The QHH tribunal case serves as a stark reminder that even basic customs errors can lead to significant financial and compliance risks. Businesses that fail to classify goods correctly, monitor declarations, or act swiftly on errors may face unexpected duty costs and HMRC scrutiny.

Summary of the Case and Judgment

The QHH tribunal case centred around the customs classification of Roll-Up Banner Stands (RBS) and the liability for customs debt. The primary issue was whether the RBS should be classified as “furniture” (heading 9403, 0% duty) or as “another article of aluminium” (heading 7616, 6% duty). HMRC argued that based on objective characteristics, the RBS fell under heading 7616.  

Additionally, QHH claimed it was not the correct entity liable for customs debt due to an agent error in using its EORI number. 

The tribunal ruled in favour of HMRC, concluding: 

    • The RBS is not furniture but an article of aluminium, making it subject to a 6% duty rate. 
    • HMRC correctly used the EU CNENs (the UK was part of the EU at the time of the imports under dispute).
    • QHH, as the entity whose EORI number appeared on the customs declarations, was the declarant and liable for the customs debt.
    • Even if QHH had not been the declarant, estoppel by convention applied, preventing it from denying liability.
    • The appeal was dismissed, and the C18 notice was upheld. 

This case highlights key lessons for businesses on customs classification, EORI responsibility, and the importance of proactive compliance. 

The Key Lessons Learned

1. Get Classification Right from the Start

    • Classification is based on objective characteristics at importation; until the banner with graphic or advert is attached to the RBS its intended purpose cannot be known.
    • The tribunal ruled that RBS should be classified as an article of aluminium (7616) rather than furniture (9403).
    • Misclassification can result in unexpected duties and penalties.

2. EORI Use Determines Liability

    • The entity whose EORI number appears on the customs declaration is the declarant and liable for customs debt.
    • If an incorrect EORI is used, the business should immediately request an amendment to avoid disputes.
    • HMRC is not responsible for checking if the right EORI is used – businesses must ensure accuracy.

3. Stay Proactive with Compliance

    • Monitor classification updates and apply for new Advance Tariff Information (ATaR) when necessary.
    • Businesses must proactively review CDS data and customs documentation – delays in addressing errors can result in financial liability.
    • Compliance checks should not only focus on tariff classification but also on who is listed as the importer.

4. Understand the Impact of Estoppel by Convention

    • If a business acts as if it is responsible for customs debt, even mistakenly, it may be prevented from later denying liability.
    • The tribunal ruled that QHH’s failure to challenge its role as declarant reinforced HMRC’s position.
    • Errors must be corrected as soon as possible – waiting until a dispute arises can limit legal defences.

Our Comments:

It is settled case-law that:

  • In the interests of legal certainty and ease of verification, the decisive criterion for the classification of goods for customs purposes is in general to be sought in their objective characteristics and properties as defined in the wording of the relevant heading of the CN and in the section or chapter notes; and
  • the intended use of a product may constitute an objective criterion for classification if it is inherent to the product, and that inherent character must be capable of being assessed on the basis of the product’s objective characteristics and properties.

In QHH, the FTT found that the intended use of the RBS could not be identified based on the objective characteristics of the product as presented at importation and this is consistent with the established case-law.

With regards to the customs debtor, HMRC guidance states that: “a direct representative becomes jointly and severally liable if:

  • Clear instructions were provided by the principal; and
  • The agent committed a deliberate or unreasonable error in executing those instructions.

The representative will be acting in their own name (and on their own behalf) if they either:

  • do not state the type of representation on the customs declaration; or
  • are not empowered to act as a representative”.

QHH argued that they were not liable for the customs debt as the customs declaration showing their unique registration identity was used in error. As a result, the demand from HMRC for unpaid duty was sent to the wrong person, and they are not estopped by convention from relying upon that.

They did not argue that the agent should be liable, and the Court did not address this or the extent and clarity of instructions from QHH or its subsidiary (the correct importer).

Final Takeaways

Classify goods correctly – wrong classifications and reliance on expired BTIs/ATaRs can result in unexpected duty costs.

Provide clear instructions to agents – it is much easier to get declarations right first time than to argue with HMRC after the fact.

Double-check EORI details – whoever’s EORI is on the customs declaration is responsible for the customs debt.

Monitor classification updates – stay informed of classification changes and seek ATaRs if needed.

Monitor CDS data for errors – do not rely on customs agents for your customs compliance.

Act fast on errors – delays in correcting mistakes can leave businesses liable.

Be thorough in compliance checks – review all customs documentation carefully.

By applying these lessons, businesses can mitigate customs risks, ensure compliance, and avoid costly disputes with HMRC.

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