England and Wales Court of Appeal (Criminal Division) Decisions

IN THE COURT OF APPEAL
CRIMINAL DIVISION

		Royal Courts of Justice The Strand London WC2
		1st May 1998

THE VICE PRESIDENT: On 20th August 1997, at Maidstone Crown Court, this appellant pleaded guilty to being knowingly concerned in the fraudulent evasion of duty chargeable on goods contrary to section 170(1)(b) of the Customs and Excise Management Act 1979. He was sentenced by His Honour Judge Neligan to 3 years' imprisonment. Against that sentence he appeals by leave of the Single Judge.

The facts can be shortly stated. In the early hours of the morning of 24th January 1997, in Kent, on a motorway, a van was stopped by police officers on mobile patrol. They stopped it because it seemed to be overweight. The appellant was a passenger. The van was searched. It contained a large number of cans of beer. Subsequently, the appellant's home was searched and a total of approximately 86 litres of spirits, 68 litres of wine, 4,500 cigarettes and 8 litres of beer were recovered, which the appellant, through his counsel, tells this Court, although the sentencing judge was not provided with this suggestion, had been acquired by the appellant from duty free shops. There were also found, at his house, several pieces of paper with names and telephone numbers on them, which were attributable to off-licences. There were also receipts for goods from off-licences.

Enquiries were made, which revealed that the appellant, as is accepted on his behalf by counsel, had made a total of 82 trips across the channel between November 1995 and September 1996. Those trips had been in a variety of vans or mini buses that had been hired in his name. This Court has been told by counsel, though the learned sentencing judge was not told this, that the appellant did not hire the vans. We have to say that we view that suggestion, like the suggestion as to the source of the alcohol and tobacco found in the appellant's home, with very deep scepticism, bearing in mind that those matters were not mentioned to the sentencing judge.

On two occasions, 30th June 1996 and 31st October 1996, the appellant had been stopped by customs officials in Dover, and quantities of alcohol and cigarettes in the vehicle in which he was had been confiscated. It is apparent that, despite the warnings inherent in those stoppages, the appellant continued with his illicit activities.

When he was interviewed, the appellant said that the goods in the van when he had been stopped in January 1997 were for a party; he denied selling goods to other people and claimed, at that stage, though clearly he resiled subsequently from this contention, that the goods he had previously purchased were all for his own use.

The learned judge, in commendably succinct sentencing remarks, said that those who were engaged in schemes of this nature made huge rewards if undetected. The appellant had played an active part in these matters, and should expect to receive a substantial prison sentence. It is of significance that the total sum of duty evaded by the appellant, as is accepted on his behalf, was £164,000.

The appellant is now 26 years of age. He has no previous convictions for an offence of this kind, but he has previously been sentenced to a short period of imprisonment for driving while disqualified and, in 1995, he was convicted and fined for an offence contrary to the Forgery Act.

The submissions made on his behalf by Mr Peterson, who appeared for him in the court below are, first, that the learned judge afforded no adequate discount for the appellant's timely plea of guilty, and Mr Peterson points out, rightly, that the learned judge in passing sentence did not expressly refer to the plea of guilty. Secondly, Mr Peterson submits that the sentence passed upon the appellant was manifestly excessive.

In order to examine, in particular, the second of those submissions, the Court, with the assistance of

Mr Sells QC, on behalf of the prosecution, has been referred to a considerable number of authorities in this Court and in courts of first instance. Mr Sells has also drawn attention, in summary form, to the findings of a review conducted by customs and excise, following an instruction by the Chancellor of the Exchequer in December 1997, in relation to the prevalence and significance of the offence of evading duty contrary to section 170. To some of the matters which emerged from that review, we shall in a moment refer.

The maximum sentence for offences contrary to section 170 was increased, we are told, by the Finance Act 1988, section 12, in relation to offences committed after 29th July 1988, from 2 to 7 years. Accordingly, authorities such as R v Hart (1986) 8 Cr App R(S) 337, decided when the maximum sentence was only 2 years, can no longer be regarded as a reliable guide to the appropriate level of sentence.

There are, obviously, similarities, as it seems to us, between defrauding the customs and excise by evading duty and by evading the payment of Value Added Tax, for which latter offence the maximum penalty is also 7 years (see section 72 of the Value Added Tax Act 1994). Indeed, smuggling can be the means of evasion in both cases. In both cases, there can be other means of evasion, such as diversion or drawback from export of dutiable or vatable goods. We therefore receive some assistance from the authorities in this Court, in particular in relation to VAT evasion, such as R v Aziz [1996] 1 Cr App R(S) 265, as well as authorities in relation to duty evasion.

We have had regard to authorities culled from three sources: first, those referred to in Dr Thomas's Current Sentencing Practice, which it is unnecessary to list in this judgment, secondly, five unreported decisions of this Court, R v Hughlock (25th July 1994), R v Myles (2nd September 1997), where the judgment of the Court erroneously referred to the maximum sentence as being 2 years, R v Mann (2nd February 1998), R v Martin and White (Court of Appeal transcript, 20th February 1998), reported in The Times in relation to conviction on 17th March 1998 and R v Ollerenshaw (23rd April 1998); thirdly, those in a schedule of decisions between July 1997 and March 1998, by Crown Courts, such as Canterbury, Maidstone, Croydon and Norwich, where tobacco and liquor smuggling offences are quite commonly dealt with.

