Neither covid nor Brexit are sufficiently exceptional for an exceptional waiver.
A clash of the Titans makes for a good social media story. ‘Brexit meets covid’ is a commonly quoted example. This proved to be the case, in the dry world of VAT, when I posted a tweet about the tribunal case of A Ball v HMRC [2022] UKFTT 85 (TC) on 10 March. This generated considerable excitement, and comment, from VAT specialists, accountancy journalists, and others for whom, if only for a matter of seconds, VAT was suddenly of interest.
The exact circumstances were not even new. The case of J Brooks v HMRC [2021] UKFTT 449 (TC), which preceded that of Ball by just days, dealt with the same subject. And despite the reference to Brexit, the case does not deal with a wholly new point.
In both cases, the appellants were moving back from the EU to the UK, and started planning their move some while before the UK left the EU acquis. They had successfully moved to the UK, taking on temporary accommodation while they looked for something more suitable in the long term. They had left their furniture and some belongings behind, as storage is cheaper where they had come from than in the UK, and they were not yet ready to accommodate them.
If they had moved their belongings prior to 23.00, 31 December 2020, there would have been no import duties or VAT to consider, since the UK was, then, part of the EU acquis. But after that deadline, the longstanding rules for VAT and duties relief, relating to moving house to the UK, became applicable to EU movements. These rules had applied to the rest of the world, and therefore to all movements of belongings from outside the EU into the UK, prior to 2021. So, if we postulate a move from, say, Tunisia to the UK, these rules applied.
These are that, for relief to apply, belongings must be moved within a strict timeframe. They cannot enter the UK more than six months prior to their owners moving to the UK, nor more than twelve months following that move. Mr Ball’s decision to allow the belongings to be stored in a cheaper location for storage purposes caused him to keep the goods outside the UK for more than 12 months after he had moved to GB. The goods arrived in January 2021, which was after the change mentioned above.
The fact that the importation was within one month of the changed UK status appears irrelevant, since it is the date of import that counts, and at that point, the EU was part of the rest of the world. The fact that they were part of a general diaspora from the EU to the UK, whether or not as a cause of Brexit, was irrelevant.
But there was a chink of hope in provisions which allowed that HMRC may grant a claim for relief from these conditions, called ‘exceptional waiver’. This requires that exceptional circumstances must be proved for the time limits to be waived. Was either covid or Brexit exceptional?
Whilst Brexit, as a phenomenon, is exceptional in itself, it is not exceptional in the context of these rules, given their long-standing application to all genuine imports. What of covid? This would appear more likely to afford an argument for something exceptional, although in the case of Ball, it did not help that he had moved the goods during the third lockdown period of covid, thus showing that covid was not necessarily, in and of itself, an insuperable hurdle to moving goods. But, as in a previous decision, the tribunal’s view was that covid was not exceptional on the basis that it affected everyone and did not uniquely impact the appellant. Since the legal framework does not discuss in what sense a circumstance is exceptional, in order for HMRC to use its discretion to waive the time limits, that is a viable interpretation of the word.
The arguments will no doubt continue. It certainly appears harsh, and one can only have sympathy for the appellants. That it is the correct decision, though, is difficult to dispute.
Neither covid nor Brexit are sufficiently exceptional for an exceptional waiver.
A clash of the Titans makes for a good social media story. ‘Brexit meets covid’ is a commonly quoted example. This proved to be the case, in the dry world of VAT, when I posted a tweet about the tribunal case of A Ball v HMRC [2022] UKFTT 85 (TC) on 10 March. This generated considerable excitement, and comment, from VAT specialists, accountancy journalists, and others for whom, if only for a matter of seconds, VAT was suddenly of interest.
The exact circumstances were not even new. The case of J Brooks v HMRC [2021] UKFTT 449 (TC), which preceded that of Ball by just days, dealt with the same subject. And despite the reference to Brexit, the case does not deal with a wholly new point.
In both cases, the appellants were moving back from the EU to the UK, and started planning their move some while before the UK left the EU acquis. They had successfully moved to the UK, taking on temporary accommodation while they looked for something more suitable in the long term. They had left their furniture and some belongings behind, as storage is cheaper where they had come from than in the UK, and they were not yet ready to accommodate them.
If they had moved their belongings prior to 23.00, 31 December 2020, there would have been no import duties or VAT to consider, since the UK was, then, part of the EU acquis. But after that deadline, the longstanding rules for VAT and duties relief, relating to moving house to the UK, became applicable to EU movements. These rules had applied to the rest of the world, and therefore to all movements of belongings from outside the EU into the UK, prior to 2021. So, if we postulate a move from, say, Tunisia to the UK, these rules applied.
These are that, for relief to apply, belongings must be moved within a strict timeframe. They cannot enter the UK more than six months prior to their owners moving to the UK, nor more than twelve months following that move. Mr Ball’s decision to allow the belongings to be stored in a cheaper location for storage purposes caused him to keep the goods outside the UK for more than 12 months after he had moved to GB. The goods arrived in January 2021, which was after the change mentioned above.
The fact that the importation was within one month of the changed UK status appears irrelevant, since it is the date of import that counts, and at that point, the EU was part of the rest of the world. The fact that they were part of a general diaspora from the EU to the UK, whether or not as a cause of Brexit, was irrelevant.
But there was a chink of hope in provisions which allowed that HMRC may grant a claim for relief from these conditions, called ‘exceptional waiver’. This requires that exceptional circumstances must be proved for the time limits to be waived. Was either covid or Brexit exceptional?
Whilst Brexit, as a phenomenon, is exceptional in itself, it is not exceptional in the context of these rules, given their long-standing application to all genuine imports. What of covid? This would appear more likely to afford an argument for something exceptional, although in the case of Ball, it did not help that he had moved the goods during the third lockdown period of covid, thus showing that covid was not necessarily, in and of itself, an insuperable hurdle to moving goods. But, as in a previous decision, the tribunal’s view was that covid was not exceptional on the basis that it affected everyone and did not uniquely impact the appellant. Since the legal framework does not discuss in what sense a circumstance is exceptional, in order for HMRC to use its discretion to waive the time limits, that is a viable interpretation of the word.
The arguments will no doubt continue. It certainly appears harsh, and one can only have sympathy for the appellants. That it is the correct decision, though, is difficult to dispute.
