FG Wilson/Caterpillar wins case at the European Court

FG Wilson/Caterpillar had been authorised by HM Revenue & Customs (HMRC) to use a special customs procedure which allowed the company to import duty free parts used in the manufacture of machinery ultimately destined for export outside the EU. However, the company had used an incorrect customs procedure code when re-exporting the goods. As a consequence of the error, HMRC contended that FG Wilson/Caterpillar had failed to comply with certain requirements of the customs procedure and argued that a customs debt arose on importation of the parts resulting in a duty. The ECJ held that although the errors could give rise to a customs debt those debts may be repaid or remitted by amending the declarations, assuming that HMRC are satisfied that the parts were ultimately exported from the EU. Total demands issued for duty and VAT against about 400 UK manufacturers amounted to more than £100 million. Giles Salmond, a director in the tax dispute resolution group at Deloitte, who advised Caterpillar in the litigation, stated: "This is a fair and just result for FG Wilson/Caterpillar and the many other UK manufacturers who found themselves unexpectedly liable to additional VAT and customs duty and are likely to be entitled to a refund."