In a ruling which is bound to cause consternation in the road transport industry, the Court of Appeal has found that a lorry driver was liable to pay duty on a contraband consignment of beer, notwithstanding the fact that he had no knowledge, whether actual or constructive, that it was being smuggled.
The driver collected from Calais a lorry loaded with 26 pallets of beer. All the paperwork appeared to be in order and he had no means of checking it. On arrival in the UK, it transpired that excise duty had not been paid on the goods. UK Border Force seized the beer and the lorry. Subsequently, HM Revenue and Customs (HMRC) imposed a penalty on the driver and assessed him as personally liable to pay £22,779 in duty on the goods.
Following his appeal to the First-tier Tribunal (FTT), both the duty assessment and the penalty were overturned. The FTT found that the driver had no interest in the beer, was not part of any conspiracy and had simply followed instructions. That decision was subsequently upheld by the Upper Tribunal.
In appealing against that outcome, HMRC did not challenge the FTT’s finding that the driver had neither actual nor constructive knowledge of the fact that the beer was being smuggled. It argued, however, that liability for excise duty is strict and that his innocence therefore did not matter. As he was holding and making delivery of the goods, he was liable to pay duty on them regardless of his state of knowledge.
The Court dismissed the appeal in respect of the penalty but referred the matter of the excise duty assessment to the Court of Justice of the European Union (CJEU) for guidance on the European law aspects of the case. In a ruling handed down shortly after the UK’s withdrawal from the EU, the CJEU preferred HMRC’s arguments.
Upholding HMRC’s appeal, the Court found that, as the reference to the CJEU was made prior to Brexit day, its subsequent ruling had binding force in this country. It followed that the lorry driver’s lack of knowledge that the beer was being smuggled could not exempt him from liability for excise duty.