Gordon McKenzie v The Commissioners for HMRC [2026] UKFTT 986 (TC)

Introduction[2026] UKFTT 00986 (TC)Case No TC 09935
FIRST-TIER TRIBUNAL
TAX CHAMBER
Hearing Heard on: 2 April 2026Date Judgment date: 30 June 2026
By remote video hearing platform
Appeal reference: TC/2024/02965
Excise duty - goods deemed to be for commercial use - appeal against assessment dismissed - penalties for deliberate behaviour – scope of deeming provision - HMRC v Tooth applied - not deliberate wrongdoing – penalty affirmed but varied by reduction
Before
TRIBUNAL JUDGE ROSA PETTIFERTRIBUNAL JUDGE JUDITH HARRISONTRIBUNAL MEMBER DUNCAN MCBRIDE
Between
GORDON MCKENZIEAppellantTHE COMMISSIONERS FOR HIS MAJESTY’S REVENUE AND CUSTOMSRespondentIn person for AppellantJordon Ness, litigator of HM Revenue and Customs’ Solicitor’s Office for RespondentsDECISION

Introduction

[1]With the consent of the parties, the hearing took place by video using the Microsoft Teams platform. Prior notice of the hearing was published on GOV.UK, together with information about how members of the public or media could apply to observe proceedings remotely. The hearing was therefore held in public.

The decisions under appeal

[2]On 4 December 2020 HMRC seized 6kg Amber Leaf hand rolling tobacco (“HRT”) from Mr McKenzie.[3]After the seizure HMRC issued:(1) an excise duty assessment for £1,628 under section 12(1A) Finance Act 1994 (“FA 1994”) on 25 November 2021 (the “Assessment”); and(2) a penalty for deliberate wrongdoing for £569.80 under paragraph 4, schedule 41 Finance Act 2008 (“Schedule 41”) on 12 January 2022 (the “Penalty”). The Penalty was imposed on the basis that Mr McKenzie’s conduct was categorised as deliberate but not concealed with a prompted disclosure. He received the maximum penalty mitigation available for that type of conduct.[4]Mr McKenzie appealed the Assessment and the Penalty.[5]For the reasons given below we dismiss the appeal against the Assessment and uphold the appeal against the Penalty. Preliminary points Documents and evidence

Preliminary points

[6]We were provided with a hearing bundle of 297 pages.[7]The Tribunal heard oral evidence from Mr McKenzie, Officer Michael Groat, an officer of UK Border Force and Officer Kerrie Auld, an officer of HMRC. Officer Groat and Officer Auld had provided witness statements in advance. Officer Auld’s evidence was accepted in full. Officer Groat’s and Mr McKenzie’s evidence was largely unchallenged.[8]The majority of our findings of fact are set out in ‘The Facts’ part of our decision. A significant proportion of our findings of fact are from the documents or unchallenged evidence. Consequently, most of them require no discussion as they were not in dispute. Where they were in dispute or require further discussion, we provide the reasons for our findings below.

Parties' submissions

[9]We are grateful to Mr McKenzie and Mr Ness for their submissions, willingness to engage with our questions and to the witnesses for their evidence. We set out below our summary of those submissions on the law and the facts. Because we do not deal specifically with any point it does not mean that it was not considered in the round when reaching our decision.

Late appeal

[10]It was common ground that the Mr McKenzie’s appeal was late. HMRC did not object to the lateness of the appeal. The Tribunal heard from the parties why they appeal was late and considered the test in Martland v HMRC ([2018] UKUT 178 (TCC)). In the circumstances of this appeal, the Tribunal granted permission for this late appeal to be brought.

