[2011] UKFTT 38 (TC)

TC00915

Appeal number: LON/2009/7041

CUSTOMS DUTY – importation of goods and their entry by the Appellant under the simplified inward processing relief procedure (SIPR) – declarations contained inaccurate information and there was a failure to comply with all the obligations relating to the entry of the goods under the SIPR – a customs debt on importation incurred pursuant to article 204(1) of the Community Customs Code Regulation 2913/92/EEC – a finding that the inaccurate information included in the declarations resulted from an attempted fraud by a person or persons unknown importing the goods and using the Appellant’s services to make the declarations – whether the Appellant was the debtor in relation to that customs debt – the circumstances to be considered in identifying the debtor in accordance with article 204(3) included the circumstance that the Appellant stated that it was acting in the name of or on behalf of another person without being empowered to do so – in consequence the Appellant was to be deemed to have acted in its own name and on its own behalf pursuant to article 5(4) – therefore the Appellant was the person who was required, according to the circumstances, to fulfil the relevant obligations and to comply with the relevant conditions and was the debtor in relation to the customs debt pursuant to article 204(3) – appeal dismissed    

FIRST-TIER TRIBUNAL
TAX 
	TNT (UK) LIMITED	Appellant
	
	-and-
	
	THE COMMISSIONERS FOR HER MAJESTY’S
	REVENUE AND CUSTOMS (Customs Duties)	Respondents

		TRIBUNAL: 	JOHN WALTERS QC (TRIBUNAL JUDGE)		
				MS. REBECCA NEWNS							
Sitting in public at 68, Lombard Street, London EC3 on 8 and 9 December 2010

Timothy Brown, Counsel, instructed by TNT (UK) Limited Legal Department, for the Appellant 
Alan Bates, Counsel, instructed by the General Counsel and Solicitor to HM Revenue and Customs, for the Respondents
© CROWN COPYRIGHT 2011

DECISION

1.	This appeal, brought by TNT (UK) Limited (“the Appellant”) on 5 February 2009, is against a decision of the Respondents (“HMRC”) to issue a C18 Post Clearance Demand for £264,993.20 duty and VAT suspended on the importation of certain goods on their being entered by the Appellant under the Simplified Inward Processing Relief (“SIPR”), procedure but demanded by HMRC by reason of non-compliance with one of the conditions of SIPR, namely failure to submit a timely Bill of Discharge. 
2.	The C18 Post Clearance Demand was issued on 26 September 2008 and confirmed on completion of a departmental review by a letter dated 16 December 2008 sent to Mr. Steven Blunt, UK Customs Operations Manager of the Appellant, by Review Officer Jan Pond on behalf of HMRC.
The evidence 
3.	The Appellant carries on a large international carrier and express delivery business. In relation to the importations with which this appeal is concerned it acted as freight agent on behalf of an importer who gave its name as Bola Travel and Freight Limited (“BTFL”). The Appellant’s business premises are at Stansted Airport. The importations with which this appeal is concerned consisted of 52 importation entries in relation to which the Appellant acted as declarant.  In 41 of the entries the Appellant declared it had direct representation for BTFL.  In the remaining 11 entries the Appellant declared it had indirect representation for BTFL, although the Appellant now claims that it had been mistaken to do so and that in fact it had direct representation for BTFL in relation to all 52 importations. The significance of direct, as opposed to indirect, representation will be explained later – see: paragraphs 31, 46 and 47.
4.	We received Witness Statements from Martin McDonald and Steven Blunt, on behalf of the Appellant.  Mr. Blunt also gave oral evidence and was cross-examined.  HMRC did not require to cross-examine Mr. McDonald and the evidence contained in his Witness Statement was not contested.
5.	That evidence was that he was employed by the Appellant as a shift manager, based at Stansted Airport.  The program which the Appellant uses on its systems to record entries of freight imports and exports is known as “Datafreight”.  When a customer engages the Appellant as its freight agent, the customer’s name, address and VAT number are entered onto the “Datafreight” program.
6.	The first consignment in the disputed importations with which this appeal is concerned was received by the Appellant from UPS SCS Cisco Systems, with a given address in the Netherlands, under consignment number 686554035 for clearance on 5 June 2007.  A retrieved consignments report was in evidence, showing the receiver as ‘ITECO Nigeria Limited’ with a given address of ‘[BTFL] Unit 11, Eurolink Business Centre, London SW2 1BZ.
7.	Mr. McDonald’s evidence was that the contact person for the receiver was given as ‘Bola Adeniyi’ (“BA”) and that he telephoned and spoke to BA to obtain import clearance details for the import entries for BTFL.  BA provided Mr. McDonald with the VAT number 6361775 to enable him to complete the entries according to the SIPR clearance procedure. Once these details had been entered onto the “Datafreight” program, they were effectively on the Appellant’s system and were used in relation to subsequent imports, dates, values and consignment numbers being entered accordingly.
