigorously pursued. We would be inclined to agree that it would not be in the interests of justice that HMRC should simply be able to sit back and say that the burden is on the taxpayer to provide the evidence to displace its liability, when the evidence that HMRC do actually have is in fact sufficient to demonstrate, objectively, that an earlier excise duty point could be established. We are in no position, however, to say whether that is the position in the present case, and any concerns of that nature would anyway have to be pursued through the medium of judicial review.”
“Although this term [the ‘evidentiary burden of proof’] is widely used, it has often been pointed out that it simply expresses a notion of practical common sense and is not a principle of substantive or procedural law. It means no more than this, that during the trial of an issue of fact there will often arrive one or more occasions when, if the judge were to take stock of the evidence so far adduced, he would conclude that, if there were to be no more evidence, a particular party would win. It would follow that, if the other party wished to escape defeat, he would have to call sufficient evidence to turn the scale. The identity of the party to whom this applies may change and change again during the hearing, and it is often convenient to speak of one party or the other as having the evidentiary burden at a given time. This is, however, no more than shorthand, which should not be allowed to disguise the fact that the burden of proof in the strict sense will remain on the same party throughout – which will almost always mean that the party who relies on a particular fact in support of his case must prove it.”
“60. We find, for the reasons advanced by both parties, that RBKC never had evidence or knowledge of any relevant applications having been made to HMCE (or HMRC). 61. We accept that HMRC were the only ones (as between the parties) who would have held such evidence and had such knowledge. We accept too that HMRC no longer have evidence of any relevant applications having been made to them, because they destroyed any evidence they may have held. …. However, that does not alter the fact that HMRC were the only ones who, as between the parties, would have held the evidence in the first place. 62. We do not accept Mr Shepherd’s submission that the fact that HMCE (or HMRC) were not obliged to retain such evidence beyond six years means that they do not bear the evidential burden of proving what relevant applications were made. Of the two parties, HMRC were the only ones to have ever held such evidence, or to have had knowledge of relevant applications having been made. It would be unreasonable, and unjust, to expect RBKC to adduce evidence of relevant applications not having been made (quite apart from the obvious difficulty of requiring them to prove a negative). 63. The factors set out at paragraphs 60 to 62 above suffice, in our judgment, for the evidential burden to have shifted to HMRC in light of Wood v Holden. … 66. For these reasons, as well as those advanced by Mr Vallat, we find that the evidential burden was on HMRC to prove what “relevant applications” were made, rather than on RBKC to prove what “relevant applications” were not made. 68. Mr Vallat reminded us that paragraph 32 of Wood v Holden holds that we can decide the appeal on the basis that the burden of proof has not been discharged, but only as a last resort. He submitted that the present case does require us to take the course of last resort, that is, to decide that HMRC’s burden of proving that “relevant applications” have been made has not been discharged, rather than requiring a positive decision that there have been no such applications. 69. HMRC’s position was that “having opted for Method 2, under the balance of probabilities, any ‘Fleming’ claims [that is, “relevant applications”] that have been submitted, are very likely to have been repaid already either in full or in part under the process agreed between the Local Authorities and Customs & Excise”
“[30] The judge noted that the special commissioners had expressed their conclusion as to the central management and control of Eulalia (at paragraph 145 of their decision) in terms which suggested that they had based that conclusion on what they saw as the taxpayers' failure to discharge the onus which was placed upon them by section 50(6) TMA 1970. As the special commissioners had put it: “the Appellants have failed to satisfy us that the central control and management was not in London from18 July 1996 when CIL became its shareholder”
“[59] I wish to say more about the way in which the Commissioners have based their decision on what they see as the failure of Mr and Mrs Wood to discharge the burden of proving a negative. I accept, despite a submission of Mr Goldberg to the contrary, that, when an Inspector of Taxes makes an adjustment to a taxpayer's self-assessment and the taxpayer appeals against the adjustment, the statutory burden on appeal rests on the taxpayer to show that the adjustment is wrong. That is the effect ofs.50(6) of the Taxes Management Act 1970 : 'If, on an appeal, it appears to … the Commissioners … by evidence – (c) that the appellant is overcharged by an assessment … the assessment … shall be reduced accordingly, but otherwise the assessment … shall stand good.'“ But he went on (ibid): “ . . . However, there plainly comes a point where the taxpayer has produced evidence which, as matters stand then, appears to show that the assessment is wrong. At that point the evidential basis must pass to the Revenue.”
“[63] . . . in so far as the Commissioners decided this appeal against Mr and Mrs Wood on grounds relating to the burden of proof (and the opening part of paragraph SC145 suggests that those were the critical grounds for the decision), I consider that they were in error.”
