QUEEN'S BENCH DIVISION
THE ADMINISTRATIVE COURT
London WC2A 2LL
B e f o r e :
|THE QUEEN ON THE APPLICATION OF HUNTINGWOOD TRADING LIMITED||Claimant|
|COMMISSIONERS OF HER MAJESTY'S REVENUE AND CUSTOMS||Defendant|
WordWave International Limited
A Merrill Communications Company
190 Fleet Street London EC4A 2AG
Tel No: 020 7404 1400 Fax No: 020 7831 8838
(Official Shorthand Writers to the Court)
Miss S Hanif (instructed by Her Majesty's Revenue and Customs) appeared on behalf of the Defendant
Crown Copyright ©
"The legitimate expectation point is arguable, the irrationality claim is not but in as much as it is the legitimate expectation point dressed up as a failure to take into account relevant considerations permission for it can be given as well. The alternative remedies point seems to be a good one but possibly Sagemaster can be invoked to counter it."
"Does not obligate the commissioners to pay drawback if the statement cannot be supported by evidence of UK duty payment."
"Brand owners try to control the market [he says] and if you buy from them under bond you will pay a significantly higher price. It is cheaper and therefore makes your prices more competitive if you buy goods duty paid and subsequently claim drawback on export rather than obtaining the same goods under duty suspension arrangements. The drawback system allows legitimate traders to compete on an equal footing with the brand owners."
"(1) (a) Conferring an entitlement to drawback in prescribed cases where the Commissioners are satisfied that goods chargeable with duty have not been, and will not be, consumed in the United Kingdom."
"(1) This section applies to -
"(a) Beer which has been produced by a registered brewer.
"(2) Subject to the provisions of this section and to such conditions as the Commissioners see fit to imposed, drawback shall be allowable -
"...(b) On the exportation ... by any person of [any beer to which this section applies] ... and shall also be allowable, subject as aforesaid, in the case of any beer to which this section applies which it is shown to the satisfaction of the Commissioners is being [exported or shipped] as mentioned in paragraph (b) or (c) above as an ingredient of other goods.
"...(6) drawback under this section shall, where it is shown to the satisfaction of the Commissioners that duty has been paid, be allowed at the same rate as the rate at which the duty is charged."
"(1) A claim for drawback may only be made in relation to eligible goods.
"(2) Subject to paragraphs (3) and (4) below, goods are eligible goods if duty has been paid and has not been remitted, repaid or drawn back and those goods have been -
"(b) warehoused for export, or
"(1) Subject to paragraph (2) below and without prejudice to any condition imposed by or in accordance with section 133 of the Act, every eligible claimant shall -
"(a) save as the Commissioners may otherwise allow, comply with the conditions imposed by these regulations; and.
"(b) in addition to those conditions, comply with such other conditions as the Commissioners see fit to impose in a notice published by them and not withdrawn by a further notice."
"(1) No drawbacks shall be payable unless it is shown to the satisfaction of the commissioners that the claimant is an eligible claimant and that the goods are eligible goods..."[I emphasise the words to the satisfaction of the commissioners.]
"What are the main conditions for drawback?
"We will pay drawback of excise duty only [and I emphasise the word only] if we are satisfied that all of the following conditions have been met:
"2. The duty on the goods was paid not more than three years before the event giving rise to the claim of drawback...
"7.1. Claiming drawback.
"If you wish to claim drawback you must [and I emphasise the word must] do all the following:
"2. Ensure that duty was paid -- and not reclaimed -- on the goods no more than three years before the event giving rise to the claim...
"10.4. What do I do with a completed claim?
"Return the completed form to the DC along with evidence of the UK duty payments; and where appropriate, any other supporting documents. You will find more information about this in Sections 12 to 18.
"If you cannot provide the original evidence of UK duty payment, you must provide other evidence which demonstrates that the goods are UK duty paid...
"11.2. Do you ever reject or reduce claims?
