First-tier Tribunal (Tax)

[2009] UKFTT 354 (TC)

                                                                                                TC00292

Appeal number: LON/2008/8112

Excise Duty – Seizure of vehicle – Refusal of Restoration – Whether refusal reasonable and proportionate in the circumstances – Yes – Appeal dismissed

FIRST-TIER TRIBUNAL

TAX CHAMBER

WIESLAW PARYSEK

                             T/A WP-TRANS WIESLAW PARYSEK            Appellant

                                                                      - and -

                                 THE COMMISSIONERS FOR HER MAJESTY’S

                                       REVENUE AND CUSTOMS (Excise Duty)   Respondents

                                                TRIBUNAL: DR K KHAN (Judge)

                                                                        ANNE REDSTON

Sitting in public in London on 12 November 2009

The Appellant did not appear

Rupert Jones, Counsel, for the Respondents

© CROWN COPYRIGHT 2009

DECISION

1.         The matter was heard under Rule 33 of the Tribunal (Procedure) (First-tier Tribunal) (Tax Chamber) Rules 2009.

2.         Attempts were made to contact the Appellant by phone but these were unsuccessful.  The Appellant did not make contact with the Tribunal before the date of the hearing.

3.         The disputed decision of the Respondents is contained in a letter, dated 18 August 2008, in which the Respondents notified the Appellant that after conducting a review they would not restore a Mercedes Actros tractor unit, registration number FSLL 401 (“the vehicle”), seized on 7 May 2008.

4.         The relevant facts are as follows:

1.         On 7 may 2008 at Dover Eastern Docks Mr Rafal Szymanski (“the driver”) was stopped by Her Majesty’s Revenue and Customs (“HMRC”) while driving the vehicle, a tractor unit, which was towing a trailer registration FSL 46 EP.  The HMRC on examination of the Polish Operator’s Licence, was able to establish that the driver worked for WP Trans which was run by Wieslaw Parysek (“the Appellant”).

2.         HMRC examined the CMR dated 6 May 2008 with three delivery notes under number 780638, 780644, 780645.  The load being carried was paper with the final destination being John Dickinson, Braintree, Springwood Drive, Essex, EM7 7YN.

3.         HMRC explained the prohibition and restrictions on importing certain goods into the UK and asked the driver if he had any such goods.  He indicated that he was aware of the prohibition and restrictions and had no such goods.  The HMRC officer explained to the driver that a concealed compartment had been located beneath the cab of the vehicle.  The concealed area was shown to the driver who denied any knowledge of the concealed compartment. HMRC provided fourteen photographs to the Tribunal (exhibit reference PU 76745-Neale-001) showing the vehicle, the concealed area and other parts of the vehicle which explained its location.  The photographs also showed a similar unaltered vehicle

4.         In short the concealed area was created below the cab floor of the vehicle.  The area is located below the floor and above the engine and was concealed by a large metal plate.  When the metal plate was removed it revealed a large rectangular access point which led to an empty space.  The metal plate has been secured with bolts as to make the area largely inaccessible.  The empty storage chamber is not found in other similar vehicles which had not been adapted to create the space.  The officer concern was satisfied that the vehicle was adapted to conceal smuggled goods and therefore seized it under section 139(1) of the Customs and Excise Management Act 1979 (“CEMA”) and was liable to forfeiture under section 88 of CEMA.  The driver was issued with a Seizure Information Notice and a Customs notice 12A dealing with seized vehicles and goods.  As the Appellant did not challenge the legality of the seizure of the vehicle the vehicle was condemned as forfeit under paragraph 5 of Schedule 3 of CEMA.

5.         On 9 May 2008, the Appellant’s representative (Marinsz, Ratajczak, Kancelaria Adwokacka) wrote asking for the vehicle to be restored.  They stated that the concealed chamber was constructed and installed by the driver of the vehicle, Rafal Szymanski of his own accord and the Appellant had no knowledge of its addition to the vehicle.

6.         On 16 May 2008 the Respondents wrote to the representatives asking for proof of ownership of the tractor unit and asking what steps the haulier had taken to prevent their vehicle being used to carry smuggled goods. On 30 May 2008, the representatives wrote providing details of the vehicle and giving further information regarding the ownership situation.  They also addressed the steps taken by the Appellant regarding the prevention of smuggling.  On 30 June 2008, HMRC replied refusing to restore the vehicle.  On 8 August 2008, the Appellant’s representatives wrote asking for a review of the decision of 30 June 2008.  They ask in particular for it to be taken into account that a vehicle owned by the Appellant had not been seized before.  On 13 August 2008, HMRC wrote explaining the review process and inviting the Appellant to make representations in support of their request for a review. No further information was received from the Appellant before the review.  On 18 August 2008, the Review Officer wrote to confirm that after conducting a review the original decision not to restore the vehicle would be upheld and the vehicle would not be restored.

