Dawson's (Wales) Ltd v The Commissioners for HMRC

For excise-duty purposes, “holding” is an autonomous EU-law concept. Subjective intention to assert control over excise goods is irrelevant. Physical possession is the starting point, but legal or de facto control may also be relevant where the circumstances justify assessing a person other than the person in physical possession.

Where an assessment is challenged on the ground that an earlier duty point arose, the relevant inquiry includes who had physical possession, who is said to have controlled the goods, when the duty point arose, and where the goods were then held. Those matters are ordinarily factual and unsuitable for determination as a preliminary issue on assumed facts.

Dawson’s (Wales) Ltd appealed against the Upper Tribunal’s decision concerning an assessment of unpaid excise duty on wine. The wine had been supplied through a chain involving missing, de-registered or hijacked companies. On assumed facts, DWL’s immediate suppliers had arranged delivery but had not physically possessed the goods, while an unidentified person had possessed them before delivery to DWL.

The First-tier Tribunal had decided the meaning of “holding” as a preliminary issue in DWL’s favour, although that conclusion was obiter because other preliminary issues had been decided for HMRC. The Upper Tribunal held that the issue could not be resolved without extensive fact-finding, remitted it, and stated principles concerning physical possession and control. DWL challenged the additional reference to an intention to assert control and the UT’s formulation of the factual inquiry.

1. Appeal allowed in part. Ground 1 succeeded. Grounds 2 and 3 were dismissed.
2. “Holding” in Article 7(2)(b) of the EU Directive 2008/118 and regulation 6(1)(b) of the Excise Goods (Holding Movement and Duty Point) Regulations 2010 has an autonomous EU-law meaning. In light of HMRC v WR, subjective intention to assert control over excise goods is irrelevant. The reference to that intention in the UT’s formulation was wrong and could not stand.
3. The Court did not determine whether legal or de facto control, without physical possession, is sufficient in every case. That issue was not directly before it. The relevant question must instead be resolved in the circumstances of the particular case.
4. The factors identified by the UT at [149] were not an impermissible over-refinement. Where a holder challenges an assessment by asserting an earlier duty point, the inquiry properly includes who had physical possession when the alleged earlier point arose; who is alleged to have legal or de facto control and how it was exercised; when the duty point arose; and where the goods were held at that time.
5. The focus on physical possession, the location of the goods and the time of the duty point is consistent with the scheme of the Excise Directive and with B&M, Van de Water, D&R, BP Europa and Polihim. The regime requires duty to be collected and permits assessment of the person found holding the goods where no earlier duty point can be established.
6. Because deciding whether an earlier holder should be assessed requires detailed consideration of the facts, the Holding Issue was a mixed question of fact and law and was unsuitable for determination as a preliminary issue on assumed facts. The matter remained for determination by the FTT at a substantive hearing.

• Court of Appeal (Civil Division) — appeal against [2019] UKUT 296 (TCC); ground 1 allowed and grounds 2 and 3 dismissed.
• Upper Tribunal (Tax and Chancery Chamber) — held that the Holding Issue could not be resolved on assumed facts and remitted it to the First-tier Tribunal.
• First-tier Tribunal (Tax Chamber) — determined the proportionality and jurisdiction issues for HMRC and gave an obiter decision on “holding” in DWL’s favour: [2018] UKFTT 66 (TC).