"Yes. We may reject or reduce claims where goods... you have not complied with any of the conditions either set out in this notice or notified by us in writing.
"Additionally, if you do not follow the procedures set out in this notice then we will not accept your claim...
"11.4. Can you cancel or recover drawback?
"Yes. If irregularities come to our notice after drawback has been paid we can assess you for the duty...
"12.7. What documents must I submit with my claim?
"The completed claim (see section 10) must be accompanied by evidence of payment of UK excise duty and...
"13.10. What documentation must I submit with my claim?
"The completed claim (see section 10) must be accompanied by:
"(a) evidence of payment of UK excise duty..."
"the collection and management of revenue for which the Commissioners of Customs and Excise were responsible before the commencement of this section."
"Held - It was not inconsistent with the Revenue's statutory duty for the Revenue to advise a tax payer as to his rights and duties where an approach was made by the latter for such advice. However, if a public authority so conducted itself as to create a legitimate expectation that a certain course would be followed, it would be unfair if the authority were permitted to follow a different course to the detriment of the person who entertained the expectation, particularly if he acted on it. Accordingly, if the Revenue agreed to, or represented that it would forego tax which might arguably be payable on a proper construction of the relevant legislation, and the tax payer relied on such agreement or representation, the Revenue would be bound by that agreement or representation, and a decision to resile therefrom would be unfair and subject to judicial review on the ground of abuse of power. The Revenue would only be bound, though, in the case of an informal approach if the tax payer gave full details of the specific transaction on which he sought the Revenue's ruling, indicated the ruling sought and made it plain that a fully considered ruling was sought, and indicated the use he intended to make of any ruling given, and the ruling or statement was clear unambiguous and devoid of qualification."
"I cannot for my part accept that the Revenue's discretion is as limited as counsel for the Crown submitted. In the Fleet Street Casuals case the Revenue agreed to cut past (irrecoverable) losses in order to facilitate collection of tax in future. In Preston the Revenue cut short an argument with the tax payer to obtain an immediate payment of tax. In both cases the Revenue acted within its managerial discretion. The present case is less obvious. But the Revenue's judgment on the best way of collecting tax should not lightly be cast aside. The Revenue might stick to the letter of its statutory duty, declining to answer any question when not statutorily obliged to do so (as it sometimes is: see, for example, section 464 and 488 (11) of the Income and Corporation Taxes Act 1970) and maintaining a strictly arm's length relationship with the tax payer. It is, however, understandable if the Revenue has not in practice found this to be the best way of facilitating collection of the public revenue but that this has been the Revenue's experience is, I think, made clear by Mr Beighton who, having described the machinery for assessment and appeal, continues:
"Notwithstanding this general approach in administering the tax system, the Board see it as a proper part of their function and contributing to the achievement of their primary role of assessing and collecting the proper amounts of tax and to detect and deter evasion, that they should when possible advise the public of their rights as well as their duties, and generally encourage co-operation between the Inland Revenue and the public."
"I do not think we, sitting in this court, have any reason to dissent from this judgment. It follows that I do not think the assurances the Revenue are here said to have given are in themselves inconsistent with the Revenue's statutory duty.