The Appellant’s case

5.         The Appellants by their notice of appeal dated 11 September 2008 appealed against the non-restoration of the vehicle.  The Appellants contend that they were not involved in smuggling but rather the driver had constructed and installed a concealed compartment unbeknown to his employer, the Appellant.  The Appellant was neither responsible nor complicit in the smuggling, it was a first offence and the driver has been reprimanded.  Their case rests essentially on the fact that the haulier was not responsible for the smuggling or the adapting of the vehicle for smuggling.

The Respondents’ case

6.         The Respondents contend that the review decision not to offer the seized vehicle for restoration was one that could have reasonably been arrived at for the following reasons:

1.         The Respondents applied the appropriate policy of HMRC to establish whether there was evidence satisfying the Commissioners that the driver, not the haulier, was responsible and complicit in the smuggling attempt and whether the haulier took reasonable steps to prevent smuggling and if restoration was appropriate in the circumstances.

2.         The Respondents also draw reference to the case of Eugene Crilly v Commissioners of Customs and Excise where it was stated:

“Furthermore, it seems to us that part of its legitimate aims in the public interest, the State is able to impose by means of a restoration policy obligations on vigilance on drivers and hauliers, providing that the burdens imposed as a result are not excessive so as to enable the relationship of proportionality to remain between the means employed and the aim sought to be realised.  The Commissioners’ policy in the instant case seems us to satisfy those requirements”.

7.         In considering this statement, the Review Officer looked at the evidence provided to establish whether the haulier, driver or both were responsible or complicit in the smuggling attempt.

8.         In particular, the Review Officer considered whether there was a previous seizure involving the Appellant.  On 6 May 2008 a vehicle registration number GD 2539L was stopped by HMRC at Dover Ferry Port.  The driver declared the load as Artex Power loaded in Germany.  The driver, Mr Kurnick, made a declaration that he had no cargo of cigarettes.  On examination of the cab area, the HMRC officer noted a non-factory welding and re-spray.  This revealed a secret chamber which was very clearly concealed with metal plates attached to nuts and bolts.  Once it was removed, a total of 35,000 cigarettes were found.  The vehicle was operated by the appellant company, WP Trans, which is owned by the Appellant.

9.         The Respondents say that the previous seizure contradicts the Appellant’s submission of 9 May and 8 August 2008 that “the above-mentioned vehicle or any other vehicle owned or used by this Appellant hadn’t been seized before”.  It transpires however that the Appellant had two vehicles seized within two days with the same or a similar secret chamber.  The Respondents say this undermines the defence that the driver had installed the secret compartment since the two vehicles had a similar concealed chamber.  In other words it is unlikely that two different drivers in charge of two different vehicles would have carried out the same adaptation of the vehicles without the knowledge of the Appellant.  The Review Officer found this not to be credible.

10.       The adaption itself was sophisticated.  It involves the addition of a metal box to the underside of the cab filling the space between the cab and engine block.  The adaption was accessed by removing a large black fibreglass plate, which is a manufactured item for the vehicle.  The fibreglass plate had been cut and re-arranged to allow the building of the adaptation to appear normal.  Once this plate was removed, a piece of black industrial carpet had been fitted, which is not a manufactured fitted item.  Once this carpet was removed the back of the cab is exposed to reveal a metal plate which had been fabricated to match the contours of the rear of the cab but which again is not a manufactured item.  It was not a casual concealment.

11.       The Respondents say that this could not have been done without the knowledge of both the haulier and driver.  The HMRC technical officer examined the vehicle and provided an opinion.  He noted the complexity of the adaptation and observed that it would have taken days rather than hours to install, to re-spray and re-trim the area.  This would necessitate the vehicle being off the road and it follows that this should have come to the attention of a reasonably careful haulier monitoring the movements of the vehicle.  The Review Officer concluded, from the evidence available to him, that on the balance of probabilities the haulier was involved or at least complicit in the adaptation of the vehicle to facilitate smuggling.  The Appellant had been offered restoration of the first vehicle seized (GD 2539L).  It was reasonable in the circumstances that it should not extend to the second seizure.  The Review Officer paid attention to the degree of hardship caused by the loss of the vehicle.  While he accepted that there would be inconvenience as a result of the seizure and perhaps a large expense in making other transport arrangements or replacing the vehicle, the officer did not regard the inconvenience and expense caused by non-restoration as showing exceptional hardship over and above what one would normally expect.  The Review Officer concluded therefore that there was no reason to disapply the restoration policy and that non-restoration was reasonable and proportionate in the light of Lindsay v Customs and Excise Commissioners [2002] 1 WLR 1766.

