“In the light of these considerations, the best approach for a judge to adopt in the trial of a commercial case is, in my view, to place little if any reliance at all on witnesses' recollections of what was said in meetings and conversations, and to base factual findings on inferences drawn from the documentary evidence and known or probable facts. This does not mean that oral testimony serves no useful purpose – though its utility is often disproportionate to its length. But its value lies largely, as I see it, in the opportunity which cross-examination affords to subject the documentary record to critical scrutiny and to gauge the personality, motivations and working practices of a witness, rather than in testimony of what the witness recalls of particular conversations and events. Above all, it is important to avoid the fallacy of supposing that, because a witness has confidence in his or her recollection and is honest, evidence based on that recollection provides any reliable guide to the truth.”
“From the information provided to me and from my experience as a practising accountant and accountancy expert, I regard the company as an owner managed company. This is relevant to my considerations because the behaviour of such companies is different to companies where ownership is wholly divorced from management. Although there are many differences between them, owner managed companies will often display features not found in other companies, which might include the following: i. Decisions may not always be made purely on commercial grounds. ii. Expectations of profits and returns on investment are invariably different, given that such companies do not have to satisfy commercial investors or investment markets. iii. They may often employ family members, even where such employment may not wholly conform to the commercial interests of the company. Where such employment exists, salaries can often be paid at a level different from market rate for the services provided. iv. Typically, in the case of owner/directors, remuneration may be structured in the form of dividend rather than salary. v. Trading activities may be funded by the owners themselves, rather than by commercial lending or by capital investment. Typically such funding is provided by way of soft or informal loans rather than term or formal borrowing arrangements. vi. Such companies are often more agile than their larger counterparts, although part of the reason for that agility is often seen as an undue reliance on key personnel (and a potential business risk).” i. Decisions may not always be made purely on commercial grounds. ii. Expectations of profits and returns on investment are invariably different, given that such companies do not have to satisfy commercial investors or investment markets. iii. They may often employ family members, even where such employment may not wholly conform to the commercial interests of the company. Where such employment exists, salaries can often be paid at a level different from market rate for the services provided. iv. Typically, in the case of owner/directors, remuneration may be structured in the form of dividend rather than salary. v. Trading activities may be funded by the owners themselves, rather than by commercial lending or by capital investment. Typically such funding is provided by way of soft or informal loans rather than term or formal borrowing arrangements. vi. Such companies are often more agile than their larger counterparts, although part of the reason for that agility is often seen as an undue reliance on key personnel (and a potential business risk).”
“3.2.5 It is important to note that whilst the existence of a negative liability position is often perceived to suggest that a company is insolvent, the technical definition of insolvency includes a requirement that a company is unable to pay debts when they fall due. As far as I understand the position, this definition does not apply to MSD Wholesale Ltd. On the assumption that the company is able to settle its accounts when they become due, which I understand has been the case historically and remains so, I conclude that the company fulfils the relevant criteria of solvency. 3.2.6 It is noted that other creditors increased from approximately£1.6m at31 March 2020 to£2.2m at31 March 2021 , with a further increase in 2022 to£2.38m . I understand that this represents an increase in financial support provided by Mrs Kaur and family members primarily to finance the reinvestment in stock referred to [above]. 3.2.7 I understand that during 2019, the funding from Mrs Kaur was supplemented by loan funding from Kuflink, a recognised peer to peer lender, amounting to£500,000 . I am further advised that Kuflink have confirmed that they are currently in discussions with the company as to the terms of repayment of this loan.”
“4.1.2 I have noted my understanding that the company is reliant on funding principally from the director and that this is not unusual in owner managed companies. I have noted that this gives the company a significant cost and cashflow advantage than if it had obtained funding from commercial sources. 4.1.3 In summary, whilst the company has undoubtedly experienced challenges as a result of COVID and is reliant upon the support of the director, in my opinion the company appears to be a going concern.”
