An award-winning hipster spirits distillery was left with a disappointing double to swallow today/yesterday(FRI) after losing a court battle with the taxman despite being scammed into giving away thousands of bottles of gin.
Bosses at trendy Pocketful of Stones had toasted a massive deal with a French supermarket chain to provide 4,800 bottles of the craft booze, worth £150,000 at retail prices.
But the whole consignment disappeared after it was despatched to a warehouse in France and no payment was received.
The business, established just eight years ago in Falmouth, Cornwall, contacted HM Revenue and Customs about the fraud after receiving a bill of £38,626 for excise duty – only to be told it must still be paid.
At the time of the 2020 deal, the UK was still in the EU Customs Union, which had rules requiring a financial ‘movement guarantee’ to be provided to HMRC either by the seller or the buyer of goods liable for duty.
This covered the time between dispatch and delivery of the goods, to make sure someone could also be held responsible for the payment.
Pocketful of Stones complained the rules around excise had been unclear in the ‘chaotic’ lead up to Brexit on January 1, 2021.
But the taxman concluded the company had, by default, accepted responsibility for guaranteeing the duty payment.
Pocketful of Stones distillery figurehead and co-director Shaun Bebington
Bosses at trendy Pocketful of Stones had toasted a massive deal with a French supermarket chain to provide 4,800 bottles of the craft booze, worth £150,000 at retail prices
But the whole consignment disappeared after it was despatched to a warehouse in France and no payment was received
The distillery, owned by three partners including former London pub landlord and surfing enthusiast Shaun Bebington, took the matter to a Tax Tribunal, arguing the decision ‘offends the overriding principle of proportionality and fairness’.
The company’s lawyers said the duty should not have been payable until the gin reached France – which could not be proved as the lorries carrying it could not be traced.
They also claimed HMRC failed to take into account the firm’s ‘reasonable excuse’ for not paying the duty, given they were never paid for the product.
But tribunal judge Vimal Tilakapala has now dismissed the appeal, saying the duty became payable on ‘release for consumption’ which, under HMRC rules, was when it left the distillery’s warehouse.
He also upheld the taxman’s decision that the distillers had accepted responsibility by default by failing to fill in a form putting the onus on the purported buyer.
The expensive hangover began when the firm received an email in November 2020 apparently from giant French supermarket chain E.Leclerc, which had over 800 stores, 133,000 employees and a revenue of £44.6 billion.
The scammers asked for 6,000 bottles of gin but accepted the 4,800 that were available at the time.
The tribunal heard the crime was reported to UK police and HMRC began a request for mutual assistance from the French authorities.
The business, established just eight years ago in Falmouth, Cornwall, contacted HM Revenue and Customs about the fraud after receiving a bill of £38,626 for excise duty – only to be told it must still be paid
Pocketful of Stones co-director Paulk Motley (left) and Mike Cunliffe (right)
‘This did not establish where the goods were delivered to. The movements of the vehicles used to collect the goods have also not been traced,’ the judge said.
Pocketful of Stones claimed ‘HMRC had not done enough to investigate this fraud and to ascertain what had happened’ and that other parties should be ‘jointly and severally liable’ but the taxman had not pursued them.
But Judge Tilakapala concluded the rules had been correctly enforced, adding: ‘It is difficult to identify a basis on which (Pocketful of Stones) can sustainably argue that the excise point has either not arisen or that it has arisen elsewhere.’
HMRC and Pocketful of Stones – which has won a series of awards for their gin and absinthe and has expanded by opening a bar in Penzance and a shop in Falmouth – were both approached for a comment.
In October, it emerged 22 tons of cheese worth £300,000 were sent to scammers by a dairy in Southwark, central London.
Days later, a steak and lobster house launched an online appeal after £5,000 of £55 tomahawk steaks were stolen from its Portsmouth site.
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