The Crown Prosecution Service v Doran & Anor

For tobacco imported by sea, liability under the Tobacco Products Regulations 2001 arises only where the defendant held the goods at the excise duty point, or caused them to reach that point while retaining the required connection with them. Covert surveillance does not itself sever that connection or control.

Under the Proceeds of Crime Act 2002, evading an excise-duty liability gives a pecuniary advantage equal to the deferred debt, even if the goods are seized before resale. Where there is no risk of double recovery, confiscation of that amount is proportionate. Joint criminal benefit must not be apportioned between conspirators, subject to protection against double recovery.

The respondents pleaded guilty at Ipswich Crown Court to conspiracy fraudulently to evade duty on imported cigarettes. The cigarettes were falsely described as toys, entered Felixstowe under covert HMRC surveillance, and were later seized before resale.

The Crown Court treated the evaded excise duty and VAT as benefit under the Proceeds of Crime Act 2002, but apportioned the total benefit among the three principal conspirators. The CPS appealed that apportionment. Doran and Gray challenged their confiscation orders, contending that they had incurred no duty liability, obtained no benefit, and suffered disproportionate confiscation.

The common issues were whether they retained the statutory connection with the cigarettes at importation, whether evaded duty was recoverable benefit despite seizure, and whether the resulting orders were proportionate.

1. The CPS appeal was allowed and the respondents’ appeals on Grounds 1–3 were dismissed. The benefit apportioned by the Crown Court was quashed. In accordance with Ahmad and Fields [2014] UKSC 36, each appellant’s benefit was substituted as the whole joint benefit of £4,368,975. The court also directed that enforcement must not produce double recovery.

2. The court held that, for tobacco imported by sea, the excise duty point and the time when the goods became chargeable coincide when the vessel enters port. Under regulation 13, liability therefore required either that the defendant was holding the goods at that point, or that he caused them to reach it and retained the prescribed connection then. The court declined to accept the contrary observation in Taylor and Wood [2013] EWCA Crim 1151, and treated the Supreme Court’s approval in Mackle & Others [2014] UKSC 5 as decisive.

3. The judge was entitled to find that the appellants retained control and connection. Their agent retained the bills of lading and used them to obtain delivery. HMRC observed the import but did not control it. The facts were therefore materially different from Bajwa [2011] EWCA Crim 1093, where the conspirators had lost or abandoned their connection with the goods, and from the dummy consignment in Olubitan [2003] EWCA Crim 2940.

4. Applying the binding decision in Smith (David) [2001] UKHL 68, evasion of excise duty was a pecuniary advantage under section 76 of the Proceeds of Crime Act 2002. The seizure of the cigarettes did not remove that advantage. The order for the amount of the deferred duty was proportionate under Article 1 of the First Protocol to the European Convention, because HMRC would not pursue a separate recovery.

5. Consideration of Gray’s valuation ground was adjourned generally. Doran’s substituted confiscation order was £4,368,975. Gray’s was £148,107.44, subject in each case to re-listing of the remaining ground.

• Court of Appeal (Criminal Division). In [2015] EWCA Crim 384, the court dismissed Doran and Gray’s appeals on liability, benefit and proportionality, allowed the CPS appeal against apportionment, and substituted confiscation orders.
• Ipswich Crown Court. His Honour Judge Goodin sentenced the respondents on 24 February 2012 and, on 29 July 2013, made confiscation orders under the Proceeds of Crime Act 2002 after apportioning the joint benefit among the three principal conspirators.