Late evidence

[11]Mr McKenzie’s grounds of appeal contain references to a number of letters (including a letter from Mr McKenzie requesting return of the seized HRT, on which the date 10 December 2020 is written by hand. Mr McKenzie’s notice of appeal indicates that these letters were included with the notice of appeal, but we understand there may have been some difficulties with submitting them with the notice of appeal. In any event, these letters were shared with HMRC and the Tribunal during the course of the hearing. HMRC did not have any objections to these letters being admitted into evidence. We consider that they are relevant to the issues we are required to decide. As a result, having regard to the overriding objective, we have admitted these letters into evidence. The issues and burden and standard of proof The issues

The issues and burden and standard of proof

[12]The issues in this appeal are:(1) Whether Mr McKenzie is liable to the Assessment.(2) Whether Mr McKenzie is liable to the Penalty.[13]It was accepted by Mr McKenzie that the Assessment and Penalty have been correctly issued i.e. there are no procedural defects. Mr McKenzie also did not seek to argue that there were any special circumstances or that he had a reasonable excuse.

Burden and standard of proof

[14]It is for Mr McKenzie to show that he is not liable for the Assessment.[15]It is for HMRC to show that Mr McKenzie is liable for the Penalty.[16]The standard of proof is on the balance of probabilities. The arguments Mr McKenzie’s arguments

The arguments

[17]Mr McKenzie’s position was that he imported the HRT for personal use, at a time when the UK did not have any restrictions on the quantity of HRT that could be so imported duty-free.[18]During the hearing Mr McKenzie explained that he had understood that he could import unlimited amounts of tobacco for personal use and that he did not understand that to argue that the HRT was for his personal use he would have needed to challenge the legality of seizure.

HMRC’s arguments

[19]HMRC argued that, because the legality of the seizure was not challenged, the import was deemed to be for commercial use (i.e. the Tribunal does not have the jurisdiction to consider whether Mr McKenzie imported the HRT for personal use). Since Mr McKenzie brought the HRT into the UK, he is liable for the duty.[20]On the Penalty, HMRC submitted that a wrongdoing penalty arises because Mr McKenzie imported a quantity of tobacco which he knew was in excess of the personal use guidelines and such tobacco is deemed (as a result of Mr McKenzie not challenging the legality of the seizure) to have been imported into the UK for commercial use. Or put another way, the fact that the HRT is deemed to have been imported for commercial use, means that (regardless of Mr McKenzie’s actual state of mind) that he should be treated as having deliberately imported HRT for commercial, and not personal, use.

Facts

[21]We make the following findings of fact. The majority of our findings of fact are from the documents supplied or from the unchallenged evidence of witnesses.[22]It is worth noting (because the law in this area has changed) that at the time Mr McKenzie imported the HRT the UK had no restrictions on the quantity of tobacco that could be imported from the EU for personal use.

The seizure

[23]At about 9pm on 4 December 2020 Mr McKenzie was stopped in the green ‘nothing to declare’ channel by Officer Groat, an officer of UK Border Force (“UKBF”). Mr McKenzie was returning from Spain.[24]Mr McKenzie’s bags contained 6kg of HRT. When questioned, Mr McKenzie initially told Officer Groat that he was not carrying any tobacco products. Following a baggage search, Mr McKenzie told Officer Groat that he was carrying 3kg of HRT and that this was for personal use. Mr McKenzie accepted that he had these discussions with Officer Groat and explained that he had said what he had said as he knew he was permitted to import unlimited amounts of tobacco for personal use and he wanted to avoid the hassle of dealing with UKBF regarding the import.[25]Officer Groat was not satisfied that the HRT was for personal use and so he seized it. The seizure occurred at approximately 11.50pm on 4 December 2020.[26]One of the reasons provided by Officer Groat for seizing the HRT was that Mr McKenzie was vague about his financial position and outgoings. When questioned Mr McKenzie explained that this was due to him being unable to access information due to the airport Wi-Fi not working.[27]Mr McKenzie’s unchallenged evidence was that he would use the HRT within a couple of months through a mixture of his own use and making gifts, and that he had bought a significant quantity of HRT as due to the UK leaving the European Union, his ability to buy cheaper tobacco abroad would soon be restricted. The Tribunal is satisfied, and finds as fact, this as an accurate description of Mr McKenzie’s thinking, and notes that when they explained how the customs duty rules worked, Mr McKenzie was clearly astonished and described the rules as delivering “no semblance of justice”. Mr McKenzie was provided by Officer Groat with copies forms BOR156 (Seizure information notice) and BOR162 (Warning letter about seized goods), Public Notice 1 and 12A.