The law

12.       The relevant legal provisions are as follows:

“In section 88 CEMA states that where 

(a)       a vehicle is or has been within the limits of any Port …

while constructed, adapted, altered or fitted in any manner for the purpose of concealing goods, that ship, aircraft or vehicle shall be liable to forfeiture”.

Section 139(1) of CEMA provides that:

“any thing liable to forfeiture under the Customs and Excise Acts may be seized or detained by any officer or constable or any member of Her Majesty’s armed forces or coastguards”.

Section 152 CEMA establishes that:

The Commissioners may, as they see fit –

(b)       restore, subject to such condition (if any) as they think proper, any thing  forfeited or seized under the Customs and Excise Act”

(d)       Section 15(1) of Finance Act 1994 provides that:

“Where the Commissioners are required in accordance with this Chapter to review any decision, it shall be their duty to do so and they may, on that review, either –

(a)       confirm the decision; or

(b)       withdraw or vary the decision and may take further steps (if any) in consequence of the withdrawal or variation as they may consider appropriate”.

(e).      Section 16(4) of the Finance Act 1994 confirms that an appeal can succeed only if the Tribunal is satisfied that the Customs “could not reasonably have arrived at” the disputed decision.

Conclusion

13.       Mr Mark Collins, Higher Officer, UK Border Agency, Review Officer gave evidence.  He said that while Polish law does not require a provision in the contract of employment for drivers involved in smuggling to be dismissed from employment but only to be warned, the Appellant was aware of the UK laws on this matter.  He was not satisfied that the appropriate steps had been taken by the haulier to prevent their vehicles being used to carry smuggled goods.  He did not find the reprimands which were given to the driver to be credible.  The procedures which the Appellant had in place were not satisfactory for dealing with smuggling.  He felt that the courier was complicit in the smuggling due to the similarities between the two cases involving two vehicles from the same company.  He said the vehicle in this appeal had made over ninety-four trips to the UK and there would have been a significant evasion of excise duty on cigarettes.

14.       It should also be pointed out that the Appellant did not appear or make representations at the hearing. 

15.       What has not been disputed by any of the parties in any of their correspondence is that the vehicle had been adapted for smuggling.  It is clear that the concealed chamber could only have been used and designed for smuggling.  Given the time taken to create the concealed chamber and the fact that the vehicle would have been taken off road for several days to make this adaptation and the fact that another vehicle owned by the Appellant had the same adaptation, this would suggest that the modus operandi of the two vehicles in the creation of the concealed chamber was similar if not identical.  The adaptation was done properly and expertly and its sophistication suggests that there was some engineering and planning input in its design.  The cost of the adaptation would not have been cheap and would have to have been funded by a party.  It is unlikely that the driver would have funded such an adaptation.  The time and money spent on this adaptation would suggest that it was clearly seen as an additional revenue stream to the party making the adaptation.  The extent and sophistication of the mechanical and engineering works involved makes it likely that the party involved in the haulage business must have known of the adaptation and been involved in its planning, design and implementation.  The parts used were specially adapted to conceal the chamber and the carpeting, fibreglass and nuts and bolts used would all have been specially made for the job.  It is quite clear that the vehicle was adapted in a costly, sophisticated and detailed manner for the concealment of goods.  It is fair and reasonable therefore to assume that the haulier would have been involved in this adaptation for concealment.  For this reason, we think that Customs reasonably concluded that the proprietors of the vehicle were complicit in the attempt to smuggle goods into the UK using the vehicles with the concealed chambers.

16.       After considering all the facts, the Tribunal is satisfied that there are no exceptional circumstances justifying the restoration of the vehicle.  The Review Officer has concluded that any hardship suffered by the Appellant as a result of the non-restoration was not over and above the normal hardship that would normally be expected.

17.       The Tribunal believes that the refusal to offer restoration of the vehicle was reasonably arrived at.  It is normal for vehicles not to be restored where Customs are satisfied that the owner of the vehicle had knowledge of the adaptation.  We believe that is the case in this Appeal.

18.       Our conclusions therefore is that the appeal should be dismissed.  No issues of costs were raised.

DR K KHAN

TRIBUNAL JUDGE

RELEASE DATE: 9 December 2009