[2009] UKFTT 295 (TC)

TC00239

EXCISE DUTY – restoration of goods – cigarettes and tobacco – appeal against HMRC review – although “guideline” amounts not exceeded goods were not for own use and had been held for a commercial purpose – review decision reasonable – appeal dismissed

FIRST-TIER TRIBUNAL (TAX CHAMBER)

                                                         JANET GARBACKA                                        Appellant

- and -

THE COMMISSIONERS FOR

                                      HER MAJESTY’S REVENUE AND CUSTOMS         Respondents

Tribunal:        Ian Vellins (Judge)

                        Susan Stott (Member)

Sitting in public in Manchester on 1 October 2009

The Appellant appeared in person

Josh Shields, counsel, instructed by the General Counsel and Solicitor to Her Majesty’s Revenue and Customs for the Respondents

© CROWN COPYRIGHT 2009

DECISION

The appeal

1.           In this appeal the Appellant is Miss Janet Garbacka, who lives in Stoke-On-Trent.  She appeals against a decision of a review officer of HMRC dated 19 November 2008 not to restore to her excise goods of 1,580 cigarettes and 3kg of hand-rolling tobacco (“the goods”) seized on 30 August 2008 when she was stopped at Dover Easton Docks having returned from a trip to Ostend, Belgium.

2.           At the hearing of this appeal the Appellant represented herself and HMRC were represented by Josh Shields, counsel.  Oral evidence was given by the Appellant herself and by her friend Michael Homer, and by the review officer, David Harris.

The background

3.           On 30 August 2008 the Appellant was a coach passenger on a trip to the continent with her friend Michael Homer, when the vehicle was stopped and the passengers questioned at the UK Customs Control at Dover Eastern Docks.  The Appellant had in her possession 1,580 cigarettes and 3kg of hand-rolling tobacco purchased by her at Ostend.  The Appellant was questioned by an officer of HMRC.  At the end of that interview the officer concluded that the goods were not for the traveller’s own use and therefore liable to UK excise duty, and the officer seized the goods.  The Appellant wrote to HMRC requesting restoration of the goods.  Restoration was refused.  The Appellant requested a review of that decision.  The review officer upheld the decision.   The Appellant appealed to the tribunal on 2 December 2008 claiming that the goods were “within my limit”, that the cigarettes for her own use and that the tobacco was for presents.

The interview

4.           At the interview at Dover on 30 August 2008, when asked by the officer how much the goods cost, the Appellant replied that she was hopeless with money and could not remember but said that she thought that the goods had cost about £200.  She said that she had taken about £500 - £600 with her on the trip, and that she had money left because she was going to buy presents for birthdays but couldn’t find any.  She said that Mr. Homer, who had accompanied her on the trip, had paid for his own goods.  She said that the goods that she had bought were for herself.   She said that she smoked about 40 cigarettes a day, a mixture of ordinary cigarettes and tailor-made cigarettes.  She said that a pouch of tobacco would last her just over a week.  She was asked how many roll-ups she got from a pouch, and she replied that that depended on how thick they were, sometimes 100, sometimes less.  She said that she smoked probably about 20 tailor-made cigarettes in a day and there was a 50/50 split between the types of cigarettes.

5.           The Appellant stated that she was unemployed for health reasons and obtained income support of about £128 per week.  She said that she was very behind in most of her bills.  She stated that she had no savings.  She stated that the money for the trip came from money that she had “saved and scrimped” and that it had taken her probably 12 months to save the money.  She said that she had been to buy tobacco and cigarettes before, at the end of February 2008.

6.           The Appellant told the officer that the coach ticket had cost her £89.97, and that she had opened one packet of cigarettes.  She said that she was staying in Folkestone.  She said that she normally bought tobacco and cigarettes at a supermarket mostly, besides the trips abroad.  She stated that in February 2008 she had purchased 6 packets of tobacco and 1,000 cigarettes abroad.  She said that the goods she had purchased in August 2008 would last her until about Easter 2009.

7.           The officer, following the interview, decided to seize the goods, the officer being satisfied that the goods were not for the Appellant’s own use.  In deciding to seize the goods the officer took into account that the goods were within the amounts specified in the guidelines (3,200 cigarettes and 3kg of tobacco), but concluded that they were held for a commercial purpose, on the grounds that the Appellant at interview had stated that she did not know how much she had spent, then stating £200, whereas the goods must have cost her over £444.  She received income support and indicated that she was struggling with bills.  She had stated that it took her 12 months to save the money up but she had in fact bought goods on a previous trip in February 2008.  She had told the officer that a 50g pouch of tobacco lasted her just over a week and that she consumed 20 rolled cigarettes per day.  That would mean that even over a 7 day period she would need to obtain 140 rolled cigarettes from a pouch.  Such a level of consumption was implausible.  On these grounds the officer was satisfied that the excise goods were held for a commercial purpose, being not for own use.

