DHL Air (UK) Limited v The Commissioners for HMRC

A retroactive end-use authorisation under Article 172(3) of Commission Delegated Regulation (EU) 2015/2446 is available only for a true renewal. The new authorisation must give the expired authorisation a new period of validity on the same terms and conditions.

An expired authorisation under the Community Customs Code could not be renewed under the materially different Union Customs Code regime. In any event, an application permitting importation and end-use across several states was not for the same kind of operation as an earlier authorisation confined to a specified airport.

“Exceptional circumstances” under Article 172(2) remain a narrow derogation. The making of an earlier application was not, by itself, exceptional, although HMRC’s failure to decide it was relevant for HMRC’s discretionary further review.

DHL Air (UK) Limited, a cargo airline, imported seven civil aircraft between June 2016 and February 2017. The aircraft were put to their prescribed end-use, but the company did not then hold end-use authorisation. HMRC refused its April 2017 application for authorisation with retroactive effect.

The First-tier Tribunal allowed the appeal against that refusal because HMRC had failed to consider a proposed condition concerning aircraft parts. It directed a further review, but held that the application was not a renewal for Article 172(3) purposes and limited what could constitute exceptional circumstances. It otherwise dismissed the associated appeals concerning the duty demand and an equitable repayment.

The company appealed the directions. The central issue was whether the First-tier Tribunal had erred in its construction of Article 172 and in declining to require particular treatment by HMRC on the further review.

1. Appeal dismissed. The First-tier Tribunal made no error of law in its directions for HMRC’s further review.
2. Article 172(3) of Commission Delegated Regulation (EU) 2015/2446 requires a renewal of an authorisation for the same kind of operation and goods. A renewal gives an expired authorisation a new lease of life: apart from its end-date, the new authorisation must remain on the same terms and conditions. A UCC authorisation could not renew an expired CCC authorisation. End-use occupied a different legal framework under the UCC, including mandatory security where a customs debt might arise. The transitional provisions also preserved and adapted only CCC authorisations valid on 1 May 2016.
3. Even if cross-regime renewal were possible, the application was not for the same kind of operation. The previous authorisation confined importation and end-use to East Midlands Airport. The application permitted operations across the EU and transcontinental routes. Geographical scope was fundamental to customs supervision and control; it was not merely an immaterial condition.
4. Article 172(2) is an exceptional derogation from the ordinary rule that retroactive effect begins no earlier than acceptance of the application. The mere existence of the 2015 application could not itself be exceptional. However, the First-tier Tribunal had not treated it as irrelevant: HMRC’s failure to decide that application, together with the full factual findings, remained relevant to HMRC’s discretionary review.
5. Under section 16(4) of the Finance Act 1994, a further review concerns the original decision and ordinarily applies the facts, law and applicable policy at that time. The First-tier Tribunal was not required to direct HMRC generally to comply with equal-treatment and rationality obligations where no real possibility of inconsistent treatment had been established. Any challenge to HMRC’s later review decision belonged in the separate appeal from that decision.

• Upper Tribunal (Tax and Chancery Chamber): dismissed DHL’s appeal against the First-tier Tribunal’s directions.
• First-tier Tribunal (Tax Chamber): on 13 February 2023, allowed the appeal against HMRC’s refusal of the 2017 authorisation application and directed a further review; it dismissed the related duty-demand and equitable-repayment appeals unless retroactive authorisation were later granted.