Post-seizure correspondence

[28]On 25 November 2021 the HMRC issued the Assessment to Mr McKenzie. The amount charged by the Assessment is for the excise duty on 6kg of hand rolling tobacco.[29]Mr McKenzie sought restoration of the HRT (in a letter received by HMRC on 22 December 2020). Restoration was refused on 9 February 2021, and was again refused on review on 19 February 2021.[30]We were provided with a copy of letter (on which the date 10 December 2020 is written by hand) which was sent by Mr McKenzie to Passenger Terminal, Edinburgh Airport and states:
“Thing – 6kg hand rolled tobacco I wish to apply for restoration of Border Force seizure of “thing” listed above I believe the goods should be returned to me as they were for personal use and gifts.”

I wish to apply for restoration of Border Force seizure of “thing” listed above

[31]Neither Mr McKenzie nor HMRC were able to confirm whether the letter on which the date 10 December 2020 (which is set out at paragraph 30 above) is written by hand was the same as the letter received by HMRC on 22 December 2020 in which Mr McKenzie sought restoration of the HRT. Mr McKenzie did not remember sending a second letter in respect of the seizure. On balance, we consider it more likely that the only a single letter was written.[32]On 9 December 2021 HMRC issued Mr McKenzie with a penalty explanation schedule.[33]On 12 January 2022 HMRC issued the Penalty to Mr McKenzie.[34]Officer Auld’s unchallenged evidence was that she imposed the Penalty on the basis that the import of the HRT by Mr McKenzie was a “deliberate act of dishonesty”. The reasons given for this conclusion were that Mr McKenzie had confirmed that he was aware of the personal allowance guidelines, was carrying 24 times the indicative guideline quantity of HRT, had initially denied having any tobacco with him and she did not believe it was credible that Mr McKenzie could have believed he was entitled to import such a large quantity of HRT without declaring it. The Tribunal notes that the minimum indicative level at the time Mr McKenzie imported the HRT was 1 kg, not 250 grammes as asserted by Officer Auld.[35]On 17 May 2024 Mr McKenzie appealed the Assessment and the Penalty. The law The legislation

The law

[36]Regulation 13 The Excise Goods (Holding, Movement and Duty Point) Regulations 2010 states:
“(1) Where excise goods already released for consumption in another Member State are held for a commercial purpose in the United Kingdom in order to be delivered or used in the United Kingdom, the excise duty point is the time when those goods are first so held (2) Depending on the cases referred to in paragraph (1), the person liable to pay the duty is the person (a) Making the delivery of the goods; (b) Holding the goods intended for delivery; or (c) To whom the goods are delivered”
[37]Paragraph 5 Schedule 3 Customs and Excise Management Act 1979 (“CEMA 1979”) states:
“If on the expiration of the relevant period under paragraph 3 above for the giving of notice of claim in respect of anything no such notice has been given to the Commissioners, or if, in the case of any such notice given, any requirement of paragraph 4 above is not complied with, the thing in question shall be deemed to have been duly condemned as forfeited.”
[38]Section 12(1A) FA 1994 states:
“Subject to subsection (4) below, where it appears to the Commissioners— (a) that any person is a person from whom any amount has become due in respect of any duty of excise; and (b) that the amount due can be ascertained by the Commissioners, the Commissioners may assess the amount of duty due from that person and notify that amount to that person or his representative.”
[39]Paragraph 4 Schedule 41 states:
“(1) 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 (2) In sub-paragraph (1) - “excise duty point” has the meaning given by section 1 of F(No2)A 1992, and “goods” has the meaning given by section 1(1) of CEMA 1979.”
[40]Paragraph 6B Schedule 41 states that:
“The penalty payable under any of paragraphs 2, 3(1) and 4 is— (a) for a deliberate and concealed act or failure, 100% of the potential lost revenue, (b) for a deliberate but not concealed act or failure, 70% of the potential lost revenue, and (c) for any other case, 30% of the potential lost revenue.”
[41]Paragraph 13 Schedule 41 allows for a penalty to be reduced where a taxpayer discloses information to HMRC. The maximum reduction for a deliberate act with prompted disclosure is to 35% of the potential lost revenue. Paragraph 20 of Schedule 41 provides that no liability to a penalty arises in relation to a non-deliberate act or failure if P is able to satisfy the Respondents or, on appeal, the FTT that there is a reasonable excuse for the act or failure.