"I am, however, of the opinion that in assessing the meaning, weight and effect reasonably to be given to statements of the Revenue the factual context, including the position of the Revenue itself, is all important. Every ordinary sophisticated tax payer knows that the Revenue is a tax collecting agency, not a tax imposing authority. The tax payer's only legitimate expectation is, prima facie, that he will be taxed according to statute, not concession or a wrong view of the law (see R v A - G ex parte Imperial Chemical Industries plc (1986) 60 TC 1 at 64 per Lord Oliver). Such tax payers would appreciate, if they could not so pithily express, the truth of Walton J's aphorism, "one should be taxed by law, and not be untaxed by concession" (see Vestey  STC 414 at 439,  1 Ch 177 at 197). No doubt a statement formally published by the Revenue to the world might safely be regarded as binding, subject to its terms, in any case falling clearly within them. But where the approach to the Revenue is of a less formal nature a more detailed inquiry is, in my view, necessary. If it is to be successfully said that as a result of such an approach the Revenue has agreed to forego, or has represented that it would forego, tax which might arguably be payable on a proper construction of the relevant legislation it would, in my judgment, be ordinarily necessary for the tax payer to show that certain conditions had been fulfilled. I say "ordinarily" to allow for the exceptional case where different rules might be appropriate, but the necessity in my view exists here. First, it is necessary that the tax payer should have put all his cards face up on the table. This means that he must give full details of the specific transaction on which he seeks the Revenue's ruling, unless it is the same as an earlier transaction on which a ruling ing has already been given. It means that he must indicate to the Revenue the ruling sought. It is one thing to ask an official of the Revenue whether he shares the tax payer's view of the legislative provision, quite another to ask whether the Revenue will forego any claim to tax on any other basis. It means that the tax payer must make plain that a fully considered ruling is sought. It means, I think, that the tax payer should indicate the use he intends to make of any ruling given. This is not because the Revenue would wish to favour one class of tax payers at the expense of the another but because knowledge that a ruling is to be published in a large and important market could affect the person by whom and the level at which a problem is considered and, indeed, whether it is appropriate to give a ruling at all. Secondly, it is necessary that the ruling or statement relied on should be clear, unambiguous and devoid of relevant qualification.
"In so stating these requirements I do not, I hope, diminish or emasculate the valuable developing doctrine of legitimate expectation. If a public authority so conducts itself as to create a legitimate expectation that a certain course will be followed it would often be unfair if the authority were permitted to follow a different course to the detriment of one who entertained the expectation, particularly if he acted on it. If in private law a body be in breach of contract in so acting or estopped from so acting a public authority should generally be in no better position. The doctrine of legitimate expectation is rooted in fairness. But fairness is not a one way street. It imports the notion of equitableness, of fair and open dealing, to which the authority is as much entitled as the citizen. The Revenue's discretion, while it exists, is limited. Fairness requires that its exercise should be on the basis of full disclosure. Counsel for the applicants accepted that it would not be reasonable for a representee to rely on an unclear or equivocal representation. Nor, I think, on facts such as the present, would it be fair to hold the Revenue bound by anything less than a clear, unambiguous and unqualified representations."
"If the argument for the Revenue were correct, any application for judicial review on the grounds of unfair abuse of power would be bound to fail if the Revenue were able to show that its actions were dictated by its statutory obligation to collect taxes. However it was clearly recognised in Preston that in an appropriate case the court could direct the Revenue:
"...to abstain from performing their statutory duties or from exercising their statutory powers if the Court is satisfied that "the unfairness" of which the tax payer complains renders the insistence by the Commissioners on performing their duties or exercising their powers an abuse of power...""
"I add to that summary of the law in the following respects.
"(1) The legitimate expectation may arise from, "the existence of a regular practice which the claimant can reasonably expect to continue" see Council for Civil Service Unions v Minister for the Civil Service  AC 374 at 401 per Lord Fraser, quoted by me in Begbie  1 WLR 1118 at 1125. "(2) It is not always a condition for a legitimate expectation to arise that there should be a clear, unambiguous and unqualified representation by the public authority (R v IRC, ex parte Unilever  STC 681 at 693 to 695, per Lord Justice Simon Brown): the test is whether the public authority has acted so unfairly that its conduct amounts to an abuse of power."
"Please be aware that we have raised these questions with an adviser and his manager at the National Advice Service in Cardiff... the adviser suggested we write to this website for written confirmation of the verbal advice given.
"Question 1. In Notice 207 clause 7 and elsewhere, reference is made to a claimant's responsibility to ensure that duty has been paid on the purchased goods. If required, what evidence of duty payment would Huntingwood be expected to produce?
