E01134

MANCHESTER TRIBUNAL CENTRE					MAN/07/8058

 
 	
					FREDERICK DYLAN NORRIS	Appellant

- and -

THE COMMISSIONERS FOR
				HER MAJESTY’S REVENUE AND CUSTOMS	Respondents

Tribunal: Ian Huddleston, Chairman
     Mrs. Joan Whiteside

					
Sitting in Belfast on 21st April 2008

Mr. Philip Henry, BL, instructed by Gibson & Quigley on behalf of the Appellant
Mr. Nigel Bird, BL instructed by the Solicitor’s Office of
HMRC appeared on behalf of the Respondents  

© CROWN COPYRIGHT 2008

DECISION

The Appeal
1.	The decision under appeal is a review decision issued by the Respondents in a letter of the 11th July 2007 upholding a decision to assess the Appellant under Section 6 of the Hyrdocarbon Oils Duties Act 1979 (“HODA”) in the sum of £3,679.  The assessment bears the reference NI 53/07, dated 12th March 2007, but was amended on review to a sum of £3,533.
Facts
2.	On 9th October 2006 Officers of the Respondents stopped the Appellant on the Foyle Bridge in Londonderry.  The Appellant was identified as Mr. Frederick Dylan Norris of 75 Cornshell Fields, Derry, BT78 7UH.  The car which he was driving was a diesel powered silver Toyota corolla, registration number LUI 6950.  Eire rebated fuel (otherwise known as “green diesel”) was detected in the fuel tank.  
3.	The Appellant was interviewed under caution, and a note of the interview was subsequently signed as a true record by the Appellant.  The Tribunal was provided with a copy of the interview notes and the following is a summary of the salient points:
•	the vehicle had been owned by the Appellant from new, and had been acquired in approximately 2001;
•	the recorded mileage was 142,787;
•	in the interview he stated his occupation to be a taxi driver and confirmed that he had worked as a taxi driver for the last three years;
•	it was confirmed that the Appellant was not registered for VAT, but had registered as self-employed from the 10th July 2006.  When asked why he had not previously registered, the Appellant suggested that his reason for not doing so was because he had “some bills to sort out”;
•	it was established that the vehicle had a PSV licence and had been insured as a taxi for the three year period in question;
•	it was confirmed that the Appellant’s weekly mileage was approximately 600 miles, and that he worked between forty five and fifty hours per week;
•	the Appellant, taking advantage of the cheaper fuel prices in the Republic of Ireland, fuelled at petrol stations in either Bridgend or Muff in County Donegal, but indicated that he did not retain fuel receipts;
•	he confirmed to the Officers that the vehicle had last been fuelled two days previously when he had purchased £10 of fuel in a Statoil Petrol Filling Station in Muff;
•	the Appellant confirmed that he knew it was an offence to run a vehicle on green diesel.
4.	Upon concluding the interview, the Officers were satisfied that the vehicle was not legally entitled to use green diesel, and issued the Appellant with a Seizure Notice.  On payment of a penalty and arrears of duty in the sum of £510, the vehicle was, however, released to the Appellant.  At the same time, the Appellant was issued with a notice requiring him to surrender records pertaining to the ownership and use of the vehicle in connection with his business during the last three years in order to allow the Respondents to undertake a road fuel audit.
5.	On the 3rd December 2006, the Appellant supplied details in respect of dates of ownership, but failed to produce any fuel receipts to evidence the purchase of white diesel.
6.	On the basis of the information available to it, the Respondents undertook a fuel audit.  From the Northern Ireland Vehicle Information System (“NIVIS”) the Respondents established that the vehicle had been purchased from new by the Appellant in September 2001.  From the “What Car” website, the Respondents established that the vehicle in question generally achieved an average fuel consumption of 48 miles per gallon.  Based on this information, the Respondents established the following particulars in connection with its audit calculation:
•	they took the date of acquisition as the 30th September 2001 – thus establishing a period of ownership of 1,835 days, or 262.14 weeks;
•	the recorded mileage during the period of ownership was 142,787.  In terms of the initial assessment, the Respondents took a commencement date of the 8th January 2004, and an end date of the 8th October 2006, giving a total assessment period of 1,004 days, or 143.42 weeks.  Based on those factors, they established an average weekly mileage of 544.69 – a figure slightly lower than that which the Appellant had suggested in his interview under caution, but obviously to his advantage;
•	based on the average miles per gallon of the vehicle, the Respondents then estimated that the fuel required per week was 11.34 gallons / 51.58 litres, giving a total fuel requirement for the total miles travelled of 7,382.64 litres for the period of the assessment;

