Drinks and Food UK Limited v The Commissioners for HMRC

An appeal against an excise-duty drawback decision may involve both a full merits assessment of entitlement and supervisory scrutiny of HMRC’s discretionary refusal to waive conditions. The tribunal may consider whether that refusal was one which HMRC could reasonably have made.

Conditions imposed by a public notice are enforceable where they are clear, precise, lawful and not impossible or excessively difficult to satisfy. A drawback claimant must comply with conditions concerning duty-stamp obliteration and prescribed evidence of export unless HMRC reasonably waives them. A prior HMRC communication may waive a time limit where, objectively construed in context, it indicates that an otherwise compliant claim will be considered despite being late.

The Appellant claimed drawback of excise duty on alcoholic goods. The goods had been subject to duty paid in 2014 and were exported in tranches between December 2020 and April 2021. The claim was made outside the three-year period in Regulation 7(6) of the Excise Goods (Drawback Regulations) 1995.

The First-tier Tribunal allowed the appeal to a limited extent, finding that HMRC had waived the time limit, but upholding refusal of the remainder because duty stamps had not been recorded in accordance with the Duty Stamp Regulations 2006 and the required export evidence had not been supplied. Both parties appealed. The central issues were the FTT’s jurisdiction, the effect of HMRC’s 2019 email, the validity of the public-notice conditions and whether the matter should be remitted.

1. Jurisdiction. The cross-appeal on jurisdiction was dismissed. Under section 16(5) of the Finance Act 1994, the FTT had full merits jurisdiction to decide entitlement to drawback and also jurisdiction to assess whether HMRC reasonably refused to waive conditions under Regulation 7(1)(a) of the Excise Goods (Drawback Regulations) 1995. This was a statutory jurisdiction specific to the drawback scheme, not a general judicial-review jurisdiction.
2. Time limit. The FTT was entitled to construe HMRC’s email of 27 December 2019 as waiving the three-year time limit. Read objectively and in context, the statement that HMRC could consider the claim despite non-compliance with Regulation 7(6) meant that the claim would not be refused solely because it was late. The reference to other conditions was a reminder that they had to be met, not a conditional waiver of the time limit.
3. Duty stamps. Paragraph 4.5 of Excise Notice 207 imposed a valid condition having force of law through Regulations 7(1)(b) and 10 of the EGDR. The requirement to obliterate stamps in accordance with the Duty Stamp Regulations 2006 included the record-keeping requirement for unique reference numbers under Regulation 24(2)(b). The failure was material and HMRC acted reasonably in refusing the affected part of the claim.
4. Export evidence. Paragraph 7.4 of Excise Notice 207 validly required an S8 document showing departed status 60, or equivalent evidence. The requirement was not impossible or excessively difficult merely because the Appellant used roll-on-roll-off transport. Alternative methods of export or evidence were available, and HMRC’s refusal to waive the condition was within the range of reasonable decisions.
5. Remittal and outcome. The FTT was not required to remit the matter. Once non-compliance with material conditions had been established and refusal to waive them was reasonable, refusal of the affected parts of the claim was inevitable. Both the appeal and cross-appeal were dismissed. The FTT’s decision was confirmed, with drawback allowed only to the extent of £9,695.27.

1. First-tier Tribunal (Tax Chamber) — In [2023] UKFTT 1044 (TC), the FTT allowed the drawback appeal to a limited extent of £9,695.27 and dismissed it otherwise.
2. Upper Tribunal (Tax and Chancery Chamber) — Both the appeal and cross-appeal were dismissed. The FTT decision was confirmed.