8.           The Appellant challenged the legality of the seizure at the Magistrates’ Court but thereafter withdrew her appeal.

Correspondence and review decision

9.           In a letter from the Appellant to HMRC dated 2 September 2008 the Appellant indicated that the hand-rolling tobacco had cost her £204 and the cigarettes £276, totalling £480.  She asked for her goods to be returned to her.  On 13 September 2008 she wrote again to HMRC stating that she did not wish to proceed with proceedings in a Magistrates’ Court.  She claimed that the tobacco and cigarettes were for her own use.  She claimed that she had been misled by what was stated in pamphlets and stated that the tobacco was for Christmas presents and a birthday.  On 26 September 2008 an officer of HMRC replied refusing to restore the excise goods.  On 22 October 2008 the Appellant wrote to HMRC asking for a review of that decision, stating again that the cigarettes were for her own use and that the tobacco was for birthday and Christmas presents, and the amounts were well within the limits stated in the pamphlets that she had read on the coach.

10.        On 19 November 2008 Mr. Harris, the review officer, reviewed the decision not to restore the seized excise goods to the Appellant.  Mr. Harris did not consider that the Appellant had purchased the goods for her own use.  From her replies at the interview it was apparent to Mr. Harris that she was unaware of how much she had just spent on goods she claimed were for herself.  She had told the officer that she could not remember, but then thought about £200.  However, the tobacco had cost £204, and she had stated in correspondence that the cigarettes had cost £276, totalling £480.  Mr. Harris considered that she had not told the officer the truth.  In addition he concluded that a person in her financial position would not be in a position to spend £480 from a limited income of £128 a week and she had told the interviewing officer that she was behind with her bills.  Also she had told the interviewing officer that she had saved for 12 months in order to pay for that day’s goods, but this reply did not sit well with her later reply at the interview when she had told the officer that she had bought a large quantity of tobacco products in February 2008.  Such an inconsistency did not persuade Mr. Harris that this was a bona fide movement of excise goods.  Mr. Harris was also drawn to the consumption rate claimed by her.  She plainly told the officer that a 50g pouch of tobacco lasted her for just over a week and that she consumed 20 rolled cigarettes a day.  Therefore, that would mean that even over a 7 day period she would need to obtain 140 rolled cigarettes from a pouch.  Mr. Harris considered that such a level of consumption was implausible as it was generally accepted that a 50g pouch of tobacco would yield 80-100 rolled cigarettes.

11.        On 2 December 2008 the Appellant appealed to the tribunal, stating as the grounds of appeal that she was well within her limits, the cigarettes were for her own use and that the tobacco was for presents.  The Appellant also wrote a letter to the tribunal dated 2 December 2008 stating that she had to borrow the money to buy the goods so was even more in debt because she had to pay this money back.  She stated that the cigarettes were for herself, as the trip to Ostend was to buy these cigarettes which were cheaper.  She stated that the tobacco was for Christmas presents.  She complained that the coach on which she was travelling contained passengers who had purchased a lot more cigarettes than she had and she stated that she knew for a fact that they were for selling in the United Kingdom.  She complained about the way that she had been treated by the Customs officers at Dover, and that the seizure of goods had cause her hardship as she was only on benefits and now had to pay full price for the cigarettes at the shops.  She stated that the pamphlets that she had read had stated that she was allowed 3,200 cigarettes.

Evidence at hearing of appeal

12.        At the hearing of the Appellant the Appellant stated that she had gone on the coach trip for a weekend break with her friend Michael Homer.  She said that she was going for the weekend and might buy some cigarettes for herself and presents for Christmas.  She stated that she had been a very heavy smoker, smoking Superkings and rolling tobacco, which she smoked when she had used up the cigarettes.  She said that she smoked over 20 a day but had given up smoking since the events as she now could not afford to do so.  She said that prior to the trip in August 2008, she had been on a trip in February 2008 but then had bought about 1,600 cigarettes and some tobacco, but could not remember the quantity.  She stated that she had used up those goods by August 2008.

13.        The Appellant said that she had last worked in 1996.  She had health problems relating to her back.  She said that she received income support of £60 per week.  It was put to her that she had told the interviewing officer that she received £128 per week in income support.  The Appellant replied that the £128 per week was for the two of them, herself and her partner, Mr. Homer.  She said that she had no savings.  She said that for the trip in August 2008 she borrowed from her brother the money that she had taken with her, about £500 to £600.  She was going to buy tobacco and cigarettes and birthday presents.  She said that Mr. Homer had brought with him money of his own for his own cigarettes.  She said that in Ostend she spent about one and a half hours looking around, and there bought 1,600 Superking cigarettes and 3kg of hand-rolling tobacco, but nothing else.  She said that the 1,600 cigarettes were for herself for six months’ supply.  With regard to the 3kg of tobacco she stated that two packs were for herself, two for her father and two for her brother.  She did not buy any goods in Calais apart from a bit of chocolate.

