MSD Wholesale Limited v The Commissioners for HMRC

Introduction

1. The Appellant, MSD Wholesale Limited (“ MSD ”) appeals against: (1) A VAT assessment of £470,209 dated 22 December 2015 (the “ VAT Assessment ”), issued under ss 26 A and 73 of the Value Added Tax Act 1994 (“ VATA ”) in respect of MSD’s 08/14 (£40,357), 11/14 (£101,288), 02/15 (£126,101), 05/15 (£102,067) and 11/15 (£100,396) VAT accounting periods on the basis that MSD had not paid its suppliers for purchases to the value of £2,801,803.70. The VAT Assessment was upheld on 27 July 2016 following an internal review. MSD appeals on the grounds that consideration was paid for the supplies in question; (2) An excise duty assessment of £1,420,919 dated 26 October 2016 (the “ First Duty Assessment ”) issued under the Excise Goods (Holding, Movement and Duty Point) Regulations 2010 (the “HMDP Regulations ”) and s 12 (1A) of the Finance Act 1994 (“ FA 1994 ”). The First Duty Assessment was upheld by an internal review on 13 February 2017. MSD appeals on the grounds that the assessments were out of time; that duty had been paid on the relevant goods, and/or that an earlier duty point had arisen in respect of the identifiable holder of the goods; (3) An excise duty assessment of £828,110 dated 26 September 2018 (the “ Second Duty Assessment ”), issued under the HMDP Regulations and s 12 (A) FA 1994 . The Second Duty Assessment was upheld by an internal review on 24 May 2019. MSD appeals on identical grounds to its appeal against the First Duty Assessment; (4) An excise duty assessment of £26,387 dated 25 October 2019 (the “ Third Duty Assessment ”), also issued under the HMDP Regulations and s 12 (A) FA 1994 . MSD appeals on the grounds that it was not the holder of the goods concerned; and (5) A decision by the Respondents (“ HMRC ”), dated 9 February 2023 (the “ AWRS Refusal Decision ”), to refuse the Appellant’s application for approval to carry on a controlled activity under section 88 C of the Alcoholic Liquor Duties Act 1979 (“ ALDA ”) (“ AWRS Approval ”) on the grounds of the decision that MSD was not a ‘fit and proper’ person for the purposes of the Alcohol Wholesaler Registration Scheme (“ AWRS ”). The AWRS Refusal Decision was upheld on 19 April 2023 following an internal review. MSD appeals on the grounds that the AWRS Refusal Decision was a decision that no reasonable officer of HMRC could have reached.

2. These appeals were stayed behind the appeal to the Court of Appeal in Davison & Robinson Ltd v HMRC . However, the appellant in that case withdrew its appeal and the appeal was formally dismissed on 2 March 2023.

3. On 2 August 2023 the Tribunal (Judge Fairpo) endorsed directions agreed by the parties under which MSD’s appeals were consolidated under a single Tribunal reference. (the “ Directions ”). The Directions required MSD to provide consolidated grounds of appeal and HMRC to provide a consolidated statement of case. On 23 September 2024, following the provision of listing information by the parties the consolidated appeal was listed for a hearing between 2 – 10 December 2025.

4. Ben Walker-Nolan appeared for the MSD. HMRC was represented by Joanna Vicary. We have been greatly assisted by their submissions, both written and oral. Although we have taken all of the submissions into account, we have not found it necessary to make specific reference in our decision to all of these, the materials or the authorities to which we were referred. Adjournment Application

5. At 19:08, on 26 November 2025, three working days before it was due to commence, MSD applied for an adjournment of the hearing which was originally listed for 2 – 10 December 2025 (the “ Application ”). The Application was supported by a witness statement made by MSD’s director, Mrs Raminder Kaur Deol. HMRC opposed the Application.

6. We dismissed the Application on the first day of the hearing and said that we would give our reasons for doing together with our decision on the substantive appeal. Our decision on the Application is set out in Appendix I, below. Law

7. As this appeal primarily raises issues of fact rather than law and given that there was little, if any, dispute as to the relevant statutory provisions and applicable authorities, rather than include these in the body of the decision we set them out in Appendix II, below. Evidence

8. In addition to a Hearing Bundle comprising 9,181 pages, we heard from the following witnesses: (1) Mrs Deol who was appointed as director of MSD on 19 July 2023. We were unable to derive much (if any) assistance from her evidence as her appointment as director of MSD post-dated the events with which this appeal is concerned. Also, although she gave some “new” evidence in cross-examination, Mrs Deol confirmed that her knowledge of events and issues arising in relation to HMRC prior to her appointment was based on conversations she had had with her late mother-in-law, Mrs Bakshish Kaur, and with Mr Chris Mann of Tiberius Solutions Limited (“ Tiberius ”), MSD’s advisers. (2) Mr Surinder Singh, a former HMRC officer who made the First Duty Assessment, the Second Duty Assessment and Third Duty Assessment. Although he retired from HMRC in March 2024, at the time he made the assessments he was an Excise Higher Officer who had been employed by HMRC and its predecessor, HM Customs and Excise (“ HMCE ”), since November 1993. Although at times quite defensive, especially in relation to any criticism of HMRC, he was on the whole a straightforward and credible witness who sought to assist the Tribunal. (3) HMRC Officer Olutoyin Alabi, a Higher Officer of HMRC. She has been an officer of HMRC and its predecessor HMCE since July 1997. It was officer Alabi that made the VAT Assessment. From November 2006 she was engaged as a member of HMRC’s Missing Trader Intra-Community (“ MTIC ”) Fraud Team and from December 2014 to 2020 was a member of HMRC’s Large Case Alcohol Team. Her roles within HMRC, between November 2009 and June 2024, have all been investigatory in nature, identifying frauds and using appropriate interventions to tackle them. Since November 2014, she has been working on the Fraud Investigation Team, where her duties included undertaking assurance visits to VAT registered alcohol businesses. Officer Alabi was responsible for checking that businesses in the alcohol trade were complying with the VAT regulations and were not part of fraudulent supply chains resulting in tax losses. She had dealt with MSD since 1 June 2015. For the main part we found her to be a straightforward witness. However, on occasions especially where it appeared that HMRC were being criticised, she became quite defensive, especially in relation to the VAT Assessment and emphasised her concerns during her enquiries into MSD about missing traders even though that was not the basis on which the VAT Assessment was made. (4) HMRC Officer Benjamine Cooper, a fraud investigator who has been employed by HMRC (and its predecessor HMCE) since 2001 and in his current position from 2016. He was the officer that seized the goods subject to the Third Duty Assessment. (5) HMRC Officer Antony Robinson, a “Criminal Disclosure Policy Lead” who has been employed by HMRC (and its predecessor HMCE) since 1993 and in his present role as a Criminal Investigator for HMRC’s Fraud Investigation Service from January 2021. He was present at the seizure of the goods subject to the Third Duty Assessment. Both Officers Cooper and Robinson were straightforward witnesses who gave clear and credible evidence. (6) HMRC Officer Stephen Peacock, an HMRC Compliance Officer who has been employed in that role since 2015. Although he did not make the AWRS Refusal Decision, Officer Peacock carried out the review of the relevant evidence alongside HMRC Officer Linda Bain (the Officer that made the AWRS Refusal Decision and has now retired from HMRC) and confirmed that he would have made the same decision as Officer Bain. Officer Peacock was not a particularly helpful witness. With the exception of the AWRS Refusal Decision (which was issued by Officer Bain) he said he was unable to speak to any document he had not written and therefore provided little assistance to the Tribunal.

9. The witness statement of HMRC Officer Kelvin Gould, a HMRC Fraud Investigation Officer who was present at the seizure of the goods subject to the Third Duty Assessment, was not challenged and was admitted into evidence.

10. Given that this appeal concerns matters that took place some time ago, the VAT Assessment, for example, concerns VAT periods ending between August 2014 and November 2015, we remind ourselves of unreliability and fallibility of the human memory and the adverse effect that the process of civil litigation has on it. As Leggatt J (as he then was), in his oft-cited observation in Gestmin SGPS SA v Credit Suisse (UK) Ltd & Anor [2020] 1 CLC 428 at [15] – [20], said, at [22]: “In the light of these considerations, the best approach for a judge to adopt in the trial of a commercial case is, in my view, to place little if any reliance at all on witnesses' recollections of what was said in meetings and conversations, and to base factual findings on inferences drawn from the documentary evidence and known or probable facts. This does not mean that oral testimony serves no useful purpose – though its utility is often disproportionate to its length. But its value lies largely, as I see it, in the opportunity which cross-examination affords to subject the documentary record to critical scrutiny and to gauge the personality, motivations and working practices of a witness, rather than in testimony of what the witness recalls of particular conversations and events. Above all, it is important to avoid the fallacy of supposing that, because a witness has confidence in his or her recollection and is honest, evidence based on that recollection provides any reliable guide to the truth.”

11. We note, however, that in Kogan v Martin & Ors [2019] EWCA Civ 1645 at [88], Floyd LJ, giving the judgment of the Court of Appeal, made it clear that Legatt J’s statements in Gestmin were not an “admonition” against placing any reliance at all on the recollections of witnesses and that: “... a proper awareness of the fallibility of memory does not relieve judges of the task of making findings of fact based upon all of the evidence. Heuristics or mental short cuts are no substitute for this essential judicial function. In particular, where a party's sworn evidence is disbelieved, the court must say why that is; it cannot simply ignore the evidence."

12. Adopting such an approach, we turn to our findings of fact. Facts Background

13. MSD is a wholesaler of alcoholic beverages that was incorporated on 19 January 2012. It trades from premises in Chatham at an address it then shared with Medway Soft Drinks Limited (“ Medway ”). At all material times with which this appeal is concerned, MSD’s sole director and shareholder was Mrs Bakshish Kaur. Mrs Kaur, who died on 17 July 2023, was the mother-in-law of Mrs Raminder Deol. Mrs Deol was appointed as the sole director of MSD on 19 July 2023. In addition to its VAT registration MSD was registered as a “High Value Dealer” under the Money Laundering Regulations and authorised to take cash payments up to £9,000.

14. Mr Sajit Deol, the son of the late Mrs Kaur and the husband of Mrs Deol, the current director of MSD, does not have, and has never held, any formal appointment with MSD (such as director or company secretary). However, he has been described in HMRC’s report of a visit by their officers to MSD on 2 July 2014 as its “Manager/buyer” and as “director” and “buyer/overseer” in a subsequent report of a visit by HMRC on 18 September 2015. Finances

15. A summary of MSD’s accounts for the years ended 31 March 2016 to 31 March 2020 are set out in the tables at Appendix III, below. The figures in those tables are taken from the summary of MSD’s accounts which was prepared by Karen Barbour, a specialist accountant in HMRC’s Fraud Investigation Service (“ FIS ”) Forensic Accounting team, and provided to Officer Peacock to assist him in his review which led to the AWRS Refusal Decision.

16. These accounts show that MSD had a net loss of £85,782 in the year ended 31 March 2016 but made profits of £3,531 the following year. It continued to be in profit in the years ending 31 March 2018 (£928), 31 March 2019 (£6,966) and 31 March 2020 (£5,254).

17. The average number of employees shown in the accounts increased from eight to 11 over the period covered by the accounts although the average wage per employee decreased from £24,821 in the year ending 31 March 2017 to £15,882 in that ending 31 March 2020.

18. The Balance Sheets for the years ended 31 March 2016 to 31 March 2020 show that the “Cash at Bank” over the years was £54,410 in 2016, £97,064 in 2017, £41,997 in 2018, 36,323 in 2019 and £46,622 in 2020.

19. Over the period from 31 March 2016 to 31 March 2020 MSD had net assets of £24,503 (2016), £24,549 (2017), £24,726 (2018), £31,693 (2019) and £36,947 (2020). Creditors due in less than one year over the same period were £2,815,286 (2016), £2,422,454 (2017), £2,579,929 (2018), £2,019,460 (2019) and £1,756,872 (2020).

20. A Business Plan for MSD, which was provided to HMRC (Officer Peacock) on 17 December 2021, stated that MSD, which suffered a loss of £805,704 in the year ended 31 March 2021, “was and continues to be impacted by Covid and Brexit as a majority of its customers rely on the public going out to buy alcohol and to socialise”. It explained that those customers were predominantly convenience stores, newsagents, post-offices, restaurants, and public houses based in in the Kent area which are licensed to sell alcoholic drinks. The Business Plan projected a net loss of £184,406 for the year ended 31 March 2022, a net loss of £250 for the year ended 31 March 2023 and net profit of £8,100 for the year ended 31 March 2024.

21. These figures were included in the further advice provided to Officer Peacock by Ms Barbour in April 2022. Also included were summaries of MSD’s Balance Sheets for the years ended 31 March 2017 – 31 March 2021. These records that for the year ended 31 March 2021 MSD had creditors of £2,499,340 and net liabilities of £783,735. This caused Ms Barbour to observe that such figures raised “concerns about its solvency”.

22. The 2021 accounts show an increase in wages to £260,295 from £174,703 the previous year. Included in the 2021 expenditure on wages were payments to Mrs Kaur’s grandchildren, Mr and Mrs Deol’s three children, two of whom were employed by MSD that year (ie during the Covid pandemic) as “Business Rep and Sales Support” and the other as “Admin Support”, with each receiving a salary of approximately £50,000. In a letter dated 14 July 2022 MSD advised HMRC that Mr and Mrs Deol’s children were “no longer employed by the company.”

23. The notes to MSD’s 2021 accounts explain that the creditors figure included “other creditors”. Ms Barbour’s advice to Officer Peacock records that this was analysed by Mrs Kaur as including, what was described as “Kuflink debenture” (£500,000) and “Harwinder Singh” (£1,660,000. These items are also included in MSD’s Balance Sheet for the year ended 31 March 2022 in which the figure for creditors – amounts falling due within one year – is £2,677,087 with total assets less liabilities being £768,807.

24. The Kuflink debenture refers to the debenture to the value of £500,000 registered at Companies House on 19 February 2019 in favour of Kuflink Bridging Limited (“ Kuflink ”), a company established by Harwinder Singh, who was described as a “family friend” by Mrs Deol. The loan agreement, which was provided to HMRC after some delay, is dated 22 January 2019. It was not signed by or on behalf of Kuflink but was signed by Mrs Kaur for MSD on 23 January 2019. Under the terms of the loan agreement MSD was required to draw down the loan in “a single amount”. However, bank statements show that separate amounts of £50,000 were deposited by Kuflink into MSD’s bank account between 4 December 2018 and 10 January 2019.

