White & Ors v The Crown

For confiscation purposes, evasion of excise duty or VAT gives a defendant a pecuniary advantage only where the defendant was personally liable for that tax. Liability under regulations made under Finance (No 2) Act 1992 must be construed consistently with the statutory requirement for a prescribed connection with the goods at the excise-duty point.

A criminal conviction for dealing with duty-unpaid goods does not itself establish that civil liability. Where the correct statutory issue was not tried below, an appellate court should not make new factual findings unless the necessary finding was inevitable. A paid courier or custodian with no interest in the goods may not have obtained them for confiscation purposes.

Four unconnected appellants challenged confiscation orders made after offences involving tobacco smuggled into the United Kingdom for resale. The appeals raised the effect of later authority requiring personal liability for evaded duty or VAT before the evasion could constitute a confiscation benefit.

Dennard and Chambers had been co-defendants, but the confiscation proceedings had been conducted by reference to the wrong tobacco-duty regulations. White was convicted in his absence of a wide conspiracy to evade duty and VAT. Rowbotham's earlier appeal had been dismissed in [2006] EWCA Crim 747 before his case was referred by the Criminal Cases Review Commission. Perry had admitted providing storage and limited transport for duty-unpaid tobacco.

The common issues were whether the appellants were personally liable under the applicable regulations and Directive, and whether the Court could sustain or replace the confiscation orders on the available findings.

1. The appeals of Dennard, Rowbotham and Perry were allowed and their confiscation orders quashed. White's appeal was dismissed.

2. Following May [2008] UKHL 28 and Jennings [2008] UKHL 29, a person obtains a pecuniary advantage from evading duty or VAT only if personally subject to the relevant liability. The fact that a defendant was knowingly concerned in dealing with duty-unpaid goods did not by itself establish that liability.

3. The 1992 and 2001 tobacco regulations were to be read consistently with section 1(4) of the Finance (No 2) Act 1992. A person who caused goods to reach the excise-duty point was liable only if he retained the required connection with them at that point. The Court held that the domestic provisions were not ultra vires on that construction.

4. Duty on irregularly imported tobacco became chargeable at importation. The Court held that the relevant domestic rules were compatible with Article 7 of Council Directive 92/12/EEC where the person liable under the regulations fell within a listed Directive category. Article 7 did not confine liability to owners. It was unnecessary to decide whether the Directive exhaustively prevented a Member State from adding other categories of liable persons.

5. The Recorder had decided Dennard's case using the superseded causation approach in the earlier Court of Appeal decision in Jennings. On the available findings, it was not inevitable that Dennard held the goods at importation or retained a connection with them then. The Court therefore set aside the order and declined to substitute one based on the tobacco's value, since he might have been no more than a custodian or minor contributor without an interest in the goods.

6. By contrast, the evidence made it inevitable that White controlled the United Kingdom operation and was consignee of all the tobacco. He was personally liable for the full excise duty and, as the acquirer and a taxable person, for the acquisition VAT. His benefit finding was therefore upheld.

7. Rowbotham and Perry had not personally evaded a duty liability. Their storage or transport roles occurred after the duty had been evaded by others. The Court made no concluded ruling on the liability of a paid lorry driver who knowingly transports smuggled tobacco.

• Court of Appeal (Criminal Division): In White & Ors v The Crown, the Court allowed the appeals of Dennard, Rowbotham and Perry and quashed their confiscation orders. It dismissed White's appeal.

• Prior proceedings: Dennard and White appealed confiscation orders made in the Crown Court. Perry appealed an order made by HHJ Onions at Shrewsbury Crown Court on 2 May 2008. Rowbotham's confiscation order, made at Wolverhampton Crown Court, had previously been upheld on appeal in [2006] EWCA Crim 747; following a Criminal Cases Review Commission reference, that result was displaced.