Excise Duties – presence of traces of rebated fuel in Appellants vehicles – circumstances in which fuel came to be present – failure of Commissioners fully to consider the matters before them and drawn to their attention. Appeal allowed and directions given about a further review. VAT Rules 1986 Rule 21 CEMA 152(d): Finance Act 1994 SS 14-16.
EDINBURGH TRIBUNAL CENTRE
MORAG JACKSON Appellant
- and -
THE COMMISSIONERS FOR
HER MAJESTY'S REVENUE & CUSTOMS Respondents
Tribunal: (Chairman): T Gordon Coutts, QC
for the Appellant Morag Jackson
for the Respondents Julie Strachan
© CROWN COPYRIGHT 2007.
Mrs Jackson appeals against the decision of the Respondents review officer, Ian Sked, to confirm the procedure whereby restoration of 2 vehicles, Vauxhall Frontera, L808 JMS and Ford Fiesta, P114 MSE seized on 31 July 2006 and offered for restoration for the sum of £750 on that very day. The Appellant on the very next day wrote requesting a review of the restoration fee and providing the information undernoted. The review officer on 8 September 2006 wrote upholding the original decision to offer restoration at the sum of £750.
The Appellant appeared on her own behalf. She was a clear credible and reliable witness but, naturally, did not possess the forensic skills which have put the decision in this matter beyond doubt.
The Respondents led no oral witness evidence. They founded upon a witness statement by Mr Sked referred to below. That witness statement was provided in terms of Rule 21 of the VAT Tribunals Rules 1986. It was not objected to in terms of 21(3) and accordingly could be read at the Hearing of the Appeal as evidence of the fact stated therein. It was plain, however, from Mrs Jackson's evidence that she did not accept part of that statement. No motion was made on behalf of the Respondents to lead any other evidence.
The Tribunal's Jurisdiction
9.. The Tribunal's jurisdiction in this appeal is statutory in nature and is set out in sections 14 to 16 of the Finance Act 1994 ("the 1994 Act"). Section 14 of the 1994 Act applies to any decision of the Commissioners of a description specified in Schedule 5 to that Act. Decisions made under section 152(b) of the 1979 Act fall within paragraph 2(1)(r) of Schedule 5. By virtue of section 14(2) of the 1994 Act decisions of a description falling within Schedule 5 to that Act are subject to review and appeal.
10.. Section 15 of the 1994 Act requires that the Commissioners review the decision not to restore the Appellant's vehicle and the excise goods if so requested.
11.. Section 16 of the 1994 Act sets out the basis for the Tribunal's jurisdiction which provides:-
"(1) Subject to the following provisions of this section, an appeal shall lie to an appeal tribunal with respect to any of the following decisions, that is to say –(a) any decision by the Commissioners on a review under section 15 above (including a deemed confirmation under subsection (2) of that section); and(b) any decision by the Commissioners on such review of a decision to which section 14 above applied as the Commissioners have agreed to undertake in consequence of a request made after the end of the period mentioned in section 14(3) above.(4) In relation to any decision as to an ancillary matter, or any decision on the review of such a decision, the powers of the appeal tribunal on an appeal under this section shall be confined to a power, where the tribunal are satisfied that the Commissioners or other person making the decision could not reasonably have arrived at it, to do one or more of the following, that is to say –(a) to direct that the decision, so far as it remains in force, is to cease to have effect from such time as the tribunal may direct;(b) to require the Commissioners to conduct, in accordance with the directions of the tribunal, a further review of the original decision; and(c) in the case of a decision which has already been acted on or taken effect and cannot be remedied by a further review, to declare the decision to have been unreasonable and to give directions to the Commissioners as to the steps to be taken for securing that repetitions of the unreasonableness do not occur when comparable circumstances arise in future.(8) … references to this section to a decision as to an ancillary matter are references to any decision of a description specified in Schedule 5 to this Act which is not comprised in a decision falling within section 14(1)(a) to (c) above".
12.. The decision in question falls within a description specified in Schedule 5 to the 1994 Act and does not fall within section 14(1)(a) to (c) of that Act and is thus a decision as to an ancillary matter. The Tribunal's jurisdiction is therefore supervisory as set out above in section 16(4) of the 1994 Act.
The question for the Tribunal
The question is whether the decision to confirm the offer to restore at the price quoted one reasonably arrived at by the Commissioners. In order to determine that issue exploration of the background facts and the Commissioners knowledge of them requires to be undertaken.
From the Respondents officer's notebook compiled by officers' Allan and Abercrombie it appears that at about 10am on 31 July 2006 they arrived at the Appellants farm and checked the contents of the fuel tanks of the above noted vehicles. They found in the samples of fuel that they contained the markers added to diesel. Somewhat contentiously the level was described in the review letter as 10% of the fuel in L808 JMS and 30% of the fuel in P114 MSE. Mrs Jackson in her appeal letter had described the amount of fuel as traces and when the officer's notebook is examined it appears that they noted that there were only 2 gallons of fuel in the Vauxhall and about 3 gallons in the Ford. Accordingly in the Vauxhall 2 tenths of a gallon of rebated fuel was present and in the Ford perhaps 1 gallon. These somewhat meagre quantities were used to justify the description of the vehicles as being "fuelled" with rebated gas oil.
However having found these traces the officers felt they should and indeed were entitled to seize the vehicles and further in terms of Section 152(d) of CEMA 1979 the Commissioners to restore the vehicles subject to the conditions above noted i.e. payment of £750 allocated as to £500 to the Vauxhall and £250 to the Ford. They purported to relate these figures to the civil penalty which would have been appropriate had it been applied if the forfeiture had been found valid.