8.	The consignment note for the first consignment, referred to above, number 686554035, was in evidence and its contents accorded with Mr. McDonald’s evidence.  Other details were: the delivery terms were that ‘sender pays’, that the consignment was 1 carton of volume 0.436 cubic metres and gross weight 109.09 kilograms. The consignment note was produced by the sender, UPS SCS Cisco Systems.
9.	The C88 entry generated by the Appellant was effected electronically.  A paper version was in evidence.  The C88 is a declaration of the import to HMRC. The details obtained by Mr. McDonald from BA were entered onto the C88 entry, with the following additional information. A description of the goods imported as ‘computer software’ was entered under Box 31.  Under Box 44 was entered inter alia the following information in code: the goods were being imported for repair, the relevant period for the repair, and the operation of SIPR was 6 months, the application to use SIPR was being made on behalf of BTFL, and the supervising office of HMRC would be that at Enniskillen.
10.	Also included on the C88 entry (in Box 33) was the tariff classification 8471800000.  We were told this related to computer hardware.  The entry to Box 37 on the C88 indicated that an application to use SIPR was being made. In Box B it was stated that the Appellant was making the entry as a direct representative.
11.	Also in evidence was the ‘entry acceptance advice’.  This is a message generated by ‘CHIEF’ - the Customs Handling Import Export Freight computer system – informing the Appellant that the entry made on form C88 has been accepted.  It records that the Appellant is the declarant (with the Appellant’s unique reference number given). It also records that no tax was due on the import.
12.	We also saw a copy of the commercial invoice issued by Cisco Systems International BV supporting the entry.
13.	We were told (and it is common ground) that the remaining 51 entries relevant to the appeal were in similar form, although on 11 of them the Appellant declared itself on the form C88 to have indirect representation.
14.	The given VAT number, 6361775, which the Appellant had included on the C88 entry and which had been given to Mr. McDonald for those purposes by BA, in fact was allocated not to BTFL but to another company ‘Afritrade’ – Afritrade (Europe) Limited. 
15.	Following, we understand, the failure to submit a bill of discharge, one of the conditions for use of SIPR, HMRC investigated the matter and visited Afritrade on 12 March 2008.  A post-clearance demand notice (C18) was issued to Afritrade.  In response, Mr. K.P. Adams of Afritrade Europe Ltd. wrote to HMRC on 14 April 2008 indicating a wish to appeal against the post-clearance demand notice and stating that the Appellant had entered goods imported under SIPR using Afritrade’s VAT number but without Afritrade’s knowledge or authorisation.  Mr. Adams stated further that BFTL was not part of Afritrade’s organization.
16.	On 12 June 2008, HMRC wrote to Mr. Adams informing him that HMRC had overturned its decision to proceed against Afritrade, because the review officer (Officer Jan Pond) was satisfied that the Appellant, as freight agent, had had no authority from Afritrade to declare the goods in Afritrade’s name using SIPR and was also satisfied that Afritrade was not the entity who required the goods or was going to process the goods.  The letter concluded with an indication that HMRC would look to the Appellant to satisfy the customs debt arising.
17.	On 16 September 2008, HMRC wrote to the Appellant, for the attention of Mr. Steven Blunt, enclosing the C18 post-clearance demand in the Appellant’s name, against which this appeal is brought.  The covering letter stated that the imports to SIPR had been incorrectly entered by the Appellant under the number of and in the name of Afritrade.  The Appellant asserts correctly that the imports were not declared to Afritrade, but, of course, Afritrade’s VAT number was used in the C88 entries made by the Appellant as declarant.
18.	Mr. Blunt responded by a letter dated 7 November 2008 requesting a formal departmental review of the decision to raise the post-clearance demand notice (C18) on the Appellant.  He made the case that authority and information (including the VAT number) had been given verbally to the Appellant by BA of ‘Bola Travels Ltd’ and that the Appellant had acted in good faith. Mr. Blunt enclosed copies of proof of delivery signatures to confirm that it was ‘Bola Travel’ who took responsibility for the goods in question. He argued that in view of the circumstances, the Appellant was entitled to act as the indirect representative of ‘Bola Travels Ltd.’ and that the demand should be addressed to that company.
19.	Review Officer Jan Pond wrote to the Appellant on 16 December 2008 upholding the original decision to issue the C18 post-clearance demand to the Appellant.  Under the heading “My Decision” she wrote:
“I have looked at the evidence supplied and considered your arguments but must agree that the C18 has been issued to TNT correctly.  The only concession that I can make in this matter is that the demand should also be issued to Bola Travel and Freight.
I do accept your argument that verbal authorisation may have been acceptable in this case if you had declared the goods using the correct VAT registration number and name and address of the importer.  However as you used Afritrade’s details and they did not verbally or otherwise agree to this, the demand must stand.