14.        The Appellant said that she was questioned in Dover by a female officer of HMRC.  The Appellant said that she did not like her attitude, “a young bit of a girl talking to me like that”.  She said that she was the only one on the coach who had goods taken away.

15.        The Appellant agreed that she had told the interviewing officer that she had only spent £200, and that she had not mentioned that the goods had cost her a total of £480.  Her explanation was that she thought that the officer was only asking her about the cigarettes.  She agreed that she could not make 140 rolled cigarettes out of a pouch, but only just over 100.  She thought that the attitude of the officer had been totally unfair.  She had read the pamphlets on the coach and thought that she was allowed to bring in goods within those limits.  She was also aggrieved that her interview had delayed the coach and no-one had talked to her on the journey afterwards.

16.        It was put to the Appellant that although she had told the tribunal that she had borrowed the money from her brother, and had also mentioned this in her letter to the tribunal on 2 December 2008, she had not told the interviewing officer, or mentioned in correspondence to HMRC that she had borrowed money from her brother.  The Appellant could not explain that discrepancy, but could only say that it was a mistake.  She insisted that she had borrowed money from her brother, saying that she could not have saved £500 herself.

17.        It was further put to her that whereas at the hearing she had stated that her income was only £60 per week from benefits, she had told the interviewing officer that she received £128 per week.  The Appellant could not provide any satisfactory explanation for that discrepancy.  She said that the £128 per week that she had mentioned to the interviewing officer was for herself and Mr. Homer, with whom she had cohabited.

18.        At the hearing, when questioned further, the Appellant said that she had borrowed some of the money and saved some of the money that she had taken with her on the trip.  When asked why she had not used the money to pay the bills that she had owed, she replied that she was entitled to a holiday.  She said that she saved £15 per week.  It was put to her that she had told the interviewing officer that she had saved for 12 months, which could not be right as she had previously been to Ostend in February 2008, some six months previously.  She then said that she started saving again for the August trip, but had about £300 left from the February trip.  When asked why she had not used that money to pay her bills that she had owed, she replied that she did not like spending all that money even though she had bills in excess of this.

19.        The Appellant was asked why she had told the interviewing officer that the goods in August 2008 had cost only £200, when in fact they had cost £480.  The Appellant replied that it was the way that the officer was talking to her, that the Appellant had had enough and just wanted to get away.  When it was put to the Appellant that this was only at the beginning of the interview, she had no explanation for the discrepancy except to say that she had made a mistake.

20.        It was further put to her that there was a discrepancy in the amount of cigarettes that she had smoked per day, in the replies that she had given to the officer and in her evidence at the hearing.  It was put to her that she had told the officer that she smoked 20 tailor-made cigarettes in a day in addition in an equal amount consumed in commercial cigarettes, indicating 40 a day in total.  At the hearing she had indicated that she had smoked 20 a day.  She was asked if she could account for that discrepancy but replied that she did not know.  It was further put to her that at the interview she had indicated that she smoked 20 tailor-made cigarettes a day, and that a pouch would last her a week, which indicated that she was telling the officer that she smoke the equivalent of 140 tailor-made cigarettes per week from a pouch, whereas it was improbable that she would have been able to roll more than 100 tailor-made cigarettes from a pouch of tobacco.  The Appellant could not explain that discrepancy, and indicated that she had not smoke 140 tailor-made cigarettes per week.

21.        The Appellant said that she had borrowed between £500 and £600 from her brother which she was going to pay back at the rate of £10-15 per week.  She said that she had brought about £200 savings with her on the trip and had brought back with her between £300 and £400 but could not remember exactly how much.  It was put to her that she was now saying that in total she had taken £700-800 with her on the trip (partly savings and partly monies borrowed from her brother), but had only told the interviewing officer that she had taken £500-600 with her.  She was asked why she had not mentioned the other £200 to the interviewing officer.  The Appellant replied that the £500-600 was for tobacco, and the other £200 was for what she buying for herself.  She was then asked exactly how much money did she bring with her on the trip and she replied £500-600 and that was her final answer.  She said that she had not bought any perfume or stuff like that because she did not have time.

22.        Michael Homer gave evidence at the hearing that he had accompanied the Appellant on the trip to Ostend.  He had bought 2kg of Golden Virginia tobacco for himself, which cost him about £247.  He said that this money came from his own savings.  He said that he was not living with the Appellant at the time of the trip as they had split up but that they had got back together three or four months afterwards.  He said that he had noticed when she came out of the interview that she was a bit dazed.

