In Nikola Polakova v HMRC [2023] TC8690, the First Tier Tribunal (FTT) found that 29,800 cigarettes brought to the UK were not for personal use. While a late appeal was considered, it was struck out. The penalties based on deliberate behaviour were upheld.

  • Ms Polakova was stopped at Stansted airport by Customs, she lied about the length of her intended visit to the UK, she declared that she had 150 cigarettes.
  • She was found have some 150 cartons with 29,800 cigarettes, with a retail value of £14,155. The cigarettes were seized.
  • HMRC issued an excise duty assessment of £8,533 and a penalty of £3,285 was raised based on Deliberate Behaviour.
  • After an unsuccessful Statutory Review, Ms Polakova Appealed the assessment and penalty on the grounds that the cigarettes had been for personal use and/or a gift and that she had insufficient funds to pay the penalty.
  • The appeal was filed seven weeks later than the 30 days allowed by statute.

The FTT found:

  • The late appeal was considered as:
    • There were postal delays and the tribunal had taken some time to return an initial notice of appeal to her.
    • A new notice of appeal was filed shortly after the tribunal had returned her the initial notice.
  • The appeal against the assessment was struck out as the FTT did not have jurisdiction to consider it as the seizure was not challenged at the Magistrate’s Court.
  • Ms Polakova’s behaviour was deliberate as:
    • She knew no duty was due for personal use or for a gift.
    • She knew she had been given money to purchase the cigarettes.
    • She intended to hand over the cigarettes to a third party on her arrival. Her subsequent departure from the UK was on the same day.
    • Written and phone correspondence after the seizure was with a third party masquerading as Ms Polakova.
  • The penalty could not be reduced or eliminated due to her inability to afford it as:

The appeal was dismissed.

Useful guides on this topic

Statutory Review (by HMRC)
What is a Statutory Review? Is it automatic? What happens in a Statutory Review? Can you challenge a Statutory Review's findings? Can you influence a Statutory Review? 

How to appeal an HMRC decision
Disagree with an HMRC decision? How to appeal, what type of decision can you appeal and what are your different options when you disagree with HMRC? What are the key steps in making an appeal?

Penalties: Deliberate Behaviour
What penalties apply to deliberate behaviour? What is deliberate behaviour?

Grounds for appeal: Reasonable excuse (freeview)
What is a 'reasonable excuse' in terms of making an appeal against a tax penalty for late filing, late payment or error?

Grounds for Appeal: Reasonable excuse (subscriber)
What is considered to be a 'reasonable excuse' when a taxpayer makes an appeal against a tax compliance failure?

External links

Nikola Polakova v HMRC [2023] TC8690


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