First-tier Tribunal (Tax)

[2009] UKFTT 168 (TC)

Arthur v Her Majesty's Revenue & Customs [2009] UKFTT 168 (TC) (15 July 2009)
EXCISE DUTY RESTORATION OF VEHICLE (see also EXCISE APPEAL)
Conditions

TC00130

Appeal number LON/2004/8032

EXCISE – Restoration conditions – Vehicle – Jaguar sold by Customs when restoration conditions under appeal – Tobacco goods on not for profit basis – Appellant asserted some for personal use and some for gifts – Duty on goods £2,285 – Fee for restoration of vehicle £2,000 – Review decision failed to specify payment in lieu of car sold – Cheque accepted subject to dispute as to £2,000 deduction – Review did not address own use element – Rainbow (2003) E393 considered – Although review defective no new review directed – Appeal dismissed

FIRST-TIER TRIBUNAL

TAX CHAMBER

ROGER BRIAN ARTHUR Appellant

- and -

THE COMMISSIONERS FOR HER MAJESTY'S

REVENUE AND CUSTOMS (Excise) Respondents

TRIBUNAL: THEODORE WALLACE (Judge)

ALEX McLOUGHLIN

Sitting in public in London on 19 June 2009

The Appellant in person

John O'Flaherty, counsel, instructed by the Solicitor for the Respondents

© CROWN COPYRIGHT 2009


 


DECISION

1. These proceedings have a long history. They concern the conditions for restoration of the Appellant's Jaguar Sovereign seized at Dover on 6 January 2001.
2. The Appellant did not make a claim against forfeiture but asked for restoration of the vehicle. Restoration was offered by letter dated 16 January 2001 conditionally on payment of a fee of £2,000.
3. A review dated 22 March 2001 confirmed the restoration fee, stating that the excise duty on the 20.25kgs of tobacco, 2400 cigarettes, 70 cigarillos and 24 litres of beer in the vehicle was £2,284.73.
4. The Appellant appealed. The grounds were as follows:

"Goods were for own use (within the section 3 amendment) – although it was planned for family members to pay a contribution to the travel cost – they did not travel and therefore did not pay. Procedures were not followed by Customs at Dover.

I was incorrectly given the impression that I was entitled to make a statement at a later date by writing to the review officer."

5. Before the original appeal was heard the vehicle was sold by auction by the Queen's Warehouse on 28 August 2001 for £1,550. The practice of selling vehicles when restoration appeals are pending has since been discontinued.
6. On 10 March 2004 the original appeal was heard in Bristol (LON/01/8031). The Respondents were represented by counsel. The Tribunal had previously directed a skeleton argument as to the powers of the Tribunal in circumstances when the goods in question had been disposed of when the matter was still under appeal.
7. After interchanges between the Tribunal and counsel for the Respondents, the Tribunal directed that the appeal be allowed by consent and that the Respondents carry out a further review of the decision under appeal. The Tribunal made no directions as to the basis on which the review should be conducted, and in particular no findings of fact.
8. The power to direct a new review is contained in section 16(4) of the Finance Act 1994 and arises "where the Tribunal are satisfied that the Commissioners or other person making that decision could not reasonably have arrived at it." "That decision" is the review decision. In Bowd v Customs and Excise Commissioners [1995] V&DR 212 it was decided that the words "could not reasonably have arrived at it" covered the question whether the Commissioners had acted reasonably in the Wednesbury sense. To put it in another way, a new review can be directed where the review under appeal is defective in law or is based on facts which are found to be incorrect or irrelevant or fails to take account of facts or matters which are relevant..
9. There is nothing to indicate why the Respondents accepted and the Tribunal was satisfied that the review was defective. The Statement of Case in this appeal stated at paragraph 16 that the appeal was allowed by consent due to the Commissioners' failure to comply with various directions. Such failure however would not have given rise to the power under section 16(4) to direct a further review.
10. The review was carried out by Mrs G M Hurrell and was dated 30 March 2004. In a lengthy document running to 15 pages she concluded,

"… that the decision to offer conditional restoration of the vehicle should be upheld. Due to the fact that the vehicle itself is no longer held, restoration remains offered by way of an appropriate sum, which should take account of the restoration fee required of £2,000.

It is not within my gift to decide on the appropriate sum to be offered in lieu of the vehicle …"

11. This appeal is against that review. The notice of appeal on 20 April 2004 was on the grounds that,

"The review officer took into consideration a great deal of subsequent communication not relevant to the original seizure, and dealing with compensation claims arising from the irregular disposal of the vehicle. There is dispute over the circumstances of seizure, legality of restoration fee and arguments under Lindsay, Hoverspeed and various other rulings."

