Revenue And Customs v Behzad Fuels (UK) Ltd

On a restricted appeal from an ancillary decision, the tribunal may intervene only where the decision-maker could not reasonably have reached the decision. A further review must proceed from the findings actually made, including an inconclusive finding on a disputed issue. The reviewer may consider fresh evidence, but must not be directed to assume guilt or innocence where the fact-finding tribunal left the issue open. A further review of the original decision must ordinarily apply the facts and published guidance in force when that decision was made.

HMRC appealed against the Upper Tribunal’s decision in conjoined restoration and revocation proceedings. The respondent’s vehicles and fuel had been seized after HMRC detected red and laundered fuel, and HMRC later revoked its registration as a registered dealer in controlled oil. The First-tier Tribunal dismissed both appeals but made no positive finding either that the respondent was involved in laundering fuel or that it was not. The Upper Tribunal set aside the relevant review decisions and directed fresh reviews. It required HMRC to proceed on the basis that the respondent had not been involved in laundering and to apply the February 2013 version of Public Notice 192. The issues were whether those directions were lawful and whether the reviews should use the guidance in force when the original revocation decision was made.

1. Outcome. HMRC’s appeal succeeded on ground 2 and failed on ground 1. The further reviews remained necessary, subject to modified directions.
2. Open factual issue. The First-tier Tribunal had deliberately left open whether the respondent, its vehicles or its staff had been involved in laundering fuel. That was a tenable conclusion on the evidence. The Upper Tribunal therefore erred in directing HMRC to conduct the further reviews on the footing that there had been no such involvement. The reviews had to begin from the same inconclusive position, while allowing HMRC to consider fresh due-diligence evidence and the history from 2009 to 2013.
3. Restoration and revocation. The same approach applied to both appeals. HMRC could not go behind the existing findings of fact, but was entitled to evaluate evidence suggesting possible involvement in laundering. The court rejected reliance on the burden of proof as the basis for deciding the terms of the further review. The statutory question under section 16(4) of the Finance Act 1994 was whether the original decision could not reasonably have been reached.
4. Applicable guidance. The Upper Tribunal correctly directed that the revocation review use the February 2013 version of Public Notice 192. Its jurisdiction was confined to requiring a further review of the original decision. That review had to be conducted by reference to the facts and guidance in force when the original decision was made, rather than by reference to later policy. Regulation 10 of the Hydrocarbon Oil (Registered Dealers in Controlled Oil) Regulations 2002 did not require the respondent’s earlier fitness to be judged by guidance not yet issued.
5. Final position. The directions in [104] and [105] of the Upper Tribunal decision were omitted. The further reviews could not be dispensed with because their outcomes could not properly be pre-empted.

1. Court of Appeal (Civil Division): [2019] EWCA Civ 319. HMRC’s appeal was allowed on ground 2 and dismissed on ground 1. The further reviews were maintained with the directions in [104] and [105] of the Upper Tribunal decision removed.
2. Upper Tribunal (Tax and Chancery Chamber): [2017] UKUT 0321 (TCC). The respondent’s appeals succeeded; the relevant HMRC decisions were set aside and fresh reviews were directed.
3. First-tier Tribunal: The 2014 and 2016 FTT decisions dismissed the respondent’s appeals, subject to the earlier direction for a further review concerning restoration of the vehicles.