The case law principles

[42]The excise and penalty legislation and case law relevant to this appeal was recently set out (with some very helpful summaries) in the First-tier Tribunal decision in Puiu v HMRC ([2021] UKFTT 255 (TC)). We set out the relevant paragraphs from the passage at [45] to [61]:
“45 In HMRC v Jones Mummery LJ in the Court of Appeal stated (at para 71): …the goods were deemed by the express language of paragraph 5 to have been condemned and to have been "duly" condemned as forfeited as illegally imported goods. The tribunal must give effect to the clear deeming provisions in the 1979 Act : it is impossible to read them in any other way than as requiring the goods to be taken as "duly condemned" if the owner does not challenge the legality of the seizure in the allocated court by invoking and pursuing the appropriate procedure…. … The role of the tribunal, as defined in the 1979 Act , does not extend to deciding as a fact that the goods were, as the respondents argued in the tribunal, being imported legally for personal use. That issue could only be decided by the court." 46. Jones was a restoration case but in HMRC v Race [2014] UKUT 0331 (TC) , Warren J confirmed that the same principles apply in appeals against assessments and stated: "26. Jones is clear authority for the proposition that the First-tier tribunal has no jurisdiction to go behind the deeming provisions of paragraph 5 , Schedule 3 . If goods are condemned to be forfeited, whether in fact or as the result of the statutory deeming, it follows that, having been bought in a Member State and then imported…, they were not held by the taxpayers for their own personal use in a way that exempted the goods from duty. The reasoning and analysis in Jones did not turn on the fact that the case concerned restoration of the goods and not assessment to duty. 33. … It is clearly not open to the tribunal to go behind the deeming effect of paragraph 5 Schedule 3 for the reasons explained in Jones… The fact that the appeal is against an assessment to excise duty rather than an appeal against non-restoration makes no difference because the substantive issue raised by Mr Race [that the goods were in fact for own use] is no different from that raised by Mr and Mrs Jones.” 47. The decisions therefore made clear that if a person did not take action within the one-month period to challenge a seizure, the goods were deemed forfeited and they must be treated as having been brought into the UK other than for personal use. 48. Race concerned an application by HMRC to strike out an appeal of an assessment. Although there was also an appealed penalty notice, HMRC had not sought to strike that out. Therefore Warren J's comments about the penalty notice provisions were strictly obiter dicta. They were also made in the context of addressing the First-tier judge's reasons for refusing the strike-out of the assessment appeal rather than addressing the position of the penalty notice itself. I therefore take into account his statement at para 39 of the decision in that context where he said that: "the First-tier Tribunal could no more re-determine, in the appeal against the Penalty Assessment, a factual issue which was a necessary consequence of the statutory deeming provision than it could re-determine a factual issue decided by a court in condemnation proceedings." 49. However, he also noted at paragraph 40 that: "…even if the issue whether duty was payable may not be reopened there are other aspects of behaviour or conduct or circumstance raised by the penalty provisions which the First-tier Tribunal will be required to consider in respect of the appeal against the Penalty Assessment." 50. In HMRC v Susan Jacobson [2018] UKUT 0018 TCC, the Upper Tribunal stated (at paragraph 24): "We respectfully agree with Warren J in Race that the reasoning and analysis in Jones applies to an appeal against a penalty in exactly the same way as it applies to an appeal against an assessment for excise duty. The deemed effect of Ms Jacobson's failure to contest the seizure of the HRT was that it was duly condemned as forfeited as, in the terms of regulation 88 of the 2010 regulations, goods liable to excise duty which had not been paid in contravention of the Regulations." 51. As stated, that conclusion must be read in the context of the comments made in Race. 52. In particular, none of the cases considered above addressed the extent to which the deeming provisions in CEMA 1979 impact on the type of penalty which can arise and the extent to which the deeming effect of paragraph 5 of Schedule 3 colours the approach to be taken in deciding whether a person's failure to comply with customs' obligations was "deliberate". 