I am unsure as to the type of representation declared on the import entries as I have not seen full copies of them, but if Direct Representation was declared then TNT would be liable because they were not authorised by Afritrade to declare goods in their name and if they declared Indirect Representation they would be liable because they were acting in their own name and on their own behalf.  Also if nothing was declared they would be deemed to be acting in their own name.  Therefore I am unable to remove the demand from TNT.”
20.	In Mr. Blunt’s Witness Statement he sought to ‘clarify’ his letter of 7 November 2008.  He produced an analysis of the 51 declarations which showed that 13 of the 51 were declared under indirect representation, with the remaining 38 declared as direct representation.  He explained that until December 2007 the Appellant had declared the ‘Bola Travel’ declarations as direct representation and from January 2008 they were declared as indirect representation, with the exception of two entries, 686806713 and 686788826, which were declared as direct representation in error.  He stated that until December 2007 the Appellant had believed that it had acted with direct representation based on the instructions given by ‘Bola Travel’.  In around December 2007, Mr. Blunt was present at a regular monthly meeting with HMRC when he was informed by the officers present that ‘in future written confirmation would be required in order for [the Appellant] to claim direct representation’. As the Appellant had had no ‘formal written authority’ from ‘Bola Travel’, ‘the remainder of the importations were claimed as indirect (with the exception of the two errors listed above)’.  He added that the Appellant’s procedures and information had remained the same throughout and that if HMRC had not said that the Appellant needed written authority to claim direct representation, the Appellant would have continued to claim it.
21.	 Mr. Blunt accepted that it was unlikely that there had been any discussion with BA (or anyone else) on the subject of whether the Appellant’s representation was direct or indirect.  He explained that the position was that if the Appellant receives instructions from the importer, then its representation is direct.  If it receives no instructions from the importer then its representation is indirect.
22.	Mr. Blunt said that Mr. McDonald had not asked whose VAT number it was that BA had given him.  He had assumed that it was the VAT number of BTFL.  He knew it was not the VAT number of ITECO Nigeria Limited, because that company was evidently established in Nigeria.  He did not know it was Afritrade’s VAT number. He said that the Appellant could not have taken any steps to confirm that the VAT number which they were given was correct for their customer – he did not know about the possibility of calling HMRC’s National Advice Service to check a VAT number.  All that the CHIEF system would do was to confirm that a given VAT number was valid.  He confirmed that the Appellant had not checked with Companies House to confirm that BTFL was an existing company.  It was not part of the Appellant’s procedures to make such a check.  He was aware at the time of the hearing – as he had not been aware in 2007 – that BTFL was not an existing company at the time(s) of the imports. (BTFL had been dissolved in January 2006.)   However a company with the name Bola Travels Limited did exist until 2010.  He had been aware when he wrote his letter to HMRC dated 7 November 2008 that BTFL had not existed at the time of the imports, but that Bola Travels Limited had then existed and he had assumed that the references to BTFL in the import documentation had referred to Bola Travels Limited.  That was why he mentioned Bola Travels Ltd. in the letter dated 7 November 2008. 
23.	We also received Witness Statements sworn on the day before the hearing started (7 December 2010) respectively by two officers of HMRC, Philip John Burkett and Vivienne Ide.  Neither of these officers was available for cross-examination at the hearing.  Mr. Bates, for HMRC, said that the contents of the Witness Statements did not include any facts which he relied on, and were there only to provide additional background information.  Mr. Brown, for the Appellant, objected to their late service.  Mr. Bates indicated that he was content to withdraw the Statements but, given the choice, Mr. Brown preferred us to look at them, and, in doing so, to bear in mind that the officers were not available for cross-examination.
24.	Officer Burkett’s Witness Statement recounted an attempted visit on 28 September 2010 to the given address of BTFL, Unit 11, Eurolink Business Centre, London SW2 1BZ. Unit 11 was visited but found to be locked and apparently out of use.  The door of unit 4 was tried and found to be open.  Enquiries were made of Bola Adeniyi (BA) and a female present answered to that name.
25.	That person (the interviewee) stated that BTFL had ceased trading ‘two years ago’ and that its business had been assumed by another company AB Cargo Express.  The interviewee was evasive about the connection with Afritrade and Officer Burkett noticed that Afritrade’s contact details were prominently displayed on lists affixed to the walls of the office.  The interviewee said that the Appellant had never been in contact regarding import consignments ultimately destined for ITECO nor had authority been given to use the VAT number belonging to Afritrade.
26.	Officer Ide’s Witness Statement recounted a visit by her on 30 September 2010 to different premises, Unit 11, Ashford Business Complex, 166 Feltham Road, Ashford, Middlesex.  The name ‘Bola Travel’ was not recognised, but when she asked for Afritrade, she was redirected to Unit 11/12, the premises of Juspaq Ltd., and spoke to Kevin Adams, whom she recognised from a previous visit to Afritrade on 12 March 2008.  Mr. Adams told her that after that previous visit he had told ‘Bola’ that she was not authorised to use Afritrade’s VAT number and that thereafter she had ceased to use it in connection with export movements to Nigeria.