"Answer 1. It is sufficient that you obtain a properly drawn up invoice with supplier's name, address, VAT number et cetera as proof of purchase. Although this in no way "proves" the duty payment, it is acknowledged that no other documentation is likely to be available to you.
"Question 2. Huntingwood acquires duty paid goods in good faith from a UK supplier and makes a subsequent claim for duty drawback. At a later date it is discovered that the supplier or indeed any previous suppliers in the chain had not properly paid the duty. Could Huntingwood Trading be required to return its duty drawback receipt as a result of these previous omissions by others?
"Answer 2. No. Huntingwood would not be exposed provided that it had exercised reasonable care in the purchase transaction and was in no way involved or complicit in the previous failure to pay duty on the goods.
"We wish to operate our business in an open, professional manner and ensure there are satisfactory safeguards in place to comply with the duty regulations.
"We would therefore appreciate your written confirmation of the advice given."
"Huntingwood has recently started trading in the purchase and sale of beer/lager products. The company will typically purchase duty paid goods, which are stored in the UK bond under the provisions of "warehousing for export". The goods are subsequently dispatched to another member state in duty suspension, under the conditions set out in clause 15 of Notice 207.
"Internal controls and procedures have been installed to ensure that claims for excise duty drawback are properly documented and presented for payment."
"Based on the information you have provided in this letter and the discussion you had with the National Advice Service... I would like to bring the following to your attention which has been taken from Notice 207 Excise Duty: drawback."
"We will pay drawback of excise duty only if we are satisfied that all of the following conditions have been met:
"... 2. The duty on the goods was paid not more that three years before the event giving rise to the claim for drawback...
"If you wish to claim drawback you must do all of the following:
"1. Comply with the law and with the requirements of this notice.
"2. Ensure that duty was paid - and not reclaimed - on the goods no more than three years before the event giving rise to the claim.
"3. Ensure that your claims are accurate..."
"With regard to the previous advice given which was correct, I would like to add the following:
"The supporting evidence should be original and not photocopied; and to make you are aware that if irregularities come to our notice after drawback has been paid, we can assess you for the duty.
"If you have any further queries regarding the contents of this particular letter then please contact the address shown above."
"I contacted M.A.K by phone to clarify Huntingwood position in regard to two questions.
"Question 1. Huntingwood purchases duty paid beer/lager from a supplier. The supplier provides an invoice for the goods which contains all of the detail expected on a professionally prepared document. Could Huntingwood be required by Customs and Excise or Drawback Processing to provide additional evidence of duty payment, and if so what evidence will be required?
"Answer 1. Customs and Excise/Drawback Processing do not require any further evidence over and above a professionally prepared VAT invoice.
"However Huntingwood has a duty of care to make reasonable enquiries of the supplier prior to entering into a transaction. Huntingwood should also assess if the price being offered is reasonable for duty paid goods. By way of example, if the market rate at a given point for a case of lager was in a range of £10.50 to £12.00, but Huntingwood had been offered a case price of £7.00 - Customs and Excise would expect Huntingwood to either satisfy itself that the duty element had been paid or not enter into the transaction, as the price differential should give rise to suspicion of non payment of duty or the validity of the goods being offered.
"Question 2. Huntingwood purchases duty paid goods from a supplier in good faith, it receives a professionally prepaid invoice and submits a claim for duty drawback. At a later date Customs and Excise investigate the supplier of the goods and discover that despite charging a sum reasonably expected to include a duty payment, the duty had not been paid on the goods supplied. Who would become liable to pay the duty and could Huntingwood be required to repay the duty retrospectively?
"Answer 2. Customs and Excise would carry out a duty assessment on the supplier and then require them to pay the unpaid duty. Provided Huntingwood makes reasonable enquiries of the supplier and is in no way involved or complicit in the non payment of duty then Huntingwood acting in good faith, would have no obligation to repay the duty drawback.
"M.A.K was due to visit to Huntingwood with Mr McWilliams also from Customs and Excise on 26th July 2005, he agreed to bring to the meeting a list of vendor checks recommended to be carried out when assessing if a supplier would be suitable to provide goods in the future.