53. In my opinion, none of the decisions led to the conclusion that, as Mr Gordon-Saker submitted, Mr Puiu's behaviour must be treated as having been "deliberate" for the penalty rules simply as a result of the deeming under CEMA 1979 . I recognise, however, that at the time of the hearing there was a stronger basis for Mr Gordon-Saker to maintain his argument given the judgement of the Court of Appeal in Commissioners for Her Majesty's Revenue and Customs v Tooth [2019] EWCA Civ 826. 54. Moreover, I am satisfied that the Supreme Court's decision in Her Majesty's Revenue and Customs v Tooth [2021] UKSC 17 should be applied by me in considering whether Mr Puiu's behaviour was "deliberate". 55. At paragraph 43 the Supreme Court said: "Deliberate is an adjective which attaches a requirement of intentionality to the whole of that which it describes, namely "inaccuracy". 56. I consider that there is no reason to apply a different approach to the interpretation of "deliberate" in Schedule 41 where it is the adjective applied to a failure to comply with obligations. I am satisfied that given the Supreme Court's approach in Tooth , the deeming provisions in CEMA 1979 should not be viewed as effectively deeming what a person's intention is. 57. The Supreme Court in Tooth considered it relevant that in the context of inaccuracies Parliament must be considered to have regarded a deliberate inaccuracy as more blameworthy, given what their Lordships described as the substantial shortening of the exposure period for carelessness (at paragraph 46). Similarly, I take into account the fact that Parliament has drawn a distinction in Schedule 41 between different levels of culpability. The reasonable excuse provisions only apply where the culpability is not deliberate. To deem every person who is deemed to have brought goods into the country for commercial purposes also to have done so intentionally undermines the distinctions drawn by Parliament. 58. Their Lordships noted that a deeming provision in a definition section of a statute commonly does give rise to a different meaning of the operative provision than the one which might have been arrived at by reading it on its own (see paragraph 38); but note that the provisions in Schedule 41 do not provide for a different meaning of "deliberate" and do not require that term to be interpreted by reference to the deeming provisions of CEMA 1979. 59. I therefore consider that a person's intention must be determined having regard to all of the circumstances and the evidence provided in order to determine whether their failure to comply with obligations was "deliberate". 60. If, but only if, the failure was not deliberate it is necessary to consider whether the person had a reasonable excuse. 61. In Christine Perrin v HMRC [2018] UKUT 0156 (TCC) , the Upper Tribunal stated: "71. In deciding whether the excuse put forward is, viewed objectively, sufficient to amount to a reasonable excuse, the tribunal should bear in mind all relevant circumstances; because the issue is whether the particular taxpayer has a reasonable excuse, the experience, knowledge and other attributes of the particular taxpayer should be taken into account, as well as the situation in which that taxpayer was at the relevant time or times (in accordance with the decisions in The Clean Car Co and Coales ).”” …the goods were deemed by the express language of paragraph 5 to have been condemned and to have been "duly" condemned as forfeited as illegally imported goods. The tribunal must give effect to the clear deeming provisions in the 1979 Act : it is impossible to read them in any other way than as requiring the goods to be taken as "duly condemned" if the owner does not challenge the legality of the seizure in the allocated court by invoking and pursuing the appropriate procedure…. … The role of the tribunal, as defined in the 1979 Act , does not extend to deciding as a fact that the goods were, as the respondents argued in the tribunal, being imported legally for personal use. That issue could only be decided by the court." "26. Jones is clear authority for the proposition that the First-tier tribunal has no jurisdiction to go behind the deeming provisions of paragraph 5 , Schedule 3 . If goods are condemned to be forfeited, whether in fact or as the result of the statutory deeming, it follows that, having been bought in a Member State and then imported…, they were not held by the taxpayers for their own personal use in a way that exempted the goods from duty. The reasoning and analysis in Jones did not turn on the fact that the case concerned restoration of the goods and not assessment to duty. 33. … It is clearly not open to the tribunal to go behind the deeming effect of paragraph 5 Schedule 3 for the reasons explained in Jones… The fact that the appeal is against an assessment to excise duty rather than an appeal against non-restoration makes no