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Challenging The Seizure of Goods By UK Border Force and HMRC9th February 2015 Business Crime
The amount of goods exported and imported under the eye of UK Border Force and HMRC is increasing year on year, especially as a result of the increase in online sales through sites such as Ebay and Amazon etc. Many businesses are unaware of the powers of seizure available to the authorities and customer relationships can be ruined when consignments are stopped even for a short time. It is therefore important to gain an understanding of what a business can do in the event that a consignment is seized and threatened with forfeiture or 'condemnation' by the court upon application from UK Border Force or HMRC. Seizure can also result in criminal prosecution and associated civil liability can arise where seizure is not dealt with in a complex commercial supply chain.
What are the options if a consignment has been seized?
If goods have been seized and you do not accept there was a legal right to seize it and/or you want them to consider returning it, you have three options:-
- Challenge the legality of the seizure and send a 'Notice of Claim' to HMRC or Border Force, explaining why you think they had no power to seize the goods.
- Ask them to return the goods to you (known as 'restoration'), even if you accept that they had the power to seize the goods in the first place.
- Raise both arguments in the same notice.
A decision regarding the legality of a seizure is made by the Magistrates' Courts (or in Scotland the sheriff's court) in condemnation proceedings. HMRC or Border Force make their own decision regarding whether or not to restore goods and if they decide to restore, conditions may be imposed. If you object to a decision not to restore (or the imposition of restoration conditions), you can ask for the matter to reviewed by a more senior officer. A subsequent decision not to restore or change/delete conditions can be appealed to an independent tribunal within a time limit. You may therefore find that if you appeal a refusal to restore and argue the legality of a seizure, you will be involved in two separate sets of proceedings. Managing the time limits and the issues can be complex, especially with large consignments and representation can ensure that your position is protected in multi-track litigation.
Why might you wish to challenge the legality of a seizure?
You may believe that HMRC or Border Force had no legal right to seize something because, for example:
- The goods were properly described, they were from another EU country and were not subject to any excise duty.
- Duty has already been paid on UK excise goods.
- The officers did not comply with their obligations in a manner relevant to the legality of the seizure.
- The goods were not prohibited or restricted.
The argument will lead to a court hearing at the Magistrates Court where HMRC or Border Force has to prove the legality of the seizure. Appeals are to the Crown Court or part of the case may be heard at the High Court in limited circumstances.
Who can challenge a seizure and is there a time limit?
Consignments are often consolidated and UK Border Force or HMRC may not be able to serve the relevant notices upon all of the owners in the first instance. Actual ownership may be impossible to determine at the point of seizure because the papers may only refer to the shipper/exporter and the consignee/importer. Any person can challenge the legality of the seizure but that person will be required to swear on oath that they owned the goods at the relevant point. The owner can ask someone to act on their behalf. For instance, an importer may ask the shipper to respond to the notice, although the proper authority must be given. Where some of the seized goods are owned by different companies or individuals, each must send a Notice of Claim to HMRC or Border Force within the time limit of one month from the date of the notice. In some circumstances, the one month limit runs from the date of seizure and there is no provision to extend that time limit.
Are there any criminal penalties?
Challenging the legality of a seizure is a civil remedy. An individual will not be convicted of a criminal offence just because the court decides there was right to seize the goods. However, other offences might be detected as a result of seizure. Many notices are served in accordance with S167 Customs and Excise Management Act 1979 following what UK Border Force or HMRC regard as an 'untrue declaration' either verbal or in the relevant documents. Conviction in relation to a Section 167 offence carries a maximum penalty of 6 months imprisonment at the Magistrates Court and 2 years imprisonment at the Crown Court. Other offences might be investigated by associated prosecuting authorities, depending upon what the officers find in the consignment.
Can the consignment be returned pending a decision on condemnation?
There are circumstances in which the goods can be 'purchased' from UK Border Force or HMRC pending a decision. Owners often pursue this option if, for instance, the goods are required to keep a high value supply chain running. The goods may have to be sold or destroyed very shortly after seizure if, for instance, they are perishable or hazardous. If the court or UK Border Force / HMRC eventually decide that the goods can be returned or should not have been seized in the first place, compensation may be paid. The option is not straightforward and the detail is beyond the scope of this article. We will happily discuss the option in particular cases.
Do I need to be represented by a solicitor?
If you are outside the UK, you need to provide UK Border Force or HMRC with contact details for UK Solicitors, together with authority for them to act on your behalf. If you are inside the UK, you are not obliged to instruct solicitors but representation can be of great assistance in complex and high value matters, especially if you are challenging the legality of a seizure. If criminal allegations arise, early representation is highly recommended because of the potential consequences.
If you or your business require assistance and representation following the seizure of goods by UK Border Force or HMRC, feel free to contact the Business Crime and Regulation team.
Evan Wright is a partner in the Business Crime and Regulation team with over 20 years of experience in serious fraud and regulatory defence.