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05-2-2015 7:18 pm  #1


Duty demands and Article 37 of EU directive 2008/118/EC

This point was raised by another member some time ago.http://n2d.boardhost.com/viewtopic.php?pid=11061#p11061

According to the preamble to the directive:

9) Since excise duty is a tax on the consumption of certain goods, duty should not be charged in respect of excise goods which, under certain circumstances, have been destroyed or irretrievably lost.

(30) In order to avoid conflicts of interest between Member States and double taxation in cases in which excise goods already released for consumption in one Member State move within the Community, provision should be made for situations in which excise goods, following their release for consumption, are subject to irregularities.


Article 37

1.   In the situations referred to in Article 33(1) and Article 36(1), in the event of the total destruction or irretrievable loss of the excise goods during their transport in a Member State other than the Member State in which they were released for consumption, as a result of the actual nature of the goods, or unforeseeable circumstances, or force majeure, or as a consequence of authorisation by the competent authorities of that Member State, the excise duty shall not be chargeable in that Member State.

The above would appear to apply to goods seized in transit by customs and subsequently destroyed.

I would be interested to know if anyone has raised the double taxation issue in an appeal against a duty assessment.

 

Last edited by turbulentupstart (05-2-2015 7:19 pm)

 

06-2-2015 9:02 am  #2


Re: Duty demands and Article 37 of EU directive 2008/118/EC

turbulentupstart wrote:

.

Article 37

1.   In the situations referred to in Article 33(1) and Article 36(1), in the event of the total destruction or irretrievable loss of the excise goods during their transport in a Member State other than the Member State in which they were released for consumption, as a result of the actual nature of the goods, or unforeseeable circumstances, or force majeure, or as a consequence of authorisation by the competent authorities of that Member State, the excise duty shall not be chargeable in that Member State.

The above would appear to apply to goods seized in transit by customs and subsequently destroyed.

I would be interested to know if anyone has raised the double taxation issue in an appeal against a duty assessment.

 

Can I draw your attention to Articles 33 & 36 in particular, since they are tied in with Article 37......

My interpretation is that these articles apply to bona fide traders transporting goods under the cover of the appropriate Customs import procedures for moving goods between member states. They do not apply to ''personal imports''.

After all there is a part there which states that excise duty paid in the member state where the goods were bought, can be reclaimed if it is then found that goods were liable to duty in the destination state. However it is clearer in that case that it only applies where goods are being legitimately moved under cover of the appropriate Customs paperwork.

Happy to be proved wrong, just my thoughts.
 


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06-2-2015 7:53 pm  #3


Re: Duty demands and Article 37 of EU directive 2008/118/EC

You may well be right eezy, It was also my initial reaction to newage's post. However, only paragaphs (1) of the respective articles apply.

According to Article 33 (1):

1.   Without prejudice to Article 36(1), where excise goods which have already been released for consumption in one Member State are held for commercial purposes in another Member State in order to be delivered or used there, they shall be subject to excise duty and excise duty shall become chargeable in that other Member State.For the purposes of this Article, ‘holding for commercial purposes’ shall mean the holding of excise goods by a person other than a private individual or by a private individual for reasons other than his own use and transported by him, in accordance with Article 32.

There is no explicit mention of paperwork.

It's certainly worth a try in an appeal against an assessment.

Last edited by turbulentupstart (06-2-2015 7:55 pm)

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08-2-2015 3:58 pm  #4


Re: Duty demands and Article 37 of EU directive 2008/118/EC

http://europa.eu/legislation_summaries/taxation/fi0003_en.htm

Movements and taxation of excise goods after release for consumption


Excise duties may be charged only in the EU country in which the goods are acquired by a private individual for his own personal use and transported from one EU country to another by him. To determine whether the excise goods are intended for a private individual, EU countries take account of:


  • the commercial status of the holder of the goods;
  • the place where the goods are located;
  • any document relating to the goods;
  • the nature of the goods;
  • the quantity of the goods.

Where excise goods intended for consumption in an EU country are held for commercial purposes in another EU country, the goods are subject to the excise duties of the latter country. Excise duties paid in the first EU country may be reimbursed.” ...

