Agniezska Hartleb t/a Hartleb Transport v The Commissioners for HMRC

For the purposes of regulation 13 of the Excise Goods (Holding, Movement and Duty Point) Regulations 2010, physical possession is the starting point when identifying the person holding, or making delivery of, excise goods. It is not invariably decisive.

An employer with legal and factual control of goods may be their holder and the person making delivery where its employee physically possesses the goods while acting in the course of employment and under the employer’s direction. Actual or constructive knowledge that duty has not been paid is not required. The relevant duty point under regulation 13 is the first commercial holding of the goods in the United Kingdom, not an earlier release for consumption in another Member State.

The appellant operated a Polish transport business. Her driver was stopped at Dover while driving her lorry and carrying cigarettes on which no excise duty had been shown to have been paid. HMRC assessed excise duty of £130,913 and an associated penalty.

The First-tier Tribunal confirmed the assessment in a decision dated 4 September 2018. The appellant appealed to the Upper Tribunal, principally contending that she could not be the person holding, or making delivery of, the cigarettes because her employee had physical possession of them.

After the decision in HM Revenue & Commissioners v WR (C-279/19), the appeal also raised whether knowledge of the excise status of the goods was required, and whether an earlier duty point in Poland should have been assessed instead.

1. Appeal dismissed. The First-tier Tribunal did not err in concluding that the appellant held the goods for regulation 13(2)(b) purposes, or alternatively that she was making their delivery for regulation 13(2)(a) purposes.

2. “Holding” must be interpreted autonomously and contextually in conformity with the Excise Directive. Physical possession is an important starting point because the scheme focuses on the location of the goods. It is nevertheless not conclusive. The relevant inquiry is one of law and fact.

3. The Tribunal adopted the guidance derived from Dawson’s (Wales) Ltd v HMRC, [2023] EWCA Civ 332. It considered physical possession, the identity and basis of any legal or factual control, the time when the duty point arose, and the location of the goods. Here, the driver had physical possession, but the appellant had arranged the transport, controlled the lorry and its destination, and directed the employee who was acting in the course of his employment. Those circumstances outweighed her lack of personal physical possession.

4. The same analysis applied to delivery. Physical possession is important but not definitive. The appellant accepted the delivery order and performed it through her vehicle and employee. She was therefore the person making delivery.

5. Following HM Revenue & Commissioners v WR, actual or constructive knowledge that excise duty was unpaid is not a condition of liability under article 33 of the Excise Directive or regulation 13. The knowledge-based proposed grounds were therefore redundant.

6. Regulation 13(1) identifies the first commercial holding in the United Kingdom. An earlier release for consumption in Poland did not create the relevant United Kingdom duty point. Permission to add the remaining proposed grounds was refused.

• Upper Tribunal (Tax and Chancery Chamber): dismissed the appeal from the First-tier Tribunal and refused permission to expand the grounds of appeal.
• First-tier Tribunal: decision dated 4 September 2018 confirmed HMRC’s excise duty assessment and associated penalty. No citation is stated in the judgment.