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You are here: BAILII >> Databases >> First-tier Tribunal (Tax) >> Best Cosmetics Ltd v Revenue and Customs (IMPORT VAT - Postponed VAT Accounting - importer not VAT registered - post-clearance demand notices issued for unpaid VAT - no evidence that postponed VAT was accounted for) [2026] UKFTT 236 (TC) (06 February 2026) URL: https://www.bailii.org/uk/cases/UKFTT/TC/2026/236.html Cite as: [2026] UKFTT 236 (TC) |
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Appeal reference: TC/2024/02869 |
TAX CHAMBER
Judgment Date: 06 February 2026 |
B e f o r e :
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| BEST COSMETICS LIMITED |
Appellant |
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| - and - |
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| THE COMMISSIONERS FOR HIS MAJESTY'S REVENUE AND CUSTOMS |
Respondents |
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For the Appellant: Azim Girach, accountant of Motif Accounting Leics Limited
For the Respondents: Esther Hickey, litigator of HM Revenue and Customs' Solicitor's Office
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Crown Copyright ©
IMPORT VAT – Postponed VAT Accounting – importer not VAT registered – post-clearance demand notices issued for unpaid VAT – no evidence that postponed VAT was accounted for – appeal dismissed
Introduction
Late Appeal
The Law
"(1) If a Customs declaration is made in respect of any chargeable goods, the person in whose name the declaration is made is the person liable to import duty in respect of the goods"
Background and facts
"Since we found this error, we are in touch with customs agents to update our VAT registration details in their records and file correct declaration with HMRC. They are processing our request and ensure to contact us if require further information."
Submissions
(1) Best Cosmetics' name and EORI were used on the imports in error and that they were in fact imported by UK Best who also paid for the goods.
(2) UK Best had used the same freight agents and suppliers as Best Cosmetics and FFCLL had failed to change the EORI from that of Best Cosmetics when UK Best took over the business from Best Cosmetics;
(3) UK Best has accounted for the PVA in its VAT returns.
(4) In any event there is no loss of VAT because under the PVA mechanism, import VAT is accounted for by declaring an equivalent amount as both output tax (box 1) and input tax (Box 4) on the same VAT return so the import VAT is cancelled out.
(5) The Customs system should have flagged that the EORI number being used was that of a non-VAT registered company. If it had, then the error could have been corrected.
(6) The introduction of customs declarations and PVAs was a new and complex process for small businesses, who were forced to rely on third party agents. There was also a lack of clear guidance from HMRC.
(1) UK Best was not authorised as an Economic Operator and so did not receive its EORI number until May 2022. UK Best did not therefore have an EORI to provide to FFCLL until four months into the Period. Also there is no evidence that it provided its EORI number to FFCLL once it had received it.
(2) Best Cosmetics has not provided any evidence that UK Best has accounted for the Import VAT on its VAT returns and Best Cosmetics could not account for the Import VAT because it was no longer registered at the time of the imports. Further the directors have allowed the dissolution of UK Best without evidencing that that company had accounted for the VAT nor have they provided any reason why Best Cosmetics, which has two common directors with UK Best, is unable to obtain UK Best's VAT records from its previous accountants.
(3) Officer Robinson reviewed UK Best's VAT returns for the relevant periods and the box totals for two of the boxes where the postponed VAT should have been accounted for were less than the postponed VAT for that period.
(4) If it was an error, there is no evidence that Best Cosmetics or UK Best attempted to correct the error at any point over the period covered by the C18s.
(5) The import VAT is only cancelled out if is entered on a VAT return and the goods on which the Import VAT is due are used to make taxable supplies. There is no evidence that the good on which the Import VAT was incurred were used to make taxable supplies or that the Import VAT was accounted for on a VAT return.
Conclusions
Right to apply for permission to appeal