27.	We accept the evidence insofar as we do not indicate to the contrary below.
The legislation
28.	The relevant legislative provisions to which our attention was drawn were as follows.
29.	The following articles (and paragraphs) from Council Regulation 2913/92/EEC of 12 October 1992, establishing the Community Customs Code (“the Community Customs Code Regulation”).
30.	Article 4:
“(17) ‘Customs declaration’ means the act whereby a person indicates in the prescribed form and manner a wish to place goods under a given customs procedure.
(18) ‘Declarant’ means the person making the customs declaration in his own name or the person in whose name a customs declaration is made.”
31.	Article 5:
“(1) … any person may appoint a representative in his dealings with the customs authorities to perform the acts and formalities laid down by customs rules.
(2) Such representation may be-
-direct, in which case the representative shall act in the name of and on behalf of another person, or
-indirect, in which case the representative shall act in his own name but on behalf of another person.
…
(3) …
(4) A representative must state that he is acting on behalf of the person represented, specify whether the representation is direct or indirect and be empowered to act as a representative.
A person who fails to state that he is acting in the name of or on behalf of another person or who states that he is acting in the name of or on behalf of another person without being empowered to do so shall be deemed to be acting in his own name and on his own behalf.
(5) The customs authorities may require any person stating that he is acting in the name of or on behalf of another person to produce evidence of his powers to act as a representative.”
32.	Articles 116 and 117, relating to the Inward Processing Relief Procedure
Article 116:
“The authorisation shall be issued at the request of the person who carries out processing operations [which include the repair of goods, including restoring them and putting them in order – see Article 114(2)(c)] or who arranges for them to be carried out.”
Article 117:
“The authorisation shall be granted only-
(a)	to persons established in the Community. However, the authorisation may be granted to persons established outside the Community in respect of imports of a non-commercial nature.
…”
33. Articles 201 to 205 and 213, being part of Title VII ‘Customs Debt’ and Chapter 2 ‘Incurrence of a Customs Debt’
Article 201:
“(1) A customs debt on importation shall be incurred through-
(a)	the release for free circulation of goods liable to import duties, or
(b)	the placing of such goods under the temporary importation procedure with partial relief from import duties.

(2) A customs debt shall be incurred at the time of acceptance of the customs declaration in question.
(3) The debtor shall be the declarant.  In the event of indirect representation, the person on whose behalf the customs declaration is made shall also be a debtor. …”
       Article 202:
      	 “(1) A customs debt on importation shall be incurred through-
(a)	the unlawful introduction into the customs territory of the Community of goods liable to import duties, or
(b)	the unlawful introduction into another part of that territory of such goods located in a free zone or free warehouse.
…
(2) The customs debt shall be incurred at the moment when the goods are unlawfully introduced.
(3) The debtors shall be-
- the person who introduced such goods unlawfully,
-any persons who participated in the unlawful introduction of the goods and who were aware or should reasonably have been aware that such introduction was unlawful, and
-any person who acquired or held the goods in question and who were aware or should reasonably have been aware at the time of acquiring or receiving the goods that they had been introduced unlawfully.”
Article 203:
 “(1) A customs debt on importation shall be incurred through-
-the unlawful removal from customs supervision of goods liable to import duties.
…”
Article 204:
“(1) A customs debt on importation shall be incurred through-
(a)	non-fulfilment of one of the obligations arising, in respect of goods liable to import duties, from their temporary storage or from the use of the customs procedure under which they are placed, or
(b)	non-compliance with a condition governing the placing of goods under that procedure or the granting of a reduced or zero rate of import duty by virtue of the end-use of the goods,
…
(2) The customs debt shall be incurred at the moment when the obligation whose non-fulfilment gives rise to the customs debt ceases to be met or at the moment when the goods are placed under the customs procedure concerned where it is established subsequently that a condition governing the placing of the goods under the said procedure or the granting of a reduced or zero rate of import duty by virtue of the end-use of the goods was not in fact fulfilled.
(3) The debtor shall be the person who is required, according to the circumstances, either to fulfil the obligations arising, in respect of goods liable to import duties, from their temporary storage or from the use of the customs procedure under which they have been placed, or to comply with the conditions governing the placing of the goods under that procedure.”
Article 205:
“(1) A customs debt on importation shall be incurred through-
-the consumption or use, in a free zone or a free warehouse, of goods liable to import duties, under conditions other than those laid down by the legislation in force.
Where goods disappear and where their disappearance cannot be explained to the satisfaction of the customs authorities, those authorities may regard the goods as having been consumed or used in the free zone or the free warehouse.
…”
       Article 213:
“Where several persons are liable for payment of one customs debt, they shall be jointly and severally liable for such debt.” 