•	based on the relevant (and different) rates of duty applicable during the period of the assessment, the Respondents then assessed the total sum of duty due on green diesel used as road fuel by the Appellant during the assessment period as £3,932.73.
7.	An assessment was issued on the 8th January 2007, accompanied by a schedule of the calculation and a copy of the audit report.
8.	By a letter dated 16th February 2007, the Appellant requested a formal review of the assessment on the basis of the quantum.  In that letter he advised:
•	that he had only started taxiing on the 10th July 2006, and that prior to that period he had been suffering from depression and was not, therefore, able to work on a consistent basis;
•	that he had purchased fuel from the Statoil Garage in Muff, County Donegal and, upon returning to that station, he had observed that there is a pump which dispenses green diesel, but that there was no signage on the pump to denote its contents, or that it dispensed green diesel.  He indicated that the pump dispensing green diesel was not the one which he normally used.
9.	The Respondents, because of an error in quoting the legislation under which the assessment had been originally raised, withdrew it on the 26th February 2007 on a without prejudice basis.  They followed that with a further assessment by a letter dated 12th March 2007.  This assessment was in the sum of £3,679 and was adjusted on the basis of the period of assessment now beginning on the 12th March 2004 (ie. three years from the date of the new assessment) (as opposed to the earlier date of 8th January 2004) and ending on the 8th October 2006 (ie, the date on which the Appellant was stopped).
10.	On the 24th March 2007, the Appellant requested a formal review of the assessment, but did not supply any additional information.
11.	By a letter dated the 9th May 2007 the Respondents wrote to the Appellant upholding the assessment in full.
12.	By a letter dated the 7th June 2007, the Appellant submitted details of his business accounts from the 1st July 2006 to the 5th April 2007, and furnished a small number of fuel receipts. 
13.	The Tribunal was furnished with copies of these fuel receipts.  They were issued from Donaghy’s Filling Station, Muff, County Donegall and were dated on various dates ranging from the 2nd August 2006 to the 20th September 2006.  They were in the same handwriting and numbered consecutively from receipt number 22 to receipt number 32.  

14.	The Respondents accepted the fuel receipts at face value and, on that basis, established that the assessment should be reduced by a total of 275.26 litres equating to a reduction of £146, leaving a balance due on the assessment of £3,533, which is the amount which remains in dispute and to which this appeal relates.
The Law
15.	Section 6 HODA levies excise duty on hydrocarbon oil imported into the United Kingdom.
16.	Regulation 4 of the Excise Goods (Holding, Movement, Warehousing and REDS) Regulations 1982 (“the Regulations”) states that:
“The excise duty point in relation to any Community Excise Goods shall be the time when the goods are charged with duty at importation.”
17.	Regulation 5 of the Regulations provides that:
“The person liable to pay the duty in the case of importation of excise goods from another member state shall be the importer of the excised goods.”
18.	Section 12 of the Finance Act 1994 provides as follows:
		“12(1)	Subject to sub-section (4) below, where it appears to the Commissioners – 
(a)	that any person is a person from whom any amount has become due in respect of any duty or excise; and
(b)	that there has been a default falling within sub-section (2) below,
the Commissioners may assess the amount of duty due from that person to the best of their judgment and notify that amount to that person or his representative.
		12(2)	The defaults falling within this sub-section are-
(a)	any failure by any person to make, keep, preserve or produce as required or directed by or under any enactment any returns, accounts, books, records or other documents;
(b)	an omission from or inaccuracy in returns, accounts, books, records or other documents which any person is required or directed by or under any enactment to make, keep, preserve or produce.
		12(3)	Where an amount has been assessed as due from any person and notified in accordance with this section, it shall, subject to any appeal under section 16 below, be deemed to be an amount of the duty in question due from that person and may be recovered accordingly unless, or except to the extent that, the assessment has subsequently been withdrawn or reduced.	
19.	In short, therefore, the Respondents contended that:
•	Section 6 HODA applied because green diesel had been detected in the Appellant’s vehicle, whilst on a public road in the United Kingdom, and the Appellant had not paid excise duty in relation to that fuel;
•	Regulations 4 and 5 of the 1992 Regulations are relevant because the Appellant became liable to excise duty at the time of importation and had not paid that duty;
•	Section 12 of the Finance Act 1994 was relevant because green diesel had been detected and, as a consequence, under that Section, the Commissioners had the vires to assess the Appellant to the unpaid excise duty, and then to the best of their judgment.
20.	Based on the calculations which the Respondents had carried out subsequent to the completion of the Fuel Audit, it was the Respondents’ case that best judgment had been exercised, that the Respondents had taken no irrelevant matters into account, had disregarded nothing which ought to have been given weight, and that in the circumstances the Appeal should be dismissed and the assessment upheld.
The Appellant’s Case
21.	The Appellant appeared in person and gave sworn evidence.  In his Notice of Appeal he stated as follows:
“I was not aware there was green diesel in the car.  I only started as a self-employed taxi driver in July 2006.  Prior to this I was ill and not working.  This is covered in my appeal letter dated 16th February 2007.”
22.	The Appellant’s case (and here I para-phrase) concentrated on three mean themes:
•	that he had only commenced trading as a taxi driver in July 2006 (ie. the date upon which he registered with Revenue and Customs as a self-employed trader);
•	that as he was conducting a long distance relationship, a good deal of his total mileage was for personal use and should be discounted;
•	that he had simply filled his car on this occasion through inadvertence, and had not used green diesel either before or since detection.