Accordingly, if the circumstance of oneself, is that of being deeming a trader, then oneself may be reimbursed. If so, the issue is how to be reimbursed.

 

08-2-2015 9:04 pm  #5


Re: Duty demands and Article 37 of EU directive 2008/118/EC

Shopper

I think that is maybe where this fails as an option for us. Have a look at HMRC notice 204B. It details the various categories of trader who can import goods with a ''privileged'' status. The way I'm reading it goods have to be bought duty free and then UK duty has to be paid before the goods are transported or can be moved under ''duty suspension'' rules.

One thing I did pick up somewhere along the line (should have copied it), is that there is no provision in UK law to be able to pay duty at the point of entry. Not entirely relevant to the above but interesting all the same.


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14-3-2016 7:42 pm  #6


Re: Duty demands and Article 37 of EU directive 2008/118/EC

The way I see it I think the recital 9 is very clear, which is as it should be.
Since excise duty is a tax on the consumption of certain goods, duty should not be charged in respect of excise goods which, under certain circumstances, have been destroyed or irretrievably lost.

Its worth pointing out the recital stands alone as a clarification already.  Excise Duty is a tax on the consumption of certain goods.  They could attempt some sort of fine, but it would not be Excise Duty (its not a fine) as that would be impossible to serve on goods which have been destroyed, and therefore, impossible to consume.

As stated above, the correct proceedure should either be seizure liable to forfeit, or if they want the money they should offer the chance to pay duty and then the owner can try to get his/her originial duty back from the member state he purchased the product from originally.
 

Last edited by NoMoTax (14-3-2016 7:46 pm)

 

14-3-2016 11:17 pm  #7


Re: Duty demands and Article 37 of EU directive 2008/118/EC

NoMoTax wrote:

The way I see it I think the recital 9 is very clear, which is as it should be.
Since excise duty is a tax on the consumption of certain goods, duty should not be charged in respect of excise goods which, under certain circumstances, have been destroyed or irretrievably lost.

Its worth pointing out the recital stands alone as a clarification already.  Excise Duty is a tax on the consumption of certain goods.  They could attempt some sort of fine, but it would not be Excise Duty (its not a fine) as that would be impossible to serve on goods which have been destroyed, and therefore, impossible to consume.

As stated above, the correct proceedure should either be seizure liable to forfeit, or if they want the money they should offer the chance to pay duty and then the owner can try to get his/her originial duty back from the member state he purchased the product from originally.
 

''Under certain circumstances'' being the optimum clause. Now how do we get that clarified, any ideas?
 


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18-3-2016 2:44 pm  #8


Re: Duty demands and Article 37 of EU directive 2008/118/EC

To help a friend I contacted a european legal advice centre to get this issue clarified (a bit like citizens advice for EU issues). Here are some quotes from the response.

Article 37 of the Directive provides :

"1. In the situations referred to in Article 33(1) and Article 36(1), in the event of the total destruction or irretrievable loss of the excise goods during their transport in a Member State other than the Member State in which they were released for consumption, as a result of the actual nature of the goods, or unforeseeable circumstances, or force majeure, or as a consequence of authorisation by the competent authorities of that Member State, the excise duty shall not be chargeable in that Member State.

The total destruction or irretrievable loss of the excise goods in question shall be proven to the satisfaction of the competent authorities of the Member State where the total destruction or irretrievable loss occurred or, when it is not possible to determine where the loss occurred, where it was detected.

2. Each Member State shall lay down its own rules and conditions under which the losses referred to in paragraph 1 are determined."

Article 38 of the Directive provides, by contrast:

"1. Where an irregularity has occurred during a movement of excise goods under Article 33(1) or Article 36(1), in a Member State other than the Member State in which they were released for consumption, they shall be subject to excise duty and excise duty shall be chargeable in the Member State where the irregularity occurred."

The UK courts have previously considered that excise duty is payable at the point of importation which logically pre-dates its destruction (case Hoverspeed [2002] EWCA Civ 1804, para. 16 under the previous Directive). You can find this at the following website:

http://www.bailii.org/ew/cases/EWCA/Civ/2002/1804.html

6. The position is that Article 37 of the Directive should be read disjunctively so that "the total destruction... as a consequence of authorisation by the authorities of the member state" should not entitle them to charge excise duty.

