Customs and excise quarterly update – August 2025

Welcome to the August 2025 edition of RPC's Customs and excise quarterly update.

News

UK Government announces new trade strategy to protect and boost British business

The UK Government has launched its first post-Brexit Trade Strategy, aimed at strengthening the UK’s global trade presence and supporting British exporters. The strategy sets out a goal to make the UK the “most connected trading nation in the world,” through a combination of market access initiatives, export support, and defensive trade measures.

The strategy acknowledges that free trade agreements are not the only means of boosting international trade. Key features include the creation of a new "Ricardo Fund" to remove regulatory barriers and shape global standards, and a £20bn expansion of UK Export Finance, alongside a new Small Export Builder scheme targeted at SMEs. The UK will also strengthen its trade defence tools to protect domestic industries from unfair practices and invest in services exports.

The strategy commits to supporting green growth through clean energy trade partnerships and confirms the UK’s participation in the Multi-Party Interim Appeal Arbitration Arrangement as an alternative to the WTO’s stalled appellate body.

You can view the official press release here.

Department for Business and Trade announce Improved Trade Rules

On 15 July 2025, the Department for Business and Trade introduced reforms to the UK Internal Market Act, aimed at smoothing trade across England, Scotland, Wales, and Northern Ireland. These changes reflect business feedback and are part of the government’s Plan for Change, designed to stimulate investment, job creation, and economic growth.

Key measures

• Greater clarity and consistency: trade rules between the nations will become more transparent and streamlined, reducing risk of friction and unexpected costs.

• Enhanced devolved flexibility: devolved administrations can now set locally tailored rules, provided these respect the integrity of the internal market.

• Simplified process for low-impact rules: proposed regulatory exclusions with limited economic effect can be approved via a faster, streamlined mechanism.

• Improved collaboration: the reforms foster better coordination between UK and devolved governments, particularly in areas like chemicals and pesticides.

You can view the full press release here.

HMRC releases overseas trade statistics for May 2025

Data published by HMRC for May 2025 shows £30.4bn total exports of goods, down £1.8bn or 5% from same time last year. The number of total goods imports for the month stand at £57.4bn, up 14% from May 2024. The statistics also include a breakdown of data across the UK's trade in goods at both country and product level, covering over 9,000 commodities and 200 partner countries.

The full report can be found here.

Case reports

DHL Air (UK) Ltd v Revenue and Customs Commissioners [2025] UKUT 176 (TCC)

DHL Air (UK) Ltd (DHL) was unsuccessful in its appeal to the Upper Tribunal against a part of the First-tier Tribunal's (FTT) decision concerning the retroactive authorisation of end-use relief for seven civil aircraft imported between June 2016 and February 2017.

DHL imported seven civil aircraft between June 2016 and February 2017 under an expired end-use authorisation. DHL applied in April 2017 for a retrospective end-use authorisation under the Union Customs Code (UCC) (the 2017 Application). HMRC refused and issued a post-clearance demand note for approximately £3m in customs duty. DHL appealed to the FTT, which directed HMRC to conduct a further review. The matter proceeded to the Upper Tribunal (UT). DHL argued that its 2017 Application should have been considered as a renewal of its previous authorisation, which would mean that it could be made retroactive.

UT decision

The UT upheld the FTT’s conclusion that the 2017 Application did not qualify as a renewal of the earlier end-use authorisation, because the earlier authorisation was made under the old Community Customs Code, and the 2017 Application was made under the UCC and had a materially different geographic scope. Therefore, the 2017 Application could not benefit from retroactive effect.

The UT also upheld the FTT’s findings regarding what could potentially constitute "exceptional circumstances" under Article 172 of the UCC Delegated Regulation justifying retroactive authorisation.

Finally, the UT found no error in the FTT’s refusal to require HMRC to treat DHL’s application in the same way as other operators, noting a lack of evidence of discriminatory treatment.

As a result, DHL’s appeal was dismissed, maintaining that the FTT’s decision and directions were correct in law.

Why it matters

This case is significant as it clarifies the legal boundaries and practical limitations surrounding retroactive end-use relief authorisations under the transition from the CCC to the UCC. The UT's decision also provides important guidance on what may constitute "exceptional circumstances" for granting retroactive relief, while affirming that fairness arguments based on the treatment of other operators will require clear, substantiated evidence. The case underscores the importance of maintaining up-to-date authorisations and ensuring strict compliance with procedural requirements.

A copy of the decision can be found here.

FTU Pod Trans v Revenue and Customs Commissioners [2025] UKFTT 753 (TC)

FTU Pod Trans (FTU), a Polish haulage company, was unsuccessful in its appeal to the First-tier Tribunal (FTT) in respect of HMRC's excise duty and penalty assessments.

On 20 January 2020, FTU's vehicle was intercepted by UK Border Force at Coquelles, France. The vehicle was found to be carrying 1,583,500 of cigarettes concealed within cable reels. The load's paperwork falsely identified the consignor and the consignee, both legitimate companies whose details had been hijacked without their involvement. The driver, an employee of FTU, had received anti-smuggling training and had checked the load and documents prior to departure, but was not permitted under Polish law to open the cable reels.

