Ponders End International Ltd v The Commissioners for HMRC

Neutral Citation: [2026] UKFTT 00356 (TC) FIRST-TIER TRIBUNAL TAX CHAMBER Case Number: TC09809 [Location/By remote video hearing] Appeal reference: TC/2024/01772 Decision by HMRC to require a guarantee in respect of a consignment of imported goods – held that it was a reasonable decision. Initially partially heard on: 31 March 2025 Further consideration on the papers 2 March 2026 Judgment date: 4 March 2026 Before TRIBUNAL JUDGE ALLATT MS SUSAN STOTT Between PONDERS END INTERNATIONAL LTD and Appellant THE COMMISSIONERS FOR HIS MAJESTY’S REVENUE AND CUSTOMS Respondents Representation: For the Appellant: Mr Stephen Cole, Director For the Respondents: Ms E Hickey, litigator of HM Revenue and Customs’ Solicitor’s Office DECISION INTRODUCTION 1. considered on the papers in March 2026. This appeal was partially heard in March 2025, it was adjourned for directions and then BACKGROUND 2. The Appellant, Ponders End International Ltd, appeals a decision by the Respondents, HMRC, upholding a requirement for a financial guarantee in relation to an import declaration accepted on 21 August 2023 (Movement Reference Number 23GB8PSNCYSJMU9AR3). The goods consisted of 266 cartons of garments, footwear and bags shipped from Taipei to Felixstowe. The accompanying commercial invoice (dated 27 June 2023) recorded a total value of €37,141.66. The import declaration recorded all goods as originating in Taiwan. 3. Following acceptance of the declaration, HMRC selected the consignment for an inland pre-clearance examination. The Appellant’s customs agent (Gondrand UK) provided the shipping and invoice documentation on 22 August 2023. On 25 August 2023 HMRC invited the agent to attend the physical examination, which the agent declined. On 4 September 2023 Border Force provided HMRC with examination notes indicating 4. the cartons contained garments and footwear. 5. On 8 September 2023 HMRC Officer Daniell reviewed the documentation and undertook an examination of the associated paperwork. He recorded that the goods had travelled in container EGHU3797328 aboard the Ever Acme from Taipei to Felixstowe. He noted that while all 30 declaration lines stated Taiwan as the country of origin, both the commercial invoice and the labels inspected indicated origins including China, Bangladesh, Cambodia, Thailand, Vietnam, Turkey and Indonesia. The Officer also observed the use of apportioned weights across lines on the declaration and concluded that the declared origins and weights did not correspond to the goods as invoiced or labelled. 6. The Officer also identified that the commodity code declared for line 1 (bags) was incorrect: the goods were declared under code 4202921100 (8% duty, plastic sheeting) whereas the examined bags were textile goods more appropriately falling within code 4202929190 (2% duty). On 11 September 2023 HMRC wrote to the Appellant’s agent identifying anomalies 7. and requesting accurate origin information for each line, splitting multi-origin lines where needed, and providing accurate weights. The agent supplied spreadsheets containing origins and weights the same day. On 6 October 2023 HMRC informed the agent that the declaration was inaccurate and 8. offered to allow amendment instead of seizing the goods. The proposed amendments were the correction of the commodity code for line 1 and insertion of the correct countries of origin. The agent accepted these amendments on 6 and 9 October 2023. A revised declaration was issued under MRN 23GBBAD2AARO09ZAR1. 9. It is important to note here that the overall amendments resulted in a reduction in duty rather than an increase. The Appellant had used Taiwan as a country of origin knowing that this would not cause any reduction in any import duties owing. 10. On 12 October 2023 HMRC issued a Right to Be Heard letter stating that a financial guarantee was required before the goods could be released. The guarantee amount was £4,960.50, comprising £1,409.35 in Customs Duty and £3,551.15 in Import VAT. The Appellant paid the guarantee under protest on 23 October 2023, and the goods were released on 25 October 2023. The Appellant made representations to HMRC by letter for consideration by statutory review. 11. The Appellant sought statutory review on 30 November 2023. The HMRC Review Officer upheld the original decision on 19 February 2024. A Notice of Appeal was filed with the Tribunal on 5 March 2024. 12. In the normal course of events, after the payment of a guarantee, HMRC would commence a post-guarantee clearance check, determine the value of the goods, and then repay the guarantee if it was determined not to be needed. 