25. Also, despite provision in the loan agreement for payment of interest none had been paid by 9 February 2023, the date of the AWRS Refusal Decision. Although the charge is recorded at Companies House as having been satisfied on 16 December 2020, as noted above, it is shown in MSD’s accounts as outstanding in the years ended 31 March 2021 and 2022.

26. In a letter of 13 July 2022, from the late Mrs Kaur to HMRC she explained that Harwinder Singh would be given security for his loan which would be transferred to her as a director’s loan. That letter explained that MSD had made no repayments to Kuflink. However, in evidence Mrs Deol said that both the Kuflink and Harwinder Singh loans were taken on personally by the Mrs Kaur and converted to director’s loans. Mrs Deol described both as “soft” loans (by which she appeared to mean a loan for which repayment was unlikely to be pursued).

27. The2019-20 and 2020-21 self-assessment tax returns filed by Mrs Kaur show that she did not take a salary from MSD and that her income did not exceed her annual personal allowance. Mrs Deol was unable to help in respect of the value of the late Mrs Kaur’s estate and what action, if any, might be taken by her personal representatives in relation to these loans.

28. The accounts for the year ended 31 March 2022 filed at Companies House on 16 December 2022 record a small profit of £1,799 for MSD and that its total assets less current liabilities were £767,008.

29. Following the AWRS Refusal Decision, and to support its (successful) application for temporary AWRS approval pending the outcome of this appeal, MSD instructed David Muggridge FCCA of Ackland Webb Limited, Chartered Certified Accountants (who was not called to give evidence) to prepare a report.

30. His report (the “ Muggridge Report ”), dated 22 March 2023, notes that MSD’s “principal activity” is the wholesale of alcohol and grocery products, with 99% of the company’s turnover relating to alcohol products, and that it has a sole director and shareholder (at that time the late Mrs Kaur). It continues: “From the information provided to me and from my experience as a practising accountant and accountancy expert, I regard the company as an owner managed company. This is relevant to my considerations because the behaviour of such companies is different to companies where ownership is wholly divorced from management. Although there are many differences between them, owner managed companies will often display features not found in other companies, which might include the following: i. Decisions may not always be made purely on commercial grounds. ii. Expectations of profits and returns on investment are invariably different, given that such companies do not have to satisfy commercial investors or investment markets. iii. They may often employ family members, even where such employment may not wholly conform to the commercial interests of the company. Where such employment exists, salaries can often be paid at a level different from market rate for the services provided. iv. Typically, in the case of owner/directors, remuneration may be structured in the form of dividend rather than salary. v. Trading activities may be funded by the owners themselves, rather than by commercial lending or by capital investment. Typically such funding is provided by way of soft or informal loans rather than term or formal borrowing arrangements. vi. Such companies are often more agile than their larger counterparts, although part of the reason for that agility is often seen as an undue reliance on key personnel (and a potential business risk).”

31. In compiling his report, Mr Muggridge considered a business plan for MSD prepared by its auditors in December 2021. This considered the financial results for the preceding four years and included forecasts for the next three years, ie to 2024. Mr Muggridge was also provided with the financial statements for MSD for the years ended 31 March 2020 and 2022.

32. The “Financial Review” section of the Muggridge Report, referred to there being a loss in 2021 which Mr Muggridge understood to be “primarily a consequence of Brexit and Covid-19.” These events had, the Muggridge Report explains, resulted in a change in customer demand which fell, particularly due to Covid, with a number of product lines passing their sell-by dates and having to be destroyed. The company’s net liabilities were a consequence of this and, the Muggridge Report considered, it unlikely that the company’s balance sheet position would change “to any significant degree” at any time in the “foreseeable future.”

33. However, the Muggridge Report notes: “3.2.5 It is important to note that whilst the existence of a negative liability position is often perceived to suggest that a company is insolvent, the technical definition of insolvency includes a requirement that a company is unable to pay debts when they fall due. As far as I understand the position, this definition does not apply to MSD Wholesale Ltd. On the assumption that the company is able to settle its accounts when they become due, which I understand has been the case historically and remains so, I conclude that the company fulfils the relevant criteria of solvency. 3.2.6 It is noted that other creditors increased from approximately £1.6m at 31 March 2020 to £2.2m at 31 March 2021, with a further increase in 2022 to £2.38m. I understand that this represents an increase in financial support provided by Mrs Kaur and family members primarily to finance the reinvestment in stock referred to [above]. 3.2.7 I understand that during 2019, the funding from Mrs Kaur was supplemented by loan funding from Kuflink, a recognised peer to peer lender, amounting to £500,000. I am further advised that Kuflink have confirmed that they are currently in discussions with the company as to the terms of repayment of this loan.”

34. With regard to the “financial outlook” for MSD, the Muggridge Report noted that the company continued to trade but that it was “reliant on the continued financial support of family members and other loan funders” to do so. At the date of the report it was understood that such arrangements were not expected to change “in the foreseeable future.”

35. Although, as noted in the Muggridge Report (see above) and notwithstanding its net liabilities at 31 March 2021 and 2022 with any change unlikely in the foreseeable future, Mr Muggridge considered that MSD appeared to be “solvent”. In relation to this the Muggridge Report states: “4.1.2 I have noted my understanding that the company is reliant on funding principally from the director and that this is not unusual in owner managed companies. I have noted that this gives the company a significant cost and cashflow advantage than if it had obtained funding from commercial sources. 4.1.3 In summary, whilst the company has undoubtedly experienced challenges as a result of COVID and is reliant upon the support of the director, in my opinion the company appears to be a going concern.”

36. MSD currently has four employees including its warehouse manager, Daniel Andrews. Its accounts for the year ending 30 September 2024, the latest accounts it filed at Companies House (on 18 August 2025) show a negative equity position of £2,462,383. Related companies MSD Cash & Carry plc (“MSD Cash & Carry”)

37. MSD Cash & Carry Plc was incorporated in March 1995. Mohinder Singh Deol, the husband of the late Mrs Kaur, was director of MSD Cash & Carry and Mr Surjit Deol, husband of Mrs Deol the current director of MSD, its main buyer. The company went into liquidation in 2012 owing money to HMRC and other non-trade creditors. In 2010, prior to its liquidation, MSD Cash & Carry transferred its cash and carry business to Dale Wholesale Limited (“ Dale ”), then a newly incorporated company. However, on 16 March 2010 MSD Cash & Carry’s motor vehicles, which included two Bentley Continentals, a Range Rover Sport, a BMW X3, a Mercedes CL55 and six cherished number plates were transferred to Lionhart Limited, of which Mr Mohinder Deol and Mrs Kaur were directors.

38. During the winding up of MSD Cash & Carry, the company issued a credit note to Dale for £996,495. The credit note was not a genuine document and was found to be a void disposition under s 127 Insolvency Act 1986 by the High Court in Ingram (Liquidator of MSD Cash & Carry plc) v Singh [2018] EWHC 1325 (Ch) . Dale

39. This was a successor company to MSD Cash & Carry (see above). It traded in wholesale alcohol products. The directors of Dale were Mrs Kaur (from October 2009 to June 2011) and, from June 2011 onwards, Mrs Deol the current director of MSD. It received AWRS approval by letter of 16 May 2017 following a reconsideration of its application that had initially been refused.

40. Companies House records show that a debenture of £500,000 was secured by MSD “on all stock held by the borrower anywhere in the United Kingdom” and that a charge was registered on 10 March 2016 in favour of Dale with that charge being satisfied on 5 November 2018.

41. On 17th October 2018 Dale was ordered to be wound-up due to insolvency;, enquiries by the joint liquidators were ongoing as at June 2022. Rag Corporation LLP

42. A trade creditor of MSD, RAG Corporation LLP supplied hand sanitiser to MSD during the Covid lockdown period. Mrs Deol, who is a partner of RAG Corporation LLP, was not involved in the Dale Wholesale litigation referred to above. Medway

43. Medway traded from the same premises as MSD. Its director was Kuldip Bassi, who was also a director of MSD Cash & Carry. Mrs Bassi is the daughter of the late Mrs Kaur and sister-in-law of Mrs Deol the director of MSD. The company, which traded in wholesale alcohol and was given conditional AWRS approval on 1 June 2017, went into liquidation on 21 November 2024. VAT Assessment

44. The VAT Assessment was issued in respect of purchases by MSD, amounting to a total of £2,803,981.70, from three traders: Gujarr Limited (“ Gujarr ”), Simon Lloyd Limited (“ Simon Lloyd ”) and Euro Choice Limited (“ Euro Choice ”), on the dates and in the amounts set out in the tables in Appendix IV below, on the basis that MSD had failed to provide sufficient evidence that it had paid those suppliers within six months (or at all) and was therefore not entitled to the input tax claimed by virtue of s 26 A VATA.

45. The figures in those tables are taken from the tax loss letter issued on 29 October 2015 by HMRC (Officer Alabi) for which the suppliers were deemed to be missing traders. The tax loss letter of 29 October 2015 replaced a similar letter Officer Alabi had issued on 27 October 2015 which had not included the final VAT accounting period. Officer Alabi accepted in evidence that she had “probably” received the invoices referred to in those tables by 25 October 2015, before she had issued the initial 27 October 2015 tax loss letter to MSD.

46. Having written to MSD on 6 August and 27 August 2015, and contacted it by telephone on 1 September 2015, to request further evidence regarding purchases from Simon Lloyd, an unannounced visit was made to the company by HMRC Officers Alabi and Swaffer on 18 September 2015. The officers met with Mr Deol who, the Visit Report records, described himself as the “buyer/overseer” of MSD.

47. Mr Deol told the officers that MSD buys and sells within the UK and that goods are purchased in cash from Simon Lloyd and Gujarr. He also told the officers that MSD did not keep a day cashbook or collect receipts but that it did keep records on a Sage or similar system. Although not reconcilable to specific invoices, these records showed that between 12 June 2014 and 11 June 2015 MSD purchased goods from Gujarr to the value £1,554,627; that between 3 April 2014 and 12 January 2015 it purchased goods from Euro Choice to the value of £1,684,258.60; and that between 17 June 2015 and 3 August 2015 it purchase goods from Simon Lloyd to the value of £602,346. Such payments are recorded as predominantly being made by cash.

48. Officer Alabi requested the Sage-type record in relation to MSD’s supplies from Euro Choice, Gujarr and Simon Lloyd. MSD subsequently provided information to HMRC which included: (1) Eight “payment acknowledgements” signed/initialled on behalf of Gujarr over the period from 5 August 2014 to 17 September 2014 of amounts ranging from £40,000 to £80,000, totalling £522,000, in respect of invoices issued by Gujarr between 18 April 2014 to 7 August 2014; and (2) 18 dated “payment receipts” provided by Euro Choice covering the period from 2 July 2014 to 12 January 2015 of differing amounts (from £33,400 to £61,500) totalling £834,700. These are signed by Mr Deol as “buyer” for MSD and Salmon Ahmed, director of Euro Choice.

49. In evidence, Officer Alabi disagreed with the suggestion that these were “important documents” and said that “anyone could have printed this and signed it”. She said that she was interested in the “money movement”, something which MSD was unable to show. Her evidence is consistent with the letter from HMRC (Officer Alabi) of 13 November 2015 in which Officer Alabi stated that she did not consider that these documents provided sufficient evidence of payment. The letter, which also requested further information from MSD, stated that the documents provided: “… as evidence of payments have been analysed and have been found to be simplistic payments slips with signatures of individuals from your company and the signature of a representative from the purported supplier. I am not satisfied that this is evidence of payment to your supplier …”

50. As MSD did not respond to HMRC’s letter of 13 November 2015 letter, on 2 December 2015, HMRC (Office Alabi) issued it with a “pre-assessment letter”. This was followed on 22 December 2015 by the VAT Assessment. A review, requested by and notified to MSD by letter of 27 July 2016, upheld the VAT Assessment.

51. Although the review acknowledged that MSD had provided information to Officer Alabi, including payment receipts and acknowledgements from Euro Choice and Gujarr which detailed the amount of the payment, date of the payment, and the invoice that the payment related to, the reviewing officer (Officer Lomath) agreed: “… with Officer Alabi that these receipts and acknowledgements on their own are insufficient evidence to demonstrate that large cash payments ranging from £33,400 to £80,000 have been made to your suppliers. Without any further evidence to demonstrate that the payments have been made I conclude that the assessment is correct. I have also considered that it is not normal business practice to pay suppliers in such large cash amounts given the security risks that are involved in transporting large amounts of cash would cause.”

52. MSD appealed to the Tribunal against the review conclusion on 26 August 2016 on the grounds that it had paid for the supplies concerned. First Duty Assessment

53. The First Duty Assessment concerns the same supplies as the VAT Assessment, ie the supplies to MSD from Gujarr, Simon Lloyd and Euro Choice on the dates and in the amounts set out in the tables in Appendix IV below.

54. On 1 November 2015 Officer Singh called Mr Deol of MSD to arrange a visit to discuss information regarding missing trader supplies to MSD. Having received a copy of the tax schedule of supplies (as attached to the tax loss letter issued by Officer Alabi on 29 October 2015), on 4 November 2015 Officer Singh, in an email of 6 November 2015, requested further information from Officer Alabi. In particular he wanted copies of all of the invoices referred to in the schedule. Officer Alabi responded later the same day confirming that she had copies of the invoices and would “organise” these for Officer Singh. On 1 December 2015 Officer Alabi, in an email to Officer Singh advised him that the invoices he wanted had been scanned onto HMRC’s electronic folder (“ EF ”) system.

55. On 14 December 2015, Officer Singh together with Officer Jacquie Stacey made a pre-arranged visit to MSD where they met with Mrs Kaur, Mr Deol and Baljit Kuman (Mrs Kaur’s daughter). Officer Singh, in evidence, described his relationship with MSD as “strained albeit civil” and that although Mrs Kaur spoke to him in Punjabi (which he also spoke) he always replied in English. At the visit Officer Singh met with Mrs Kaur, Mr Deol and Ms Kuman. He explained to Mrs Kaur that the purpose of the visit was to make further enquiries in relation to the supply chains identified by Officer Alabi to assess the excise duty implications of those supplies.

56. Further information, including several invoices from Gujarr to MSD were provided to Officer Singh by email from Officer Alabi on 18 December 2015. On 6 January 2016, in an email, Officer Singh provided Officer Alabi with an update and advised her of “some anomalies which may need to be addressed. These included wrong invoice numbers for Simon Lloyd invoices and net figures being incorrectly recorded, a Euro Choice invoice being on the schedule but not the EF and the value of the VAT being greater than the net sales value.

57. On 11 January 2016 Officers Singh and Stacey made another pre-arranged visit to MSD, again meeting with Mrs Kaur, Mr Deol and Ms Kuman.

