Logistics firm hit with £1.1 Million VAT bill after failing to check client’s status
A recent decision from the First-tier Tax Tribunal is a sharp reminder of the risks logistics companies face when handling import declarations, especially when relying on third-party instructions and using the Postponed VAT Accounting (PVA) system.
Peter Hastings has advised and acted on PVA cases for several years and is dealing with a number of Appeals to the First Tax Tribunal relating to PVA. It’s clear that HMRC is actively enforcing this area of law. The message is simple: failing to verify a client’s VAT status can have costly consequences as can other non-compliance and it seems now HMRC will consider Ownership as a reason to reject the use of PVA.
In Roseline Logistics Ltd v HMRC [2025] UKFTT 427 (TC), Roseline was hit with a £1.1 million VAT bill after submitting 32 import declarations for a company that wasn’t actually entitled to use PVA – and crucially, without checking whether it was.
The Background
Between January – May 2022, Roseline acted on behalf of QP Trading Ltd (QPTL), submitting customs declarations that used PVA. For those unfamiliar, PVA allows VAT-registered businesses to defer paying import VAT by accounting for it on their VAT return instead of paying at the border.
What Roseline didn’t realise (and didn’t check) was that QPTL’s VAT registration had already been cancelled at the time. That meant QPTL wasn’t eligible to use PVA at all.
Roseline hadn’t dealt directly with QPTL, instructions came via a third party. But rather than verify QPTL’s VAT status, Roseline relied entirely on those instructions. When QPTL subsequently folded, HMRC looked to Roseline for the unpaid VAT and issued a post-clearance demand for around £1.1m.
HMRC’s case was that Roseline was jointly liable under the Taxation (Cross-border Trade) Act 2018, due to its involvement in the declarations – either as a customs agent, or as someone otherwise responsible for the breach.
The Appeal
Roseline appealed to the FTT on two main grounds:
- That it wasn’t liable because it didn’t (and couldn’t reasonably have been expected to) know QPTL was ineligible for PVA; and
- That making it pay the VAT would breach its rights under Article 1 of Protocol 1 of the European Convention on Human Rights (the right to peaceful enjoyment of possessions).
The Tribunal didn’t agree. It found that Roseline hadn’t been validly authorised to act as QPTL’s customs agent, but was still clearly involved in the declarations – either as the declarant or the party on whose behalf they were made. By not checking QPTL’s VAT registration status and still submitting PVA declarations, Roseline had become involved in a breach of customs law.
The Tribunal accepted that the liability impacted Roseline’s property rights, but found that it was lawful, pursued a legitimate aim (preventing tax loss), and was proportionate. This wasn’t a penalty – it was the consequence of getting the basics wrong.
This decision makes one thing crystal clear: if you’re submitting customs declarations for clients – especially under PVA – you have to do your own checks. Relying on a third party isn’t enough, and if the client disappears, you may still end up holding the bill.
Customs agents and logistics providers need to have robust procedures in place to confirm a client’s VAT registration and PVA eligibility. If not, the financial consequences can be serious, and as this case shows, legally enforceable.
How We Can Help
If your business handles import declarations or acts as a customs agent, now is the time to review your internal procedures. We can help you assess your risk exposure, tighten compliance processes and respond effectively to any HMRC challenge. For practical advice or a confidential review of your current setup, please get in touch.
Our litigation team brings a wealth of expertise in efficiently navigating VAT and Tax disputes, investigations , Appeals and Court claims, drawing on their extensive knowledge of VAT and Tax laws and procedures to effectively resolve issues.
If you have a VAT dispute, seeking advice at the earliest opportunity is highly recommended. To book an appointment, please contact Peter Hastings at ph@rogers-norton.co.uk or phone 01603 675639
For more information on our legal services or to arrange an appointment with a member of our team, contact us at 01603 666001, email enquiries@rogers-norton.co.uk or complete the ‘Request a Consultation’ enquiry form on our website.
*This article is provided for general information purposes only and does not constitute legal or any other professional advice.