These authorities, almost all of which deal with pleas of guilty, indicate a range of sentences currently being imposed by reference to the amount of duty or VAT evaded, as follows: under £10,000, up to 6 months; £15,000 to £20,000, 4 to 15 months; £20,000 to £100,000, 9 months to two-and-a-half years; £100,000 to £500,000, 2 to 3 years, with 4 to four-and-a-half years following a trial; in excess of £1 million, five-and-a-half years on a plea, and 6 years following a trial.

As was pointed out in Ollerenshaw, the amount of duty evaded is an important factor in determining the appropriate sentence. But it is not the only factor. We venture to repeat what we said at page 5C in the unapproved transcript of the Court's judgment in Ollerenshaw:

"The authorities show that those who evade significant amounts of duty by such conduct, should expect to go to prison. The term of imprisonment will obviously be affected by a number of factors, including the amount of duty evaded. Aggravating features which are likely to increase the sentence include playing an organisational role in the importation; making importations repeatedly over a period of time; continuing to make importations despite a warning from the customs and excise authorities, and importing more than one type of dutiable goods, for example, alcohol and tobacco.

Mitigation will lie, as in almost all offences, in a prompt plea of guilty; as in many offences, in previous good character and, as in some offences, in the personal circumstances of the offender."

There is little doubt, on the information before this Court, that cross channel liquor and tobacco smuggling is a source of major loss to the Revenue approximately £950 million in 1996/1997. And there has been in recent years an increase in the number of those prosecuted for this activity, 466 in 1994/1995, 961 in 1995/1996, and 986 in 1996/1997.

Not all offenders are prosecuted. Minor offenders may merely have their goods seized and forfeited under Article 5(1) of the Excise Duties (Personal

Release) Order 1993 SI No 3155. A vehicle carrying goods may be seized under section 1(4)(i)(b) of the 1979 Act. Sometimes a civil penalty, akin to a parking ticket and contestable before the VAT and Duties Tribunal, may be imposed under section 170A of the Act. Sometimes an offence may be compounded by payment instead of prosecution under section 152(a).

In 1996/1997 there were approximately 7,000 seizures of goods, 2,000 seizures of vehicles and almost 2,000 civil penalties of £250. In the first 8 months of 1997/1998, there have been over 7,000 goods seizures, and 947 civil penalties.

The illicit import of alcohol and tobacco is often associated with other criminal activities involving gangs. There has, in recent times, been an increase in violence towards and intimidation of customs officers and ferry staff. Illicit alcohol and tobacco can pass more readily to under aged consumers and such goods are often transported in overloaded vehicles, to the hazard of other road users. Legitimate traders are unfairly deprived of business.

The courts need to distinguish between three broad categories of offenders: those who import comparatively small quantities on a few occasions; those who, acting on their own, or possibly with one other, persistently import greater quantities, and those in organised gangs, involved in importation on a large commercial scale.

There is, in our judgment, a need for a deterrent element in sentencing, particularly when significant amounts of duty are evaded by repeated organised expeditions, which lead to distribution subsequently on a commercial scale. In those cases, good character and personal circumstances will be of comparatively little mitigating significance.

In the light of all these considerations, and in an attempt to achieve a greater degree of uniformity in sentencing than has always been apparent hitherto, we suggest the following guidelines by reference to the amount of duty evaded. We stress that these are guidelines only, and that in addition to the amount of duty evaded, many other factors which we have earlier identified in this judgment, have a role to play in sentencing.

Cases involving less than £10,000 will frequently, though not always, properly be dealt with by magistrates (see the National Mode of Trial Guidelines 1995, issued by the Criminal Justice Consultative Council: these are to be found in 1998 Archbold paragraph 1, in particular, subparagraph 42, and 1998 Stones Justices Manual, Volume I, paragraph 6482). In any event, when the amount evaded is in thousands of pounds, custody will generally be called for, and, on a plea of guilty, sentences up to 6 months will be appropriate; for amounts between £10,000 and £100,000, sentences between 6 months and 2 years will generally be appropriate on a guilty plea; for amounts between £100,000 and £500,000, 2 to 3 years on a guilty plea, and up to 4 years, following a trial, will generally be appropriate; for amounts in excess of

£500,000, sentences in the region of 4 years, increasing to the statutory maximum of 7 years, when a million pounds or more in duty is evaded, will be appropriate, following a trial, with a suitable discount for a plea of guilty. In exceptional cases, where very many millions of pounds in duty are evaded, consecutive sentences may be appropriate; alternatively, it may be appropriate to charge conspiracy to cheat, which is capable of attracting higher sentences than those already indicated.

In addition to ordering imprisonment, in an appropriate case the court should also consider exercising its power to make a deprivation order under section 43 of the Powers of Criminal Courts Act 1973. Consideration should also be given to disqualifying drivers under section 44 of the same Act. Justices, of course, also have a power in relation to the revocation of licences, where licensees are involved.

In that context, we turn to the present appeal, which consisted of repeated wholesale importation by the appellant, in a van hired in his name, despite two previous warnings. He is not of good character and his record includes previous dishonesty.

In those circumstances, although the sentence of 3 years which was passed upon him was at the top of the bracket which we have indicated, following a guilty plea, it was not a sentence which, in our judgment, was so manifestly excessive that this Court should interfere.

Accordingly, this appeal is dismissed.