58. On 4 February 2016, Officer Singh sent an email summarising his findings to Officer Alabi. In the email he referred to his email of 6 January 2016 and requested further information regarding identification of any earlier points where the goods supplied to MSD could have been identified as held. Officer Alabi sent further information to Officer Singh by email of 11 March 2016 and advised that it had not been possible to identify an earlier holding of the goods supplied to MSD by Gujarr, Simon Lloyd, and Euro Choice.

59. In evidence Officer Singh confirmed that it was not until 11 March 2016, after he had he received all the invoices from Officer Alabi and completed his enquiries into MSD supply chains that he had sufficient evidence to issue the First Duty Assessment.

60. On 4 October 2016 HMRC (Officer Singh) issued MSD with a pre-assessment letter in which it was explained: “This letter is a notice of intention which offers you the opportunity to provide any further information or to make a representation which may assist in my decision to raising a formal assessment. Any response must be made by the very latest on 18th October 2016, at which time I will make my decision.”

61. MSD, through its then solicitors, responded to the pre-assessment letter on 12 October 2016. However, as Officer Singh considered no further substantive information had been provided, the First Duty Assessment was issued on 26 October 2016. This was upheld on 13 February 2017 following an internal review.

62. MSD appealed to the Tribunal against the First Duty Assessment on 27 February 2017 on the grounds that the assessment was out of time, that duty had been paid on the relevant goods, or that an earlier duty point had arisen in respect of the identifiable holder of the goods.

63. In preparation for this appeal MSD’s then solicitors wrote to the relevant suppliers or their liquidators requesting information but received no response. However, the suppliers had previously provided MSD with assurances that goods would be supplied with excise duty already paid.

64. A letter, dated 1 February 2014, from Gujarr to MSD states: “I can confirm to you that Gujarr Limited’s alcoholic stock is UK Duty paid. We distribute our alcoholic beverages from our sister company’s depot Meadowhall Limited’s warehouse premises, which is located at; …, Doxford International Business Park, Sunderland … .”

65. Additionally, all Gujarr invoices issued to MSD stated, “All Goods Are Full UK duty paid” and contain a retention of title clause. Identical statements also appear on all invoices from Simon Lloyd to MSD. A letter, dated 6 October 2014, from Simon Lloyd to MSD confirms that “all our goods are United Kingdom Fully Duty Paid items.” That letter continues, stating: “We will deliver to your Cash & Carry direct from our on trade warehouse premises, which is located in Cardiff.”

66. Euro Choice also confirmed, in an undated letter to MSD, that all of its stock it supplied was “UK Duty Paid” and that it is “stored and distributed in our own liveried transport vehicles from our warehouse”. Second Duty Assessment

67. The Second Duty Assessment concerns supplies to MSD by Barge Leisure Company Limited (“ Barge ”), Meadowhall Wholesale Limited t/a Meadowhall Cash and Carry (“ Meadowhall ”) and Wentworth Drinks Limited (“ Wentworth ”).

68. Officer Alabi visited MSD on 4 October 2016 and was provided with VAT records including VAT return breakdowns. On 4 January 2017 she wrote to MSD requesting further information and documents concerning 62 supplies from Barge, Meadowhall, Wentworth, Drinks Stop Cash and Carry Limited (“ Drinks Stop ”) and Paragon X Limited (“ Paragon ”) that had been received by MSD during the periods 08/15, 11 /15, 02/16 and 05/16.

69. On 20 January 2017 MSD sent documents to HMRC by recorded delivery. Receipt of these documents was acknowledged by Officer Alabi by letter of 8 February 2017. That letter also instructed MSD to “ignore” a Notice of Assessment which had been issued on 2 February 2017 as the records had been provided to HMRC and been copied and saved on HMRC’s systems. However, as much of the information that had been requested in HMRC’s letter of 4 January 2017 had not been provided, on 6 March 2017 Officer Alabi wrote to MSD to request that she be supplied with the omitted documents.

70. Further documents were supplied by MSD. These were received by HMRC on 23 March 2017 and acknowledged by Officer Alabi in a letter of 11 April 2017. On 25 July 2017, HMRC (Officer Alabi) sent a tax loss letter to MSD stating that its purchases from those traders had resulted in a substantial tax loss.

71. During the course of his investigation into what became the Second Duty Assessment it became apparent to Officer Singh that HMRC had not been provided with a complete set of invoices. On 26 July 2017 Officer Singh sent an email to Officer Alabi asking if she had “invoices scanned for these transactions”. Officer Alabi replied the same day, by email, confirming that she had the scanned documents but would “make an arrangement for them to be copied” and sent to Officer Singh as she was “not confident that the scanned records are everything we have.”

72. On 9 August 2017 Officer Singh received an email from Officer Stacey (who had visited MSD with Officer Alabi) to let him know that two lever arch files containing the MSD documents had been sent to him. On 26 October 2017, having received the two folders of information from Officer Stacey, and finding the information provided was in “a poor state of disarray”, Officer Singh requested support from colleagues to “tidy up” the files before any analysis took place describing the files as being “in an absolute mess. In evidence, Officer Singh confirmed that was the case and explained that although the files were in a “dreadful state of order” this might have been because they were received by HMRC in that condition.

73. Having analysed the documents it transpired that various invoices were missing. Officer Singh requested these from Officer Alabi but, in an email of 28 November 2017, she explained that she did not hold “any further information” and had sent Officer Singh: “… all the invoices and the tax loss schedule I used in reaching my decision to deny the input tax during the stated periods.” The decision to which Officer Alabi referred in that email, was made on 16 August 2017 by the issue of an assessment to deny MSD the right to deduct input tax of £354,963.47 claimed on the purchase of alcoholic drinks in the periods ending 08/15, 11/15, 02/16 and 05/16. However, that assessment was subsequently withdrawn by HMRC (a decision with which Officer Alabi, as she made clear in evidence, did not agree).

74. On 9 January 2018, HMRC (Officer Singh) wrote to MSD requesting the missing invoices. On 26 January 2018 MSD sent a number of those invoices to HMRC.

75. A pre-assessment letter was issued by HMRC (Officer Singh) on 28 March 2018. The letter notified MSD of HMRC’s intention to raise an assessment for £1,528,703 in respect of goods purchased from Barge, Meadowhall, Wentworth, Drinks Stop and Paragon and offered it “the opportunity to provide any further information or to make a representation which may assist” in the decision to raise a formal assessment.

76. MSD responded on 6 April 2018 to inform HMRC that none of its suppliers were missing at the time of the transactions concerned and all were VAT registered traders, but that “at least one of the suppliers” (which was not identified) was in liquidation. Officer Singh undertook further investigations and concluded that, in relation to goods purchased from Drinks Stop and Paragon, an earlier duty point could be identified. However, MSD was the earliest duty point that HMRC were able to identify for goods it had obtained from Barge, Meadowhall and Wentworth.

77. Officer Singh explained that it was when he received the remaining invoices from MSD on 26 January 2018, on which he based the Second Duty Assessment, that he had sufficient information to calculate the duty due on the relevant goods. However, he said, that it was not until 24 September 2018 that he “firmly concluded” that there was insufficient evidence of an earlier duty point before MSD in relation to those goods.

78. The Second Duty Assessment was issued on 26 September 2018. That decision was upheld by an internal review on 24 May 2019. On 26 June 2019 MSD appealed to the Tribunal on the grounds that the Second Duty Assessment was out of time, that duty had been paid and/or an earlier duty point had arisen in respect of the identifiable holder of the goods concerned.

79. As with the First Duty Assessment, in 2023, in preparation for this appeal MSD’s then solicitors wrote to the director of Barge, the liquidator and director of Meadowhall and the liquidator and director of Wentworth requesting information but received no response.

80. However, MSD had previously received an “Introductory Letter”, dated 6 May 2015, from Barge which stated that all its alcoholic goods were “UK Duty Paid”. That letter continued: “Our company has been trading for a few years now and have established itself to become the delivered wholesale partner for our customers from our large distribution warehouse. …”

81. A similar introductory letter from Meadowhall, dated 3 November 2014, stated that all stock held “in our warehouse is UK Duty Paid. An introductory letter to MSD from Wentworth, dated 6 January 2016 states that its beers, wines and spirit are “UK Duty Paid” and are distributed from its cash and carry premises in Barking. Invoices issued by Wentworth states that “all” of its goods are “UK Duty Paid”. Third Duty Assessment

82. The Third Duty Assessment concerns alcohol seized by HMRC at a Unit at Detling Aerodrome, Maidstone, Kent, which was owned by Transpak Direct Limited (“ Transpak ”) a company that also owned other storage depots in Kent. A number of companies, including MSD, held accounts to store alcoholic goods at those premises.

83. Officer Cooper, who was on duty at the Aerodrome with other HMRC officers, including Officers Robinson and Gould, observed a silver heavy goods vehicle towing a red curtain side trailer reverse up to unit E. Having entered the unit he saw multiple pallets of alcohol inside and was told by a Stephen Gary Boosey, who said that he helped load and unload any lorries and that he worked for Transpak, that the alcohol in the unit belonged to MSD.

84. Officer Cooper and Officer Robinson spoke to an individual who was at the unit who gave his name as Daniel Robert Andrews (MSD’s warehouse manager). Officer Robinson asked Mr Andrews whether alcohol that had been identified within the unit had arrived there from the continent? Mr Andrews gave a “no comment” response but did explain that the alcohol from the unit belonged to MSD. In evidence, both Officer Robinson and Officer Cooper said that Mr Andrews rather than being confused or flustered himself, appeared to them to be trying to “muddy the waters” and confuse the situation.

85. Mr Andrews was advised by Officer Cooper that, given the commercial quantities of alcohol present, all the goods within the unit would be seized by HMRC as there was no paperwork and/or insufficient evidence to verify that UK Excise Duty had been paid. In all, 28 pallets were seized. That seizure was not challenged and the goods were therefore condemned as forfeit.

86. A Seizure Information Notice, Warning of Liability to Prosecution and Revenue Goods Tally sheet were issued to Mrs Kaur as director of MSD and Mr Andrews as manager.

87. HMRC (Officer Singh) issued a pre-assessment letter on 24 September 2019 to notify MSD that it was intended to raise an excise duty assessment in respect of the seized goods. The letter, which set out the details of the seizure, explained that it was: “… a notice of intention which offers you the opportunity to provide any further information or to make a representation which may assist in my intended decision to raise a formal assessment of excise duty. Any response must be made by the very latest on 24 th October 2019, at which time I will make my decision.”

88. No representations were received from MSD and no documentation provided to HMRC in relation to the goods. On 25 October 2019 HMRC issued the Third Duty Assessment. MSD did not request a review of Third Duty Assessment but appealed directly to the Tribunal on 18 November 2019 on the grounds that its customer, Stella Wholesale Limited, rather than MSD was the owner of the goods concerned.

89. However, MSD appears to have accepted ownership of those goods in a letter to HMRC, dated 17 July 2022, sent in response to the AWRS “minded to refuse” letter issued by HMRC on 23 June 2022 (see below) in which it is stated: “In relation to the goods seized on 31st October 2018: Again, we repeat that these goods were stored at premises that we had been told by HMRC did not need to be “registered”. In relation to the documentation regarding those, and other goods, we provided extensive documentation to HMRC at the time and were told that they were content for the rest of the stock that was stored there to be collected by MSD Wholesale.” AWRS Refusal Decision

90. On 14 March 2016 MSD made an application to HMRC for AWRS approval. This was refused by HMRC (Officer Lauren Roberts), in a letter dated 28 March 2016, having taken into account the VAT Assessment, the First Duty Assessment and the failure by MSD to provide statutory records as requested by Officer Alabi on 13 November 2015.

91. However, following MSD’s successful application for injunctive relief by the Administrative Court (under which it was able to continue trade in alcohol products) and its appeal to the Tribunal, in a letter of 22 September 2021 to its then solicitors, HMRC notified MSD that its AWRS application would be reconsidered afresh. The letter explained: “For the avoidance of doubt, the reconsideration of your client’s AWRS Application does not automatically mean that your client’s AWRS Application will be approved. Once HMRC has completed its reconsideration of your client’s AWRS Application, HMRC will either: (a) Issue a new decision allowing your client’s AWRS Application and approving your client to carry on a controlled activity pursuant to s 88 C ALDA, either with or without specific conditions; or (b) Issue a “minded to refuse” letter stating the grounds on which HMRC intends to refuse your client’s AWRS Application. Your client would have the opportunity to make representations in response to any such letter. If those representations succeeded in altering HMRC’s intended decision, then HMRC would issue a new decision allowing your client’s AWRS Application and approving your client to carry on a controlled activity pursuant to s 88 C ALDA, either with or without specific conditions. If your client failed to make any representations, or its representations failed to alter HMRC’s intended decision, then HMRC would issue a new decision refusing your client’s AWRS Application. The issuing of a new decision will give rise to new statutory review and appeal rights. Once a new decision is issued, we will be in contact to discuss whether a conclusion to the current FTT appeal against the Refusal Decision can be agreed between the parties.”

92. The reconsideration of MSD’s application for AWRS approval was allocated to Officer Peacock who, on 26 October 2021, commenced research and background checks which included examining MSD’s company accounts which were held on the Companies House website. Officer Peacock, whose reconsideration was paper based, did not visit MSD nor did he speak to its director or any member of staff. He did not have any contact with Officer Roberts, who had refused MSD’s application for AWRS approval in March 2016, as he considered that his remit was to reconsider the application afresh. However, he did receive assistance from Karen Barbour of HMRC’s FIS Forensic Accounting Team (whose advice to Officer Peacock we have referred to in the Background section, above).

93. Officer Peacock wrote an “opening contact letter” to MSD on 15 November 2021 in which he requested further business information including details of any other businesses or companies that the director and key people were involved in. He also requested copies of any leases and supporting invoices for all business premises, including all storage premises, and a business plan, a full list of customers and suppliers and a copy of the company’s due diligence policy and a list of due diligence checks that MSD carried out.

94. Many of the documents requested were provided by MSD on 26 November 2021 and the business plan (to which we have referred, above) provided on 17 December 2021. Further information was requested by Officer Peacock and provided to him by MSD.

95. Having considered the information provided, on 23 June 2022 HMRC (Officer Peacock) issued a “minded to refuse” letter to MSD. The letter explained why Officer Peacock considered MSD was not fit and proper to carry on the wholesale of alcohol and why he was considering refusing its application for AWRS approval. Officer Peacock explained that the letter also afforded MSD an opportunity to provide any further information it wished to be considered before a final decision was made.

96. MSD availed itself of the opportunity to provide additional information and responded to the “minded to refuse” letter. However, after further consideration, and in the unavoidable absence of Officer Peacock, on 9 February 2023 HMRC (Officer Bain) issued the AWRS Refusal Decision. This replaced the AWRS refusal issued on 28 March 2016 which was withdrawn by the new decision.

