Judgment summary
This appeal concerned a civil evasion penalty imposed under s.8 Finance Act 1994 and s.25 Finance Act 2003, following the seizure by Border Force of 506,400 cigarettes concealed within a container consigned to the Appellant at Tilbury Docks on 23 November 2022 (1, 2, 6).
The Respondents assessed a combined civil evasion penalty of £181,201, which was upheld on internal review (3). The Appellant appealed to the Tribunal, which had to decide whether the Respondents had established, on the balance of probabilities, that the Appellant engaged in dishonest conduct for the purpose of evading duty (4).
The Tribunal heard oral evidence from Border Force officer Ms Lucy Grant and HMRC officer Ms Siwanna Halliday, both of whom it found reliable and accepted in full (31, 32, 36, 37, 117). It also heard from the Appellant's director, Mr Moses Okeoma, and from Mr Bosun Dare, said to be the owner of Infinity Limited, both of whom the Tribunal found to be untruthful witnesses whose evidence on material matters was deliberately false (42, 48, 65, 101, 106, 118).
The Tribunal concluded that the cigarettes were concealed within boxes forming part of the Appellant's own consignment of Xpression hair extension products, not within goods belonging to unknown third parties, based on arithmetical discrepancies in box numbers, the restoration request, and the rejection of the account involving an individual called "Mr Abiodun" (92, 96, 104, 143-146).
Applying the test in Ivey v Genting Casinos (UK) Ltd [2017] UKSC 67, the Tribunal found that the Appellant knew the cigarettes were present within the shipment and that this conduct would be regarded as dishonest by the standards of ordinary decent people (173, 174). The statutory requirements of s.8 Finance Act 1994 and s.25 Finance Act 2003 were therefore satisfied (175, 188).
The Tribunal declined to reduce the penalty further, noting the Appellant had made no admission of responsibility, and confirmed the penalty of £181,201 as assessed (178-181). The appeal was dismissed (190).
Background
The Appellant operated a business importing hair extension products from Nigeria into the United Kingdom (75). On 23 November 2022, Border Force officers examined container ACLU9681666 at Tilbury Docks, consigned to the Appellant, and discovered 506,400 cigarettes concealed within boxes of goods declared as hair products and food products (2, 6, 67-70). The cigarettes had not been declared for customs or excise purposes and were seized (70, 71).
The Appellant did not appeal the seizure in the Magistrates' Court but, on 3 December 2022, requested restoration of the seized goods (7, 8). Restoration was refused on 20 January 2023, and no appeal was made against that refusal (9). HMRC subsequently imposed a civil evasion penalty of £181,201 following enquiries, which was upheld on internal review by letter dated 25 January 2024 (10, 11).
The Appellant was represented at various stages by Lawmans Solicitors Ltd and later Buzzacott LLP, but appeared at the hearing only through its Director, Mr Moses Okeoma (13). There had also been three previous seizures of tobacco products connected with shipments associated with the Appellant, which the Tribunal found had occurred, though full facts concerning them were not before the Tribunal (108-110).
Core dispute
The central issue was whether the Respondents had established, on the balance of probabilities, that the Appellant engaged in dishonest conduct for the purpose of evading excise duty, customs duty and import VAT, within the meaning of s.8 Finance Act 1994 and s.25 Finance Act 2003 (4, 122-124).
The Appellant's case was that it had operated a legitimate "groupage" arrangement, consolidating consignments from multiple customers into a single container, and that the cigarettes had been introduced into the shipment by an unknown third party, "Mr Abiodun", without the Appellant's knowledge (39, 59, 60, 164).
The Respondents contended that the Appellant was knowingly concerned in a deliberate attempt to evade duty, relying on the concealment of the cigarettes within the Appellant's own goods, discrepancies in the number of boxes shipped and received, the restoration request, and the Appellant's history of prior tobacco seizures (2, 54, 94, 108).
Court findings
The Tribunal accepted the evidence of Ms Lucy Grant and Ms Siwanna Halliday in its entirety, finding both to be careful, reliable and honest witnesses (31, 32, 36, 37, 117).
The Tribunal rejected the evidence of Mr Moses Okeoma and Mr Bosun Dare, finding that both had deliberately sought to mislead the Tribunal concerning the circumstances in which the cigarettes were loaded into and concealed within the container (42, 48, 65, 101, 106, 118, 119). The Tribunal found Mr Dare's account of "Mr Abiodun" introducing the cigarettes to be fabricated (104-106, 148).
The Tribunal accepted that a genuine groupage arrangement existed for some goods, including noodles belonging to a third party, but found this did not explain the presence of the concealed cigarettes (76-79, 139-142). It found that the cigarettes were concealed within boxes of the Appellant's own Xpression hair extension products, based on photographic evidence, the evidence of Ms Grant, and arithmetical discrepancies between the number of boxes ordered, seized and received (84, 92, 96, 143-146).
The Tribunal found that Mr Dare acted as agent for the Appellant with its knowledge and authority, and that the Appellant exercised a high degree of control over the shipping arrangements (82, 83, 166). It found no credible explanation for how unknown third parties could have recovered the cigarettes after importation, concluding the cigarettes were intended to be recovered by the Appellant or persons acting on its behalf (157-161, 171).
Applying Ivey v Genting Casinos (UK) Ltd [2017] UKSC 67, the Tribunal found first that the Appellant knew the cigarettes were concealed within the shipment, and second that this conduct would be regarded as dishonest by the standards of ordinary decent people (163, 173, 174). The three previous seizures were treated as relevant context but given limited weight (151-154, 172).
Outcome
The Tribunal found that the Appellant had engaged in conduct involving dishonesty for the purpose of evading excise duty, customs duty and import VAT, satisfying the requirements of s.8 Finance Act 1994 and s.25 Finance Act 2003 (175, 188).
The Tribunal declined to make any further reduction to the penalty of £181,201 already assessed by the Respondents, which had included a 20% mitigation reduction, finding no further mitigating factors and noting the Appellant had made no admission of responsibility (178-181).
The appeal was dismissed and the penalty confirmed in the amount assessed (190).
Major issues / areas of contention
- Whether the Appellant engaged in conduct for the purpose of evading excise duty, customs duty and import VAT under s.8 Finance Act 1994 and s.25 Finance Act 2003.
- Whether that conduct involved dishonesty, applying the two-stage test in Ivey v Genting Casinos (UK) Ltd [2017] UKSC 67.
- Whether the concealed cigarettes were contained within boxes belonging to the Appellant or to unknown third parties participating in a groupage arrangement.
- The credibility of the evidence of Mr Moses Okeoma and Mr Bosun Dare, including the fabricated account of an individual known as "Mr Abiodun".
- The evidential significance of arithmetical discrepancies between the number of boxes ordered, seized and received.
- The relevance and weight to be given to three previous seizures of tobacco products connected with the Appellant.
- Whether any further reduction to the assessed penalty of £181,201 was warranted.
- A preliminary issue concerning the admission of late evidence under Rule 15(2) of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009.