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23-3-2016 11:57 pm  #1


Duty demands and penalties after destruction of goods.

Credit to NoMoTax

Dear Sir/Madam,

Please find below the reply to your enquiry. Please note that the advice given by Your Europe Advice is an independent advice and cannot be considered to be the opinion of the European Commission, of any other EU institution or its staff nor will this advice be binding upon the European Commission, any other EU or national institution.

Dear Sir,

Thank you for this enquiry.

As you will already know the EU comprises an area in which the free movement of goods is assured. Member States may only restrict the free movement of goods in exceptional cases, for example when there is a risk resulting from issues such as public health, protection of the environment, consumer protection or public policy. This restriction applies for the internal market in excise goods, such as tobacco and alcohol.

1.As a general rule, there are no limits on what private persons can buy and take with them between EU countries, as long as the products purchased are for personal use (not for resale), and transported by the individual. These rules are set out, as you correctly identify in Directive 2008/118.

2. Excise duty on excise goods acquired by a private individual for his own use, and transported from one Member State to another by him, must be charged only in the Member State in which the excise goods are acquired and not in another member state of import. This means that your friend may be charged duty if you are determined to be travelling for a commercial purpose. The authorities are entitled to consider a number of factors, which include the quantity of goods, although this only a form of evidence and is not a hard and fast rule. The guideline level for smoking tobacco is 1 kg.

3. 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."

4. 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."

5. 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.

You can do so by contacting a solicitor. You can find details of one specialising in excise rules at the following website:

http://www.lawsociety.org.uk/choosingandusing/findasolicitor.law


We hope that this assists,

Your Europe Advice.

To submit another enquiry, please visit Your Europe Advice, but do not reply to this e-mail.

Your original enquiry was:
One of my friends came back from Belgium to the UK, with 3kg of tobacco. He was given the option of a legal battle which they told him he would lose or the choice to leave his goods where they would be destroyed. He chose the later option, even though he had not done anything wrong. United Kingdom Border Force then went on to destroy the tobacco they had seized. Now several months later he has received a bill for excise duty.

As Directive 2008/118/EC states in Article 37 that "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." There is also a Recital, recital 9 states "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."

Now, given that excise duty is a tax on consumption, and these goods have been destroyed by the member state, is it incorrect for them to try and charge excise duty on a product that is impossible to consume because of the destruction of the goods?




Yours sincerely,

Your Europe Advice


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