97. Having considered and dismissed the application of conditions to an approval to mitigate risks to the revenue, the AWRS Refusal Decision set out the reasons for such a conclusion, in essence that: (1) The business has not provided sufficient evidence of its commercial viability and/or credibility; (2) Evidence of significant revenue non-compliance indicated a serious threat to the revenue; (3) There are connections between the business, or key persons involved in the business, with other known non-compliant or fraudulent businesses; and (4) The absence of satisfactory due diligence procedures.

98. The AWRS Decision was upheld on 19 April 2023 following a review requested by MSD. On 18 May 2023, MSD appealed to the Tribunal contending that the AWRS Refusal Decision was unreasonable. Due diligence

99. The due diligence procedure, adopted by MSD from 1 April 2017, is set out in a document produced by the company.

100. The first section of the document refers to HMRC’s due diligence requirements set out in Notice 2002 and the “F.I.T.T.E.D.” checks, namely the Financial health of the company concerned, Identity of the business, Terms of contracts, Transport details etc.

101. The document continues in the next section where it sets out the “roles and responsibilities” for initial data gathering, initial application vetting, third party due diligence and data analysis and decision log.

102. It is the responsibility of the “person designated by the Director” to gather “basic information” on any party wishing to trade with the company, to be examined and assessed by the director . Such information included a copy of the VAT Registration Certificate, a copy of Certificate of Incorporation, director’s identification, a letter of introduction on business letterhead, director's contact details (phone number, email address etc.), address of the principal place of business (“ PPOB ”) if different from the Registered Office, address of any other relevant places of business, bank account details, copy of Warehousekeepers and Owners of Warehoused Goods Registration certificate (where appropriate), confirmation that the business has an account in any approved premises in which they intend to trade, AWRS registration details, Money Laundering Regulations registration certificate (where applicable), a recent utility bill for the trading premises in addition to undertaking a credit check.

103. The director, having reviewed the data, will instruct that either: (1) additional information be obtained; (2) that a third party due diligence contractor will be instructed to undertake further checks; or (3) no further trade should be undertaken with the potential trader and record the reason for that decision.

104. Where a third party due diligence contractor was to be instructed, that contractor was required (as a minimum) to contact an officer of the business concerned to arrange a face to face meeting at the PPOB and report to the director if any difficulties in making such arrangements were encountered. The third party contractor was also required to apply those parts of the F.I.T.T.E.D test, provide photographic evidence as to the identity of the director of the business concerned and the “fit for purpose” status of any trading premises. In addition it should confirm the current AWRS status of the business and, should the business be exempt from registration, establish the grounds for exemption. It should also analyse financial returns and verify all data supplied in support of the application to trade and notify any concerns not otherwise recorded. Suppliers

105. Both the VAT Assessment and the First Duty Assessment concern purchases from Gujarr, Simon Lloyd and Euro Choice. The Second Duty Assessment concerns supplies by Barge, Meadowhall and Wentworth. HMRC investigated these companies and the results of those investigations are summarised below: Gujarr

106. Gujarr was incorporated on 10 November 2009. It was struck of the register in June 2012 but restored in November 2012 as a dormant company. On 26 January 2015 the High Court ordered it be wound up and the company was dissolved on 28 August 2019. Gujarr was deregistered for VAT on 9 October 2014 on the basis that its VAT registration had been used for abusive purposes. Amongst other reasons the VAT deregistration letter, dated 9 October 2014, stated that Gujarr had used its VAT registration solely for the purpose of participation in VAT fraud.

107. HMRC visited Gujarr’s PPOB, a serviced/virtual office in Windsor and also its director’s address in Hounslow, on 26 March 2014, but found nobody from the company was present at either address. However, on a visit to a different serviced office address (also in Windsor), on 7 April 2014, HMRC Officers were able to speak to the director and uplift records from the company.

108. The director stated that Gujarr’s sole supplier was UK Beer and Wine Limited (“ UKBWL ”) which organised delivery to addresses supplied by Gujarr’s customers. UKBWL was deregistered for VAT on 12 April 2014, ordered by the High Court to be wound up on 2 February 2015 and dissolved on 21 February 2017. The VAT registration number provided for UKBWL, when checked by HMRC, was found to belong to a different company Chalvey Car Company Limited (“ Chalvey ”). HMRC were unable to obtain any further information on visits to Chalvey’s premises in Slough (a domestic address) in April 2014 and Birmingham (a serviced office) in April and June 2014.

109. At a further visit to Gujarr, on 22 May 2014, HMRC officers were told that Gujarr did not issue invoices or have any business transactions between 25 April 2014 and 22 May 2014. However, HMRC had been provided, by MSD, with VAT invoices issued by Gujarr to MSD dated 29 April 2014 and 19 May 2014 with VAT amounts of £12,525.72 and £12,645.84 respectively.

110. HMRC’s records showed that Gujarr also purchased goods from Logical Retail. On visits to various addresses associated with that business there was no response from one and at another, which was a domestic address, HMRC Officers were told by the person answering the door that she did not know either the company or its director. The receptionist at a third address, a serviced office, had no record of Logical Retail or its director. Logical Retail was deregistered for VAT with effect from 6 August 2014.

111. Another of Gujarr’s suppliers, according to HMRC’s records, was Fahm Marketing. Its address was a flat on a housing estate from which there was no response at the address when visited by HMRC officers and no sign of any trading activity there.

112. HMRC visited Gujarr’s premises in Bolton on 16 September 2014 which were found to be empty. However, on a subsequent visit, on 20 January 2015, neighbours confirmed that Gujarr had occupied the unit for about three months, workers were rarely seen at the premises and only fruit and vegetables had been seen there. On a visit to both Windsor premises HMRC officers were told that they were no longer used and that Mr Gujarr had closed his account.

113. MSD instructed The Due Diligence Exchange Limited (“ DDEL ”) to undertake due diligence on Gujarr and it produced a report dated 10 February 2014. It is noted in the report that Gujarr is not registered as a High Value Dealer under the Money Laundering Regulations and, although it had applied for registration, it did not accept payment in cash to the equivalent of € 15,000 or more (which at the time was approximately £11,000). Simon Lloyd

114. Simon Lloyd, regarded as a “missing trader” by HMRC, was incorporated on 26 November 2012. It was deregistered for VAT on 4 June 2015 and was ordered to be wound up by the High Court on 27 February 2017 on the petition of HMRC.

115. Its address was a serviced office in the heart of a business park in the outskirts of Newport. It also had a unit in a Cardiff industrial estate, as it had stated in a letter to MSD, dated 6 October 2014, that it would deliver “direct from our trade warehouse premises, which is located in Cardiff” (see paragraph 65, above). However, there were no signs of occupancy when visited by HMRC on 20 May 2015 and there was also nobody there and no stock was seen on a subsequent visit to the unit by HMRC on 19 November 2015. The owner of the leasehold of the unit, in a witness statement dated 18 November 2015, said that she had “never” seen alcohol at the unit.

116. A purported supplier of goods to the value of £3.7m to Simon Lloyd, Henry Richardson Limited, had had its VAT registration number hijacked and its director had no knowledge of the business.

117. DDEL provided MSD with its report “Due Diligence Vetting and Visit” on 23 April 2015. A covering letter, dated 23 April 2015, from DDEL to MSD enclosing the report states that: “… This business passed the vetting procedures. Please see our report at section 1 of the file. You will note that we cannot provide the financial assessment at this time as we are currently awaiting receipt of references. This will be forwarded to you in due course and should be filed in the appropriate section of the file upon receipt.” Euro Choice

118. Euro Choice was deregistered for VAT on 29 January 2015 on the basis that its VAT registration had been used for abusive purposes. The deregistration letter, dated 27 January 2015, stated that it had used its VAT registration solely for the purpose of participation in VAT fraud. It was struck off the companies register at Companies House on 7 February 2017 but was subsequently restored to the register, on HMRC’s application, by order of the court on 6 March 2018.

119. In an undated letter to MSD, Euro Choice stated that its stock was “stored and distributed in our own liveried transport vehicles from our warehouse” (see paragraph 66, above). However, HMRC’s investigation concluded that Euro Choice was a broker of alcohol that never handled (or saw) the goods it sold, relying on its suppliers to arrange insurance and transport and direct payment between its customer and supplier. HMRC records also note that Euro Choice had poor knowledge of the goods and sectors in which it purported to trade.

120. By letter of 24 October 2016, HMRC denied Euro Choice its entitlement to reclaim input tax, of approximately £1.5m, on all alcoholic beverages and soft drinks purchased in its 10/14 VAT accounting period on the basis that all transactions traced to a fraudulent tax loss. An internal HMRC brief noted that Euro Choice had no warehouse, storage or distribution facilities and had a history of dealing in tax loss chains. Barge

121. Barge, which did not file any VAT returns, was considered by HMRC to be a missing trader and its VAT registration number cancelled. The company was dissolved on 3 November 2020.

122. A visit by HMRC to Barge’s PPOB on 20 October 2015 revealed that the premises was a public house. The visiting officers were informed that Barge had left the premises three months before the visit and the current occupier (to whom the premises was transferred on 20 March 2015) was unaware of its whereabouts.

123. On a visit to the warehouse address, as stated in an “introductory letter” of 6 May 2015 to MSD (see paragraph 80, above), the occupier and site manager told HMRC officers that he had received post for Barge which he had returned to sender. He confirmed that his business had been operating from that site since December 2015 and that Barge was not operating from the premises then and that the premises had been empty until they moved in. He gave the visiting officers a telephone number and suggested that the person whose number it was might be able to assist with the provision of details of any previous tenant. However, HMRC were unable to make contact with that person.

124. A letter, dated 15 July 2015, from DDEL to MSD states that Barge has “passed the vetting procedure” but that a financial assessment cannot be provided “as we are currently awaiting receipt of references”. Meadowhall

125. Meadowhall, described by Gujarr as its “sister company” from which it (Gujarr) distributed “our alcoholic beverages” (see paragraph 64, above), was compulsorily deregistered for VAT (pursuant to Ablessio , ie on the basis that its VAT number had been used to “abuse the VAT system”) on 29 January 2016 and had ceased trading by the time of the Second Duty Assessment. The company was wound up on 10 August 2017 and dissolved on 29 June 2023.

126. The company’s liquidator, when contacted by HMRC, confirmed that no records were held in relation to the relevant supply chain or the invoices subject to the Second Duty Assessment.

127. HMRC have ascertained that Meadowhall was supplied by the following missing traders: (1) Beer Bhai Cash & Carry Limited which was deregistered on 29 June 2015 and against which VAT assessments were issued on 26 November 2015 and 8 December 2015; and (2) Southern Drinks Wholesale Limited (t/a Palace Drinks) which was denied input tax by HMRC on 29 January 2016 the basis it knew or should have known its transaction were connected to the fraudulent evasion of VAT (a Kittel denial).

128. By letter of 11 September 2015 to MSD, DDEL stated that Meadowhall had “passed the vetting” but that, because references had not yet been provided, a financial assessment could not be provided. Wentworth

129. Wentworth was compulsorily deregistered for VAT and had been wound up by the time of the Second Duty Assessment.

130. HMRC visited Wentworth on 22 September 2016. The Visit Report records that its directors were elusive, cancelled appointments and failed to produce business records. Contact with the company’s liquidator by Officer Singh established that the liquidator held no records in relation to the relevant supply chain or the invoices subject to the Second Duty Assessment.

131. HMRC have ascertained that Wentworth was supplied by missing traders including Garden City Sales Limited which was deregistered on 23 December 2015.

132. DDEL provided MSD with its due diligence report on Wentworth on 26 January 2016. As with its reports on MSD’s other suppliers, DDEL stated that Wenworth had passed the vetting but that it was unable to provide any financial assessment as it was “awaiting references.” Discussion and Conclusions Issues

133. The following issues arise: (1) In respect of the VAT Assessment, whether MSD has adduced sufficient evidence to show it paid consideration for the supplies in question. (2) In respect of the First and Second Duty Assessments, whether MSD has established that: (a) the assessment in question was made more than one year from communication to the Respondents of the last piece of evidence of sufficient weight to justify the assessment; or (b) duty has been paid on the relevant goods; or (c) an earlier duty point arose in respect of an identifiable holder of the goods. (3) In respect of the Third Duty Assessment, whether MSD has demonstrated that it was not, at the time of the seizure (or at any prior point in time), the holder of the goods in question. (4) In respect of the AWRS refusal, whether the decision by HMRC Officer Bain to find MSD was not a ‘fit and proper’ person for the purposes of the Alcohol Warehouse Registration Scheme (“ AWRS ”) was a decision which no reasonable officer of HMRC could have reached. In particular whether, on the primary facts: (a) Officer Bain failed to consider any matter which should have been taken into account; or (b) Took into account any irrelevant matter; or (c) Whether the decision was otherwise one that was plainly wrong in that no officer of HMRC, acting reasonably, could have reached it. VAT Assessment – Whether sufficient evidence consideration paid

134. It is common ground that it is for MSD to establish that it has adduced sufficient evidence that consideration was paid to its suppliers for the goods invoiced as set out in Appendix IV, below.

135. MSD contends that it has done so and relies on the eight Gujarr “payment acknowledgements” totalling £522,000 and 18 signed and dated Euro Choice “payment receipts” totalling £834,700 (see paragraph 48, above) in addition to the assertions of Mr Deol to HMRC officers when they visited MSD in August 2015 (see above) that it was common for MSD to buy in bulk and pay its suppliers in cash. It also relies on the Sage-type spreadsheets showing payments to Gujarr of £1,554,627, to Euro Choice of £1,684.258.60 and to Simon Lloyd of £602,346 (see paragraph 47, above).

136. Other than the Sage-type spreadsheets and payment acknowledgements/receipts, there is little, if any, evidence to support and/or explain how such cash payments were made, no record of any cash movements or indeed how or why MSD came to have such large amounts of cash to make the payments given the cash shown in its accounts during the periods in question. There is no audit trail or reconciliation of amounts paid to invoices. There was also no recording of income or expenditure in a cash book and no receipts were kept.

137. Neither is there any explanation of how Gujarr, which had been deregistered for VAT on the basis that it had used its VAT registration for fraudulent purposes, was able to make supplies to MSD after it had been deregistered when its (Gujarr’s) suppliers were missing traders that, in some cases were said to operate from private residential addresses with no sign of there having been any trading activity undertaken. In addition, MSD has not explained why, having instructed DDEL to undertake due diligence on Gujarr, it contends it made cash payments of between of £40,000 and £80,000 to Gujarr when it is clear from the due diligence report that Gujarr does not accept payment in cash over £11,000 (see paragraph 113, above).