You can find out more about this Directive at the following website:

http://europa.eu/legislation_summaries/taxation/l31018_en.htm

You may wish to take legal proceedings, and should seek specific legal advice. This is because the rules applied by the UK authorities do not match the rules set out in the Directive, and would need to be disapplied in the national courts.

So if someone else is being charged Duty on goods that have been destroyed, either get in touch with me or one of the mods and we will advise on where to get help.

 

18-3-2016 3:09 pm  #9


Re: Duty demands and Article 37 of EU directive 2008/118/EC

This a potentially groundbreaking find that NoMo has shared with the forum and he is to be applauded for finding a way forward to get it defined.

Hats off too, to turbulentupstart for pursuing the matter in the first place on the back of Newage's post.

My thoughts are that it is unlikely to help anyone in the early stages of restoration. Only when it gets to the tribunal stage will somebody then have to make a judgement on it. Even then it will probably go all the way to Supreme court because if HMRC are found to have been mis-applying the law it opens the floodgates for compensation dating back to about 2013 when it started.

Last edited by eezyrider (18-3-2016 4:52 pm)


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19-3-2016 7:10 am  #10


Re: Duty demands and Article 37 of EU directive 2008/118/EC

Very interesting.  Good post NMT!

Elsewhere on the forum, Sparky has posted that his goods have been destroyed and that he is being offered the purchase price in lieu.  Should the above be pointed out to UKBF in his negotiations?

JMK

 

19-3-2016 10:26 pm  #11


Re: Duty demands and Article 37 of EU directive 2008/118/EC

nah, they are disconnected issues.  The issue here is that Article 37 says one thing, and by various means the duty men are trying to get around it by inserting their own rules, which conflict the directive.  Sparkys issue is more to do with one of conversion, and in particular conversion dates and any compensation for that conversion if needed.

 

 

14-6-2016 10:40 am  #12


Re: Duty demands and Article 37 of EU directive 2008/118/EC

Good morning all,well it was until i opened my front door this morning to be met by a bailiff  from HM Revenue and Customs demanding £2186.00,with reference to excise duty and wrongdoing penalty.

She was actually quite nice and helpful she works for HMRC she is not a third party bailiff ,basically i explained that i was disputing liability due to EU directives.

Her course of action was to take control of my 2 work vans and my car,i have 14 days to appeal or she will be back to take the vehicles, i was charged 75 pounds for this visit,and it will be considerably more for a 2nd visit.

Could you please tell me what the stance here with the EU directives is at present ,and also any advice on the way forward.  Kind Regards   Deano 


FIGHT BACK OR WE ARE DOOMED !!!
 

14-6-2016 12:17 pm  #13


Re: Duty demands and Article 37 of EU directive 2008/118/EC

I think this is uncharted territory for us.

I seem to recall you went through condems and crown appeal? Did you also apply for restoration?

As I understand it there is no time limit for the restoration procedure although once you start it there are limits between each step. Alternatively is there a time limit on the paperwork for the demands which tells you how long you have got to appeal?

So if you have not started restoration then I think you can. If you have then you can start a new appeal against the demands. I don't know if the bailiff action has to be authorised by a court or if HMRC are empowered to collect their own dues. If it's a court action you would have to apply to the court to get it ''set aside''. 

I know you look in regularly so no doubt you would have seen the latest on seizures whereby our defence would be, EU directive states they cannot charge duty on destroyed goods. This would be your reason for requesting an appeal.

Maybe turbulent may be able to offer some other advice as it's his specialist area.


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14-6-2016 1:38 pm  #14


Re: Duty demands and Article 37 of EU directive 2008/118/EC

Hi Eezy thanks for your reply, I have just looked at the original letter for the Duty Demand and wrongdoing penalty dated July 2012 and it states i have 30 days to appeal ,as i had a ongoing Condemnation hearing i did not appeal,and i did not appeal after the Condems.