difference because the substantive issue raised by Mr Race [that the goods were in fact for own use] is no different from that raised by Mr and Mrs Jones.” "the First-tier Tribunal could no more re-determine, in the appeal against the Penalty Assessment, a factual issue which was a necessary consequence of the statutory deeming provision than it could re-determine a factual issue decided by a court in condemnation proceedings." "…even if the issue whether duty was payable may not be reopened there are other aspects of behaviour or conduct or circumstance raised by the penalty provisions which the First-tier Tribunal will be required to consider in respect of the appeal against the Penalty Assessment." "We respectfully agree with Warren J in Race that the reasoning and analysis in Jones applies to an appeal against a penalty in exactly the same way as it applies to an appeal against an assessment for excise duty. The deemed effect of Ms Jacobson's failure to contest the seizure of the HRT was that it was duly condemned as forfeited as, in the terms of regulation 88 of the 2010 regulations, goods liable to excise duty which had not been paid in contravention of the Regulations." "Deliberate is an adjective which attaches a requirement of intentionality to the whole of that which it describes, namely "inaccuracy". "71. In deciding whether the excuse put forward is, viewed objectively, sufficient to amount to a reasonable excuse, the tribunal should bear in mind all relevant circumstances; because the issue is whether the particular taxpayer has a reasonable excuse, the experience, knowledge and other attributes of the particular taxpayer should be taken into account, as well as the situation in which that taxpayer was at the relevant time or times (in accordance with the decisions in The Clean Car Co and Coales ).””
[43]In reaching that conclusion, this Tribunal are aware that the question of the interaction between the deeming provisions in CEMA 1979 and the penalty regime has been subject to a number of conflicting First-tier Tribunal decisions. Unfortunately we did not receive any submissions from the parties on this case law, and when asked HMRC were unable to provide any authority to support their submission that the effect of the deemed commercial import meant that Mr McKenzie’s behaviour was deliberate.[44]The conflicting approach was identified in Mlekanov v HMRC ([2022] UKFTT 357 (TC)) where HMRC referred the Tribunal to:(1) Odinas v HMRC ([2021] UKFTT 303 (TC)) which held that the appellant must have known that the goods he was importing were for commercial use due to the deeming provision in schedule 3. Therefore when the appellant told Border Force the goods were for personal use, he acted with an intention to misled, such that a deliberate penalty was appropriate.(2) Puiu v HMRC ([2021] UKFTT 255 (TC)) which we have referred to in detail above.[45]In addition, in Paul Clark v HMRC ([2019] UKFTT 0479 (TC) the Tribunal concluded (by means of a casting vote) that in determining whether the appellant had a reasonable excuse, they were unable to consider the appellant’s state of mind as this would mean retesting the paragraph 5, schedule 3 CEMA 1979 deeming.[46]In Mlekanov, the Tribunal choose to follow the approach in Puiu v HMRC. Like the Tribunal in Mlekanov this Tribunal also prefers and adopts the analysis in Puiu v HMRC ([2021] UKFTT 255 (TC).[47]Our conclusion is further supported by Hare Wines Limited v HMRC ([2023] UK FTT 25 (TC)) where the First-tier Tribunal considered the meaning of deliberate in the context of Schedule 41 following the Supreme Court's decision in Tooth, concluding:
“A person is liable to a penalty under Sch 41 if he "acquired possession of...goods on which a payment of duty is outstanding and has not been deferred", with higher penalties charged if that person acted "deliberately". Applying the meaning of "deliberate" as established in Tooth to that statutory context, I find that a person has acted "deliberately" if he intentionally acquires possession of goods knowing that the payment of duty is outstanding, and intentionally does not pay that duty.”
[48]Again, this approach is also supported by the Upper Tribunal decision in HMRC v Race, where the Upper Tribunal stated that:
“the issues raised by the appeal against the Penalty Assessment extend beyond the question of whether duty is payable and include, for example, an assessment of culpability because this is relevant to the level of penalty imposed under Schedule 41 of the Finance Act 2008.”
[49]The Tribunal therefore considers that a person’s intention must be determined having regard to all of the circumstances and the evidence provided in order to determine whether their failure to comply with obligations was “deliberate”. Discussion and findings The Assessment