138. Similarly, there is no explanation of supplies MSD received from Euro Choice, following its VAT deregistration on the basis that its VAT registration had been used for abusive purposes, given that Euro Choice was a broker of alcohol that did not handle any products itself but relied on its suppliers to arrange transport and insurance and directed payment between its customers and suppliers, notwithstanding it had referred to its own warehouse and its “own liveried transport vehicles” in an undated letter to MSD (see paragraph 66, above). The absence of any explanation also applies to Simon Lloyd, a missing trader.

139. Also, as he did not give evidence, we are unable to accept the accuracy or reliability of Mr Deol’s untested assertions made to HMRC officers.

140. That leaves the Sage-type spreadsheets and the payment acknowledgements and the payment receipts from Gujarr and Euro Choice respectively. Given the spreadsheets were compiled by MSD, the payment acknowledgements and payment receipts are the only corroborating evidence of consideration being paid by MSD for the purchases from Gujarr and Euro Choice. In the case of Euro Choice just under 50% of the purchases as shown in the Sage-type spreadsheets are supported by the payment receipts with the Gujarr payment acknowledgements amounting to just 38% of the purchases recorded on the spreadsheets. There is no such evidence in support of supplies from Simon Lloyd.

141. Although they did not challenge the veracity of the payment acknowledgements and payment receipts, HMRC contend that they are not sufficient evidence that payment was made by MSD for the supplies they relate to and that, as they are all the evidence MSD has ever provided to show any of the supplies in question were paid for the appeal against the VAT Assessment should be dismissed.

142. On balance, and for the reasons above (in paragraphs 136 – 138), we agree. As such, as it has not adduced sufficient evidence to establish consideration was paid for the supplies in question, MSD’s appeal against the VAT Assessment cannot succeed. First Duty Assessment and Second Duty Assessment

143. Three issues arise in relation to the First Duty Assessment and Second Duty Assessment: (1) Whether the assessments were made in time; (2) whether duty has been paid on the goods concerned; and (3) whether an earlier duty point arose.

144. It is accepted that, in respect of these issues, the burden of proof is on MSD (see s 16(6) FA 1994 and s 154 Customs and Excise Management Act 1979 ).

145. For the reasons below, we have concluded that both the First Duty Assessment and the Second Duty Assessment were made in time and that there is insufficient evidence to establish that duty had been paid or that there was an earlier duty point. It therefore follows that the appeals against the First Duty Assessment and the Second Duty Assessment must be dismissed. First Duty Assessment Whether in time

146. With regard to the First Duty Assessment, Mr Walker-Nolan contends that, as this concerned identical supplies to those in the VAT Assessment, HMRC had knowledge of the facts required to make the First Duty Assessment by 25 October 2015 when Officer Alabi was in possession of the invoices needed to make an assessment (see paragraph 45, above) and, as such, HMRC were out of time when the First Duty Assessment was issued on 26 October 2016.

147. Mr Walker-Nolan accepts that Officer Singh made further enquiries after 25 October 2015 but says, relying on Lithuanian Beer Ltd v HMRC [2019] 1 WLR 627 , (see paragraph 15 of Appendix II, below), that this was an exercise in identifying or verifying evidence already in the possession of HMRC and, as such, contends that these enquiries do not affect the time by which an assessment should have been made.

148. However, as Ms Vicary submits, the one year time limit under s 12(4) (b) FA 1994 , does not commence on the day that HMRC held evidence of facts which might justify an assessment but begins on the day in which evidence of facts “sufficient in the opinion of the Commissioners to justify the assessment, comes to their knowledge” (emphasis added). It is clear from Pegasus Birds Ltd v HMCE [1999] STC 95 at 102, (see paragraph 12 of Appendix II, below) that, the “person whose opinion is imputed to the Commissioners is the person who decided to make the assessment” which in this case is Officer Singh.

149. Although he was aware of the supplies to MSD included in the VAT Assessment, from the information provided to him by Officer Alabi, Officer Singh continued to make enquiries, which included visits to MSD on 14 December 2015 and 11 January 2016 to assess the excise duty implications of those supplies (see paragraphs 55 and 57, above) and that he did not consider that he had sufficient evidence to issue an assessment until 11 March 2016 after he completed his enquiries into MSD’s supply chains and was in possession of all the invoices from Officer Alabi (see paragraph 59, above).

150. It is also clear from the pre-assessment letter to MSD of 4 October 2016 (see paragraph 60, above) that Officer Singh was giving MSD a final opportunity to provide further information or make representations before he made the First Duty Assessment.

151. In that regard Officer Singh can be compared to Mr Spranklen, the assessing officer in the case of Rasul v HMRC [2017] UKUT 357 (TCC) (“ Rasul ”). In that case the sole issue before the Upper Tribunal (Judges Herrington and Poole) was whether assessments issued by HMRC were within the time limit set out in s 73(6)(b) VATA which provides, in very similar l terms to s 12(4) (b), that an assessment (for VAT) must be made no later than: … one year after evidence of facts sufficient in the opinion of the Commissioners to justify the making the assessment came to their knowledge.

152. The Upper Tribunal noted, at [89], that the fact the officer who made the assessment might, “as a matter of law” have been able to proceed to an assessment on the basis of information he already had was a separate matter “to the question as to whether he was of the opinion that the evidence he had was of sufficient weight and whether such opinion was wholly unreasonable or perverse.” The Tribunal continued: “90. … had Mr Spranklen proceeded to make an assessment in circumstances where his belief was that the evidence that he had was not of sufficient weight to justify the assessment and that he would be acting wholly unreasonably and taking advantage of the taxpayer in so doing, that would call into question whether the assessment was made honestly and in good faith.

91. Therefore, we can see no basis on which we should interfere with the FTT’s finding that it was not wholly unreasonable or perverse of Mr Spranklen to have formed the opinion that he did not have evidence of sufficient weight to make the assessment until after the meeting on 20 April 2010. Since s 76 (6) (b) VATA 1994 focuses on whether the evidence obtained is of sufficient weight, the fact that no new material emerged from the meeting of 20 April 2010 is of no concern. It was the context of the meeting of 4 September 2009 that in the opinion of Mr Spranklen did not give the evidence he obtained sufficient weight to make an assessment, but the fact that it was repeated in a more formal setting in his opinion gave that same information sufficient weight on which he could base his assessment.

92. We can see nothing wholly unreasonable or perverse in that opinion. Indeed, Mr Spranklen is to be commended for following an approach which was designed to be scrupulously fair to Mr Rasul. It is obviously highly desirable that HMRC’s Officers should be seen to be scrupulously fair in the way that they approach the question of best judgment assessments and it would be highly undesirable if the law was to be interpreted in such a way that it operated as an encouragement to make an assessment in circumstances where there is any doubt as to whether the taxpayer has been treated fairly.”

153. As with Mr Spranklen in Rasul , it is, in our judgment, clear that Officer Singh did not consider that the evidence available to him was sufficient to issue an assessment until he had completed his enquiries into MSD’s supply chains, ie by 11 March 2016. However, we consider that it is arguable that a later date could have applied given the 4 October 2016 pre-assessment letter gave MSD an opportunity to provide further information which Officer Singh could have taken into account. However, in either case, the First Duty Assessment would have been made in time. Whether duty paid

154. Mr Walker-Nolan fairly accepts that MSD has only been able to adduce limited evidence in support of MSD’s case that duty has been paid. As there was no response from its request, via its then solicitors, to its suppliers or liquidators (see paragraph 63, above) MSD relies on the assurances given to it by its suppliers, in particular: (1) The letter from Gujarr, dated 1 February 2014, confirming duty was paid (see paragraph 64, above); (2) the invoices from Gujarr stating all are goods are “Full UK duty paid” (see paragraph 65, above); (3) the identically worded invoices issued by Simon Lloyd (see paragraph 65, above); (4) a letter, dated 6 October 2014, from Simon Lloyd confirming that the goods it supplies are UK “Fully Duty Paid items” (see paragraph 66, above); and (5) an undated letter from Euro Choice confirming all its stock was Duty Paid (see paragraph 66, above).

155. However, for the same reasons that we do not consider the payment acknowledgements and payment receipts sufficient evidence of payment being made in relation to the VAT Assessment (goods supplied by missing traders operating from residential addresses, lack of handling of any products by Euro Choice etc) we do not consider that these uncorroborated documents amount to sufficient evidence to establish that duty has been paid on the goods concerned. This is especially the case with regard to the Simon Lloyd invoices where there was no evidence of alcohol trading at the Cardiff warehouse from which Simon Lloyd claimed it operated.

156. Having regard to all the circumstances we cannot be satisfied that it was more likely than not that duty was paid on the goods concerned. Whether earlier duty point

157. Again Mr Walker-Nolan accepts there is a paucity of evidence but contends that it would be “entirely logical” that there must have been some prior holding/release for consumption before the goods were delivered to MSD.

158. He again relies on the letter of 1 February 2014 from Gujarr which states that goods are distributed from Meadowhall, its sister company’s depot (see paragraph 64, above). In addition, he refers to the retention of title statement included in the invoices issued by Gujarr (see paragraph 65, above). Similar statements are also included in the invoices issued by Euro Choice and Simon Lloyd (see paragraphs 65 and 66, above).

159. However, given that HMRC’s investigations found that the suppliers were either missing traders or supplied by missing traders, we agree with Ms Vicary that there is insufficient evidence to ascertain any earlier duty point. Second Duty Assessment Whether in time

160. The Second Duty Assessment was issued on 26 September 2018. Mr Walker-Nolan contends that it was not made in time as HMRC was in possession of the factual information required to make the assessment by 25 September 2017 given that a VAT assessment in relation to the same supplies as the Second Duty Assessment had been issued on 16 August 2017 (although the VAT assessment was subsequently withdrawn).

161. However, as was the case with the First Duty Assessment, time only starts to run for the purposes of s 12(4) (b) FA 1994 when evidence of facts “sufficient in the opinion of the Commissioners to justify the assessment, comes to their knowledge”, not when evidence of facts which might justify an assessment is held by HMRC. Again, as with the First Duty Assessment the person whose opinion is imputed to HMRC is Officer Singh.

162. Officer Singh requested and was provided with invoices that had been missing by MSD on 26 January 2018 (see paragraph 75, above). It was at that point that Officer Singh said that he had sufficient information to calculate the duty on the goods concerned (see paragraph 77, above). However, following MSD’s response of 6 April 2018 to the 28 March 2018 pre-assessment letter and the further investigations undertaken, Officer Singh concluded that an earlier duty point could be identified in relation to two of the suppliers, Drinks Stop and Paragon, and these were not included in the Second Duty Assessment. However, he did not “firmly” conclude that that was the case with regard to Barge, Meadowhall and Wentworth until 24 September 2018 (see paragraph 77, above) shortly before he made the Second Duty Assessment on 26 September 2018.

163. Having regard to all the circumstances, and the decision of the Upper Tribunal in Rasul and Supreme Court in DCM (Optical Holdings) Ltd v HMRC (see paragraph 16 of Appendix II, below) we do not consider it unreasonable of Officer Singh to have formed the view that he did not have sufficient evidence to make an assessment until he had completed his investigations. As such the Second Duty Assessment was made within the s 12(4) (b) FA 1994 time limit. Whether duty paid

164. As with the First Duty Assessment, MSD relies on the introductory letters and invoices provided by Barge, Meadowhall and Wentworth (see paragraphs 80 and 81, above).

165. However, this evidence without any corroboration is not, in our judgment, sufficient to establish that duty was paid. That is especially the case when considered against the results of the investigations undertaken by HMRC which found Barge’s PPOB to be a public house (see paragraph 122, above), that Meadowhall had been supplied by missing traders (see paragraph 127, above) and the failure by the directors of Wentworth, who were described as elusive, to provide any business records (see paragraph 130, above). Whether earlier duty point

166. For the same reasons that we do not consider there is sufficient evidence to establish that duty was paid, we also find that there is insufficient evidence of any earlier duty point for the goods acquired by MSD from Barge, Meadowhall and Wentworth. Third Duty Assessment - Whether holder of the goods

167. It is not disputed that it is for MSD to establish that the goods seized did not belong to it but one of its suppliers Stella Wholesale Limited and that it, not MSD, held the goods. However, there was no evidence to support MSD’s case that Mr Andrews (who did not give evidence) did not know what was going on but was nevertheless keen to assist and produce the correct paperwork for the HMRC officers who attended the premises and seized the goods.

168. That was not the evidence of Officer Cooper and Officer Robinson (who both gave evidence) who said that the opposite was true, that Mr Andrews sought to obfuscate rather than assist and that he identified the goods as belonging to MSD. MSD, in its response to the AWRS “minded to refuse letter”, accepted ownership of the goods and did not avail itself of the opportunity to respond to the Seizure Information Notice. It did not provide any documentation in relation to those goods or raise the issue of ownership in response to the “minded to refuse” AWRS letter.

169. Therefore, having regard to all of the circumstances, we have come to the conclusion that MSD has failed to demonstrate that it was not, at the time of the seizure (or at any prior point in time) the holder of the goods in question and its appeal on this issue cannot therefore succeed. AWRS Refusal Decision – Whether reasonable

170. MSD contends that HMRC’s conclusion that it was not a “fit and proper” person to be approved under AWRS was not one that a reasonable officer of HMRC could have arrived at. It is clear from s 16(6) FA 1994 that, if it is to succeed, it is for MSD to establish that is the case.

171. As Mr Walker-Nolan submits, the AWRS Refusal Decision is predicated on the following four factors: (1) The business has not provided sufficient evidence of its commercial viability and/or credibility; (2) Evidence of significant revenue non-compliance indicating a serious threat to the revenue; (3) There are connections between the businesses, or key persons involved in the business, with other known non-compliant or fraudulent businesses; and (4) The absence of satisfactory due diligence procedures.

172. In addition, Mr Walker-Nolan contends that it was unreasonable for Officer Peacock not to have considered the original decision of Officer Roberts to refuse AWRS approval and her reasons for doing so. However, we do not agree. It is clear from his letter of 22 September 2021 (see paragraph 91, above) that the matter would be reconsidered afresh and that a new decision would be made. As such, the reasons for the decision by Officer Roberts to refuse AWRS approval can have no bearing on, or relevance to, the decision taken by Officer Peacock and, accordingly, it was not unreasonable of him not to have taken it into account.