34.	Article 199 (as in force at the relevant time) of Commission regulation (EEC) No. 2454/93 of 2 July 1993 laying down provisions for the implementation of [the Community Customs Code](“the Implementation Regulation”)
“Without prejudice to the possible application of penal provisions, the lodging with a customs office of a declaration signed by the declarant or his representative shall render him responsible under the provisions in force for:
-the accuracy of the information given in the declaration,
-the authenticity of the documents presented, and
-compliance with all the obligations relating to the entry of the goods in question under the procedure concerned.”
35.	Article 499 of the Implementation Regulation, in relation to applications for authorisation to operate a customs procedure with economic impact, including the inward processing relief procedure:
“… where an application may be made by making a customs declaration, the customs authorities shall require … that the application be accompanied by a document made out by the declarant containing at least the following information …
(a)	name and address of the applicant, the declarant and the operator;
…”
36.	Article 506 of the Implementation Regulation, in relation to the decision on authorisation:
“The applicant shall be informed of the decision to issue an authorisation, or the reasons why the application was rejected, within 30 days … of the date when the application was lodged or the date any requested outstanding or additional information is received by the customs authorities …”
37.	Article 521 of the Implementation Regulation, in relation to the operation of customs procedures with economic impact, including the inward processing relief procedure, specifically, discharge:
“(1) At the latest upon expiry for the period for discharge …
-	in the case of inward processing (suspension system) or processing under customs control, the bill of discharge shall be supplied to the supervising office within 30 days;
-	in the case of inward processing (drawback system), the claim for repayment or remission of import duties must be lodged with the supervising office within six months.
…”
38.	Article 537 of the Implementation Regulation, under Title III, ‘Customs procedures with economic impact’:
“An authorisation [including an authorisation to operate the inward processing relief procedure] shall be granted only where the applicant has the intention of re-exporting or exporting main compensating products.”
The submissions for the Appellant
39.	Mr. Brown, for the Appellant, focussed on article 204 of the Community Customs Code Regulation, which is, he submitted, the charging provision which is relevant in this case, and which fixes liability for the charge on the person (“the debtor”) who was required to fulfil the obligations arising from the use of the inward processing relief procedure or to comply with the conditions governing the placing of the goods under that procedure (art. 204(3)).
40.	He accepted that there had been a non-fulfilment of those obligations or a non-compliance with those conditions and that therefore a customs debt on importation of the goods concerned had arisen.  
41.	However, his submission was that the Appellant was not the person identified as the debtor by article 204 and accordingly was not properly charged with any customs debt on importation.
42.	He referred to the Implementation Regulation to make good his submission that the declarant was fixed with the responsibility for the accuracy of the information given in a declaration lodged by him or his representative, the authenticity of the documents presented and compliance with all the obligations relating to the entry of the goods in question under the procedure concerned (art. 199). 
43.	The declarant is ‘the person making the customs declaration in his own name or the person in whose name a customs declaration is made’ – see: art. 4(18) of the Community Customs Code Regulation.
44.	Thus, prima facie, the declarant was the importer of the goods, and not the Appellant, who merely made the relevant customs declarations in the name of the importer.
45.	This position was displaced, in his submission, only in a case of indirect representation – that is, where the representative acts in his own name but on behalf of another person (art. 5(2) of the Community Customs Code Regulation.  In that case, Mr. Brown accepted that the representative was the declarant and was therefore fixed with the responsibility for the accuracy of the information given in the declaration, etc. (see: art. 199 of the Implementation Regulation).  The declarant was the person fixed with responsibility for applying for authorisation to operate the inward processing relief procedure (art. 499 of the Implementation Regulation) and, in a case of indirect representation, the representative was also the applicant for the authorisation (cf. arts. 499, 506 and 537 of the Implementation Regulation) and the person responsible for supplying a bill of discharge within art. 521(1) of the Implementation Regulation.
46.	 In such a case (indirect representation), the representative was the person ‘required, according to the circumstances, … to fulfil the obligations arising  … from the use of the customs procedure’ within art. 204(3) of the Community Customs Code Regulation, and was therefore, properly, the ‘debtor’ charged with the relevant customs debt.
47.	This was not the position where the representation was direct.  In such a case the regulations envisaged all relevant responsibilities lying with the importer, who was the declarant and therefore the person fixed with all the relevant responsibilities.
48.	Mr. Brown’s submission was that the Appellant was in all cases the direct representative of the importer of the goods (whoever that was). He referred to the evidence and submitted that there was no dispute that while the Appellant had completed and submitted the relevant forms C88 (declarations of imports to HMRC), the goods had been delivered to and signed for by another person.
49.	According to Mr. McDonald’s uncontested evidence, the Appellant had contacted BA and following the oral conversation between Mr. McDonald and BA the original declaration of goods had been made in the name of BTFL.  Mr. Brown accepted that the evidence showed that at the relevant time(s) in 2007 and 2008 BTFL had not legally existed as a company, but submitted that that did not detract from the fact that the Appellant was instructed by another person representing him-/her-/itself as BTFL to import the goods in issue.