I did have communications from a Debt Collection Agency around a year ago ,but i told them i would not pay as i believed HMRC to be breaking EU directives,they said they would relay this information back to HMRC ,and today was the first contact with HMRC since my Condems.

I did not apply for restoration after Crown ,as i felt enough was enough at the time i now feel i have the will again to pursue my defence against these demands.

I will lodge my appeal this week,and maybe look into restoration for the future   Many Thanks   Dean 


FIGHT BACK OR WE ARE DOOMED !!!
 

14-6-2016 3:51 pm  #15


Re: Duty demands and Article 37 of EU directive 2008/118/EC

In that case I would also argue that your appeal is valid and should be heard because the duty demands were issued out of procedure while condems were ongoing. They therefore pre-empted your guilt. (That would be the argument for having an appeal heard).

I would then use the reason for appeal as the destruction of seized goods contra to EU directive 2008/118 as above.


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16-6-2016 5:53 am  #16


Re: Duty demands and Article 37 of EU directive 2008/118/EC

Hi thanks for your help , i just wanted to clarify what article of the EU directive i should quote ,in my appeal letter Kind Regards Deano


FIGHT BACK OR WE ARE DOOMED !!!
 

16-6-2016 7:04 am  #17


Re: Duty demands and Article 37 of EU directive 2008/118/EC

deanobeano99 wrote:

Hi thanks for your help , i just wanted to clarify what article of the EU directive i should quote ,in my appeal letter Kind Regards Deano

Deano,

Can you send an email to the address on the header at the top of the page and I will reply. It's easier to use email rather than PM for lengthy replies. I don't want to jeopardise your chances by posting all in public until we have some progress. 
 


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17-6-2016 10:16 am  #18


Re: Duty demands and Article 37 of EU directive 2008/118/EC

Deano

Following on from our conversations, normally you will have to pay the demands before getting to tribunal or apply for hardship relief.

If HMRC refuse to allow an appeal you can appeal direct to the tribunal (as it is an indirect tax) giving reasons as to why your appeal is late. Tribunal has the discretion to grant a hearing out of time.

https://www.gov.uk/tax-tribunal/overview


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19-10-2016 11:39 pm  #19


Re: Duty demands and Article 37 of EU directive 2008/118/EC

Update in relation to Article 37

We have 3 ongoing cases at the moment using Article 37 as a basis for appeal. One appears to have reached stalemate as there has been no progress since June. The other 2 are in the early stages. One has been refused at review stage and is going to tribunal and the 3rd has not yet been reviewed.

The information relating to the Article 37 defence is no longer sensitive as it appears a number of cases have gone before the tribunal recently using this argument. Probably just coincidence that they have come about since the development of this thread...........

Anyway, the appeals that have gone before the tribunal have all been dismissed. I have only read the reasons for dismissal in one case and quite frankly they are gibberish. The tribunal chairman stated something to the effect that whilst he agreed Article 37 does appear to offer a valid defence, it does not reflect what the law was intended to achieve. In other words Article 37 should not be relied upon as a defence against the issue of duty demands and penalties.

As a consequence 4 appeals are going to the upper tribunal. They are being ''stacked'' in order until the 1st can be heard which will set a precedent for any following. As far as I know a date has not yet been set.

The member with the best understanding of these procedures is turbulentupstart and maybe he will add further comment.





 


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05-11-2016 9:57 pm  #20


Re: Duty demands and Article 37 of EU directive 2008/118/EC

Well according to Article 233 of the Community Customs Code, excise goods imported  from outside the EU which are seized and subsequently destroyed are definitely not liable for duty, but could give rise to penalties or prosecution (see Fox v Revenue and Customs ) It would therefore appear very odd if goods brought from inside the EU were liable for duty in those circumstaces.

Also, proceedings regarding penalties are regarded as criminal for ECHR Article 6 purpose albeit the standard of proof is still the civil balance of probabilites. (see Evans v Revenue and Customs at [63])

What this means in practice is that when issuing a penalty, HMRC must prove that the importer acted dishonestly - a failure to appeal the seizure does not automatically mean that he did. (see alsoLewis v Revenue and Customs [23-24])

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