173. With regard to commercial viability, Mr Walker-Nolan contends that there was sufficient evidence. He says that the MSD has been operating since its incorporation in 2012 and continues to trade. He also submits that, in considering the commercial viability, Officer Peacock failed to take account of what are described in the Muggridge Report as “soft or informal” loans (see paragraph 30, above), which appear to include the loan from Harwinder Singh which was apparently taken on by the late Mrs Kaur and absorbed in her director’s loan in addition to the Kuflink loan. However, we agree with Officer Peacock who, when asked about “soft” loans, said that he did not consider £1.6m to be a “soft loan”. We also note that the accounts for the year ended 31 March 2021 and 31 March 2022 show that MSD was loss making and had total assets less current liabilities of £783,785 and £768,807 respectively.

174. By including revenue non-compliance as a reason for the AWRS Refusal Decision, Mr Walker-Nolan contends that HMRC have taken account of an irrelevant matter as there have been no persistent failures by MSD to comply with any HMRC record-keeping requirements as is apparent from its registration as a “High Value Dealer” under the Money Laundering Regulations (see paragraph 13, above).

175. However, notwithstanding the requirement to produce and make available records under the Revenue Traders (Accounts and Records) Regulations 1992 and Annex A to Excise Notice 2002 (see paragraph 28 of Appendix II, below) MSD did not produce any documentation in relation to the seized goods. There was, as Ms Vicary submits, also some delay in providing details of the Kuflink debenture to HMRC. We also note that MSD did not keep a cashbook or receipts (see paragraph 47, above).

176. There was, Mr Walker-Nolan contends, a failure by Officer Peacock to take into account that Dale, whose directors were Mrs Kaur and subsequently Mrs Deol, was granted AWRS approval on 16 May 2017 (see paragraph 39, above). He also contends that no account was taken of a conditional AWRS granted to Medway on 1 June 2017 (see paragraph 43, above), a relevant matter given that Medway and MSD trade from the same premises. However, even though he did not refer to these matters in the AWRS Refusal Decision letter, Officer Peacock did not take into account the connections between MSD and the related companies referred to above (see paragraphs 37 – 41, above).

177. In relation to due diligence Mr Walker-Nolan contends that Officer Peacock failed to take account of that undertaken by MSD (see paragraphs 99 – 104, above) and did not provide any guidance to MSD on what improvements could be made.

178. However, Ms Vicary contends that by taking into account that MSD repeatedly traded in tax loss chains it is self-evident its due diligence was ineffective. Moreover, she submits that the due diligence documentation provided to HMRC does not document the checks that it would undertake to ensure the provenance and duty status of the goods concerned. Although it did state that F.I.T.T.E.D checks would be undertaken, no further insight into the checks was provided.

179. Having regard to all these matters in the round, we do not consider that the decision of HMRC (Officer Peacock) to refuse MSD’s application for AWRS approval was one that no reasonable officer of HMRC could have reached. Even if we had concluded that it was, given MSD’s current financial position, especially the uncertainty what action might be taken in relation to the “soft” loans by the personal representative of the estate of the late Mrs Kaur, we consider that, were we to allow the appeal and direct a further review, HMRC would inevitably come to the same conclusion (see John Dee Ltd v HM Customs and Excise [1995] STC 941 ).

180. As such, it follows that the appeal against the AWRS Refusal Decision is dismissed. Decision

181. For the reasons above the appeal is dismissed. Right to apply for permission to appeal

182. 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. Release date: 20 th FEBRUARY 2026 Appendix I Decision on Adjournment Application Background

1. As noted above, MSD filed Notices of Appeal against the VAT Assessment, First, Second and Third Duty Assessments and the AWRS Refusal Decision between 26 August 2016 and 18 May 2023. The appeals were consolidated under the Directions and, on 23 September 2024, listed for a hearing between 2 – 10 December 2025.

2. On 20 October 2025 HMRC contacted MSD’s then solicitors regarding the formatting of the Hearing Bundle only to receive an email in reply the same day stating that those solicitors were not acting for MSD and, despite email correspondence between HMRC and the solicitors regarding the appeal on 31 July 2024, had not done so for over two years.

3. Later, on 20 October 2025, in an email to the solicitors, HMRC requested contact details for MSD and suggested that the solicitors notify the Tribunal that they were no longer acting for MSD and come off the record. However, it was only in response to a letter of 13 November 2025 from the Tribunal that, on 17 November 2025, the solicitors wrote to the Tribunal to confirm that that was the case.

4. MSD’s warehouse manager, Daniel Andrews, replied to HMRC by a letter dated 24 October 2024. He explained that Mrs Deol was currently away in India and would respond to HMRC on her return. The letter also confirmed that MSD intended to pursue its appeal. HMRC replied by letter of 29 October 2025 asking when Mrs Deol was expected to return to the UK and to provide an email address and phone number at which Mrs Deol could be contacted in India.

5. In the absence of a response from Mr Andrews, on 5 November 2025, HMRC made an application to the Tribunal for a direction that MSD provide contact details and confirmation it intended to continue with its appeal. Mrs Deol responded on 7 November 2025. She stated that she was surprised to hear the solicitors were no longer acting as she had not received anything from them to indicate that this was the case. She explained that she had received emails from the partner at the firm who had conduct of the appeal in October 2024.

6. In evidence, Mrs Deol confirmed that she had not been in touch with the solicitors since October 2024 and had not sought any update from them until she had heard from HMRC that the solicitors had said they were no longer acting for MSD in relation to its appeal. She said that she was happy with the way the solicitors were handling MSD’s appeal despite the same solicitors being “disinstructed” in January 2025 in relation to proceedings brought by other companies controlled by Deol family members and her becoming aware, through friends, in around June or July 2025, of criminal proceedings (money laundering charges) being pursued in the Crown Court against the partner in the solicitors who had conduct of MSD’s appeal.

7. Mrs Deol’s 5 November 2025 letter to HMRC concluded by explaining that MSD was seeking new representation and sought HMRC’s agreement to a postponement of the hearing. However, HMRC did not agree to any postponement as the hearing had been listed for over 13 months.

8. On 12 November 2025, as MSD had not provided a skeleton argument in accordance with the Directions, HMRC applied for an ‘unless’ direction. On 13 November 2025, the Tribunal (Judge Brooks) granted HMRC’s application and issued directions (the “ Unless Directions ”) under which MSD’s appeal would be struck out, unless by 27 November 2025, it or its director provided: (1) the name of an individual with whom the Tribunal and HMRC could communicate in relation to the appeal; and (2) a skeleton argument.

9. On 18 November 2025, MSD’s current solicitors came on record and requested a copy of the hearing bundle (of 9,181 pages) from HMRC. This was provided together with a copy of the 267 page Core Bundle on 20 November 2025. Instructions to counsel were confirmed in the evening of 21 November 2025 and a skeleton argument in compliance with the Unless Directions filed and served on 27 November 2025.

10. On 20 November 2025, HMRC had been notified by the new solicitors that while they were considering the “considerable volume of material” within the hearing bundles as “swiftly” as they could, it remained “highly probable” that an application would be made to adjourn the hearing. HMRC responded on 21 November 2025 confirming that any application to postpone the hearing would be opposed.

11. On 26 November MSD made the Application. Late applications

12. The parties agreed that the relevant law in relation to applications to adjourn is as set out in Bilta (UK) Ltd & Others v Tradition Financial Services Ltd [2021] EWCA Civ 221 in which Nugee LJ (with whom Peter Jackson and David Richards LJJ agreed) after hearing “extensive submissions on the law” observed, at [30]: “… that the guiding principle in an application to adjourn of this type is whether if the trial goes ahead it will be fair in all the circumstances; that the assessment of what is fair is a fact-sensitive one, and not one to be judged by the mechanistic application of any particular checklist; that although the inability of a party himself to attend trial through illness will almost always be a highly material consideration, it is artificial to seek to draw a sharp distinction between that case and the unavailability of a witness; and that the significance to be attached to the inability of an important witness to attend through illness will vary from case to case, but that it will usually be material, and may be decisive. And if the refusal of an adjournment would make the resulting trial unfair, an adjournment should ordinarily be granted, regardless of inconvenience to the other party or other court users, unless this were outweighed by injustice to the other party that could not be compensated for.”

13. We also took into account the overriding objective in rule 2 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 (the “FTT Rules”) which is to deal with cases “fairly and justly”. This includes: (a) dealing with the case in ways which are proportionate to the importance of the case, the complexity of the issues, the anticipated costs and the resources of the parties; (b) avoiding unnecessary formality and seeking flexibility in the proceedings; (c) ensuring, so far as practicable, that the parties are able to participate fully in the proceedings; (d) using any special expertise of the Tribunal effectively; and (e) avoiding delay, so far as compatible with proper consideration of the issues.” Discussion and Conclusion

14. For MSD, Mr Walker-Nolan contended that as a matter of fairness, given the appeal is factually and legally complex, encompassing lengthy periods (from 2014 to 2023), with a hearing bundle in excess of 9,000 pages and three component appeals, the hearing should be adjourned and re-listed. He noted that MSD had not been given any notice of its previous solicitors ceasing to act and by failing to notify it, or indeed the Tribunal, they had acted unprofessionally.

15. As such, he said, the new legal team did not have sufficient time to properly prepare and faced a situation similar to that the High Court proceedings in Manchester Property Development Holdings v Kuit Steinart Levy LLP [2025] EWCA 35 (Comm) in which leading counsel for the defendant was taken ill and his instructing solicitors informed the day before the trial. Although two junior counsel had also been instructed, and were therefore familiar with the case, they did not have adequate time to properly prepare cross-examination and submissions. In that case, Dame Clare Moulder DBE granted the adjournment, concluding that the prejudice to the defendant in refusing an adjournment outweighed the other factors.

16. Mr Walker-Nolan also observed that the delays in the appeal were not the fault of either party, that the appeal had previously been stayed and that this was the first application for an adjournment.

17. He also emphasised that MSD had taken reasonable and prompt action by indicating, by 7 November 2025, that it intended to instruct new solicitors, and whose instructions were confirmed by 18 November 2025 and had instructed counsel by 21 November 2025. MSD’s instructions to its new legal representatives were not, he said, limited to the Application but also to represent it and prepare for a hearing in the event the Application did not succeed.

18. Ms Vicary, for HMRC, contended that it was trite that keeping of hearing dates was important (see eg Quah-Su Ling v Goldman Sachs International [2015] EWHC 759 (Comm) ).

19. She also submitted that the situation in which MSD found itself was the result of the failure of Mrs Deol to keep in contact with her former solicitors between October 2024 and October 2025 in what was accepted as a “business critical” matter and compared such “cursory contact” in this case with that of the appellant in Shafique Uddin v HMRC [2023] UK UT 99 (TCC) in which the Upper Tribunal (Judges Raghavan and Baldwin) noted, at [30]: “… The reason why Mr Uddin lost, despite his argument that he had been misled, was clear. That was that, even though Mr Uddin may have relied on his accountant (and been misled into believing that everything was in order), the cursory and general enquiries he made were insufficient to displace the general rule that the taxpayer should bear the consequences of the representative’s failings. … Put another way, a client will always rely on their advisers, but their adviser’s failings are still laid at their door. Why the adviser failed and how they led their client to continue to rely on them is not relevant to the Martland analysis, unless the client can show that they did whatever a reasonable taxpayer in that situation would have done (which would generally be to make sufficient efforts to keep tabs on the adviser and make sure that matters were on track). Mr Uddin lost because he did not demonstrate more than a cursory interest in what was (not) going on, he had not done what a reasonable taxpayer in his position would be expected to do, rather than because the tribunal failed to recognise that such cursory enquiries as he made were met with untruthful answers.”

20. Ms Vicary also contended that HMRC would suffer significant prejudice if the hearing was postponed. In particular she referred to the continuation of MSD with its temporary approval to be able to trade in wholesale alcohol (where there was potentially £2.7m of duty outstanding); that HMRC were reluctant to impose on Mr Surinder Singh, the HMRC officer who had made the Duty Assessments, as he had retired and had made himself available to give evidence but might not be available again; that the hearing was not likely to be re-listed for over a year with the inevitable effect that would have on memories of events which took place, in some cases, more than ten years ago; and that HMRC would have to divert significant resources to continue defending an appeal which it was entitled consider would have been heard. There was, she said, also prejudice to other taxpayers as HMRC’s and the Tribunal’s resources would have to be diverted to deal with this appeal.

21. As Ms Vicary accepted, the question of whether to postpone the hearing was finely balanced. We agreed, and it took longer for us to reach a conclusion on the issue than we had anticipated.

22. Although we accept that MSD’s new solicitors and counsel were not in an ideal position with regard to preparation, we note that they did have more time to prepare for this hearing than the single day that the junior counsel had in the Manchester Property case. We have also taken into account that those relatively late instructions were caused by the failure by Mrs Deol, who was aware of the difficulties in relation to her former solicitors in June or July 2025, to “keep tabs on the adviser and make sure that matters were on track”. Had she taken more than a cursory interest, as Ms Vicary described it, in MSD’s appeal it would seem likely that she would have taken action to instruct alternative solicitors and counsel much sooner than she did.

23. Therefore, having regard to all the circumstances, especially that it was possible to adjust the hearing timetable and include an additional day for closing submissions, thereby extending the preparation time for MSD’s legal team, we concluded that a postponement was not necessary for the hearing in this appeal to be fair.

24. We therefore dismissed the Application and proceeded to hear MSD’s appeal. Appendix II Relevant Legislation and Legal Principles etc The VAT Assessment

1. Input tax can be claimed, under s 26 VATA, where it is attributable to taxable supplies that have been made by a person in the course or furtherance of his business. However, s 26 A VATA provides: 26A Disallowance of input tax where consideration not paid (1) Where— (a) a person has become entitled to credit for any input tax, and (b) the consideration for the supply to which that input tax relates, or any part of it, is unpaid at the end of the period of six months following the relevant date, he shall be taken, as from the end of that period, not to have been entitled to credit for input tax in respect of the VAT that is referable to the unpaid consideration or part. … (2) For the purposes of subsection (1) above ‘the relevant date’, in relation to any sum representing consideration for a supply, is – (a) the date of the supply; or (b) if later, the date on which the sum became payable. …

2. Where an amount has been credited to a person which ought not to have been so paid or credited, or which would not have been so paid or credited had the facts been known or been as they later turn out to be, s 73(2) VATA provides that HMRC may assess that amount as being VAT due from him for that period and notify it to him.

3. The Appellant bears the burden of displacing the VAT Assessment (see Brady (HM Inspector of Taxes) v Group Lotus Car Companies plc [1987] STC 635 at 642, Grunwick Processing Laboratories Ltd v Commissioners of Customs and Excise [1987] STC 357 and HMRC v General Motors (UK) Ltd [2015] UKUT 605 (TCC) at [69].