Self-Employed Status
23.	In relation to the period through which the Appellant operated as a self-employed taxi driver, there is a certain inconsistency in the evidence before this Tribunal.  In his interview under caution in October 2006, Mr. Norris indicated that he had been trading as a taxi driver for the past three years (ie. from approximately 2003), that his car had the benefit of a PSV licence and that it had been insured as a taxi throughout that three year period.  Further to that he indicated that by his own estimation his average weekly mileage was approximately 600 miles per week.
24.	As against that, in correspondence with the Respondents after the fuel audit had been conducted, and before the Tribunal in oral evidence, Mr. Norris had made the point that he had been suffering from depression and that he had not been able to work during most of that period.  In support he had furnished the Respondents with correspondence from his doctor and from the Benefits Office in Derry that he had been in receipt of benefits from the period 07.04.03 to the 11.05.06.  There are inconsistencies here.  What is clear, however, is that recorded mileage of 142,787 miles in approximately five years is well in excess of normal domestic mileage, which, it was put to him, was normally approximately 14,000 miles per annum for ordinary domestic usage.  The higher mileage suggests use which is consistent with use of the vehicle as a taxi.  
Personal Usage
25.	The second point which was raised in the Appellant’s appeal related to his usage of the vehicle for his personal use.  In circumstances like this where green or red diesel is traced, it is the Respondents’ policy to only levy assessments on the drivers of commercial vehicles who are detected using rebated fuel.  That is, however, a policy concession from the Respondents, and is not one which is reflected in the legislation.  I think that point needs to be made.  In the present case, the Appellant gave evidence (and the Tribunal has no reason to disbelieve him) that he was conducting an affair with someone who lived in Dublin, and that resulted in significant travel both to and from Dublin (a distance of 150 miles per trip) and to and from what are known as the “Border Counties”.  The relationship had started in 2001 and had lasted for approximately 3½ to 4 years.  There is no doubt that excessive personal mileage of this type could well have influenced the Respondents’ assessment but, for it to do so, cogent evidence would need to have been supplied to them and, as I have said above, even then, technically, there is no requirement on the Respondents to take personal usage into account. 
	Mistake
26.	The final ground the Appellant put forward in this appeal was his inadvertence in his use of green diesel on this single unfortunate occasion when he partially filled the fuel tank of his vehicle before he was stopped in October 2006 and the rebated fuel detected in the fuel tank.  That may well have been the case, but the reality is that he was detected using rebated fuel, and that was sufficient grounds for the Respondents to undertake the fuel audit which resulted in the assessment raised.
	Conclusion
27.	This is an unfortunate case.  The Appellant clearly feels that he is being penalised for what he regards as a combination of factors, ranging from his high personal mileage to his inadvertence in filling up with green diesel on the day in question.  Be that as it may, the reality is that in cases such as this the onus of proof falls squarely on the Appellant to establish to the Respondents’ (and this Tribunal’s) satisfaction that legitimate fuel was used for the mileage covered.  Section 12(2) Finance Act 1994 makes it very clear that it is the Appellant’s responsibility to maintain accurate fuel records.  To some extent he did have success on that point in that he did produce some fuel receipts which, although they were consecutively numbered and clearly not contemporaneous with the fuel purchases, were accepted by the Respondents in good faith and resulted in a reduction of the assessment.  Had he been able to produce more cogent evidence to the Commissioners or, indeed, this Tribunal to explain or verify his legitimate fuel usage – regardless of whether it was personal or not - he may have had further success in achieving a reduction in the overall assessment.  He failed, however, in that regard.
28.	In short, the onus is on the Appellant to establish that for the assessment period in question the fuel used was “duty paid”, and this Tribunal finds that the Appellant has failed to discharge that onus.  In terms of the assessment which the Respondents undertook, and the calculations on which it was based, those appear to this Tribunal to be entirely reasonable in the circumstances.  The Respondents took into account all relevant information that was provided to them and disregarded nothing to which weight ought to have been given.  In those circumstances this Tribunal upholds the Respondents’ assessment and DISMISSES the appeal.
29.	The Respondents made no application for costs and no order is given in that regard.

Ian Huddleston
Chairman 6 August 2008