HMRC subsequently issued an excise duty assessment for £472,378 and a wrongdoing penalty of £307,045, alleging that FTU had acted deliberately and concealed its involvement. FTU appealed to the FTT.

FTU had accepted the transportation job via an online portal, dealing with an individual whose identity and credentials were not fully verified.

The FTT was asked to determine several key issues including:

• whether FTU was “holding” excise goods for the purposes of Regulation 13 of the Excise Goods (Holding, Movement and Duty Point) Regulations 2010 (HMDP)

• whether FTU was liable for a wrongdoing penalty under Schedule 41 of the Finance Act 2008

• whether FTU had a reasonable excuse for its conduct

• whether the penalty should be reduced for the quality of disclosure or for special circumstances.

FTT decision

The FTT upheld the excise duty assessment. In reaching its decision, the FTT applied the Court of Justice of the European Union's ruling in HMRC v WR (C-279/19) and the Upper Tribunal’s decision in Agniezska Hartleb v HMRC [2024] UKUT 034 (TCC), both of which establish that “holding” excise goods can encompass de facto or legal control, not merely physical possession. The FTT found that FTU, as the employer and owner of the vehicle, exercised de facto control over the goods by directing its employee, the driver, and was therefore liable for the duty.

In relation to the wrongdoing penalty, the FTT affirmed the penalty but varied its quantum. The FTT concluded that FTU's behaviour was “prompted but not deliberate”. There was no evidence that FTU had actual or blind-eye knowledge of the smuggling, but it had failed to conduct sufficient due diligence given the unusual and suspicious circumstances. The FTT rejected the argument that FTU was an “innocent agent” with a reasonable excuse, noting that, objectively, it should have made further enquiries about the intermediary that placed the transport order and the nature of the arrangements.

The FTT also considered the quality of disclosure made by FTU. It found that it had partially “told” HMRC about its version of events in correspondence, and accordingly applied an 85% reduction to the penalty. No special circumstances were identified to warrant any further reduction.

Why it matters

This decision reinforces the broad interpretation of “holding” excise goods under both UK and EU law, confirming that logistics companies may be liable for excise duty even when physical possession rests with an employee, provided they exercise de facto or legal control. The FTT’s approach to penalties and reasonable excuse highlights the expectation that businesses must undertake robust due diligence, particularly where arrangements are unusual, or parties are not known to them. The decision also demonstrates the FTT’s willingness to scrutinise the quality of disclosure and adjust penalties accordingly.

A copy of the decision can be found here.

Canmi Limited v HMRC [2025] UKFTT 890 (TC)

Canmi Limited, a customs clearance broker, was unsuccessful in its appeal to the First-tier Tribunal (FTT) in respect of a notice of joint and several liability issued by HMRC in the sum of £13,972 in unpaid excise duty. The notice related to an assessment made against Miss Miram Bumah on the same date.

The case concerned beer imported from Nigeria using tax code 443 (reduced duty rate for small breweries), which HMRC later determined was inapplicable. The correct code - 473 - would have triggered a higher rate of duty. The goods were declared by Miss Bumah, with Canmi acting as her direct representative in the customs process.

The central issue between the parties concerns the level of involvement required for Canmi to be jointly and severally liable for Miss Bumah’s irregular imports of beer. HMRC's position is that any involvement in the importation is sufficient to establish liability under excise duty rules, and that customs duty rules are irrelevant in this context. In contrast, Canmi argues that a direct representative cannot be held liable, and even if that is incorrect, liability would still require knowledge of the irregularity.

FTT decision
The FTT upheld HMRC’s assessment.

The FTT considered whether Canmi was “a person involved in the importation” under Regulation 12(2) of the Excise Goods (Holding, Movement and Duty Point) Regulations 2010. It found that Canmi was indeed involved in the importation, irrespective of whether it acted as a direct representative or whether it had knowledge of the irregularity, and was therefore liable for the duty.

The FTT rejected Canmi’s attempt to distinguish between excise and customs liability and dismissed its late request to amend grounds to argue that HMRC should first pursue Miss Bumah.

The FTT also rejected arguments from Canmi that a higher burden of proof (such as the criminal standard) apply, confirming that the burden is upon Canmi and the standard of proof is only the balance of probabilities.

Why it matters
This decision clarifies that under excise law, any party involved in an irregular importation - regardless of their role or intent - may be held liable for unpaid duty. The FTT confirmed that liability is not restricted to those acting knowingly or fraudulently. For customs agents and customs representatives, this underscores the importance of due diligence when handling imports, as the use of incorrect codes or assumptions about reliefs can result in significant financial exposure.

A copy of the decision can be found here.

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Navigating customs and excise compliance in the logistics sector

Logistics companies and customs agents operate in a fast-moving, high-volume and significant value industry. They are heavily regulated by UK authorities, such as HMRC and Border Force, who remain determined in their scrutiny of this area, and businesses therefore must ensure they operate lawfully and in compliance with UK laws.

Non‑compliance can lead to serious consequences such as a substantial tax liability, forfeiture, significant penalties, shipment delays, or even criminal sanctions.

Stay ahead by understanding the most pressing tax and customs compliance challenges that your business could face and take steps to mitigate against these risks. Some common issues you might face and key considerations for your business are summarised here.