12. This case was listed to be heard together with Powell v Customs and Excise Commissioners [2005] V&DR 1 in order to consider the jurisdiction and powers of the Tribunal when Customs have disposed of the goods seized. The Tribunal was assisted by David Ewart, as Advocate to the Tribunal, appointed by the Solicitor General. Mr Arthur was unable to attend and the hearing in Powell alone continued.
13. In Powell the Tribunal decided that "restoration" in section 152(b) of the Customs and Excise Management Act 1979 included payments in place of restoration where restoration was not possible and that the Tribunal had jurisdiction to consider the reasonableness of the payment offered and the value of the goods in question. The Tribunal directed that Mr Powell was at liberty to lead evidence as to the value of his motor-cycle. There was no appeal by Customs against the decision in Powell.
14. Following Powell on 19 August 2005 the Tribunal directed that it had jurisdiction in the present appeal to consider the value of the vehicle and the reasonableness of the payment.
15. The decision in Powell has the further effect that where a vehicle has been disposed of and payment in place is offered that payment must be specified in the review. The review in this case was decided before Powell and did not state the figure. It was therefore incomplete and defective in law.
16. Meanwhile in September 2004 the Appellant cashed a cheque from Customs for £6,275, based on the £8,275 retail value given in Glass's Guide for a Blue Jaguar Sovereign 3.2 Auto 4 door saloon registered on 12 August 1993 in good condition with a mileage of 120,000, with the deduction of £2,000. Mr O'Flaherty accepted that this did not as a matter of law settle this appeal.
17. The Appellant does not now challenge the £8,275 valuation. His dispute is over the £2,000 deduction.
18. In his skeleton argument Mr O'Flaherty contended that the Appellant could not challenge the validity of the seizure. The Appellant told us that when he consented at the hearing in March 2004 to a re-review he did not know that the re-review would be confined to the fee for restoration but thought that all issues would be open; he said that if he had been told that he would have no right to go back to the original seizure decision he would not have agreed to the review in March 2004 without a hearing.
19. By the time of the Bristol hearing in March 2004 the Court of Appeal had decided in Gora v Customs and Excise Commissioners [2003] WLR 160 that if the owner failed to give notice of a claim against forfeiture the effect of the deeming provision in Customs and Excise Management Act 1979, Schedule 3, paragraph 5 prevented him from challenging the forfeiture in the Tribunal. Although the decision in Gora has been overtaken by the later decision of the Court of Appeal in Gascoyne v Customs and Excise Commissioners [2005] 2 WLR 222 where it was held that in certain circumstances the Tribunal can reopen the issues deemed to have been decided, see [54-55]. As appears below at paragraphs 29 and 30 that is academic in this case.
20. The decision to restore for a fee was made on the basis that the Appellant had bought goods on a not for profit basis for family and friends.
21. Nolan Paul Kent who stopped the Appellant made a note. He recorded the Appellant as saying that he had forgotten his money but had bought some fags on the boat with a switch card. The Appellant did not mention tobacco. Mr Kent asked the Appellant to open the boot and found three boxes of hand rolling tobacco totalling 18kgs. He noted the Appellant as saying (inter alia),

"To be honest, I just wanted to sort out my finances. My family have given me £50 each towards the goods and cost of travel."

Mr Kent noted that he asked, "So these goods are not for your personal use"? The reply was, "Not all." Mr Kent recorded that the commerciality statement was read and the Appellant said that he wished to go, at which point the car and goods were seized. The Appellant initialled the note as an accurate account and added three sentences as follows:

"I would like to add that I felt I had told the officer I also had the tobacco in the car. I was under the belief that it was legal to import goods for direct family and that they could pay part of the costs, the money I forget to take was for beer and spirits."

22. On 9 January 2001 the Appellant wrote asking for return of the vehicle. His letter included the following passages:

"Originally the trip was planned to take four of my family, on a day trip to France, primarily as a thank you for their help … the others backed out for various reasons having paid for the trip …

"The others gave me their money and I was to buy tobacco, spirits wine and beer on their behalf, which as there was to be no profit, I felt was legal … This was the money I had left behind, which I mentioned to the officers …

"Two of my brothers had been doing some building work for me at no charge and I had decided to get them a box of tobacco each, and some cigarettes as a payment … In addition I had got cigarettes and tobacco for the rest of my family and friends as a thank you for all their help. The amount that the absent members of my family had contributed was £150. Their orders were twenty pouches of tobacco a case of Stella Artois and a bottle of spirits each. I was going to give them some tobacco and cigarettes in addition."

He ended the letter by commenting on the courteous attitude of Customs' staff.

23. Following the decision to restore the car on payment of £2,000, he wrote a letter on 30 January 2001. This was considerably longer. He wrote that he had decided to charge his family £50 to cover most of the fuel and tickets but that this was never paid.

"They had discussed what they could afford to buy and I decided to translate that into an order, which to be frank I knew would never be paid for."

He wrote that he was intending to give a box of tobacco and 200 cigarettes to each brother, 40 pouches each to his nephew and his father and 20 pouches each to his uncle and a friend. The remainder was for himself. He gave the total cost of the tobacco and cigarettes as £978. The cost of the journey including petrol from Cornwall and fares was approximately £190.

