Customs officers may be forced to rein in their ability to detain alcoholic products at retail and wholesale outlets following a landmark ruling at London’s Court of Appeal last month.

The court ruled in favour of Eastenders cash and carry, which was seeking a judicial review of Customs’ activity in seizing and detaining stock from its premises on suspicion of duty evasion. The application for a review was dismissed in 2010, but the appeal court has now overturned this decision, leaving the way clear for Eastenders to pursue damages against HMRC. This could in turn lead to a change in Customs officers’ approach to detaining stock based on suspicion instead of clear factual evidence of wrongdoing.

The case centres on raids on Eastenders depots in 2010 when a large quantity of alcohol was detained by Customs while the authority investigated whether or not duty had been paid. Eastenders argued that because there was no evidence that duty had been avoided, Customs should be liable for damages caused by impounding stock for an extended period. The Customs action has been blamed for causing trading difficulties at Eastenders, and the wholesaler has successfully overturned a number of other court rulings connected to the case.

In recent years, many retailers and wholesalers have contacted C-Store’s news desk and Dear Jac helpline complaining of heavy-handed activity by Customs officers in removing stock from premises based on a suspicion of wrongdoing. Customs officers have legal powers under the 1979 Customs & Excise Management Act to detain stock from traders while they make investigations, but appeal court judge Lord Justice Davis said in his ruling that this needs to be based on factual evidence rather than on “the blind hope that something may turn up”. Without these grounds, he added, Customs should not escape legal liability for their actions.

Sanjay Panesar of Rainer Hughes acted for Eastenders in the case. Amrit Johal, partner of Rainer Hughes, said: “This Judgment provides much needed clarification in relation to the detention powers operated by HMRC. It will mean customs officers must provide factual evidence rather than just a suspicion of wrongdoing before they detain any goods. I am sure that this Judgment will impact upon pending detention cases, with the relevant legal action for damages spiralling.”

HMRC said it was considering its position, but made no further comment.