23.        The review officer, David Harris, gave evidence at the hearing confirming his review decision dated 19 November 2008.  He considered that his decision had been made after a full consideration of all the circumstances.  He considered that the Appellant had been importing the goods which were not for her own use, but which were held for a commercial purpose.  He considered that the Appellant was importing the goods on a for-profit basis.  He had taken into account that the Appellant’s amounts were within the guidelines, but confirmed that the guidelines were not an entitlement and amounts within the guideline figures were forfeitable if imported for a commercial purpose.

Findings of fact and law and conclusions

24.        The law relating to the issues in this appeal is set out in the Tobacco Products Duty Act 1979, the Excise Goods (Holding, Movement, Warehousing and REDS) Regulations 1992, Council Directive 92/12/EEC Articles 8 & 9, Excise Goods, Beer and Tobacco Products (Amendment) Regulations 2002 and Customs and Excise Management Act 1979.

25.        The effect of the Excise Goods, Beer and Tobacco Products (Amendment) Regulations 2002 is that in the case of tobacco products acquired by a person in another Member State for his own use and transported by him to the United Kingdom, the excise duty point is the time when those goods are held or used for a commercial purpose by any person.  If the goods in question are transferred to another person for money or money’s worth (including any reimbursement of expenses incurred in connection with obtaining then), or the person holding them intends to make such a transfer, those goods are to be regarded as being held for a commercial purpose.  The 3,200 cigarettes and 3kg of any other tobacco products referred to therein are guidelines.

26.        The Appellant when intercepted at Dover had in her possession 1,580 cigarettes and 3kg of hand-rolling tobacco.  We find that the Appellant did not tell the truth when questioned by the interviewing officer at Dover.  We find that she was evasive at her interview and that there were a number of inconsistencies between her answers at the interview, and the evidence at the hearing of this appeal.

27.        She clearly told the interviewing officer that the goods had cost £200.  In reality the cigarettes and tobacco had cost £480.  She told the officer that she had taken with her on the trip about £500-600.  There was no mention at the interview of borrowing any money from her brother, nor was there any mention of this in her correspondence to HMRC.  It was only in a letter to the tribunal with her Notice of Appeal, and in her evidence at the hearing of the appeal that she mentioned having borrowed money from her brother.  Then having giving evidence at the hearing that she borrowed £500-600 from her brother and taken £200 of her own savings with her (which would have totalled £700-800), she then contradicted herself and stated that the total money she had taken with her on the trip was £500-600.  She had told the interviewing officer that she received £128 per week income support.  She contradicted this at the hearing of the appeal, stating that she in fact received £60 per week income support and that was her only source of income.  She also told the interviewing officer that she was behind with most of her bills.  We did not find credible her assertion that, in those financial circumstances, she intended to spend over £550 on a coach journey to Ostend and on purchasing goods for her own use.  Her suggestion that she had savings of her own, when faced with bills owing, was not credible.  She had previously travelled to Ostend in February 2008 and purchased goods on that occasion.  The cost of such trips and the purchase of goods at such cost do not accord with her financial circumstances, and lead to the conclusion that she was purchasing goods in August 2008 for a commercial purpose.  There were inconsistencies in the consumption rate claimed by her before the interviewing officer, and at the hearing, and her suggested consumption of rolled cigarettes are not credible both as to amount and so to cost in her financial situation.

28.        We found the Appellant to be an evasive witness, and an untruthful witness, and we did not believe her evidence that she was importing the goods for her own use and as presents for her family.  We find that she was importing the goods for a commercial purpose, on a profit basis.  We find that the decision of the review officer, David Harris not to restore the goods was in accordance with the publically stated policy of HMRC, was a reasonable exercise by HMRC of their discretion and we find that the officer had taken into account that the imported goods did not exceed the guideline amounts and that the Appellant believed that an importation of goods within those guideline amounts was permissible.  We find that the seizure by HMRC of the goods was lawful.  The interviewing officer had been satisfied that goods were held for a commercial purpose, being not for own use, and had seized the goods in accordance with the law.  The appropriate Notices were issued to the Appellant.  The Appellant did not persevere with the challenge to the legality of the seizure in the Magistrates’ Court.  The goods were condemned as forfeited to the Crown by the passage of time.  We find that the review officer in his decision applied the policy of HMRC in relation to the seizure of excise goods, which were considered as not for own use.  We find that the excise goods that the Appellant was bringing to the United Kingdom were properly regarded by HMRC as being held for a commercial purpose.  We find that there has been no error on a point of law by the review officer.  We find that HMRC have not acted in a way that no reasonable panel of Customs could have acted, and that they have not taken into account irrelevant matters or disregarded something to which they should have given weight.

29.        Accordingly we dismissed the Appellant’s appeal.

30.        HMRC did not apply for costs and we make no order as to costs.

MAN/2008/8129

IAN VELLINS

JUDGE
Release Date: 4 November 2009