S1 Ep7: The UK's post-Brexit customs and excise duty regime

Pump Court Tax Chat

Rupert Baldry KC and Sadiya Choudhury KC examine how the customs and excise duty regime is operating post-Brexit. This includes a brief overview of the pre-Brexit regime, the main legislative changes since Brexit, the relationship between the old and new regimes, some recent cases and future developments in this area.

1:15 History of customs and excise duties

3:31 Tariffs - what are they? Why do we have them? Who pays them? Any restrictions on them?

6:45 Role of World Trade Organisation in harmonising tariffs. Role of Free Trade Agreements (FTAs) and customs unions.

8:25 Framework of customs law pre Brexit - a customs union in which the EU negotiated FTAs and there was no need for a domestic UK customs code except in relation to remedies and enforcement.

11:23 Excise duty regime pre Brexit.

12:55 Pre Brexit, dualistic interpretation to legislation ie look at Act then underlying directive it sought to implement.

15:13 Legislative changes to customs post Brexit principally (a) Taxation Cross-border Trade Act 2018 (TCTA) and (b) new FTAs.

16:21 TCTA brings in a new customs duty known as import duty. How this operates is set out in O'Neill Wet Suits. The TCTA recognises and allows for FTAs to be agreed.

20:07 3 types of FTA now (a) Continuity Agreements (b) new FTAs (c) Trade & Cooperation Agreement 2020 with EU.

22:40 Status of FTAs in UK law. Interaction of article 5 TCTA and s29 European Union Future Relations Act 2020 + Lipton v BA City Flyer.

29:39 Current regime for customs - FTAs but no customs unions. If there is no FTA/relief/tariff suspension (eg Developing Countries Trading Scheme) then UK global tariff applies.

31:17 Practical consequences of new customs regime for all parts of UK other than Northern Ireland. Less drastic consequences for excise duties.

32:44 Explanation of the rules of origin.

35:20 The relationship between the new domestic customs regime and EU law. How are accrued EU law rights treated? And what of events after 31.12.20? What is the status of previous case law?

49:43 Excise duty - legislative interpretation now has a carve out like VAT (s28 Finance Act 2024) and will refer back to the old law. How are the courts going to view previous case law e.g. in relation to “holding” goods?

55:07 How do the new rules tie in with the appeal framework? Very few changes other than that the courts no longer have to apply EU principles. Changes from the previous rules are causing complications eg the interaction of appeals and remission applications.

1:01:42 New regime is made up of a very short Act and a lot of secondary legislation which allows HMRC to publish notices. This makes it difficult to see an overarching policy or find the policy that applies to a particular case.

1:03:44 Discussion of some recent cases.

1:06:36 What of the future? New case law will take time to build up, there are developments in the EU which will affect the UK and the carbon cross-border adjustment mechanism is to be introduced in 2027.

Citations and legislation

UK legislation

• Section 2, European Communities Act 1972
• Customs and Excise Management Act 1979
• Alcoholic Liquor Duties Act 1979
• Hydrocarbon Oil Duties Act 1979
• Tobacco Products Duty Act 1979
• Chapter II, Finance Act 1994
• The Excise Goods (Holding, Movement and REDS) Regulations 1992 (SI 1992/3135)
• The Excise Goods (Holding, Movement and Duty Point) Regulations 2010 (SI 2010/593)
• Taxation (Cross-border Trade) Act 2018
• European Union (Withdrawal) Act 2018
• Sections 52 and 56(4), The Customs (Import Duty) (EU Exit) Regulations 2018
• The Customs Tariff (Preferential Trade Arrangements) (EU Exit) Regulations 2020
• Section 29, European Union (Future Relationship) Act 2020
• Part 2, Finance (No 2) Act 2023
• The Finance Act 2016, Section 126 (Appointed Day), the Taxation (Cross-border Trade) Act 2018 (Appointed Day No. 8, Transition and Saving Provisions) and the Taxation (Post-transition Period) Act 2020 (Appointed Day No. 1) (EU Exit) Regulations 2020 (SI 2020/1642)
• Retained EU Law (Revocation and Reform) Act 2023
• Section 28, Finance Act 2024

EU Legislation

• Treaty on European Union / Maastricht Treaty
• Treaty on the Functioning of the European Union
• Council Regulation (EEC) No 2913/92 (the Community Customs Code)
• Commission Regulation (EEC) No 2454/93
• Council Directive 1992/12/EEC
• Council Directive 2008/118/EC
• Regulation (EU) No 952/2013 (the Union Customs Code)
• Commission Delegated Regulation (EU) 2015/2446
• Commission Implementing Regulation (EU) 2015/2447

EU/UK agreements

• The EU-UK Withdrawal Agreement
• The EU-UK Trade and Co-operation Agreement
• The Northern Ireland Protocol and Windsor Framework

Cases

• Case C-279/19 HMRC v WR (reference fromHMRC v Perfect [2019] EWCA Civ 465)
• Lipton & Anor v BA City Flyer Ltd [2021] EWCA Civ 454, [2021] WLR 2545
• HMRC v Perfect (No 2) [2022] EWCA Civ 330, [2022] 1 WLR 3180
• Dawson’s (Wales) Ltd v HMRC [2023] EWCA Civ 332, [2023] 4 WLR 35
• Hartleb T/A Hartleb Transport v HMRC [2024] UKUT 34 (TCC)
• Cozy Pet Ltd v HMRC [2024] UKUT 96 (TCC)
• Kent Couriers Ltd v HMRC [2024] UKFTT 145 (TC)
• Bunting v HMRC [2024] UKFTT 431 (TC)
• Electric Mobility Euro Ltd v HMRC [2024] UKFTT 590 (TC)
• Lipton & Anor v BA Cityflyer Ltd [2024] UKSC 24, [2024] 3 WLR 474
• O’Neill Wetsuits Ltd v HMRC [2024] UKFTT 1071 (TC)

Other materials

• Practice Statement (Judicial Precedent) [1966] 1 WLR 1234
• WTO rules: https://www.wto.org/english/thewto_e/whatis_e/tif_e/agrm1_e.htm
• Lancaster House speech: https://www.gov.uk/government/speeches/the-governments-negotiating-objectives-for-exiting-the-eu-pm-speech
• Free Trade Agreements: https://www.gov.uk/government/collections/the-uks-trade-agreements
• UK Global Tariff: https://www.gov.uk/trade-tariffand https://data.api.trade.gov.uk/v1/datasets/uk-tariff-2021-01-01/versions/v4.0.956/metadata?format=html
• EU customs reform: https://taxation-customs.ec.europa.eu/customs-4/eu-customs-reform_en
• Introduction of a UK Carbon Border Adjustment Mechanism from January 2027:https://www.gov.uk/government/publications/factsheet-carbon-border-adjustment-mechanism-cbam/factsheet-carbon-border-adjustment-mechanism
• Tax Journal article by Joshua Stevens:https://www.taxjournal.com/articles/the-cbam-trilemma