50.	He submitted that since the consignment notes and other documents did not state how the goods should be entered, the fact that they were entered to SIPR showed that this must have been done at the behest of the person representing him-/herself as BA.
51.	Mr. Brown submitted that little or no weight should be placed on Officer Burkitt’s evidence that the person he spoke to, who answered to the name of BA, had denied that the Appellant had contacted her.  This was in conflict with Mr. McDonald’s evidence which ought to be preferred and in any case Officer Burkitt stated that the person answering to the name of BA had been evasive.
52.	On the nature of the Appellant’s representation, whether direct or indirect, Mr. Brown submitted that the Appellant had plainly received verbal authorisation from BA to act as representative and, as Officer Jan Pond effectively acknowledged in her letter of 16 December 2008, verbal authorisation would have been acceptable if the correct VAT number and name and address of the importer had been used.  This showed that verbal authorisation was enough and written authorisation could not be insisted on.
53.	Mr. Brown accepted that the correct VAT number was not given and that the name and address of the importer had been incorrect, but submitted that this took nothing away from the fact that the Appellant had received verbal authorisation to represent the entity that in fact imported the goods and to whom the goods were in fact delivered.  In these circumstances the representation was direct representation.  It would only have been indirect representation if the Appellant had made no contact with the importer of the goods before generating the form C88 declaration.  That, on the evidence, is not what happened.
54.	In relation to those declarations where the Appellant had in fact declared that it was an indirect representative, Mr. Brown submitted that we should have regard to Mr. Blunt’s evidence that he was told by HMRC officers that formal written instructions were required before direct representation could be claimed and, acting on that advice (which was not correct) indirect  representation had been claimed in a minority of the form C88 declarations in issue.  In fact, the factual position regarding representation had been the same in relation to all the declarations and Mr. Brown submitted that we should bear this in mind when we considered whether the fact that indirect representation had actually been claimed was determinative in assessing ‘the circumstances’ indicating who was required to fulfil the relevant obligations and comply with the relevant conditions, so as to be fixed with being ‘the debtor’ for the purposes of article 204 of the Community Customs Code Regulation. 
55.	It was common ground between the parties that ‘the circumstances’ to be considered in accordance with article 204(3) of the Community Customs Code Regulation include circumstances which would indicate direct or, on the other hand, indirect representation.
56.	 Mr. Brown referred to articles 499, 506, 521 and 537 of the Implementing Regulation and submitted that the text of these articles indicated a scheme whereby indirect representation was not permitted in cases where SIPR was applied for and operated.  The responsibilities arising from the operation of SIPR were clearly to be discharged by the actual importer as declarant and not a representative as such. When pressed, he accepted that this was the case even when the applicant and holder of authorisation to operate SIPR, as proposed to HMRC, was in fact a non-existent company.
57.	He submitted that articles 201 to 205 (inclusive) of the Community Customs Code Regulation were mutually exclusive provisions dealing with different cases where customs debts on importation were to be incurred.  There was no evidence before the Tribunal that any circumstances other than those giving rise to the application of article 204(1)(b) of the Community Customs Code Regulation were present and therefore that only that provision was relevant to the appeal.
58.	In summary, the Appellant was empowered to act, and did act, as the direct representative of the importer of the goods in issue and therefore could not, or should not, be fixed as debtor in relation to a customs debt on importation of the goods pursuant to article 204 of the Community Customs Code Regulation, by reference to ‘the circumstances’ to which regard must be had pursuant to article 204(3).
Submissions for HMRC
59.	Mr. Bates, for HMRC, submitted that the evidence established the following facts:
First, that although the form C88 declarations had stated that the Appellant was representing BTFL, that statement was false, because the Appellant was never authorised by BTFL to represent it, as BTFL had been dissolved in January 2006 and was not in existence at the time(s) of the relevant importation(s).
Secondly, the Appellant’s assertions that it was representing Bola Travels Ltd. (a company which was in existence at the relevant time(s)) should not be accepted because they were based on someone in the Appellant’s organisation ascertaining from the Companies House website that BTFL did not exist, but that another company (Bola Travels Ltd.) with a similar name did exist and deciding that that must be the company which the Appellant was representing.  It was not open to the Appellant to assert that Bola Travels Ltd. was the importer or that the Appellant was the representative of Bola Travels Ltd.
Thirdly, Afritrade’s VAT number had been used in generating the form C88 declarations and there was no evidence that Afritrade had given authorisation for this.
Fourthly, the form C88 declarations specified the consignments as computer software.  But the consignment notes indicate that they were in fact (or included) computer hardware.
Fifthly, the stated importer, namely ITECO Nigeria Limited, was a Nigerian based company and would not have been eligible to present goods under SIPR on that account.
Sixthly, according to the form C8 declaration, the goods were being entered for the purposes of repair.  However neither Mr. Blunt nor anything in the commercial documents gave any indication that the goods had a fault or required to be repaired.
