Judgment summary
This is a decision of the Upper Tribunal (Tax and Chancery Chamber) on an application by IT Way Transgroup Clearance LLP for permission to appeal against a First-tier Tribunal decision released on 2 December 2024 (TC/2021/03135). The FTT had dismissed IT Way's appeal against an assessment for customs duty and import VAT, holding that IT Way had not shown on the balance of probabilities that it was the direct, rather than indirect, representative of the Trader (FTT[74]).
The FTT had earlier refused permission to appeal on 23 June 2025, and IT Way renewed its application on 7 August 2025. Judge Zaman admitted the late renewed application but refused permission on the papers (the "UT Papers Decision"). IT Way requested an oral hearing, held on 14 January 2026, at which it narrowed its case to a single ground concerning the burden of proof.
Judge Zaman refused permission to appeal, holding that it was not arguable that the FTT had erred in law in its approach to the burden of proof.
Background
HMRC issued an assessment for customs duty and import VAT to IT Way in relation to a shipment of goods imported by a third party, the Trader, into the UK, on which "Disaster Relief" had been incorrectly claimed (para 5). IT Way is a customs clearance agent and was assessed jointly and severally with the Trader because it had declared itself as acting as the Trader's indirect agent (para 5).
IT Way appealed to the FTT on the basis that it was not an indirect agent, relying on a subsequently signed "Direct Representation Letter" under which it and the Trader agreed IT Way was to act as a direct agent (para 5).
The FTT made detailed findings about two letters sent by IT Way to HMRC by special delivery on the same date to different addresses ("Letter 1" and "Letter 2"), one of which (Letter 2) was returned to IT Way unopened by HMRC (paras 6-9, 25-26). The FTT found it could not conclude, on the balance of probabilities, that the Direct Representation Letter existed, and that even if it did, no evidence had been adduced of its contents (FTT[71]). The FTT dismissed the appeal (FTT[74]).
Core dispute
Before the Upper Tribunal, IT Way did not renew its challenge to the FTT's findings of fact (para 15). Instead, it argued that the FTT made an error of law by failing to consider what burden was on HMRC, and whether HMRC's failure to read and consider documents sent to it by IT Way constituted a failure by HMRC to discharge that burden (para 15).
IT Way submitted that the evidential burden had shifted to HMRC once the letters (sent by special delivery) were sent, relying on Van Boeckel v Customs and Excise Commissioners [1981] 2 All ER 505 and Wood v Holden [2006] EWCA Civ 26, and arguing that HMRC had a duty to open and read documents sent to it, particularly by special delivery (paras 17-18, 22-24).
HMRC submitted there was no arguable error of law, because for any burden to shift IT Way needed to prove that the letter said to require opening did contain confirmation of direct representation, which the FTT found was not established and which was not challenged as irrational (para 20). HMRC also disputed that Van Boeckel applied, noting the appeal concerned only whether IT Way was a direct or indirect representative, with no challenge to quantum (para 20).
Court findings
The Upper Tribunal held that Van Boeckel did not assist IT Way, since that case concerned a statutory "best judgment" provision (then s31(1) Finance Act 1972) that had no equivalent in the present case, and the amount of customs duty and import VAT was not challenged (para 27).
The Tribunal distinguished Wood v Holden, noting that in that case the taxpayer had adduced sufficient evidence to be able to say "we have done enough", shifting the burden to HMRC. Here, the FTT's unchallenged findings did not establish either that the Direct Representation Letter existed or that it would have been sufficient to displace IT Way's own designation as indirect representative on the customs clearance form (paras 25-26).
The Tribunal noted the FTT's detailed reasoning at FTT[73] for not accepting the existence or content of the Direct Representation Letter, including the lack of any reference to it in early correspondence, inconsistencies in Mr Du's evidence about the two letters, and the absence of any need to send an original document to HMRC (para 26).
The Tribunal accepted that in some instances it might be arguable that HMRC's conduct in dealing with correspondence should be expressly considered in relation to the burden of proof, but held this was not such an instance (para 28). It concluded it was not arguable that the FTT erred in law in its approach to the burden of proof (para 29).
Outcome
Permission to appeal was refused. The Upper Tribunal held it was not arguable that the FTT made an error of law by failing to consider what burden was on HMRC and whether HMRC's failure to read and consider documents sent to it by IT Way constituted a failure by HMRC to discharge that burden (para 30).
Major issues / areas of contention
- Whether the FTT erred in law by failing to consider whether the evidential burden of proof had shifted to HMRC after IT Way sent documents to HMRC by special delivery.
- Whether HMRC's failure to open and read one of two letters sent by special delivery, one of which was returned unopened, constituted a failure to discharge any burden on HMRC.
- Whether the principle in Van Boeckel v Customs and Excise Commissioners, concerning a statutory best judgment duty, applied where there was no equivalent statutory provision and quantum was not in dispute.
- Whether the circumstances were analogous to Wood v Holden, where sufficient evidence from the taxpayer had shifted the evidential burden to HMRC.
- Whether the FTT's unchallenged findings that the Direct Representation Letter's existence and contents were not established on the balance of probabilities precluded any shift in the evidential burden.