Upper tribunal allows personal appeal right in excise case

Pierhead Drinks had unsuccessfully appealed to the FTT HMRC's refusal to grant it a certificate under the 1999 Warehousekeepers and Owners of Warehoused Goods Regulations (WOWGR). Pierhead did not appeal the FTT's substantive decision, and was not represented before the UT at all. However its sole director, Ian Hercules, challenged the FTT's finding that he was not a fit and proper person to hold a WOWGR authorisation.

The UT ultimately dismissed Hercules' appeal, finding that the FTT's conclusions as to his character were based on answers that he provided, as a witness, in cross-examination and that therefore there was no procedural impropriety in the case. However, the decision (17-page / 525KB PDF) was still an interesting one, given the UT's conclusions that Hercules was entitled to appeal in his own right, according to customs and excise expert Jake Landman of Pinsent Masons, the law firm behind Out-Law.com.

"The case confirms that a director of a company which has been the subject of an adverse FTT decision may have a right of appeal, independent of the company's own appeal right, where the FTT decision had made an adverse finding in respect of that director," he said.

"It is an interesting example of a situation where the European Convention on Human Rights meant that there was a duty under section 3 of the 1998 Human Rights Act to read the Tribunal Courts and Enforcement Act and UT rules in such a manner so as to provide such an individual a right of appeal," he said.

Landman was referring to Hercules' right to respect for private life under article 8 of the European Convention on Human Rights (ECHR). Section 3 of the Human Rights Act (HRA) requires that UK legislation be interpreted in such a way as to uphold ECHR rights wherever possible, including, in this case, tribunal rules set out by statute.

Human rights law requires that Hercules be given not only the right to appeal the FTT's findings against him, but also the means by which to enforce that right, the UT said. The UT was therefore entitled to hear his appeal, even though Hercules was not personally a party to the FTT proceedings, it said.

The UT then went on to consider whether the FTT's finding that Hercules was not a fit and proper person was within the 'four corners' of Pierhead's appeal, and whether it was necessary for the FTT to make that finding in order to fulfil the judicial task in the case. If so, then the UT considered that Hercules could not complain that the FTT carried out its proper judicial function and made relevant findings of fact, based on his statements as a witness.

HMRC, in its decision letter in the case, did not refuse Pierhead's application on the grounds that Hercules was not a fit and proper person. Its refusal was instead based on the fitness and propriety of Pierhead itself and of Hercules' father, Richard Hercules, who was seen as the 'guiding mind' of Pierhead. However, given the nature of the business, it would have been "artificial" for the FTT to only consider the fitness and propriety of Pierhead and not of Richard and Ian Hercules, the UT said. It noted that HMRC's decision letter referred to Ian Hercules' work history with two other companies, which had been in breach of their own WOWGR certification.

"In our view, the FTT could not conclude that Pierhead was not a fit and proper person without considering the knowledge and conduct of its directors and attributing that to the company," the UT said in its decision. "Only if the FTT were satisfied that Mr Ian Hercules and Mr Richard Hercules were both fit and proper persons could the FTT be satisfied that HMRC's decision that Pierhead was not a fit and proper person was unreasonable."

"We do not consider that the fact that the decision letter does not say in terms that Mr Ian Hercules was not a fit and proper person constrains the FTT from considering the point when it so clearly arises in the appeal," it said.

Although Hercules' appeal failed on this first point, the UT decided to go on to consider whether the FTT's process had been procedurally fair. It found that HMRC had cross-examined Hercules in detail during the hearing before the FTT about his history with the non-compliant businesses, and about his knowledge and experience of the excise trade. The FTT had therefore been entitled to take this evidence into account, the UT found.