It should be noted at this stage that the vehicles were examined on the Appellants property and there was no evidence before the Commissioners that red diesel had in fact been used as fuel for a road vehicle although it plainly had been taken into the road vehicle. In the circumstances undernoted a serious question should have arisen as to whether the rebated oil had been taken into the vehicle as fuel.
Mrs Jackson whose evidence the Tribunal saw no reason to disbelieve gave a graphic account of the troubles she and her neighbours had been having over a period of time from an extended family, no strangers to the Sheriff Court, who had come to live nearby. The Jacksons had been subjected to repeated acts of vandalism, which had never taken place previously such as the smashing of window glass in agricultural vehicles, the disabling by interfering with the fuel tank of a tractor and a combine harvester and digger. Additionally their son's petrol engined vehicle had had red diesel put into it thereby ruining the engine. Fence wires had been cut, gates destroyed or stolen and in short the said extended family were apparently wholly evilly disposed.
In addition on the day in question, whether before or after the events at the Appellants farm it was not entirely clear but certainly subsequently these other persons had been responsible according to Mrs Jackson for the theft of 400 gallons of red diesel and were involved in a fracas with the Customs officers which involved damage to their vehicle and the matter being brought to the attention of the Police. Some of the neighbours were charged and subsequently sentenced at Banff Sheriff Court. Any inquiry of the officers in question must have revealed the somewhat startling events of the day in which Mr and Mrs Jackson were involved.
Mrs Jackson wrote comprehensively to the Commissioners explaining the circumstances and provided records of considerable quantities of fuel purchased. In addition she drew the Tribunals attention to the fact that her vehicles had been examined on previous occasions by Customs officers and on no occasion was any rebated fuel found.
Mr and Mrs Jackson were adamant that they did not and would not fuel the vehicles in question with rebated fuel they took the view in the light of the events above narrated that they had been subjected to yet another act of malicious damage by the neighbouring persons.
Now all this was put before Mr Sked not only in letters from Mrs Jackson but also at an interview but only of Mr Jackson. Mrs Jackson was not asked any specific matters in relation to the 3 letters she produced.
In Mr Sked's witness statement he states:
"In this case Mr and Mrs Jackson allege that they have a reasonable excuse in that they did not fuel the vehicle with gas oil and they believe that a neighbour fuelled the vehicle with rebated fuel maliciously.
However, they have no evidence that this was carried out by their neighbour.
I also note that this was a routine challenge by the Customs Officers. If their vehicle had been fuelled with rebated fuel maliciously then I believe the person who so fuelled the vehicle would have then contacted the appropriate authorities to inform on Mr and Mrs Jackson which did not happen in this case".
That witness statement simply reiterates what had been said in the letter refusing the application for review, and does not discuss any of the further matters drawn to the Commissioners attention.
No doubt it would have been better had Mrs Jackson challenged the statement that this was a routine challenge by Customs officers in terms but it is plain in the Tribunals view from her correspondence that she did not so regard it. Indeed she regarded it as a piece of malicious information given to Customs by the neighbours. This she thought was confirmed by the attitude of the officers on arriving at her farm. She gained the impression that they were quite certain they were going to find traces of rebated fuel. These matters were alluded to in the Appellants grounds of appeal and in a letter dated 1 December 2006 to the Respondents Legal Services Group at Salford. It was reasonably clear at least to the Tribunal that the Appellants contention that this was a visit by Customs officers encouraged by extraneous information was plain. The Tribunal was not satisfied that there was sufficient evidence before the reviewing officer that would justify the comment that the visit was routine, but the appeal does not succeed on that ground alone.
Consideration of the review letter
In the eyes of the Tribunal the review letter contained several preconceptions, prejudgments and non-sequiturs. One is to be found in the passage above quoted being a mere speculation; another is in the emphasis placed upon the fact that the Police were unable to prosecute because of lack of evidence. Because there is a lack of evidence for a prosecution does not mean to say that the account given by the Jacksons should be disbelieved. Indeed there were no rational grounds disclosed in the letter for not accepting the account of the Jacksons and as a result restoring the vehicle without any monetary consideration, it being clear on the balance of probabilities that neither of them had fuelled their vehicles with rebated fuel or taken in rebated fuel into their vehicles. The statutory presumptions do not aid the Commissioners in this instance if the Appellant did not take rebated fuel into the vehicle for use then the mere fact that it was present does not carry the day.
Had this been an ordinary appeal and not one involving the supervisory jurisdiction on an ancillary matter there would have been no question whatsoever in the mind of the Tribunal that the fee imposed could not stand. However the Tribunal's jurisdiction is limited to examining whether the particular decision was one which the Commissioners could not reasonably have arrived at. The Tribunal has no hesitation in so holding in the light of the whole circumstances which were known or which should have been known to the Commissioners, in particular the involvement of their officers with the alleged delinquents, that no reasonable officer could have upheld the restoration fee imposed. In any event a fee based upon an alleged double penalty for the Vauxhall vehicle is not justifiable and it is not appropriate to take a shortcut in the way done here.
The Tribunal recognises that it has had more and better information than appears in the written material disclosed as being before Mr Sked but in any event the circumstances as narrated are so unusual and unique that far greater effort at determining the justice of the Commissioners position should have been made.
The Tribunal accordingly requires the Commissioners to conduct a further review of the original decision and directs that they pay particular attention to the factual matters above found and narrated and the entitlement of the Appellants to invoke the presumption of innocence by having their narration of events accepted. It is neither here nor there that a specific delinquent cannot be pinpointed for the vandalism.
The review is directed to be conducted by a different review officer who is directed to have proper regard to the whole background circumstances narrated in coming to a view about the appropriateness of any sum being demanded for the restoration of vehicles in question.