Taxation logo taxation mission text

Since 1927 the leading authority on tax law, practice and administration

Cross-border shopping

03 July 2006
Categories: News , European Commission , VAT
EC closes case over UK application of law relating to excise duties

The European Commission has decided to close the case against the UK over its application of EU law relating to excise duties on tobacco and alcohol.

Although this is not a subject closely followed by Taxation, the UK's heavy-handedness in this respect was covered by Malcolm Gunn, Taxation, 6 December 2001, page 239 and in Update, 11 July 2002, page 398.

Under EU legislation, individuals are entitled to bring back goods which have been bought tax paid in a Member State without incurring further charges, provided the goods are transported by the individuals themselves and are for their own use.

This does not apply if the goods are bought on behalf of a third party.

Where a person brings back goods for a commercial purpose, and fails to comply with the formalities, Member States are entitled to apply sanctions, provided these are reasonable and proportionate.

Following a number of complaints, in October 2001 the Commission opened proceedings against the UK.

Since the beginning of the proceedings, the Commission understood that the UK had gradually modified its policies in relation to the forfeiture of vehicles in cases involving purchases of excise goods on behalf of a third party and for small-scale offences, and had made clear that the burden of proving that goods are held for a commercial purpose rested with the authorities.

Nevertheless, the Commission considered that two aspects of the UK's sanctions policies: those relating to the purchase of goods on behalf of a third party, and the importation of goods by post, remained disproportionate where there were no aggravating circumstances.

It therefore requested the UK to modify its policies. As the UK failed to comply, the Commission decided to refer the matter to the European Court of Justice for a ruling.

As a result, the UK has amended its policies relating to these areas, as laid out in the Commission's reasoned opinion.

Now, the UK will no longer systematically seize as liable to forfeiture the goods and cars of persons holding excise goods for purposes other than their own use.

Instead, in first-time irregular movements without aggravating circumstances, the holder will be offered the option of holding on to his goods against payment of the duty plus a penalty.

Where a car is used to carry the goods in such cases it will not be seized but the owner will normally be warned that it could be seized in any further cases. The Commission therefore considers that there is no further need to refer the case to the ECJ.

Categories: News , European Commission , VAT
back to top icon