4. The Tribunal has a full merits jurisdiction with its role being to determine whether the Appellant’s claim to input tax has been proved on the balance of probabilities. As such, the issue is whether there is sufficient evidence to invoke the operation of s 26 A VATA (see discussion in Conor Robinson v HMRC [2017] UKUT 0383 (TCC) at [27]-[28], [39]-[40]; and HMRC v General Motors (UK) Ltd [2015] UKUT 605 (TCC) at [67]-[72]). The Duty Assessments

5. Each of the Duty Assessments were issued in relation to a liability incurred prior to the UK’s departure from the European Union and, accordingly, relevant EU legislation has effect in relation to these Assessments. The time and place of chargeability of excise goods released for consumption is defined by Articles 7 and 8 of the Council Directive 2008/118/EC (concerning the general arrangements for excise duty and repealing Directive 92/12/EEC) (the “ 2008 Directive ”) which harmonises the principles to be applied across the EU concerning the point at which excise duty is levied on excise goods and the duty-suspended movement of goods between Member States. An expansive summary of the relevant provisions of the 2008 Directive to excise cases in which the point of chargeability is disputed can be seen in HMRC v Martyn Glen Perfect [2019] EWCA Civ 465 at [14]-[19].

6. The domestic legislation giving effect to the 2008 Directive is contained in the HMDP Regulations. These provide as follows:

7. Regulation 5 of the HMDP Regulations provides that there is an excise duty point at the time when excise goods are released for consumption in the UK.

8. Regulation 6(1)(b) of the HMDP Regulations provides that excise goods are released for consumption in the UK at the time when the goods are held outside a duty suspension arrangement and UK excise duty on those goods has not been paid, relieved, remitted or deferred under a duty deferment arrangement.

9. Regulation 10(1) of the HMDP Regulations provides that the person liable to pay the duty when excise goods are released for consumption by virtue of regulation 6(1)(b) is the person holding the excise goods at that time.

10. Regulation 20(1) of the HMDP Regulations has the effect that duty must be paid at or before an excise duty point.

11. HMRC may issue an assessment to a person from whom any amount has become due in respect of any excise duty under s 12 FA 1994 , the material parts of which provide: 12 Assessments to excise duty … (1A) Subject to subsection (4) below, where it appears to the Commissioners— (a) that any person is a person from whom any amount has become due in respect of any duty of excise; and (b) that the amount can be ascertained by the Commissioners, the Commissioners may assess the amount of duty due from that person and notify that amount to that person or his representative. ... (4) An assessment of the amount of any duty of excise due from any person shall not be made under this section at any time after whichever is the earlier of the following times, that is to say— (a) subject to subsection (5) below, the end of the period of 4 years beginning with the time when his liability to the duty arose; and (b) the end of the period of 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; but this subsection shall be without prejudice, where further evidence comes to the knowledge of the Commissioners at any time after the making of an assessment under this section, to the making of a further assessment within the period applicable by virtue of this subsection in relation to that further assessment.

12. In Pegasus Birds Ltd v HMCE [1999] STC 95 , Dyson J (as he then was) considered the similarly worded s 73(6)(b) VATA. At 102 he said: “The person whose opinion is imputed to the commissioners is the person who decided to make the assessment. It does not matter that he or she may not be the person who first acquired knowledge of the evidence of the facts which are considered to be sufficient to justify making the assessment. The knowledge of all officers who are authorised to receive information which is relevant to the decision to make an assessment is imputed to the commissioners.”

13. Dyson J’s approach was upheld in the Court of Appeal in the same case (see [2000] STC 91 ), in which Aldous LJ said, at [11]: “The relevant evidence of facts is that which was considered, in the opinion of the Commissioners, to justify the making of the assessment. The one-year time limit runs from the date when the facts constituting the evidence came to the knowledge of the Commissioners.”

14. Aldous LJ went on to state, at [15]: “An opinion as to what evidence justifies an assessment requires judgment and in that sense is subjective; but the existence of the opinion is a fact. From that it is possible to ascertain what was the evidence of facts which was thought to justify the making of the assessment. Once that evidence has been ascertained, then the date when the last piece of the puzzle fell into place can be ascertained”

15. In Lithuanian Beer Ltd v HMRC [2019] 1 WLR 627 . Having observed, at [13], that a spreadsheet and cross-checking exercise “did nothing more than replicate information which HMRC already had” from invoices it previously obtained, Sales LJ (as he then was) said, at [28]: “… If the “evidence of facts” known to the Commissioners previously was the same as the evidence of facts which led them to form the opinion later on that an assessment was justified (or, on a Wednesbury approach, should have led them to form that opinion), then it will be clear that the Commissioners have sat on their hands and the special, truncated limitation period in paragraph (b) [ie one year] will apply.”

16. The Supreme Court in DCM (Optical Holdings) Ltd v HMRC [2022] 1 WLR at [20] having referred to referred to the comments of Dyson J and Aldous LJ in Pegasus Birds observed: “It is clear from these dicta, which in my view are a correct statement of the law, that section 73(6)(b) addresses the assessment which HMRC has in fact made and not a hypothetical assessment which they might have made but did not. The words of the subsection are clear: “facts, sufficient in the opinion of the Commissioners to justify the making of the assessment.” (Emphasis added.) The focus is also on the subjective opinion of the relevant HMRC official, which is a question of fact. Absent a perverse view, akin to Wednesbury unreasonableness, on the part of the official as to the adequacy of the evidence before him or her in relation to the assessment which is later made, it is HMRC’s knowledge of the evidence relevant to the particular assessment which starts the clock running under section 73(6)(b).

17. Sections 13 A(2)(b) and 16(1B) FA 1994 provide for an appeal to the Tribunal against a decision of HMRC to issue an assessment to excise duty under s 12(1) FA 1994. The power of the Tribunal, under s 16(5) FA 1994 includes power to quash or vary any decision and to substitute its own decision for any decision quashed on appeal.

18. Section 16(6) FA 1994 provides: that in such an appeal to the Tribunal against an assessment, with certain limited exceptions, it is for the appellant to show that the grounds on which any such appeal is brought have been established. And consistently, s 154(2) (a) of the Customs and Excise Management Act 1979 provides that: (2) Where in any proceedings relating to customs or excise any question arises as to whether or not— (a) any duty has been paid or secured in respect of any goods; or … then, where those proceedings are brought by or against the Commissioners …, the burden of proof shall lie upon the other party to the proceedings. ‘Holding’

19. The question of whether a person can be said to be “ holding ” goods has been the subject of detailed consideration: (1) In B & M Retail Ltd v HMRC [2016] UKUT 429 (TCC) (“ B&M ”), the Upper Tribunal held that a person holding excise duty goods in respect of which duty had not been paid could be assessed under reg 6(1)(b) notwithstanding that, in principle, an earlier release for consumption had occurred. (2) In Davison & Robinson Ltd v HMRC [2018] UKUT 0437 (TCC) (“ Davison ”) at [79], HMRC accepted, as matter of law, HMRC was obliged to assess against the earliest point in time at which they are able to establish, on the evidence before them, that excise goods have been held outside a duty suspension arrangement (see [79] and [80]) (ie, the matter was not one of discretion). The UT observed at [67] that: “… clearly, HMRC cannot make an assessment until it has the necessary information on which to establish when, how, where and by whose acts the excise duty point occurred. Therefore, in the absence of any relevant information in relation to any prior release for consumption, HMRC must assess the person who it finds to be holding the goods in question, since that is the only excise duty point which HMRC is able to establish.” (3) In Dawson’s (Wales) Ltd v HMRC [2019] UKUT 296 (TCC) (“ Dawsons UT ”) at [149], the Upper Tribunal set out the factors a person found to be holding excise duty goods in respect of which duty has not been paid would have to show in order successfully to challenge an assessment on the basis that an earlier duty point could be established against which HMRC should have made an assessment (the “ Factors ”): “(1) Who had physical possession at the time that the alleged earlier excise duty point occurred. For example, the earlier excise duty point might be established immediately before the goods concerned were delivered to the premises of the subsequent holder, by reference to the physical possession of the courier delivering those goods. (2) Who is the person alleged to have de facto or legal control over the goods who it is said should be assessed rather than the subsequent holder (if it is the case that the courier was an innocent agent and it is not appropriate to assess the courier) and how that person is said to have such control and the basis on which it was being exercised. For example, the terms of supply to the person alleged to have de facto or legal control might mean that in fact that person never had control of the goods and did not direct their delivery. Control might have been exercised by another entity earlier in the chain of supply in compliance with a request by the person in question to deliver them to the subsequent holder. Alternatively, for example, the terms of supply to the subsequent holder, including where relevant the operation of the Sale of Goods Act or the Convention…might mean that the goods were already under the control of the subsequent holder while in transit to him. (3) The time at which the excise duty point arose. Whilst precise temporal exactitude is not essential…in our view the date of an invoice is not sufficient in itself without establishing who was in possession of the goods at some identified point or points in time. In that context, and as already indicated, the terms of the relevant sale may be relevant, in particular as to when delivery is deemed to have occurred. Copies of CMRs, if they can be obtained, may be relevant. (4) Where the goods were being held at the relevant time. In the case of goods being transported, that could be by reference to the means of transport or the location of that means of transport at some point in time, possibly immediately prior to the delivery of the goods at a particular location. We do not consider that the goods need necessarily to be shown to have been static at a particular place at a single fixed point in time...For example, in the case of means of transport the transport used, the start and/or end points of the journey and a defined period of time within which it must have occurred might be identified.” (4) In 2019, the Court of Appeal had considered HMRC’s appeal against the Upper Tribunal’s judgment in HMRC v Perfect [2017] UKUT 0476 (TC). The UT had agreed with the FTT that Mr Perfect, a haulier, was not liable to excise duty because he had no actual or constructive knowledge that the load he was carrying was liable to duty which had not been paid. The Court referred to the CJEU the question as to whether a person holding goods (such as a haulier) who had no actual or constructive knowledge that duty was unpaid was nevertheless liable for that duty. (5) In HMRC v WR [2021] C- 279/19, at [33] of its judgment, the CJEU answered the question posed by the Court of Appeal, saying at [36] that Directive 2008/118/EC: “… must be interpreted as meaning that a person who transports, on behalf of others, excise goods to another Member State, and who is in physical possession of those goods at the moment when they have become chargeable to the corresponding excise duty, is liable for that excise duty, under that provision, even if that person has no right to or interest in those goods and is not aware that they are subject to excise duty or, if so aware, is not aware that they have become chargeable to the corresponding excise duty.” The CJEU therefore held that a person in physical control of goods is a ‘holder’ of them even if he does not know that the goods are excise goods and/or that they have become chargeable to excise duty. (6) The Court of Appeal held it was bound by the CJEU’s judgment. It allowed HMRC’s appeal, and concluded, in HMRC v Perfect [2022] EWCA Civ 330 (“ Perfect ”), at [23]: “… the fact that Mr Perfect had neither actual nor constructive knowledge of the smuggling of the beer he was carrying cannot exempt him from liability from excise duty.” (7) In Dawson’s (Wales) Ltd v HMRC [2023] EWCA Civ 332 , Asplin LJ considered the Dawsons UT decision, in light of the decisions of the CJEU and Court of Appeal in Perfect . At [77], she endorsed factor (1) of the UT decision (physical possession). At [94], she endorsed factors (3) and (4) (timing and location), and at [86], she recorded factor (2) (de facto or legal control) as not having been subject to challenge. (8) In Hartleb v HMRC [2024] UKUT 00034 (TCC) (“ Hartleb ”) the Upper Tribunal refused an appeal made by the owner of a lorry against an excise duty assessment charged on goods which had been seized from her employee, the lorry driver stating: “78. We find the factors identified by the UT in Dawson to be a useful guide in determining who to regard as holder in circumstances where physical possession and de facto and/or legal control are separated as they are in our situation, noting in this regard that the second factor must now be seen in the context of Perfect and WR .

79. This is notwithstanding the fact that in Dawson the factors were intended to aid identification of an earlier excise duty point in circumstances where an assessment was being challenged on the basis of there being an earlier excise duty point against which the assessment should have been made.

80. We also take into account the fact that Dawson and the majority of cases considered in it, including Perfect , involve persons arguing that they should not be assessed to duty simply on the basis of having physical possession of excise goods. The Appellant’s position is, in effect, the reverse as she contends that she should not be assessed to duty as she did not have physical possession of the relevant excise goods. Although the situation is the reverse, we consider that the principle of physical possession not being determinative must apply equally.

81. The approach of the UT and Court of Appeal in Dawson demonstrates that the determination of “holding” is a question of law and fact. Although the initial focus, given the scheme and wording of the legislation together with the case law, is necessarily on the physical location of goods so giving weight to physical possession – that is not the end of the matter and a more detailed consideration of the facts is needed.” (9) In Qais Majeed Ali v HMRC [2024] UKUT 176 (TCC) (“ Ali ”) at [38], the Upper Tribunal held, by reference to Davison, that the First-tier Tribunal had been wrong to decide that HMRC could refuse to assess an insolvent or impecunious holder and instead assess a subsequent holder, holding that: “… the correct position is that, if there was someone who HMRC had sufficient information to assess, then HMRC had to assess that person irrespective of the prospects of recovery” (emphasis in original).

20. Insofar as legal ownership is concerned, it is well established that the parties may agree retention of title pending payment (see Goode & McKendrick on Commercial Law at 15.74, “a seller who in his contract of sale reserves title until payment continues as owner pending payment unless and until his title is displaced by virtue of some exception to the nemo dat rule”. Also see Chitty (35 th Ed.) at [47-173]). The AWRS Refusal

21. The AWRS was introduced in 2016 by the insertion of Part 6A into ALDA by section 54 of the Finance Act 2015 . Part 6A makes the wholesaling of alcohol a “controlled activity” which cannot be carried out without approval from HMRC. Section 88 C(1) ALDA prohibits persons from selling alcohol wholesale unless they are approved by HMRC and registered under the AWRS. It is an offence under s 88 G(1) ALDA to knowingly contravene s 88 C(1) ALDA.

22. Section 88 C(2) ALDA provides that HMRC may only give approval if satisfied that the applicant is a “fit and proper person” to carry out the controlled activity. An approval may be made subject to conditions or restrictions and can be revoked at any time for reasonable cause (see s 88 C(3) and (5) ALDA). The Wholesaling of Controlled Liquor Regulations 2015 (the “ 2015 Regulations ”) made under Part 6A of ALDA, provide for the manner in which an application for approval is to be made and processed.

