Judgment summary
This appeal concerned a Civil Evasion Penalty of £27,024, comprising a customs CEP of £5,817.00 and an excise CEP of £21,207.00, issued by HMRC on 22 January 2025 and upheld on review on 28 March 2025 (para 1).
The sole issue agreed by the parties was whether the Appellant's conduct on 14 August 2024, when he entered the United Kingdom carrying 86,400 cigarettes, involved dishonesty so as to give rise to liability to the penalty (para 2).
The Tribunal heard evidence from Border Force officer McLean, HMRC officer Aynsley, and the Appellant, and preferred the evidence of Mrs McLean, finding the Appellant's account vague, unconvincing and inconsistent (paras 25, 58-59, 63-64). Applying the test in Ivey v Genting Casinos (UK) Ltd [2017] UKSC 67, the Tribunal found that the Appellant knowingly engaged in conduct for the purpose of evading duty and that his conduct was dishonest (para 65). The appeal was dismissed (para 67).
Background
On 14 August 2024 the Appellant arrived at Manchester Airport from Jordan and was found to be carrying 86,400 cigarettes, which were not UK duty paid and exceeded the travellers' allowance of 200 cigarettes under the Travellers Allowance Order 1994 (paras 4, 9). The cigarettes were seized by Border Force, and the seizure was not challenged, so the goods are treated as condemned and forfeited (para 5).
On 22 January 2025 HMRC Officer Aynsley issued the penalty decision under appeal, and following a statutory review HMRC upheld the decision (paras 6-7). The Appellant appealed to the Tribunal on 2 May 2025 (para 7).
Core dispute
The parties disputed whether the Appellant's conduct at the time of interception involved dishonesty for the purposes of section 8(1) Finance Act 1994 and section 25(1) Finance Act 2003 (paras 10-11, 24).
The Appellant's case was that the cigarettes were lawfully purchased abroad, taxes had been paid abroad, he believed additional UK liability could be paid on arrival, he did not appreciate the scale of the liability demanded, and he acted under a genuine misunderstanding rather than dishonestly (para 21). He submitted HMRC had failed to establish the statutory ingredients of the penalty, and alternatively sought a reduction of the penalty to nil under section 8(4) Finance Act 1994 and section 29(1) Finance Act 2003 (paras 22-23).
HMRC's case, through Officer Aynsley, was that the Appellant had been taken to the declaration board and made no declaration, subsequently admitted to having cigarettes and stated he did not know the allowances, was 432 times over the allowance, had paid tax on only 10,000 of the 76,400 remaining cigarettes in Jordan, had made no contemporaneous claim to want to pay UK tax, was an experienced traveller having travelled four times in 15 months, and had indicated in an email an intention to gain financially from the goods (para 51).
Court findings
The Tribunal accepted the evidence of Mrs McLean as clear, cogent and persuasive, and accepted her notebook as a reliable and contemporaneous record (para 58). It rejected the Appellant's evidence as vague and unconvincing, finding inconsistencies between his claim that he would have declared goods under the 'normal process' and the contemporaneous notebook record showing he stated he did not know the allowance (para 59).
The Tribunal found the Appellant's explanation of a general understanding of a 20% levy unpersuasive, noting he had purchased additional suitcases specifically to transport the cigarettes and finding it lacked credibility that he would not have checked for import restrictions (paras 60-61). It found it inconceivable, given his frequent travel and long residence in the UK since 2002, that he was unaware of airport signage on restrictions (para 62).
The Tribunal found further inconsistencies as to whether the Appellant intended to receive payment for the cigarettes, rejected his claim that the email had been inaccurately transcribed, and accepted HMRC's evidence that the quantity of goods indicated commercial use rather than gifts (para 63). It rejected the Appellant's account that he had declared the goods at the declaration board and chosen to leave them upon being told the tax owed, and rejected his claim that he had been shepherded through the Green Channel against his will, preferring Mrs McLean's evidence that no such conversation or estimate of duty took place (para 64).
Applying the test in Ivey v Genting Casinos (UK) Ltd [2017] UKSC 67, the Tribunal was satisfied that the Appellant knowingly engaged in conduct for the purpose of evading duty and that this conduct was dishonest, and that HMRC had discharged the burden of proof (para 65). The Tribunal also considered the mitigation of 20% for cooperation and 20% for disclosure allowed by Officer Aynsley and, while noting it could be viewed as generous, found no basis to interfere with the quantum of the penalty (para 66).
Outcome
The appeal was dismissed, and the Civil Evasion Penalty of £27,024 was upheld in full (para 67).
Major issues / areas of contention
- Whether the Appellant engaged in conduct for the purpose of evading duty (para 24)
- Whether such conduct involved dishonesty under the Ivey test (paras 16-19, 24)
- Whether HMRC discharged the burden of proof under section 16(6) Finance Act 1994 and section 33(7)(a) Finance Act 2003 (paras 13, 24)
- Whether the penalty should be reduced under section 8(4) Finance Act 1994 and section 29 Finance Act 2003 (paras 12, 24, 66)
- Conflicting factual accounts between the Appellant and Border Force officer McLean regarding the interception, declaration board and search (paras 27-64)