60.	Mr. Bates said that these facts raised concerns about the standard of due diligence exercised by the Appellant in making form C88 declarations.
61.	On the law, Mr. Bates’s case was based on the provisions of article 5(4) of the Community Customs Code Regulation, and particularly on the provision that:
“A person who fails to state that he is acting in the name of or on behalf of another person or who states that he is acting in the name of or on behalf of another person without being empowered to do so shall be deemed to be acting in his own name and on his own behalf.”
62.	Given that the Appellant had stated in the form C88 declarations that it was acting on behalf of BTFL and that BTFL no longer existed at the time(s) of the declarations, the Appellant cannot have been empowered to act in the name of or on behalf of BTFL and, following article 5(4) of the Community Customs Code Regulation, the Appellant must for present purposes be deemed to have acted in its own name and on its own behalf.
63.	The same point was made in relation to the Appellant’s representation that it acted on behalf of a person with Afritrade’s VAT number.  It was not empowered to give that VAT number.
64.	It followed, in Mr. Bates’s submission, that the importations must be regarded for customs duty purposes as having been made by the Appellant on its own behalf and, consequently, that HMRC are entitled to look to the Appellant for payment of the customs debts due on the importations.
65.	While not accepting that article 204 of the Community Customs Code Regulation was the only one of articles 201 to 205 inclusive which could be in point, Mr. Bates was content to rely on article 204(3) as imposing the relevant liability on the Appellant.
66.	That paragraph provides that:
The debtor shall be the person who is required, according to the circumstances, either to fulfil the obligations arising, in respect of goods liable to import duties, from their temporary storage or from the use of the customs procedure under which they have been placed, or to comply with the conditions governing the placing of the goods under that procedure.”
and Mr. Bates submitted that the circumstances of this case (in particular the effect of article 5(4) of the Community Customs Code Regulation) showed that the Appellant was the person who was required to fulfil the obligations arising in respect of the imported goods from the use of SIPR and to also was the person who was required to comply with the conditions governing the placing of the goods under SIPR.
67.	Mr. Bates submitted that since, pursuant to article 204 of the Community Customs Code Regulation, the customs debt arose as soon as there was a non-compliance with the procedural conditions, it arose as soon as the form C88 declaration was made, since that declaration was defective in so many respects.  Therefore the Appellant could not rely on the subsequent failure of a third person (BA or whoever represented him-/her-/itself to the Appellant as BTFL) to submit a timely bill of discharge in conformity with article 521 of the Implementing Regulation.
68.	Mr. Bates also submitted that, having regard to article 5(4) of the Community Customs Code Regulation, article 199 of the Implementing Regulation had effect to render the Appellant (and not any third party) responsible for the accuracy of the information given in the form C88 declarations, the authenticity of any documents presented and, in particular, compliance with all the obligations relating to the entry of the goods under the SIPR.
69.	Mr. Bates did not accept that the Appellant could resile from its statements in a minority of the from C88 declarations that it was the indirect representative of the importer (whoever that was).  He submitted that the Appellant must be held to the statements it had made.
70.	He accepted that in cases of direct representation, there would be no liability on the representative for the customs debt if article 5(4) of the Community Customs Code Regulation did not apply (contrary to his main submission) to deem the representative to be acting in its own name and on its own behalf.
71.	Mr. Bates submitted that the difference between the Appellant’s case and HMRC’s case was that the Appellant assumed that it was acting on behalf of a principal, but HMRC contended that the evidence made it clear that this was not so.  In a case where HMRC accepted that there was a principal and that the representative was in fact a direct representative, Mr. Bates said that HMRC would be content to accept the interpretation of the rules that Mr. Brown had advanced.  That was why, Mr. Bates said, HMRC initially raised a C18 Post Clearance Demand on Afritrade.    
Discussion and Decision
72.	We start by finding on the basis of the evidence that the goods were despatched to the Appellant by UPS SCS Cisco Systems for onward delivery by the Appellant to ITECO Nigeria Limited care of BTFL at the London SW2 address with BA being the stated contact person.  We also find that Mr. McDonald on behalf of the Appellant contacted by telephone a person who he thought was, and who represented himself/herself to be, BA, and obtained from that person the VAT number, which turned out (unbeknown at the time to Mr. McDonald) to be Afritrade’s VAT number, and instructions to apply for authorisation to operate the SIPR procedure – together with what seemed to Mr. McDonald to be sufficient details to enable him to do so.
73.	We also find – as is common ground – that the bill of discharge required to be made as a condition of the operation of the SIPR procedure was not made in respect of any of the consignments.
74.	We find on the basis of the evidence that these events took place in the context of a fraud sought to be perpetrated on HMRC by a person or persons unknown using the names BTFL and BA, and the VAT number of Afritrade, being a fraud in the nature of an evasion of the customs duty (and VAT) arising on the importation of the goods concerned.