23. Although there is no definition of “fit and proper person” in ALDA, paragraph 6.9 of Excise Notice (“ EN ”) 2002 provides the following non-statutory guidance: “6.9 The fit and proper test Only applicants who can demonstrate that they’re fit and proper to carry on a controlled activity will be granted approval. This means HMRC must be satisfied the business is genuine and that all persons with an important role or interest in it are law abiding, responsible, and do not pose any significant threat in terms of potential revenue non-compliance or fraud. HMRC will assess all applicants (not just the legal entity of the business but all partners, directors and other key persons) against a number of ‘fit and proper’ criteria to establish: • there’s no evidence of illicit trading indicating the business is a serious threat to the revenue, or that key persons involved in the business have been previously involved in significant revenue non-compliance, or fraud, either within excise or other regimes, some examples of evidence HMRC would consider are: • assessments for duty unpaid stock or for other underdeclarations of tax that suggest there's a significant risk that the business would be prepared to trade in duty unpaid alcohol • seizures of duty unpaid products • penalties for wrongdoing or other civil penalties which suggest a business do not have a responsible outlook on its tax obligations • trading with unapproved persons • previous occasions where approvals have been revoked or refused for this or other regimes (including liquor licensing, and so on) • previous confiscation orders and recovery proceedings under the Proceeds of Crime Act • key persons have been disqualified as a director under company law • there are no connections between the businesses, or key persons involved in the business, with other known non-compliant or fraudulent businesses • key persons involved in the business have no criminal convictions which are relevant (for example offences involving dishonesty, or links to organised criminal activity). HMRC will disregard convictions that are spent under the terms of the Rehabilitation of Offenders Act 1974 . Where the person in question has a spent conviction, HMRC will disregard the conviction and assess that person on the remaining fit and proper criteria in this paragraph • the application is accurate and complete and there has been no attempt to deceive • there have not been persistent or negligent failures to comply with any HMRC record-keeping requirements, for example poor record keeping in spite of warnings or absence of key business records • the applicant, or key persons in the business, have not previously attempted to avoid being approved and traded unapproved • the business has provided sufficient evidence of its commercial viability and/or credibility - HMRC will not approve applicants where they find that they cannot substantiate that there's a genuine plan to legitimately trade from the proposed date of approval • there are no outstanding, unmanaged HMRC debts or a history of poor payment • the business has in place satisfactory due diligence procedures covering its dealings with customers and suppliers to protect it from trading in illicit supply-chains, see section 12 for more information about due diligence This list is not exhaustive. HMRC may refuse to approve you for reasons other than those listed, if they have justifiable concerns about your suitability to be approved for AWRS. HMRC is also unlikely to approve an application if the applicant has previously had their application for AWRS approval refused if the reasons for the previous refusal are still relevant.”

24. The term “fit and proper” has been subject to judicial consideration. In R v Warrington Crown Court, ex parte RBNB (a company) [2002] 1 WLR 1954 at [9] Lord Bingham said (in the context of a licensing application) that: “… some consideration must be given to the expression 'fit and proper' person. This is a portmanteau expression, widely used in many contexts. It does not lend itself to semantic exegesis or paraphrase and takes its colour from the context in which it is used. It is an expression directed to ensuring that an applicant for permission to do something has the personal qualities and professional qualifications reasonably required of a person doing whatever it is that the applicant seeks permission to do.”

25. In Safe Cellars Ltd v HMRC [2017] UKFTT 78 (TC) the Tribunal (Judge Hellier and Toby Simon JP) observed (in relation to the Warehouse Keepers and Owners of Warehoused Goods Regulations 1999) that: “19. In para C of EN 196 it is said that only persons who demonstrate that they are fit and proper to carry out excise businesses will be authorised. This “fit and proper” requirement must, in our view, be read in the light of the purposes of the provisions in section 100G: for the administration, collection and protection of the revenue.

20. As a result, ‘fit and proper’ does not in this context mean fine, upstanding, or well-connected; it means persons who demonstrate behaviours of a type likely to assist, and not to hinder, the proper administration, collection and protection of the revenue.

21. Para C does not expressly make being fit and proper a condition for the holding of an approval, but in our judgement the effect of the paragraph is that if a person cannot demonstrate that he is in this sense fit and proper, that will afford reasonable cause for revocation of an approval.

22. If a person fails to carry out “due diligence” (in the sense described in para H above, rather than merely collecting bits of paper) its actions will generally not assist and may hinder the achievement of that purpose. Thus generally such a person will not be fit and proper. There may however be reasons for the failure which permit such a person to be regarded as fit and proper; and conversely reasons why a person who does carry out required due diligence, may not be fit and proper.”

26. The discretion afforded to HMRC in considering whether a person meets the ‘fit and proper’ standard has also been the subject of judicial comment. In CC&C Ltd v HMRC [2014] EWCA Civ 1653 Underhill LJ (with whom Lewison and Arden LJJ agreed) said, at [15]: “… the management of the excise system is a matter for the administrative discretion of HMRC. The decision whether a registered owner remains a fit and proper person to trade in duty-suspended goods is a good example of the kind of decision which the HMRC are peculiarly well-fitted to judge, since it requires what is necessarily to some extent a subjective – albeit evidence-based – assessment of such matters as the attitude of the trader and its principal employees to due diligence issues and their sensitivity to the risk of becoming involved, albeit unintentionally, in unlawful activities.”

27. Examples of the Tribunal upholding HMRC’s decisions to refuse AWRS approval include Morgan James Ltd and Exeter Drinks v HMRC [2020] UKFTT 151 (TC) , Harp Wines & Spirits Ltd v HMRC [2021] UKFTT 192 (TC) , Continental Cash & Carry Ltd v HMRC [2022] UKFTT 49 (TC) and Nwadei v HMRC [2023] UKFTT 00724 (TC) . Conversely, the Tribunal has allowed appeals where HMRC has failed to properly apply the relevant test (see eg Casa Di Vini Ltd v HMRC [2021] UKFTT 11 (TC) and Hare Wines Ltd v HMRC [2022] UKFTT 176 (TC) ).

28. An approved alcohol wholesaler is obliged to keep (for 6 years) and make available to HMRC the records required by The Revenue Traders (Accounts and Records) Regulations 1992 and those contained in Annex A to Excise Notice 2002 (see Regulation 8 of the Wholesaling of Controlled Liquor Regulations 1992). Refusal of approval

29. Regulation 4(4) of the 2015 Regulations provides that: If the Commissioners refuse an application for approval they must notify the person who made the application of that fact and give the reasons for the refusal.

30. There is no requirement in those Regulations that HMRC provide the trader with any documents supporting the decision to refuse approval. Jurisdiction of the FTT on appeal

31. An appeal to the tribunal against a refusal of approval lies under s 16(4) FA Act 1994 and is an ancillary matter pursuant to that section 16(4) FA 1994 . It is well established that the Tribunal has a supervisory jurisdiction in relation to such matters.

32. As with any supervisory discretion, as clearly enunciated by Lord Lane in Customs & Excise Commissioners v JH Corbitt (Numismatists) Ltd [1981] AC 22 at 367 that the Tribunal can only properly review the decision: “… if it were shown that the commissioners that the commissioners had acted in a way in which no reasonable panel of commissioners could have acted; if they had taken into account some irrelevant matter or had disregarded something to which they should have given weight. …”

33. In John Dee Ltd v Customs and Excise [1995] STC 941 at 952(f)-(h) the Court of Appeal outlined the principles in a similar fashion to J H Corbitt (Numismatists) Ltd but went on to acknowledge a caveat approved by Neil LJ at 953 that: “… where it is shown that, had the additional material been taken into account, the decision would inevitably have been the same, a tribunal can dismiss an appeal …”

34. Further, in Balbir Singh Gora v Customs & Excise Commissioners [2004] QB 93 , it was accepted by Pill LJ that the tribunal could decide for itself primary facts and then go on to decide whether, in the light of its findings of facts, the decision was reasonable.

35. Section 16(6) FA 1994 provides that the burden of proof is on the Appellant who has to establish that HMRC’s decision that it is not “fit and proper” to be approved under the AWRS was one that no reasonable officer of HMRC could have arrived at.

36. By way of completeness, it should be noted that, although not relevant to the present appeal where the decision appealed against was taken on 9 February 2023, the primary legislation underpinning the AWRS, from 1 August 2023, is Chapter 7 of Part 2 (ss 98-107) of the Finance Act (No 2) 2023. Appendix III MSD Accounts for the years ended 31 March 2016 – 31 March 2020: Profit and Loss Y/E 31 March 2020 £ 2019 £ 2018 £ 2017 £ 2016 £ Turnover 3,421,618 4,169,321 4,311,181 3,681,465 4,401,758 Less Cost of Sales 3,096,549 3,813,787 3,963,584 3,320,592 4,084,012 Gross Profit 325,069 355,534 347,597 360,873 317,746 Less Administrative Expenses Wages 174,073 198,977 194,628 198,567 304,234 Rent 59,480 64,243 78,959 50,400 51,541 Legal Fees 18,259 21,835 22,159 18,340 6,018 Accountancy 3,500 2,750 2,650 Other expenses 21,119 19,680 25,385 70,925 34,721 Operating profit/(loss) 48,008 47,299 23,466 19,891 (81,418) Less depreciation 3,718 3,027 3,117 3,896 3,718 Bank Charges 24,859 35,698 19,421 12,464 14,493 Interest on overdue tax 75 Profit/(loss) before tax 19,626 8,574 928 3,531 (99,629) Less Tax 14,352l 1,608 13,847 Profit/(Loss) for year 5,254 6,966 928 3,531 (85,782) Average no of employees 11 8 Average wage/employee 15,882 18,089 24,329 24,821 Balance Sheet Y/E 31 March 2020 £ 2019 £ 2018 £ 2017 £ 2016 £ Fixed Assets Tangible Assets 14,880 12,108 12,466 15,583 14,872 Total Fixed Assets 14,880 12,108 12,466 15,583 14,872 Stock 1,699,465 1,909,907 2,528,002 2,276,990 2,695,214 Debtors 10,852 92,725 22,190 58,366 75,294 Cash at Bank 46,622 36,323 41,997 97,064 54,410 Current Assets 1,756,939 2,039,045 2,592,189 2,431,420 2,824,918 Less Creditors < 1 year 1,734,872 2,019,460 2,579,929 2,422,454 2,815,286 Net Current Assets 1 22,067 18,585 12,260 8,966 9,632 Net Assets(Liabilities) 36,947 31,693 24,726 24,549 24,504 Share Capital 1 P&L Reserves 2 36,946 31,692 24,725 24,548 24,503 Total Equity 36,947 31,693 24,726 24,549 24,504 1 Creditors due < 1 year Trade Creditors 55,621 99,994 2,557,414 2,388,615 2,807,952 Tax & Soc Sec 72,153 6,629 15,451 22,836 4,484 Other Creditors 1,607,098 1,912,837 7,064 11,003 2,850 2 P&L Reserves Opening 31,629 24,726 24,548 24,503 119,589 Profit/(Loss) for year 5,254 6,966 928 3,531 (85,782) Dividends (751) (3,486) (9,313) Closing 36,946 31,629 24,726 24,548 24,503 Appendix IV The amounts shown in the tables below are taken from the tax loss letter issued on 29 October 2015 by HMRC (Officer Alabi) on which the VAT Assessment was based Gujarr Invoice Date Net £ VAT £ Gross £ 07/02/2014 32,772.20 6,554.44 39,326.64 08/02/2014 33,879.60 6,775.92 40,655.52 10/02/2014 56,779.51 11,355.90 68,135.41 21/02/2014 37,336.00 7,467.20 44,833.20 28/02/2014 41,018.40 8,203.68 49,222.08 18/04/2014 59,564.44 11,912.89 71,477.33 29/04/2014 62,628.62 12,525.72 75,154.34 19/05/2014 63,229.22 12,645.84 75,875.06 30/05/2014 65,062.48 13,012.50 78,074.98 30/06/2014 57,372.50 11,474.50 68,847.00 05/08/2014 65,995.36 13,199.07 79,194.13 07/08/2014 66,688.66 13,337.73 80,026.39 02/09/2014 44,262.81 8,852.56 53,115.37 04/09/2014 47,642.49 9,528.50 57,170.99 07/09/2014 35,900.80 7,180.16 43,080.96 08/09//2014 41,900.00 8,380.00 50,280.00 10/09/2014 35,540.00 7,108.00 42,648.00 12/09/2014 33,698.60 6,739.72 40,438.32 15/09/2014 42,682.22 8,536.44 51,218.66 22/09/2014 64,943.80 12,988.76 77,932.56 28/09/2014 66,486.12 13,297.22 79,783.34 01/10/2014 42,298.60 8,459.72 50,758.32 07/10/2014 33,558.96 6,711.79 40,270.76 1,13,241.39 226,248.28 1,357,489.67 Simon Lloyd Invoice Date Net £ VAT £ Gross £ 22/04/2015 40,561.44 8,112.29 48,673.73 23/04/2015 37,253.28 7,450.66 44,703.94 24/05/2015 27,452.92 5,490.48 32,943.50 27/04/2015 34,380.36 6,876.07 41,256.43 29/04/2015 40,812.06 8,162.41 48,974.47 05/05/2015 38,859.04 7,771.81 46,630.85 07/05/2015 62,917.96 12,583.59 75,501.55 11/05/2015 66,970.39 13,394.08 80,364.47 23/05/2015 37,274.72 7,454.04 44,729.66 26/05/2015 38,600.19 7,720.04 46,320.23 28/05/2015 78,900.68 15,380.14 94,280.82 503,983.04 100,396.61 604,379.65 Euro Choice Invoice Date Net £ VAT £ Gross £ 06/05/2014 41,336.76 8,267.35 49,604.11 09/05/2014 41,865.88 8,373.18 50,239.06 14/05/2014 38,005.50 7,601.10 45,606.60 19/05/2014 45,442.08 9,088.42 54,530.50 23/05/2014 38,001.96 7,600.39 45,602.35 28/05/2014 51,303.30 10,260.66 61,563.96 14/07/2014 40,297.20 8,059.44 48,356.64 15/07/2014 27,829.62 5,565.92 33,395.54 16/07/2014 38,139.20 7,627.84 45,767.04 17/07/2014 44,299.20 8,859.84 53,159.04 18/07/2014 36,460.80 7,292.16 43,752.96 18/07/2014 32,620.80 6,524.16 39,144.96 25/07/2014 32,620.80 6,524.16 39,144.96 31/07/2014 32,459.20 6,491.84 38,951.04 04/08/2014 39,817.60 7,963.52 47,781.22 08/08/2014 36,881.04 7,376.21 44,257.25 13/08/2014 39,140.00 7,828.00 46,968.00 18/08/2014 39,884.04 7,976.81 47,860.85 28/11/2014 2,141.92 4,284.38 6,426.30 698,546.90 143,565.38 842,112.38