HMRC v FMX

Under Article 221(3) of the Customs Code (as was then in force), a customs debt had to be communicated within three-years of the date on which the relevant customs debt was incurred. Article 221(4) provided that where the customs debt was the result of an act which “was liable to give rise to criminal court proceedings” the amount may, “under the conditions set out in the provisions in force”, be communicated to the debtor after the expiry of the three-year period in Article 221(3). 

HMRC communicated a customs debt to FMX outside the three-year period. FMX accepted that the customs debt was the result of an act which was liable to give rise to criminal court proceedings but argued that the communication was still out of time because HMRC could not rely upon Article 221(4) since the UK did not have any provisions in force replacing the three-year time limit in Article 221(3). 

The First tier Tribunal and the Court of Appeal agreed with FMX; the Upper Tribunal disagreed. HMRC appealed against the Court of Appeal’s determination. 

The Supreme Court agreed that the debt had been communicated in time and therefore allowed HMRC’s appeal. Lords Reed, Hodge, Briggs and Kitchin found that it was not necessary for the UK to put in place provisions to replace the three-year time limit and that the principle of legal certainty was not offended because HMRC is under an EU-law obligation to take action within a reasonable time. On the facts of this case, HMRC had acted within a reasonable time. Lady Arden came to a similar conclusion but for slightly different reasons, relying instead on the availability of other control mechanisms within the UK legal framework that ensure that HMRC act reasonably, including judicial review.

The Supreme Court judgment can be found here. 

Kieron Beal QC and Simon Pritchard successfully acted for HMRC.