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Import duty overview:
- Who: A U.K. alcohol wholesaler is challenging a £3.7 million import duty charge.
- Why: The British Court of Appeal ruled that the wholesaler is not necessarily the entity responsible for paying the duty.
- Where: The latest ruling was made in the British Court of Appeal.
Alcohol wholesaler Dawson’s can challenge an import tariff of £3.7 million ($4.6 million), the British Court of Appeal ruled, saying a lower court overstepped in an earlier decision.
The alcohol wholesaler first appealed the tariff after HM Revenue & Customs (HMRC) traced the supply chain on Dawson’s sales and found that excise duty might not have been paid on the imported wine, Law360 reports.
HMRC determined that Dawson’s (Wales) Ltd. should be responsible for the £3.7 million tariff, however the company appealed.
The case, which has been moving through the courts since then, centers on working out which company is responsible to pay import duties on the wines, which were sold to U.K. supermarkets Morrisons and Tesco.
In a recent British Court of Appeal decision, judges sided with Dawson’s, which argued that a lower court wrongly added to the legal definition of “de facto control” when it defined the word “holding,” Law360 reports.
The correct definition is simply the party that has de facto control of the goods, the court reportedly ruled.
Tracing a supply chain
Dawson’s sold wines it held in its warehouses to two suppliers who in turn sold them to the supermarkets, Law360 reports.
HMRC determined that Dawson’s owed the tariff because it could not establish any companies in the supply chain before the company that had taken physical possession of the wines, court documents said.
HMRC reportedly assumed Dawson’s suppliers did not receive the wines but instead arranged for their shipment to Dawson’s. The supplies were later traced to missing, deregistered or hijacked companies, the ruling reportedly said.
Dawson’s appealed to the First-Tier Tribunal, which ruled that the duties were payable by the first identifiable party that had de facto control over the goods. Dawon’s argued that there was a supplier prior to itself that could be identified by use of this definition.
The HMRC appealed to the Upper Tribunal, which expounded on the definition of de facto control, and ruled that Dawson’s could not pass the duty to another party.
However, Dawson’s appealed that ruling and The Court of Appeals ruled the Upper Tribunal erroneously added to the definition of “holding.” Therefore, who is responsible for the tariff is still in question.
What do you think of the Court of Appeals’ ruling? Let us know in the comments!
Dawson’s is represented by Michael Firth and instructed by Morrisons Solicitors LLP.
The Dawson’s duty case is Dawson’s (Wales) Ltd v. HM Revenue & Customs, Case No. CA-2019-001534, in the Court of Appeal, Civil Division.
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