Introduction
On 15 April 2025, the Tax Chamber of the First-tier Tribunal issued its judgment inRoseline Logistics Limited v HMRC [2025] UKFTT 0042 (TC), holding that a customs service-provider that had wrongfully used post VAT accounting (“PVA”) on various declarations made on behalf of an importer was jointly and severally liable for the import VAT due to HMRC.
Facts
The appellant, Roseline Logistics Limited (“Roseline“), provided customs agency services. In a 4-month period in 2022, Roseline made 32 import declarations to HMRC ostensibly on behalf of QP Trading Limited (“QPTL“). The services had been procured by an intermediary, Craig Isaac Transport (“CIT“).
The 32 declarations came to HMRC’s attention because Roseline had used PVA for importers that were not VAT registered. PVA allows the import VAT payable on goods imported into the UK to be accounted for in the importer’s VAT return, where they are VAT registered at the time of import, rather than being paid at the point of import. It transpired that Roseline should not have used PVA because QPTL was not eligible for PVA, its VAT registration having been cancelled in 2021. HMRC therefore issued Roseline with a post-clearance demand note in the amount of £1,126,249.64, being the total import VAT due on the 32 declarations.
Key issue
The key issue for the Tribunal was whether Roseline was jointly and severally liable for the import VAT due from QPTL under section 6(3)(b) or 6(3)(d) of the Taxation (Cross-border Trade) Act 2018 (“TCTA“).
The Tribunal approached this issue in two stages:
- First, using ordinary principles of statutory interpretation, was Roseline jointly and severally liable for the import VAT?
- Second, if so, did that conclusion need to be revisited given Roseline’s right to peaceful enjoyment of its possessions under Article 1 of the First Protocol to the European Convention on Human Rights (“ECHR“)?
Stage 1: statutory interpretation
The Tribunal identified three relevant heads of potential liability under the TCTA ([17]):
- Section 6(3)(b) read with section 21(6)(c): This would apply if Roseline acted as a “direct agent” of QPTL, and purported to declare import duty on QPTL’s behalf, without the authority to do so.
- Section 6(3)(d) read with section 6(4)(b): This would apply if QPTL breached a relevant Customs obligation, and Roseline acted on behalf of QPTL, when Roseline knew or ought reasonably to have known about QPTL’s breach.
- Section 6(3)(d) read with section 6(4)(c): This would apply if QPTL breached a relevant Customs obligation, and Roseline participated (or was otherwise involved) in the breach, when it knew or ought reasonably to have known about QPTL’s breach.
The Tribunal held that Roseline was not liable under the first or second heads because it had not been validly appointed as QPTL’s Customs agent, as both heads required ([120], [125]). When assessing the validity of Roseline’s appointment, the Tribunal was influenced by the fact that:
- Roseline had no direct contact with QPTL.
- There was no evidence of a contract between Roseline and QPTL.
- There was no evidence of QPTL authorising CIT to appoint Roseline as a Customs agent (or, in fact, of QPTL authorising CIT to “do anything at all on its behalf”) ([109]).
In the end, however, the Tribunal held that Roseline was jointly and severally liable for the import VAT, on the basis of the third head ([142]). There had been a breach of a relevant Customs obligation, Roseline participated or was otherwise involved in the breach, and Roseline knew or ought reasonably to have known about the breach.
Taking each element in turn, there was a breach of a relevant Customs obligation because import VAT should have been paid on goods imported into the UK but was not ([127]). Roseline played a “very important part” in that breach by using PVA on the import declaration ([129]). Further, while Roseline did not actually know about the breach, it ought reasonably to have done so. This was on the basis that ([137]):
- It was clear, both in law and in HMRC’s guidance, that PVA can only be claimed by a VAT registered importer, which QPTL was not.
- Roseline assumed that, because QPTL had an EORI number, and because the EORI number appeared in HMRC’s CHIEF system, and the import declaration did not “bounce back” as invalid QPTL must have been VAT registered. The Tribunal found that both assumptions were ill-founded, noting that the CHEF system was “antiquated”, and did not check EORI numbers beyond their formatting.
- Roseline made no attempt to contact QPTL, nor to conduct due diligence on QPTL’s entitlement to claim PVA.
- Roseline could have checked Companies House and identified HMRC had applied to strike QPTL off the Register of Companies due to finding no evidence it was trading.
- Roseline could have checked QPTL’s VAT registration using “quick, easy and obvious steps”, notably by using HMRC’s online VAT registration checking facility as highlighted in HMRC’s guidance published to assist Customs agents with making Customs declarations. However, it failed to do so.
The Tribunal also emphasised that, since Roseline was a professional Customs agent, it could: “reasonably be expected to appreciate the importance of carrying out due diligence on its clients and ensuring that its clients are entitled to make any claims it makes on their behalf”. If a Customs agent did not take those steps, the Tribunal would attribute to it the knowledge that it would have obtained if it had done so ([141]).
In conclusion, therefore, Roseline was jointly and severally liable for the import VAT payable to HMRC based on ordinary principles of statutory interpretation.
Stage 2: human rights
Turning to the second stage, while it was common ground that imposing joint and several liability constituted an interference with Roseline’s right to peaceful enjoyment of its possessions under Article 1 of the First Protocol to the ECHR ([145]), the Tribunal held that the interference was justified, so there was no need to revisit its conclusion under the TCTA ([181]).
Significance
The Tribunal’s judgment in Roseline Logistics Limited v HMRC provides useful guidance on when a Customs agent or other party involved in the import ought reasonably to know about a breach of a Customs obligation and could be held liable for import duty and VAT. It reinforces, in particular, that professional Customs agents must take appropriate steps to carry out due diligence on their clients (including clients referred through intermediaries). The judgment also provides useful guidance on when a Customs agent will be considered to have been validly appointed.
