Individual secures knock-out blow: HMRC’s £6m Excise Duty Assessment was out of time

In the decision on John Cozens v HMRC [2015] UKFTT 0482 (TC) handed down on 21 September 2015, the First-tier Tribunal (Tax Chamber) upheld the taxpayer’s appeal against an assessment charging excise duty of £6,128,138 on the basis that the assessment was made out of time.


Mr. Cozens was alleged by HMRC to have been a "person who caused … the occurrence of an excise duty point"  under the Excise Duty Points (Duty Suspended Movements of Excise Goods) Regulations 2001 in respect of each of 58 loads of spirits that were ostensibly being moved in bond from a bonded warehouse in France to bonded warehouses in the United Kingdom and Italy, but never arrived at their stated destinations. He was accordingly assessed (jointly, with others) to over £6m, being the excise duty payable on the spirits at the time of the alleged diversions.

Mr. Cozens took a preliminary issue – that HMRC’s assessment was out of time under section 12(4)(b) Finance Act 1994, it having been issued on 17 December 2010, which was: "more than one year beginning with the day on which evidence of facts, sufficient in the opinion of the Commissioners to justify the making of the assessment, comes to their knowledge."   

The arguments in support of this contention were:

(1) That the assessment was a single global assessment (rather than 58 individual assessments) and since all of the necessary facts sufficient to assess 6 of the 58 loads had come to HMRC’s knowledge more than one year before 17 December 2010, (as HMRC belatedly admitted) the entire assessment was out of time. 

(2) That HMRC’s decision that they did not have sufficient evidence of facts to justify the making of an assessment in respect of the loads until they had received confirmation (within 12 months of the date of the assessment) of certain specific facts was, on the evidence, perverse, so that the assessment was out of time in any event.

The Decision of the First-tier Tribunal

The Tribunal allowed Mr. Cozens’ appeal. In particular, it held that:

(1) The assessment was a single global assessment covering 58 excise duty points;
(2) For the assessment to be valid, it had to be raised in time with respect to all of the excise duty points to which it related;
(3) Since the assessment included excise duty points in respect of which evidence of facts sufficient to justify assessment had come to HMRC’s knowledge more than one year before the assessment was made, the whole assessment was out of time;
(4) Although that disposed of the appeal, the Tribunal also dealt with Mr. Cozens’ second argument (above) and held that, in the case of some of the loads, the facts showed that HMRC’s opinion that they did not have sufficient evidence of facts to justify the making of an assessment until May 2010 was perverse in that they clearly had sufficient evidence by September 2009.


The First-tier Tribunal accordingly allowed the appeal.

Barrie Akin and Marika Lemos represented Mr Cozens. To read the full decision please click here.

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