Discussion and findings

[50]Where goods are deemed to have been condemned as forfeited under paragraph 5 Schedule 3 CEMA 1979, the Tribunal cannot go behind that deeming to consider whether the goods were in fact imported for personal use. Mr McKenzie did not give notice of claim within the statutory period and, although this was because he was unaware that this step was required, the consequence is that the goods are treated as condemned.[51]The effect of this deeming is that the Tribunal cannot find that the goods were held for personal use. In those circumstances, we must proceed on the basis that the goods were not held for personal use. It follows that the Assessment was correctly issued.[52]Accordingly, the appeal against the Assessment is dismissed.

The Penalty

[53]The application of CEMA 1979 means that the Tribunal must find that Mr McKenzie failed to comply with the relevant obligations because he is treated as having brought the goods to the UK other than for personal use.[54]However, given the acceptance of his account, the Tribunal is satisfied that Mr McKenzie did not intend to breach the relevant rules. His intention was to bring the cigarettes to the UK for his own use and as gifts. He had no intention of selling the HRT or putting it to any other commercial purpose.[55]The Tribunal did not consider that the fact that Mr McKenzie denied carrying tobacco products to Officer Groat altered that conclusion. Mr McKenzie acknowledged that this statement was incorrect, and that he had subsequently told Officer Groat he was carrying a lower quantity of HRT than he was. However, Mr McKenzie explained this on the basis that he was trying to avoid the hassle of dealing with UKBF. Although this was an unfortunate way to manage the situation, the Tribunal accepts, given it was late at night, and Mr McKenzie had been travelling that he made these statements in order to reduce his dealings with UKBF.[56]Making false statements to a UKBF officer is a serious matter and is capable, in an appropriate case, of supporting a finding of deliberate conduct. However, in this case, we do not consider that these statements demonstrate an intention to evade duty. We accept Mr McKenzie’s explanation that he was seeking to avoid inconvenience, in the context of a genuine misunderstanding as to the applicable legal framework.[57]Officer Groat’s notebook indicates that in addition to the incorrect statements referred to above, he seized the HRT because Mr McKenzie was “vague about finances, unable to explain outgoings”. Mr McKenzie explained this as being due to his inability to access the airport Wi-Fi to obtain the information. The Tribunal is satisfied that this is a credible explanation.[58]Therefore for all these reasons the Tribunal conclude that Mr McKenzie did not intend to fail to comply with his relevant obligations. Consequently, applying the law as set out earlier, the Tribunal also concludes that he did not deliberately fail to comply with the customs obligations.

Did Mr McKenzie have a reasonable excuse or do special circumstances apply?

[59]In this appeal both Mr McKenzie and HMRC accepted that there was no reasonable excuse. Similarly Mr McKenzie did not seek to argue that any special circumstances applied.[60]The parties’ positions on reasonable excuse and special circumstances are the same and we can identify no sufficient reason for the Tribunal to disturb their positions.

Conclusion

[61]In conclusion:(1) the Assessment of £1,628 is upheld; and(2) the Penalty is affirmed but varied to reflect our finding that Mr McKenzie’s behaviour was not deliberate. Any party has liberty to apply to the Tribunal for determination of quantum of the varied Penalty should the parties not agree what it is

Right to apply for permission to appeal

[62]This document contains full findings of fact and reasons for the decision. Any party dissatisfied with this decision has a right to apply for permission to appeal against it pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009. The application must be received by this Tribunal not later than 56 days after this decision is sent to that party. The parties are referred to “Guidance to accompany a Decision from the First-tier Tribunal (Tax Chamber)” which accompanies and forms part of this decision notice. Release date: 30 June 2026