“[60] In this case, at the beginning of the appeal before the Special Commissioners the position was that the Revenue had made an adjustment on the basis that Mr and Mrs Wood were liable to CGT, and that Mr and Mrs Wood had to show to the civil standard of proof that the adjustment was wrong. I accept that the onus was on them to show that Eulalia was not resident in the United Kingdom, but rather was resident in the Netherlands. [Park J then set out what Mrs and Mrs Wood had shown and went on] Surely at that point they can say: 'We have done enough to raise a case that Eulalia was not resident in the United Kingdom. What more can the Special Commissioners expect from us? The burden must now pass to the Revenue to produce some material to show that, despite what appears from everything which we have produced, Eulalia was actually resident in the United Kingdom.” [32] As the judge pointed out, the revenue had produced no positive material to show where the central control and management of Eulalia was. It was not enough (as the judge thought) for the revenue to criticise the lack of evidence from some of those at Price Waterhouse and ABN AMRO who had been involved in the transaction in 1996. The special commissioners had said that they would not have been assisted, to any material extent, by oral evidence of events then some seven years in the past. Nor was it enough to demonstrate, as counsel for the revenue had done convincingly, “that the steps taken were part of a single tax scheme, that there were overall architects of the scheme in Price Waterhouse, and that those involved all shared the common expectation that the various stages of the scheme would in fact take place”
'If, on an appeal, it appears to … the Commissioners … by evidence – (c) that the appellant is overcharged by an assessment … the assessment … shall be reduced accordingly, but otherwise the assessment … shall stand good.'“ “ . . . However, there plainly comes a point where the taxpayer has produced evidence which, as matters stand then, appears to show that the assessment is wrong. At that point the evidential basis must pass to the Revenue.” “[63] . . . in so far as the Commissioners decided this appeal against Mr and Mrs Wood on grounds relating to the burden of proof (and the opening part of paragraph SC145 suggests that those were the critical grounds for the decision), I consider that they were in error.” “[60] In this case, at the beginning of the appeal before the Special Commissioners the position was that the Revenue had made an adjustment on the basis that Mr and Mrs Wood were liable to CGT, and that Mr and Mrs Wood had to show to the civil standard of proof that the adjustment was wrong. I accept that the onus was on them to show that Eulalia was not resident in the United Kingdom, but rather was resident in the Netherlands. [Park J then set out what Mrs and Mrs Wood had shown and went on] Surely at that point they can say: '
“There was a dispute as to when CenPOL changed its view and in particular whether it was before or after the decision and review decision at issue in this appeal. I had no evidence on this: Mr Kane [the HMRC officer] simply did not know. Ms Choudhary’s view was that if it was the appellant’s proposition that CenPOL changed its view before the information notice was issued, then the appellant had the burden of proof: Mr Firth said HMRC had the burden of proof on this as only HMRC could possess the evidence of this. I agree with the appellant over this for the reasons given by the FTT in the decision of Royal Borough of Kensington & Chelsea[2014] UKFTT 729 (TC) at§§60-63. So I find the change of view was sometime before the issue of the information notice as HMRC were the only party who could have known the truth on the date of the change and they adduced no evidence on it.”
“104. Previous iterations of the Transactions in Securities legislation made it clear that the burden of proof lay upon the taxpayer to demonstrate that its purpose was not to obtain an income tax advantage (see, for example,section 703(1) Income and Corporation Taxes Act 1988 andsection 685 Income Tax Act 2007 as in force prior to24 March 2010 ). 105. However, the current wording of section 684(1) is silent as to who must demonstrate the requisite purpose of being a party to the transactions in securities. A number of commentators consider that the burden of proof now lies upon HMRC. This is a curious result, because the main purpose of the person who is a party to a transaction in securities, the test being a subjective one, will be a matter which is primarily within the knowledge of the taxpayer rather than HMRC. 106. In his submissions, Mr Elliott addressed this issue. First, he noted that in HMRC’s Statement of Case it was said: “The burden of proof lies with HMRC to show that the main purpose, or one of the main purposes, of the transaction was to obtain an income tax advantage.” 107. However, in Mr Elliott’s submission, regardless of where the legal burden of proof lay, HMRC had adduced sufficient documentary evidence to demonstrate that a main purpose or one of the main purposes of the Appellants being party to the transactions in securities was the obtaining of an income tax advantage with the result that the evidential burden of proof shifted to the Appellants. In any event, the evidential burden should lie upon the Appellants since the evidence of the Appellants’ purposes was primarily within their control and knowledge. Mr Elliott noted that this Tribunal (Judge Poole), on3 March 2020 , had already made a determination under section 697 and decided that there was a prima facie case for HMRC to take further action on the basis that section 684 applied. 108. I did not understand Mr Foster, appearing for the Appellants, to dispute this analysis, but in any event I shall proceed on this basis as I see no sensible alternative.”