“… as evidence of payments have been analysed and have been found to be simplistic payments slips with signatures of individuals from your company and the signature of a representative from the purported supplier. I am not satisfied that this is evidence of payment to your supplier …”
“… with Officer Alabi that these receipts and acknowledgements on their own are insufficient evidence to demonstrate that large cash payments ranging from£33,400 to£80,000 have been made to your suppliers. Without any further evidence to demonstrate that the payments have been made I conclude that the assessment is correct. I have also considered that it is not normal business practice to pay suppliers in such large cash amounts given the security risks that are involved in transporting large amounts of cash would cause.”
“This letter is a notice of intention which offers you the opportunity to provide any further information or to make a representation which may assist in my decision to raising a formal assessment. Any response must be made by the very latest on18th October 2016 , at which time I will make my decision.”
“I can confirm to you that Gujarr Limited’s alcoholic stock is UK Duty paid. We distribute our alcoholic beverages from our sister company’s depot Meadowhall Limited’s warehouse premises, which is located at; …, Doxford International Business Park, Sunderland … .”
“We will deliver to your Cash & Carry direct from our on trade warehouse premises, which is located in Cardiff.”
“… all the invoices and the tax loss schedule I used in reaching my decision to deny the input tax during the stated periods.”
“Our company has been trading for a few years now and have established itself to become the delivered wholesale partner for our customers from our large distribution warehouse. …”
“… a notice of intention which offers you the opportunity to provide any further information or to make a representation which may assist in my intended decision to raise a formal assessment of excise duty. Any response must be made by the very latest on24th October 2019 , at which time I will make my decision.”
“In relation to the goods seized on31st October 2018 : Again, we repeat that these goods were stored at premises that we had been told by HMRC did not need to be “registered”
“… This business passed the vetting procedures. Please see our report at section 1 of the file. You will note that we cannot provide the financial assessment at this time as we are currently awaiting receipt of references. This will be forwarded to you in due course and should be filed in the appropriate section of the file upon receipt.”
“90. … had Mr Spranklen proceeded to make an assessment in circumstances where his belief was that the evidence that he had was not of sufficient weight to justify the assessment and that he would be acting wholly unreasonably and taking advantage of the taxpayer in so doing, that would call into question whether the assessment was made honestly and in good faith. 91. Therefore, we can see no basis on which we should interfere with the FTT’s finding that it was not wholly unreasonable or perverse of Mr Spranklen to have formed the opinion that he did not have evidence of sufficient weight to make the assessment until after the meeting on20 April 2010 . Since s 76 (6) (b) VATA 1994 focuses on whether the evidence obtained is of sufficient weight, the fact that no new material emerged from the meeting of20 April 2010 is of no concern. It was the context of the meeting of4 September 2009 that in the opinion of Mr Spranklen did not give the evidence he obtained sufficient weight to make an assessment, but the fact that it was repeated in a more formal setting in his opinion gave that same information sufficient weight on which he could base his assessment. 92. We can see nothing wholly unreasonable or perverse in that opinion. Indeed, Mr Spranklen is to be commended for following an approach which was designed to be scrupulously fair to Mr Rasul. It is obviously highly desirable that HMRC’s Officers should be seen to be scrupulously fair in the way that they approach the question of best judgment assessments and it would be highly undesirable if the law was to be interpreted in such a way that it operated as an encouragement to make an assessment in circumstances where there is any doubt as to whether the taxpayer has been treated fairly.”
“… that the guiding principle in an application to adjourn of this type is whether if the trial goes ahead it will be fair in all the circumstances; that the assessment of what is fair is a fact-sensitive one, and not one to be judged by the mechanistic application of any particular checklist; that although the inability of a party himself to attend trial through illness will almost always be a highly material consideration, it is artificial to seek to draw a sharp distinction between that case and the unavailability of a witness; and that the significance to be attached to the inability of an important witness to attend through illness will vary from case to case, but that it will usually be material, and may be decisive. And if the refusal of an adjournment would make the resulting trial unfair, an adjournment should ordinarily be granted, regardless of inconvenience to the other party or other court users, unless this were outweighed by injustice to the other party that could not be compensated for.”