"Mr Abdul Karim also recommended that Huntingwood request future invoices from suppliers to state "Duty Paid" in respect of the goods purchased. Although this practice is not mandatory he suggested it would be a good working practice for Huntingwood to adopt for the future."
"Discussed the legal requirements with regard to time limits for the parts of the drawback procedure with regard to standing time prior to export and the potential liability that Huntingwood would incur if the supplier to Checkprice [which was one of two suppliers to Huntingwood] was found to be missing or if Huntingwood were buying from a business that was subsequently found to be missing. I advised that there would be no come back on Huntingwood if they bought the goods in good faith from Checkprice. If Huntingwood were to buy from someone who subsequently went missing then their liability would depend on the due diligence checks they had taken prior to dealing with the supplier."
"Some concerns highlighted within the supply chain. The sales made by BA Cash and Carry in Cardiff to Huntingwood appear to be sold for less than BA actually purchased them for. Further checks/visits are being carried out to BA Cash and Carry and others further down the supply chain. The implications of this would not make a difference to Huntingwood's application as they are able to produce a genuine purchase invoice from their supplier."
"Duty of care taken with their suppliers and customers, only dealing with recommended/better known wholesalers... the time spent/research done by the trader to ensure that all aspects of the business are fully understood. Minimising the risks whenever possible and the obtaining relevant notices/guidance and advice from the department. Any advice given is accurately documented by the trader. A clearly set out audit trail for each transaction undertaken by the business, with all of the documents immediately available on request."
"For each transaction Huntingwood are able to provide a wealth of information substantiating the drawback claims that they have submitted. Documents produced by Huntingwood for each claim include... a purchase invoice and a UK warehouse stock receipt...
"Purchases by Huntingwood have been referenced through the supply chain to ensure that the excise duty has been accounted for. Responses to these references show that the main suppliers to Huntingwood purchase their goods directly from the manufacturers who account for the duty themselves.
"We have also identified that in earlier transactions, one of the Huntingwood suppliers may in turn have been supplied by a missing trader, four suppliers back from the receipt of the goods. Consequently we have fully advised Huntingwood of their responsibilities in respect of due diligence and expect them to carry out reasonable checks on any suppliers or transactions that give cause for concern, such as unusually competitive prices et cetera.
"The trader discharges their "Duty of Care" in respect of the companies it deals with and avoids any money laundering implications by only accepting payment by bank transfers."
"As per previous requests the trader is able to provide a wealth of information to substantiate each individual drawback claim... Huntingwood have been able to produce, on request, any documents above what we could expect them to retain in their records. Copies of all document relating to drawback have been taken as an example of what you would expect to see for all of this trader's transactions and also a benchmark of what we would expect from other businesses using the drawback processes."
"In addition to the above and as part of the Huntingwood's "Duty of Care" to ensure that the goods they purchase are duty paid, they have requested further evidence from their supplier in addition to a sales invoice. Checkprice state on their sales invoice under the description of the goods that they are "UK Duty Paid" and when asked by Huntingwood if they are able to provide further evidence of duty payment, Checkprice replied that they would not jeopardise their Excise Warehouse approval by falsely making this declaration."
"Discussed recently submitted drawback claims with Mr Evans and mentioned to him that due to recent concerns with his supply chain as precautionary measures to protect the revenue from risk, the following steps have been taken. As from the 1st April 2006 any excise drawback claims submitted by Huntingwood will be the subject to pre-payment verification - the trader will be asked to provide evidence to substantiate each claim. Due to concerns with possible missing traders within the supply chain an invoice stating UK duty paid will not be sufficient evidence of excise duty payment on the goods to the department. Huntingwood should make enquiries with their suppliers and obtain further evidence of duty payment. Their suppliers may need to make enquiries through their supply chain. Acceptable forms of duty paid evidence include copies of W5D, REDS, Occasional importers, Invoice/Delivery note from UK manufacturers."
