Awards Drinks Limited v HMRC: permission to appeal is granted at the Upper Tribunal

Judge Jonathan Richards sitting in the Upper Tribunal has given permission to appeal in the case of Awards Drinks v HMRC (UT/2019/0040).

In an important VAT decision which potentially extends VAT liability to traders whose goods are innocently sold on to others who use them for inward diversion fraud (smuggling to the UK), the First-tier Tribunal found against the appellant without fully considering the legal arguments made by Counsel, or applying the correct legal test. Permission to appeal was refused by the FTT but on oral application to the Upper Tribunal, Judge Richards held:

I will say only that, contrary to what I had thought when refusing permission to appeal on the papers, Mr Howard has satisfied me that it is arguable that there is a “missing step” in the FTT’s reasoning. If, as the Applicant alleges, it effected in-bond transactions that caused it to lose possession and control of the goods while they were located in France, then it is arguable that, even though it had rejected as untrue the Applicant’s account of who its customers were and how they paid, the FTT needed to go on explain how the Applicant came to make subsequent supplies of those goods in the UK. Moreover, if, as the Applicant alleges, it lost possession and/or control of the goods while they were outside the UK, it is arguable that, to the extent those goods were the subject of taxable supplies in the UK, those supplies must have been effected by persons other than the Applicant (so that the Applicant cannot have been liable for VAT on those supplies).

The Appellant was represented at the First-tier and on appeal by Joseph Howard and Tristan Thornton. 

Download the case here.