“… The reason why Mr Uddin lost, despite his argument that he had been misled, was clear. That was that, even though Mr Uddin may have relied on his accountant (and been misled into believing that everything was in order), the cursory and general enquiries he made were insufficient to displace the general rule that the taxpayer should bear the consequences of the representative’s failings. … Put another way, a client will always rely on their advisers, but their adviser’s failings are still laid at their door. Why the adviser failed and how they led their client to continue to rely on them is not relevant to the Martland analysis, unless the client can show that they did whatever a reasonable taxpayer in that situation would have done (which would generally be to make sufficient efforts to keep tabs on the adviser and make sure that matters were on track). Mr Uddin lost because he did not demonstrate more than a cursory interest in what was (not) going on, he had not done what a reasonable taxpayer in his position would be expected to do, rather than because the tribunal failed to recognise that such cursory enquiries as he made were met with untruthful answers.”
“The person whose opinion is imputed to the commissioners is the person who decided to make the assessment. It does not matter that he or she may not be the person who first acquired knowledge of the evidence of the facts which are considered to be sufficient to justify making the assessment. The knowledge of all officers who are authorised to receive information which is relevant to the decision to make an assessment is imputed to the commissioners.”
“The relevant evidence of facts is that which was considered, in the opinion of the Commissioners, to justify the making of the assessment. The one-year time limit runs from the date when the facts constituting the evidence came to the knowledge of the Commissioners.”
“An opinion as to what evidence justifies an assessment requires judgment and in that sense is subjective; but the existence of the opinion is a fact. From that it is possible to ascertain what was the evidence of facts which was thought to justify the making of the assessment. Once that evidence has been ascertained, then the date when the last piece of the puzzle fell into place can be ascertained”
“… If the “evidence of facts” known to the Commissioners previously was the same as the evidence of facts which led them to form the opinion later on that an assessment was justified (or, on a Wednesbury approach, should have led them to form that opinion), then it will be clear that the Commissioners have sat on their hands and the special, truncated limitation period in paragraph (b) [ie one year] will apply.”
“It is clear from these dicta, which in my view are a correct statement of the law, that section 73(6)(b) addresses the assessment which HMRC has in fact made and not a hypothetical assessment which they might have made but did not. The words of the subsection are clear: “facts, sufficient in the opinion of the Commissioners to justify the making of the assessment.” (Emphasis added.)
“… 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.” (3) In Dawson’s (Wales) Ltd v HMRC[2019] UKUT 296 (TCC) (“Dawsons UT”) at [149], the Upper Tribunal set out the factors a person found to be holding excise duty goods in respect of which duty has not been paid would have to show in order successfully to challenge an assessment on the basis that an earlier duty point could be established against which HMRC should have made an assessment (the “Factors”): “(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…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…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...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.” (4) In 2019, the Court of Appeal had considered HMRC’s appeal against the Upper Tribunal’s judgment in HMRC v Perfect[2017] UKUT 0476 (TC) . The UT had agreed with the FTT that Mr Perfect, a haulier, was not liable to excise duty because he had no actual or constructive knowledge that the load he was carrying was liable to duty which had not been paid. The Court referred to the CJEU the question as to whether a person holding goods (such as a haulier) who had no actual or constructive knowledge that duty was unpaid was nevertheless liable for that duty. (5) In HMRC v WR [2021] C- 279/19, at [33] of its judgment, the CJEU answered the question posed by the Court of Appeal, saying at [36] that Directive 2008/118/EC: “… must be interpreted as meaning that a person who transports, on behalf of others, excise goods to another Member State, and who is in physical possession of those goods at the moment when they have become chargeable to the corresponding excise duty, is liable for that excise duty, under that provision, even if that person has no right to or interest in those goods and is not aware that they are subject to excise duty or, if so aware, is not aware that they have become chargeable to the corresponding excise duty.”