"Mr Evans should expect the above condition confirmed in writing which he can appeal against should he choose to."
"The Commissioners may require any person who has been concerned at any stage with the good or article --
"(a) To furnish such information as may reasonably be necessary to enable the commissioners to determine whether duty has been duly paid and not drawn back and for enabling a calculation to be made to the amount of drawback payable; and
"(b) to produce any book of account or other document of whatever nature relating to the goods or article."
"If the Commissions consider it necessary for protection of the Revenue they may by a notice in writing deliver to a revenue trader require him to comply with such additions that they see fit to impose."
"Mr Evans stated that he understood the new requirements but felt that it would be unfair if only his business had these conditions imposed on him. I confirmed that the conditions are already in the law for all drawback claimants to abide by and due to the level of drawback claims submitted by Huntingwood the action taken is purely to minimise the inherent risk. Again, once this has been confirmed in writing, Huntingwood would have the right to appeal against my decision."
"Guidance requested from our policy unit in Manchester, see e-mail correspondences included with this report. 20th April 2006 letter issued to Huntingwood withdrawing the above conditions imposed verbally on 11th April 2006. 21st April 2006, Huntingwood drawback claims reverted to post payment (see e-mail correspondences included with this report)."
"Further to our meeting on 11th April 2006 and our subsequent telephone conversations please accept this letter as clarification of the conditions imposed on Huntingwood Trading. These conditions related to the provision of evidence that UK Excise Duty had been accounted for on goods purchased by your company. We have received further guidance which suggests that we cannot impose on Huntingwood the condition to provide the original document evidencing UK Duty payment.
"Although the above condition will no longer be applied drawback claims may still be subject to further verification through your supply chain to ensure that the appropriate duty on the excise goods has been paid to HM Revenue and Customs. As such, our enquiries may have a bearing on the repayment of the drawback claim submitted by your company.
"You must still exercise the appropriate duty of care before entering into any transaction in order to satisfy HM Revenue and Customs that excise duty has been accounted for on goods purchased as UK duty paid. If you would like to discuss this matter further please do not hesitate to contact me on my direct telephone number."
"Over the past year there has been a marked increase in the warehousing of beer and spirits for export often for very short periods. HMRC is not aware of any clear commercial rationale for this and is concerned that given the relaxed evidence requirements that currently apply to drawback claims in respect of goods warehoused for export this could represent a fraud risk and threat to the livelihood of complaint traders.
"HMRC's objective is to introduce changes to the excise duty drawback system."
"Often, the goods are only warehoused for very short periods. It seems, therefore, that traders using the WFE are not suffering a significantly greater cash flow disadvantage than those using the direct dispatch system. HMRC is not aware of any clear commercial rationale for using the WFE scheme in this way and is concerned that given the relaxed evidence requirement that currently apply to drawback claims in respect WFE goods, this could represent a fraud risk and a threat to the livelihood of compliant traders."
"Question. I pay my suppliers, the likes of Checkprice, slightly higher than average market prices to ensure the goods are granted UK duty paid. I would like to know truthfully if there has ever been a case of missing traders discovered in my supply chain?
"Answer. An honest answer is yes. Not always can we establish the duty payment/duty point due to missing traders in the supply chain. However, this is not to say any of your suppliers will know about this because they are also in a supply chain and again they may not be aware of suppliers actions/intentions further down the chain. Also from Huntingwood's point you have carried out your due diligence checks and provided what you are required to."
"Claims paid on the basis that Huntingwood have provided what is asked of them. All claims submitted are procedurally correct, however, very rarely can we evidence the duty point/duty payment on the goods currently due to delays in receiving references issued in the supply chain, and the presence of "missing traders" at the end of the chain."