13. At the time of the hearing, the post guarantee check had not been commenced. All parties agreed that it was critical that this was started as soon as possible, and we agreed to adjourn the hearing to allow for this to happen, in case in due course the Appellant wanted to dispute the outcome of the post-clearance check. Directions were issued to ensure HMRC gave this matter priority. In May 2025 the post clearance check was completed and HMRC determined that the 14. values given by the Appellant were correct. The guarantee was therefore repaid by HMRC. This was duly reported to this Tribunal, and all parties agreed that the original appeal could now be decided on the papers by the original panel. HMRC requested a full written reasons decision. Confirmation of this was received by the panel in September 2025, and they were then booked to consider the matter. EVIDENCE 15. The Tribunal heard from Mr Cole in person at the initial hearing, and has read the bundle provided for the initial hearing, and the further evidence which HMRC were directed to provide after the hearing which was provided by HMRC within the time stipulated. The bundle contained a witness statement from Officer Daniell of HMRC, and we heard from him during the original hearing. 16. We found all parties at the hearing to be truthful and helpful in wanting to resolve the practical matter at the heart of this. 17. The evidence is undisputed, and so will be set out here briefly. 18. The Appellant is a well established business and has been trading for many years. HMRC carried out basic checks on the Appellant and found nothing untoward. 19. Although the Appellant has been trading and importing in this way for many years, the Officer could not find any previous consignments that had been examined by the inland pre- clearance team. He was therefore unaware that the Appellant was an experienced importer. 20. The Officer found that the consignment had been misclassified as to the countries of origin, and also misclassified as the weight had been incorrectly apportioned between the goods. This allows HMRC to make the goods liable to forfeiture, but HMRC considered that this was not proportionate to the fault. HMRC had also found 1 line misclassified as the wrong classification of bag type. They contacted the agent and offered an amendment to the declaration to correct the weights, commodity code and country of origin, and then to consider any guarantees required after the amendments. 21. The offer of the amendments was accepted and a new declaration made. 22. Officer Daniell issued a letter requiring a guarantee payment of £4,960.50, with a schedule of the goods that this related to. 23. The letter explained that after payment of a guarantee, the goods would be released, and then there would be a post-clearance verification check to determine whether all the details on the new declaration were correct or if any adjustment to the value, or anything else, was required. 24. At the hearing Officer Daniel explained that his intention, throughout the whole process, was in the spirit of an ‘education’ around the various (minor) mistakes made by the agent in the declarations, and to look into the valuations as he was not satisfied they were necessarily correct. 25. In the hearing, Mr Cole, for the Appellant, explained that his is a major importer (over 1 million pieces a year) of goods from Puma Taiwan, which are the goods in relation to this matter. The goods imported are from previous seasons, end of line, and generally in sizes that are not mainstream sizes for the UK market. In addition they may be B-grade goods. He therefore imports them at a sizeable discount to standard prices. In this case he had received a discount of 92.5%, and he had received emails agreeing this with Puma which he provided to HMRC as part of his right to be heard response, 26. Officer Daniell explained that he had read the documents provided by the Appellant as part of the ‘Right to be Heard’ response. In his witness statement Officer Daniell said: I considered the information supplied and discounted it on the basis I couldn’t confirm the accuracy of the emails or bank documents with the details I had before me. I considered the 92.5% discount to be incredible. I considered that the values of this consignment fell well short of the indicative reasonable value calculated by HMRC. Where HMRC has doubts about the precise amounts of duties that may be due, HMRC is bound by legislation to calculate securities based on the duty we estimate may be due. This amount is based on an indicative reasonable value for this type of product. I considered the best way to proceed was to continue with my intended decision, to apply a financial guarantee, and this consignment could be considered at a post clearance check by an HMRC officer in person, to check the records are correct, and if so return the guarantees paid if appropriate. 27. Mr Cole explained that the reason for his appeal was on a matter of principle more than a matter of the money. He was unhappy at HMRC’s decision particularly because he was concerned that, by reason of not accepting the evidence he had produced, he was being accused of, for example, collusion with a supplier to show inaccurate values. He was very clear that was not the case. 28. Mr Daniell stated that it was not his intention to imply any deliberate wrongdoing, and he did not in fact think that this was anything more than a potential misvaluation that should be looked into further. 29. The Tribunal has been provided with the complete list of the commodity codes of the items that were imported in this consignment, broken down by type and into which lines HMRC considered were potentially undervalued. 