“… the fact that Mr Perfect had neither actual nor constructive knowledge of the smuggling of the beer he was carrying cannot exempt him from liability from excise duty.” (7) In Dawson’s (Wales) Ltd v HMRC[2023] EWCA Civ 332 , Asplin LJ considered the Dawsons UT decision, in light of the decisions of the CJEU and Court of Appeal in Perfect. At [77], she endorsed factor (1) of the UT decision (physical possession). At [94], she endorsed factors (3) and (4) (timing and location), and at [86], she recorded factor (2) (de facto or legal control) as not having been subject to challenge. (8) In Hartleb v HMRC[2024] UKUT 00034 (TCC) (“Hartleb”) the Upper Tribunal refused an appeal made by the owner of a lorry against an excise duty assessment charged on goods which had been seized from her employee, the lorry driver stating: “78. We find the factors identified by the UT in Dawson to be a useful guide in determining who to regard as holder in circumstances where physical possession and de facto and/or legal control are separated as they are in our situation, noting in this regard that the second factor must now be seen in the context of Perfect and WR. 79. This is notwithstanding the fact that in Dawson the factors were intended to aid identification of an earlier excise duty point in circumstances where an assessment was being challenged on the basis of there being an earlier excise duty point against which the assessment should have been made. 80. We also take into account the fact that Dawson and the majority of cases considered in it, including Perfect, involve persons arguing that they should not be assessed to duty simply on the basis of having physical possession of excise goods. The Appellant’s position is, in effect, the reverse as she contends that she should not be assessed to duty as she did not have physical possession of the relevant excise goods. Although the situation is the reverse, we consider that the principle of physical possession not being determinative must apply equally. 81. The approach of the UT and Court of Appeal in Dawson demonstrates that the determination of “holding” is a question of law and fact. Although the initial focus, given the scheme and wording of the legislation together with the case law, is necessarily on the physical location of goods so giving weight to physical possession – that is not the end of the matter and a more detailed consideration of the facts is needed.” (9) In Qais Majeed Ali v HMRC[2024] UKUT 176 (TCC) (“Ali”) at [38], the Upper Tribunal held, by reference to Davison, that the First-tier Tribunal had been wrong to decide that HMRC could refuse to assess an insolvent or impecunious holder and instead assess a subsequent holder, holding that: “… the correct position is that, if there was someone who HMRC had sufficient information to assess, then HMRC had to assess that person irrespective of the prospects of recovery”
“… some consideration must be given to the expression 'fit and proper' person. This is a portmanteau expression, widely used in many contexts. It does not lend itself to semantic exegesis or paraphrase and takes its colour from the context in which it is used. It is an expression directed to ensuring that an applicant for permission to do something has the personal qualities and professional qualifications reasonably required of a person doing whatever it is that the applicant seeks permission to do.”
“19. In para C of EN 196 it is said that only persons who demonstrate that they are fit and proper to carry out excise businesses will be authorised. This “fit and proper” requirement must, in our view, be read in the light of the purposes of the provisions in section 100G: for the administration, collection and protection of the revenue. 20. As a result, ‘fit and proper’ does not in this context mean fine, upstanding, or well-connected; it means persons who demonstrate behaviours of a type likely to assist, and not to hinder, the proper administration, collection and protection of the revenue. 21. Para C does not expressly make being fit and proper a condition for the holding of an approval, but in our judgement the effect of the paragraph is that if a person cannot demonstrate that he is in this sense fit and proper, that will afford reasonable cause for revocation of an approval. 22. If a person fails to carry out “due diligence” (in the sense described in para H above, rather than merely collecting bits of paper) its actions will generally not assist and may hinder the achievement of that purpose. Thus generally such a person will not be fit and proper. There may however be reasons for the failure which permit such a person to be regarded as fit and proper; and conversely reasons why a person who does carry out required due diligence, may not be fit and proper.”
“… the management of the excise system is a matter for the administrative discretion of HMRC. The decision whether a registered owner remains a fit and proper person to trade in duty-suspended goods is a good example of the kind of decision which the HMRC are peculiarly well-fitted to judge, since it requires what is necessarily to some extent a subjective – albeit evidence-based – assessment of such matters as the attitude of the trader and its principal employees to due diligence issues and their sensitivity to the risk of becoming involved, albeit unintentionally, in unlawful activities.”
“… if it were shown that the commissioners that the commissioners had acted in a way in which no reasonable panel of commissioners could have acted; if they had taken into account some irrelevant matter or had disregarded something to which they should have given weight. …”
“… where it is shown that, had the additional material been taken into account, the decision would inevitably have been the same, a tribunal can dismiss an appeal …”