"This is because of the presence of missing or defaulting traders found in the supply chains relevant to the goods in question which prevents HMRC from tracing the supply paths of these traders and therefore establishing whether the goods originated from a duty paid source. Your client is also unable to provide sufficient evidence to satisfy HMRC that duty has been payed and not reclaimed on the goods in question."
(1) To produce a properly prepared professional VAT invoice from its supplier showing the goods were duty paid;
(2) To fulfil its obligation to exercise a duty of care to make reasonable inquires of its immediate supplier before entering into a transaction; and
(3) To assess if the price paid was a reasonable duty paid open market price which would also include VAT.
(1) By the specific advice given by the Commissioners' Advisory Service on 19th July 2005, as confirmed by the letter dated 25th July 2005.
(2) By the specific advice given by Mr Abdul Karim on 19th July 2005, as confirmed by his acceptance of the record note dated 20th July 2005.
(3) By the specific advice from the National Advice Service, in the letter dated 25th July 2005 in response to a specific question, that if it was discovered at a later date that its supplier (or any previous suppliers in the chain) had not properly paid the excise duty, Huntingwood would not be exposed provided it had acted in good faith, exercised reasonable care in the purchase transaction and was in no way involved or complicit in the previous failure to pay the duty on the goods.
(4) By giving Huntingwood during the period from the time Huntingwood started trading in July 2005 until August 2006 when its business was subject to close and regular scrutiny by the commissioners, repeated, clear and unambiguous assurances that its processes and procedures fully complied with the regulations and went further than those expected the commissioners.
(5) By withdrawing the specific ruling by Mr Abdul Karim on 11th April 2006 that future claims for drawback must contain evidence that excise duty had been paid on the goods Huntingwood had purchased.
(6) By giving no indication in the letter dated 20th April 2006 that they required any evidence from Huntingwood in addition to the supplier's professional invoice that the goods in respect of which drawback were being claimed were duty paid.
(7) By referring in the letter dated 20th April 2006 to the appropriate duty of care, which was a clear reference to the advice Mr Abdul Karim gave on 19th July 2005, that Huntingwood had a duty of care to make reasonable inquiries of the supplier and assess the price paid.
(8) By accepting and paying Huntingwood's earlier claims for drawback, made from June 2005 to June 2006, when the only evidence that the goods in respect of which drawback had been claimed were duty paid was a VAT invoice marked, "duty paid".
(9) By publishing a consultation document, "Reform of the excise duty drawback system" in June 2006 which referred twice to "the relaxed evidence requirement that currently apply to drawback claims" in relation to goods warehoused for export.
(10) By telling Huntingwood during the visit on 4th August 2006 that, "you have carried out your due diligence checks and provided what you are required to do" thus reinforcing the earlier advice given.
"You must still exercise the appropriate duty of care before entering into any transaction in order to satisfy HM Revenue and Customs that excise duty has been accounted for on goods purchased as UK duty paid."
"Drawback claims may still be subject to further verification through the supply chain to ensure that the duty has been paid and as such our inquiries may have a bearing on the repayment of the drawback submitted by your company."
Might be read as indicating that it was possible that the result of such inquiries might be, if it turned out that duty had not been paid, that a drawback claim would not be paid. In other words, the words as such, "our inquiries may have a bearing on the repayment of the drawback claim submitted by your company," were intended to be as general in their form as they are and not limited in the way suggested by Mr Milne QC. On that reading, the last paragraph would be an independent reminder to the claimant that, quite apart from anything else, it must continue to exercise its duty of care, because it might be that the defendant would continue to pay drawback claims provided the duty of care had been satisfied, albeit it was not undertaking that that would necessarily be so if the commissioners were not satisfied that that duty had in fact been paid.
"On the basis of my conversations with Mr Abdul Karim and the NAS, my understanding of HMRC's statement that, "if irregularities come to our notice after drawback is paid, we can assess for the duty" was that HMRC would only assess Huntingwood for the duty, if irregularities in the way Huntingwood conducted itself came to their attention by not following their advice. Any reasonable interpretation would confirm this view."