30. There are 59 lines on the schedule. HMRC imposed an additional guarantee on 20 of these lines. For the items to be revalued, in the most part the HMRC valuation was in the region of double the value placed by the Appellant. For 3 lines, representing more than 78% of the value of the guarantee in question, the value indicated by HMRC was considerably more than double the value declared by the Appellant. MATTER UNDER DISPUTE AND THE POWER OF THE TRIBUNAL 31. The question for the Tribunal to decide is whether it was reasonable of HMRC to impose a financial guarantee in consideration of all the evidence held at that time. 32. The Appellant’s Notice of Appeal requested a refund of the guarantee, an apology for the accusation made, and a refund for the difference in duty paid in respect of the bag reclassification. 33. In the hearing the Tribunal explained that the Tribunal’s powers are limited by statute. We are unable to adjudicate on matters relating to HMRC service levels or to require HMRC to apologise. 34. At the hearing HMRC did apologise for the delay in undertaking the post-clearance check. The Tribunal issued directions in order to encourage HMRC to expedite this matter. It has now been undertaken and the guarantee has been refunded. HMRC made clear it was not accusing the Appellant of any matter of criminal wrongdoing. 35. The Appellant has therefore had matters substantially resolved in the manner that they wished. THE LAW 36. There is no dispute around the law that applies to this Appeal. 37. The appealable decision is the review letter dated 19 February 2024 and the appeal was made in time. 38. This decision is appealable under Finance Act 1994, Schedule 5, Paragraph 1(m), being “any decision as to whether or not any person is to be required to give any security or other guarantee…” Section 16(4) of Finance Act 1994 applies in respect of an appeal to the Tribunal “In 39. relation to any decision as to an ancillary matter” and gives the Tribunal a supervisory jurisdiction to decide whether or not the decision made by the officer was reasonable, at the time it was made, based on the information and evidence available to the officer at the time of the decision. 40. Section 16(6) of Finance Act 1994 applies and places the burden of proof on the Appellant to show that the grounds on which the appeal is brought have been established (i.e. that the decision of the officer was unreasonable at the time it was made, based on the information held by the officer at that time.) 41. The standard of proof is the ordinary civil standard of the balance of probabilities. DISCUSSION 42. The Tribunal has the benefit of hindsight in this matter. HMRC has now agreed that the values declared by the Appellant, thought by Officer Daniell at the time of the decision to be ‘incredible’ are indeed the correct valuation for the goods. 43. However, that does not mean that the decision made by the officer at the time was unreasonable. 44. The information available to the officer at the time was the following: (1) The valuations provided by the Appellant/their agent (2) The further documentation provided by the Appellant including the reasons for the significant discount, and the emails to and from Puma Taiwan (3) HMRC’s valuations, that were provided by a different department 45. At the hearing, the officer was unable to explain in detail the methodology used by HMRC to arrive at the differing valuations for the various line items. However, it was clear from the spreadsheet provided that it was done individually on a line by line basis, rather than a blanket rule being applied. It is also clear that the method still takes into account that a substantial discount from ‘standard’ rates were being applied. 46. Mr Cole, whilst submitting what with hindsight everyone agrees are completely true and reasonable explanations, did not provide any detailed submissions on individual valuations. Given that he had decided, albeit under protest, to pay the guarantee and await the post guarantee checks, it was a reasonable decision on his part not to do so. 47. We consider that Officer Daniell took all relevant matters, including the explanation by the Appellant, into account when making his decision. 48. He may have made a different decision if he had looked further into every single line item, but that does not mean that the decision was unreasonable. 49. We do not consider that he took into account any irrelevant factor when making his decision. In particular, we are satisfied that he never suspected the Appellant of intentional 50. wrongdoing. DECISION 51. Accordingly, we consider that the decision made by HMRC was reasonable and therefore this appeal is DISMISSED. RIGHT TO APPLY FOR PERMISSION TO APPEAL 52. This document contains full findings of fact and reasons for the decision. Any party dissatisfied with this decision has a right to apply for permission to appeal against it pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009. The application must be received by this Tribunal not later than 56 days after this decision is sent to that party. The parties are referred to “Guidance to accompany a Decision from the First- tier Tribunal (Tax Chamber)” which accompanies and forms part of this decision notice. Release date: 04th MARCH 2026 5