75.	A central issue in this appeal is whether in those circumstances the Appellant was empowered to act as a representative of whoever the true importer of the goods was.  We find that the true importer of the goods was not the Appellant, or Afritrade, or BTFL (which was a company no longer in existence at the time(s) of the importations), or Bola Travels Ltd. or Bola Travel (as to which there is no sufficient evidence that either was the true importer).  The true importer was none of the above, but a person or persons unknown.
76.	We find (so far as it is a question of fact) and hold (so far as it is a question of law) that the Appellant was not empowered to act as a representative of whoever was the true importer of the goods.
77.	We reject Mr. Brown’s submission that the fact that the correct VAT number was not used and the name and address of the importer had been incorrect on the form C88 declarations did not detract from the proposition that the Appellant had received verbal authorisation to represent the entity that in fact imported the goods and to whom the goods were in fact delivered.  In our view the Appellant was deceived by the person or persons unknown who organised the fraud and no person validly empowered the Appellant to act as representative.
78.	Empowerment to act as a representative for the purposes of the Community Customs Code Regulation is clearly an empowerment which is valid as a matter of law and, further, an empowerment which the putative representative must be able to prove by evidence if required to do so by the customs authorities (article 5(5)).  The Appellant has been unable to prove its empowerment to act as a representative.  First, the real identity of the importer who purportedly empowered the Appellant to act as his/its representative is unknown.  Secondly, the VAT number declared by the Appellant in relation to that importer was not that importer’s VAT number, but the VAT number of a different person.
79.	If a person claiming to be a representative of an importer for these purposes was not a person who was aware or should reasonably have been aware at the relevant time(s) of the fact that he was not validly empowered to be a representative of the importer, difficult issues might arise on the question of whether such a person could be held liable for customs debts for which the importer was prima facie liable.
80.	However we find that although the Appellant was not aware at any relevant time that it was not validly empowered to be a representative of the importer(s) of the goods in issue, it should reasonably have been aware of that fact.  The Appellant had a responsibility deriving from its participation in the customs procedure to carry out reasonable checks (due diligence) as to the accuracy and correctness of the information included in the form C88 declarations made by it.  The Appellant failed in that responsibility, in particular in not verifying that BTFL was a company existing at the time(s) of the importation(s) and a person who could validly empower the Appellant to act as its representative.
81.	The Appellant, as a person who stated that it was acting in the name of or on behalf of another person (BTFL) without being empowered to do so is therefore deemed for the purposes of the Community Customs Code Regulation to have acted in its own name and in its own behalf (article 5(4) of the Community Customs Code Regulation).
82.	The question of whether the Appellant’s representation was direct or indirect within article 5 does not therefore arise.
83.	We therefore cannot accept the Appellant’s submission that in those cases where it declared that it was an indirect representative it was in fact a direct representative.  In none of the cases, for the reasons given above, can it be treated as a direct or an indirect representative.
84.	We turn to article 204 of the Community Customs Code Regulation, which is the relevant charging provision.  A customs debt on importation has been incurred through non-fulfilment of one of the obligations arising from the use of SIPR or non-compliance with a condition governing the placing of goods under SIPR (art. 204(1)).
85.	The obligations which have not been fulfilled include the obligation to give accurate information in the form C88 declaration (see: article 199 of the Implementation Regulation) and the obligation to supply a bill of discharge in accordance with article 521 of the Implementation Regulation.
86.	The debtor in relation to the customs debt on importation is ‘the person who is required, according to the circumstances’ to fulfil the relevant obligations or to comply with the relevant conditions (article 204(3)).
87.	We conclude that the relevant circumstances plainly include the circumstance that pursuant to article 5(4) of the Community Customs Code Regulation the Appellant is to be deemed to have acted in its own name and on its own behalf.  
88.	In those circumstances the responsibility to give accurate information in the form C88 declaration and to comply with all the obligations relating to the entry of the goods in question under SIPR is on the Appellant pursuant to article 199 of the Implementation Regulation.
89.	This means that the Appellant ranks as the debtor for the purposes of article 204(3) of the Community Customs Code Regulation and the appeal must be dismissed.
Costs
90. The parties were in agreement that it was appropriate to direct that the old provisions relative to costs in the VAT Tribunals Rules 1986 should apply to this appeal. We so direct.  Mr. Bates said that on this basis and in the event that HMRC was successful in the appeal he would not be seeking his costs.  Accordingly we make no costs direction. 

Right to apply for permission to appeal
91.  This document contains full findings of fact and reasons for the decision. Any party dissatisfied with this decision has a right to apply for permission to appeal against it pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009.   The application must be received by this Tribunal not later than 56 days after this decision is sent to that party.  The parties are referred to “Guidance to accompany a Decision from the First-tier Tribunal (Tax Chamber)” which accompanies and forms part of this decision notice.

JOHN WALTERS QC

TRIBUNAL JUDGE
RELEASE DATE: 10 January 2011