24. The original review upholding the decision to restore for £2,000 was dated 22 March 2001. Following sale by Customs of the car, he agreed to withdraw his action if agreement could be reached on compensation for the car. He wrote on 18 June 2002, "I also agree that any figure will take into consideration the deduction of £2,000."
25. Following further correspondence and a telephone conversation the Appellant cashed a cheque for £6,275 referred to at paragraph 16 above. There was no agreement to settle this appeal. Mr Arthur told us that he was no longer disputing the figure of £8,275 for the car but wanted to challenge the £2,000 deduction : he said that he wanted to challenge the fact of any deduction being made rather than the amount.
26. He told us that the family did not pay him £150; he had put this in the letter because he was advised to be totally open and honest and they had intended to pay that towards the cost of petrol if they did come. He said that he was in a very bad state when he signed the statement, being shocked about the car. He said that since the goods were confiscated, the £2,000 deduction was in effect a fine. He said that at the time of the seizure of the car he was not aware of the condemnation alternative.
27. Mr O'Flaherty's submissions were largely contained in an eight page skeleton argument. He said that in the light of Gascoyne it would be an abuse for the appellant now to challenge the validity of the seizure. He submitted that the decision to make the deduction of £2,000 was one which a reasonable body of commissioners could have reached. He cited Rainbow v Customs and Excise Commissioners (2003) E 393 where the Tribunal had approved such conditional restoration. The £2,000 deduction here was less than the duty on the goods. He stated that he was not applying for costs.

Conclusions

28. Although the Appellant told us that contrary to what the officer recorded in the note (see paragraph 21 above) he had in fact been paid nothing towards the trip, it is clear on the evidence that he was in any event expecting to be paid and that it is likely that he would have received at least £150 if he had not been intercepted on his return.
29. We are satisfied that any challenge to forfeiture in the magistrates court would have been doomed to failure, even if the court had accepted that, contrary to the note which he signed, he had never actually been paid any money. It is quite clear that when a person buying goods for others is reimbursed or is to be reimbursed part of the expenses of the trip, the own use relief is not available. This was not a de minimis case. Since the goods were carried in the car, the car was liable to forfeiture.
30. The deemed forfeiture does not however determine the facts beyond the fact that the vehicle was liable to forfeiture. In particular it does not decide what proportion of the goods were for the Appellant's own use, what proportion were for those who contributed or were to contribute to the expenses, whether a further payment would be received for goods "ordered" and how far the goods for his brothers were a quid pro quo for work done. The addition to the officer's note and the letters of 9 and 30 January 2001 were both contradictory and confusing. The Appellant did not leave us with a clear picture of what he asserted really happened. We are prepared to accept that the Appellant now, eight years later, believes that he received nothing from his family, however the notebook addition makes no sense if that belief is correct.
31. It is clear from the decision of the Court of Appeal in Lindsay v Customs and Excise Commissioners [2002] 1 WLR 1766 that when considering restoration the Commissioners must pay regard to the principle of proportionality and that where importations not for profit are concerned proportionality requires consideration of the particular facts, see per Lord Phillips MR at [64].
32. In Rainbow, the Tribunal (chairman, Stephen Oliver QC) concluded that a decision to require £1,625 for restoration of a car worth £10,500 was on the facts disproportionately large and quashed the decision directing a new review. The Tribunal concluded that the "commercial" imports were only half and considered that the appropriate amount given that Mr Rainbow had lost all the goods was the duty on the half bought for not for profit sale.
33. The Review in this case gave no consideration to the proportion of the excise goods which were for the Appellant's personal use or genuine gifts as opposed to not for profit sales to his family. However the Appellant had provided no clear indication as to what this proportion was since he did not remain for interview when stopped. Given that he wrote commenting on the courteous attitude of the staff, we do not accept that he was too shocked to be interviewed.
34. Compared with the indicative limits, the amount of goods imported was relatively large, and it is clear that most of the goods were not for the Appellant. It is unclear whether any was for pure gifts to people who were to make no contribution whatsoever. The sum was in fact mitigated to £2,000 from the £2,295 duty involved.
35. As pointed out already the Review was defective in that it did not state the figure offered in place of restoration of the car. It was thus an incomplete or partial review. However section 16(4) does not oblige the Tribunal to exercise one of the three powers under that section. Since the figure for the car is not now in dispute, no purpose would be served in directing a review specifying the figure.
36. The Review did not address the £2,000 condition beyond stating that it was less than the duty. In particular it did not address the pure own use element. However in spite of writing a number of letters, some quite lengthy the Appellant did not do this either. It is clear that Customs are entitled to demand a payment for restoration as a sanction additional to the loss of the goods. The amount required was 10 per cent less than the duty. We do not consider that this is a proper case to direct yet another review after such a long lapse of time when the Appellant has provided no satisfactory evidence on which to decide how much was for his personal use.
37. The appeal is dismissed.

THEODORE WALLACE

TRIBUNAL JUDGE

RELEASE DATE: 15 July 2009