The customs issued a post-clearance demand for customs duty almost seven years after the taxpayer had imported garlic into the United Kingdom, which had been falsely declared to be of a certain origin, and just under four years after the customs became aware of the fraud. The First-tier Tribunal allowed the taxpayer’s appeal from the demand on the basis that it had been communicated to the taxpayer after the expiry of the three-year time limit specified by article 221(3) of Council Regulation (EEC) No 2913/92 establishing the Community Customs Code and that the time limit was not overriden by article 221(4), which provided that where a customs debt was as a result of an act that was liable to give rise to criminal proceedings the amount could, under certain conditions, be communicated to the debtor after the expiry of the three-year period. The Upper Tribunal allowed the customs’ appeal, determining that article 221(4) itself disapplied the three-year period without the need for specific provisions being enacted in national law and that, in the circumstances, the communication of the demand was not time-barred.
On the taxpayer’s appeal—
Held, appeal allowed. Under the Customs Code member states were not required to adopt specific procedural rules relating to the communication of the amount of the customs debt but were required by the principle of legal certainty to specify a finite period during which a customs debt might be recovered if the three-year period in article 221(3) were to be extended pursuant to article 221(4). The United Kingdom had not so specified a finite period. The principle of legal certainty meant that a taxpayer’s affairs could not be opened indefinitely and should be fixed in advance and the Upper Tribunal had erred in its interpretation of article 221. Further, assuming that section 37(2)(a) of the Limitation Act 1980 constituted an express and conscious decision by Parliament in relation to customs debts, that choice was not open to the United Kingdom under European Union law (paras 46–47, 51, 63, 66, 68, 72, 80, 81).
David Cavender QC and Valentina Sloane (instructed by RPC) for the taxpayer.
Kieron Beal QC and Simon Pritchard (instructed by Solicitor, Revenue and Customs) for the customs.