Taylor & Anor v R.

A person who evades an excise-duty liability to which he is personally subject obtains a pecuniary advantage for confiscation purposes. A person may hold tobacco products at the excise-duty point through legal and factual control exercised via carriers, even where an innocent carrier has physical custody. A person who makes the arrangements and bears real responsibility for delivery may also cause the products to reach that point.

Those domestic bases of liability correspond with Article 7(3) of Council Directive 92/12/EEC. A confiscation order is not disproportionate merely because the State could have pursued unpaid tax by civil recovery or because several offenders are each liable for jointly obtained benefit. Confiscation is a penal, non-compensatory remedy, subject to the statutory proportionality safeguard.

The appellants pleaded guilty at Leeds Crown Court to being knowingly concerned in the fraudulent evasion of duty on 600,000 counterfeit cigarettes imported from Belgium. They arranged the transport through freight-forwarding businesses and used innocent road hauliers to carry the concealed goods.

In confiscation proceedings under Proceeds of Crime Act 2002, the judge found that each had benefited from the criminal conduct. The Crown no longer maintained that they had obtained the cigarettes or their resale value. It contended instead that they had obtained the value of excise duty evaded.

The appeals concerned whether the appellants were personally liable for duty under the domestic regulations, whether that liability accorded with EU law, and whether confiscation of the evaded duty was disproportionate.

1. Both appeals were dismissed. Following the Crown’s concession, the confiscation amount for each appellant was reduced to £95,730, being the excise duty evaded.

2. Under sections 76(4) and 76(5) of the Proceeds of Crime Act 2002, evasion of a personal duty liability constituted a pecuniary advantage. The appellants were principal participants in the importation, not minor contributors. Their benefit was therefore the value of the duty which they had evaded.

3. For Regulation 13(1) of the Tobacco Products Regulations 2001, holding tobacco products meant possession through legal and factual control. The innocent hauliers had physical custody but no knowledge of the concealed cigarettes. The appellants controlled the consignment through the transport arrangements and their rights as consignee. Each therefore held the cigarettes at the excise-duty point.

4. Each appellant also fell within Regulation 13(3)(e). By arranging and controlling the transportation, they caused the cigarettes to reach the excise-duty point. A prescribed connection under section 1(4)(a) of the Finance (No2) Act 1992 could rest on a sufficiently close past connection; it need not be contemporaneous physical involvement.

5. Those conclusions accorded with Article 7(3) of Council Directive 92/12/EEC. The appellants were, in substance, the persons holding and effecting delivery of the goods. The third EU-law issue consequently did not arise.

6. The orders were proportionate. Applying R v Waya [2012] UKSC 51, confiscation must maintain a fair balance, but it is distinct from civil compensation. HMRC had not recovered the duty as a debt. The possibility of civil recovery did not prevent confiscation, and separate orders against participants in jointly obtained benefit were lawful.

• Court of Appeal (Criminal Division) Dismissed both appeals against confiscation orders, subject to the Crown’s concession reducing each amount to £95,730: [2013] EWCA Crim 1151.
• Leeds Crown Court On 11 August 2010, HHJ McCallum held that each appellant had benefited from criminal conduct and made confiscation orders under Proceeds of Crime Act 2002.