“53. Mr Vallat also took us to paragraph 772 of [Volume 11 of Halsbury’s Laws of England, 5th edition (2009)] — “Where the truth of a party’s allegation lies peculiarly within the knowledge of his opponent, the burden of disproving it often lies upon the latter (R v Edwards[1975] QB 27 ,[1974] 2 All ER 1085 , CA), but there is no general rule of law to this effect (R v Edwards). There is authority contrary to this exception [citing inter alia Doe d Bridger v Whitehead (1838) 8 Ad & El 571], but it certainly exists and has frequently been applied by the courts.”
“The qualification cannot apply to all negative averments. There is not, and never has been, a general rule of law that the mere fact that a matter lies peculiarly within the knowledge of the defendant is sufficient to cast the onus on him. If there was any such rule, anyone charged with doing an unlawful act with a specified intent would find himself having to prove his innocence because if there ever was a matter which could be said to be peculiarly within a person's knowledge it is the state of his own mind.”
“Where the truth of a party's allegation lies peculiarly within the knowledge of his opponent, the burden of disproving it often lies upon the latter, but there is no general rule of law to this effect. There is authority contrary to this exception, but it certainly exists and has frequently been applied by the courts. This is particularly the case in magistrates' courts and in criminal proceedings based on statute, and in some employers' liability situations. In civil cases the incidence of the burden of proof may be determined by agreement between the parties, so far as not prohibited by statute.”
“A penalty is payable by a person (P) where— (a) after the excise duty point for any goods which are chargeable with a duty of excise, P acquires possession of the goods or is concerned in carrying, removing, depositing, keeping or otherwise dealing with the goods, and (b) at the time when P acquires possession of the goods or is so concerned, a payment of duty on the goods is outstanding and has not been deferred.”
“P's acquiring possession of, or being concerned in dealing with, goods on which a payment of duty is outstanding and has not been deferred…is – 'deliberate and concealed' if it is done deliberately and P makes arrangements to conceal it, and 'deliberate but not concealed' if it is done deliberately but P does not make arrangements to conceal it.”
“Disclosure of a relevant act or failure (a) is ‘unprompted’ if made at a time when the person making it has no reason to believe that HMRC have discovered or are about to discover the relevant act or failure, and (b) otherwise, is prompted.”
“23. In our view, where a taxpayer suspects that a document contained an inaccuracy but deliberately and without good reason chooses not to confirm the true position before submitting the document to HMRC then the inaccuracy is deliberate on the part of the taxpayer. If it were otherwise then a person who believed there was a high probability that their return contained errors but chose not to investigate would never be subject to a deliberate penalty. However, the suspicion must be more than merely fanciful. Lord Scott of Foscote urged caution in this context in Manifest Shipping Co Ltd v Uni-Polaris Insurance Co Ltd[2001] UKHL 1 at [116]: “In summary, blind-eye knowledge requires, in my opinion, a suspicion that the relevant facts do exist and a deliberate decision to avoid confirming that they exist. But a warning should be sounded. Suspicion is a word that can be used to describe a state-of-mind that may, at one extreme, be no more than a vague feeling of unease and, at the other extreme, reflect a firm belief in the existence of the relevant facts. In my opinion, in order for there to be blind-eye knowledge, the suspicion must be firmly grounded and targeted on specific facts. The deliberate decision must be a decision to avoid obtaining confirmation of facts in whose existence the individual has good reason to believe. To allow blind-eye knowledge to be constituted by a decision not to enquire into an untargeted or speculative suspicion would be to allow negligence, albeit gross, to be the basis of a finding of privity.” 24. Although the concepts of blind-eye knowledge and recklessness as to the truth or falsity of a statement may intersect, they are clearly not identical. As we have already stated, HMRC did not ask us to consider whether an inaccuracy is deliberate where a taxpayer is reckless as to whether the document contains any errors. In the absence of any argument on the point from HMRC, and because it is not necessary for the purposes of this decision, we do not consider whether recklessness is a sufficient basis for determining that an inaccuracy is deliberate further in this decision, and make no comment either way.” “In summary, blind-eye knowledge requires, in my opinion, a suspicion that the relevant facts do exist and a deliberate decision to avoid confirming that they exist. But a warning should be sounded. Suspicion is a word that can be used to describe a state-of-mind that may, at one extreme, be no more than a vague feeling of unease and, at the other extreme, reflect a firm belief in the existence of the relevant facts. In my opinion, in order for there to be blind-eye knowledge, the suspicion must be firmly grounded and targeted on specific facts. The deliberate decision must be a decision to avoid obtaining confirmation of facts in whose existence the individual has good reason to believe. To allow blind-eye knowledge to be constituted by a decision not to enquire into an untargeted or speculative suspicion would be to allow negligence, albeit gross, to be the basis of a finding of privity.”