Dynamic Construction Ltd v Revenue & Customs [2006] UKVAT(Excise) E00980 (14 August 2006)
E00980

EXCISE DUTY – Restoration of Ford Transit subject to payment of restoration fee – Appellant’s vehicle was run on red diesel – Appellant sought to distance itself by placing the blame on an employee who admitted the misuse – The directors’ behaviour suggested that they knew that red diesel was being used in the vehicle – Appellant provided no information about steps taken to prevent misuse and of disciplinary action taken against the employee – was the decision to offer conditional restoration of the vehicle reasonable – yes – Appeal dismissed.

MANCHESTER TRIBUNAL CENTRE

DYNAMIC CONSTRUCTION LTD	Appellant

- and -

HER MAJESTY’S REVENUE and CUSTOMS	Respondents

Tribunal:	MICHAEL TILDESLEY  OBE (Chairman)
MARJORIE KOSTICK BA FCA CTA (Member)

Sitting in public in Birmingham 6 July 2006

Appellant did not appear

Claire Chapman, Counsel instructed by the Acting Solicitor for HM Revenue & Customs, for the Respondents

© CROWN COPYRIGHT 2006

DECISION
The Appeal
1.	The Appellant was appealing against the Respondents’ decision on review dated 8 August 2005 to restore a Ford Transit, registration number R636 OAD, on condition of payment of a fee in the sum of £1,150.
2.	The ground of Appeal as stated in the Notice of Appeal dated 1 September 2005 was:
“My employee who admitted putting the red diesel in the van also admitted he was given the cash to go to the garage. I feel I did all I could to ensure proper diesel was used”.
Background
3.	On 16 May 2005, Customs Officers visited the Appellant’s yard at 73 Main Road, Kempsey, Worcester where they removed the Ford Transit because they suspected it was being run on red diesel. On 25 May 2005 tests were carried out on fuel samples taken from the Ford Transit which confirmed the presence of red diesel. On 17 July 2005, Mr Mountney, an employee, admitted that on three occasions he refuelled the Ford Transit from drums of red diesel kept at the Appellant’s yard. 
4.	On 4 July 2005 the Respondents offered restoration of the Ford Transit on payment of a fee made up of £500 civil penalties and £650 costs, which was confirmed on review dated 8 August 2005.
The Hearing on 6 July 2006
5.	The Appellant sent a letter dated 6 July 2006 stating that Mr Southall and Mr Mountney were unable to attend the Tribunal hearing because they had to deal with various property problems which had been caused by the recent thunder storms. The Appellant acknowledged that the Appeal had already been re-scheduled at its request and understood that the Appeal may be heard in its absence.
6.	We granted the Respondents’ application to proceed in the Appellant’s absence because:
(1)	This was the second occasion when the Appellant had failed to prosecute its Appeal.
(2)	The Appellant did not specifically request an adjournment of the Appeal in its letter of 6 July 2006.
(3)	There were no good reasons to delay the hearing of the Appeal.
7.	The Respondents adduced evidence in the form of a witness statement of Brian Rayden. The Appellant had not objected to the statement. Mr Rayden conducted the review of the Respondents’ decision to offer conditional restoration of the Ford Transit on 8 August 2006. 
The Review Decision dated 8 August 2005
8.	Mr Rayden considered afresh the decision to restore the Ford Transit on terms by taking account of the material available to the Commissioners both before and after the decision.
9.	He placed weight on the following facts;
(1)	Mr Mountney’s admission that he ran the Ford Transit deliberately on red diesel and that he knew he was committing an offence.
(2)	The directors of the Appellant company failed to co-operate with the inspection of the Ford Transit by Customs Officers by refusing to witness the inspection and to hand over the keys to the vehicle.
(3)	The Appellant did not provide information about what steps it took before or after the incident to prevent the illicit use of red diesel by its employees.
(4)	No information has been forthcoming from the Appellant about disciplinary action taken against Mr Mountney.
(5)	The Appellant has not explained how it accounted for the discrepancy in the red diesel stocks.
(6)	The Appellant as an employer was responsible for the actions of its employees when engaged on company’s business.
10.	Mr Rayden took account of the “Respondents’ Policy for the Restoration of Vehicles involved in the Misuse of Road Fuel on which Duty has not been paid” which adopted a “three strikes and out approach”. Under the policy the Respondents restored the seized vehicle on the first and second occasion on payment of a fee which consisted of the value of the civil penalties, 100% of the revenue evaded and any storage costs with non restoration on the third occasion.
11.	In this case the £1,150 fee comprised £500, the value of two civil penalties of £250 imposed for separate contraventions of the Hydrocarbon Oil Duties Act 1979, and costs of £650 (recovery fee £250 plus £450 storage).
12.	Mr Rayden formed the view that the circumstances did not justify departure from the Respondents’ policy for a first misuse of red diesel.
Decision
13.	The issue for the Tribunal was whether the Respondents’ decision dated 8 August 2005 to restore the Ford Transit subject to a payment of a fee in the sum of £1,150 was a decision which no reasonable body of Commissioners could have arrived at. In order for the decision to be reasonable the decision maker must have considered all relevant matters and must not have taken into consideration irrelevant matters.
14.	The Appellant challenged the payment of the fee on the ground that it was not blameworthy for the misuse of the red diesel. The fault rested with its employee, Mr Mountney ,who had no reason to use red diesel in the Appellant’s vehicle because he was provided with a company credit card to purchase fuel. Mr Mountney also knew that the Appellant would reimburse him if he used cash to pay for fuel.
15.	We are satisfied from the facts of the case that Mr Rayden was justified in dismissing the Appellant’s claim that it was not to blame for the actions of its employees. The directors’ behaviour at the time of the inspection of the Ford Transit by Customs Officers suggested that they knew that the vehicle was being run on red diesel. The Appellant provided no information about what steps it took to prevent the misuse of red diesel and of disciplinary action taken against Mr Mountney. The Appellant was responsible for the actions of its employee. 
16.	We find that Mr Rayden took account of all relevant circumstances and disregarded irrelevant matters.
17.	We are satisfied for the reasons set out above that the Respondents’ decision on review dated 8 August 2005 offering restoration of the Ford Transit subject to payment of a fee in the sum of £1,150 was reasonably arrived at within the meaning of section 16(4) of the Finance Act 1994. 
18.	We, therefore, dismiss the Appeal.
19.	We are satisfied that the Appellant misused the Tribunal procedure by its non-attendance. We, therefore, order the Appellant to pay the costs of the Respondents in the sum of £250 plus VAT.

 

MICHAEL TILDESLEY OBE

CHAIRMAN 
RELEASE DATE: 14 August 2006

MAN/