First-tier Tribunal (Tax)

[2009] UKFTT 355 (TC)

                                                                                                            TC00293

Appeal number LON/2008/8057

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

FIRST-TIER TRIBUNAL

TAX CHAMBER

                                        DAVID ARTHUR HEMMS                       Appellant

                                                                      - and -

                                 THE COMMISSIONERS FOR HER MAJESTY’S

                                       REVENUE AND CUSTOMS (Excise duty)    Respondents

                                                TRIBUNAL: DR K KHAN (JUDGE)

                                                                        ELIZABETH BRIDGE

Sitting in public in London on 9 November 2009

The Appellant appeared in person

Miss Charlotte Hardfield, Counsel, for the Respondents

© CROWN COPYRIGHT 2009

DECISION

1.         This is an Appeal by David Arthur Hemms against the decision of the Respondent Commissioners, set out in a letter written by Mr D Cawthraw, Review Officer, dated 19 June 2008, which notified the Appellant that Her Majesty’s Revenue and Customs (HMRC) would not restore his Fiat Ducato Motor-home (registered number R2WDY  (“the vehicle”) which had been seized on 15 August 2008, following the seizure of 22kg (440 pouches) of Golden Virginia rolling tobacco, 1000 Silk Cut cigarettes and a gun.

2.         The Appellant did not dispute the underlying facts nor the legality of the seizure of the vehicle and the cigarettes and vehicle were condemned as forfeit.  The following are the relevant facts:

1.               On 15 April 2008, the Appellant and his wife, Mrs Ena Hemms, were stopped at Dover Eastern Docks whilst driving the vehicle.  They were returning from holiday in Spain. They were asked by HMRC if they had any cigarettes or tobacco.  The Appellant said he had a box in the back and a box in the wardrobe and the goods were for himself and his wife.  These boxes of tobacco were shown to the officer.  The officer asked if there were any more tobacco.  The Appellant replied “I have two packs under the seat” and produced from beneath the seat of the vehicle 8x250 gram pouches (2 kilograms) of Golden Virginia tobacco.  At that point the Appellant confirmed that that was all the tobacco he had in the vehicle. 

2.               A search by the officer revealed there was a further 250 gram box.  The officer asked the Appellant if he had more tobacco.  The Appellant replied “that must be one of the two.” The search continued and a further three packs of 500 gram Golden Virginia rolling tobacco (1.5 kilograms) was found under the sink behind crates of food.  The Appellant was then asked to show the officer all his tobacco and a further nine pouches of Golden Virginia rolling tobacco of 500 grams each (4.5 kilograms) from beneath the driver’s and passenger’s seats was found.  The Appellant was then asked if that was all.  He said yes.  A further search produced a gun, which was found behind a light fitting and further tobacco was once again discovered. The quantity being 1.25 kilograms rolling tobacco hidden in a shoe box under a seat.  The Appellant and his wife signed the officer’s notebook to confirm the accuracy of the search and questioning as recorded.  They were then interviewed separately.

3.               The Appellant confirmed that he did not know how much tobacco he had but was told it was 22 kilograms.  He said it was for himself and his wife since they were both smokers.  He said he had bought the tobacco in Gibraltar or Spain but did not know how much it had cost as his wife had paid for it.  He said that he had the tobacco hidden in the camper because of the incidence of robberies in Spain.  He confirmed that the vehicle was owned by him and there was no financing on purchase.  It was explained to him that he had failed to declare goods and pay tax on those goods.

4.               The Appellant’s wife said that the tobacco goods had been bought in Gibraltar and Spain and she confirmed she was a smoker (15 cigarettes a day, same as her husband).  She said the tobacco was for own use.  She explained the goods had been bought in Gibraltar because it was cheaper and that both she and her husband walked from the Spanish side to Gibraltar every couple of days to purchase small quantities of tobacco each time.  She said there was no particular reason why the tobacco goods were hidden in the camper. 

5.               The HMRC officer believed that the cigarettes were for a commercial purpose and packed in a manner intended to deceive which made them liable to forfeiture under section 49 (1)(a) and 49 (1)(f)  of the Customs And Excise Management Act 1979 (“CEMA”) and Regulation 16 of The Excise Goods (Holding, Movement, Warehousing and REDS) Regulations 1992.  The vehicle was liable to forfeiture under section 14 (1)(b) CEMA.  All the cigarettes and vehicle were seized under section 139 (1)(c) CEMA.

6.               On seizing the cigarettes and vehicle the driver was issued with a Seizure Information Notice and Customs Notice 12A.  The Appellant did not challenge the legality of the seizure of the vehicle and the cigarettes and the vehicle were condemned as forfeit under paragraph 5 of Schedule 3 CEMA.

7.               The Appellant wrote a letter dated 19 April 2008 requesting a restoration which stated “the tobacco was acquired as a result of requests from friends and members of my family and was to be distributed to these people on our return home”, and “due to the confined space in the vehicle, it was stored in various compartments to facilitate our daily living requirements”.

THE APPELLANT’S CASE

6.   Mr Hemm’s principle submission, as stated in a Notice of Appeal dated 17 July

2008, is based on proportionality.  He stated that the value of the excise duty on tobacco and cigarettes (2,755.37) and the value of the seized motor home (£28,000 - £30,000) are disproportionate.  In his letter to the Review Officer of 23 May 2008 he stated:

“My motor-home was confiscated, because it contained tobacco items referred to above.  The vehicle has a market value of £28,000 and this confiscation appears to be an out of proportion penalty imposed by the officers in relation to the value of the items above.  In company with my wife, I have been on holiday in Europe from 18 December 2007 until out return on 15 April 2008, which demonstrates our holiday venture is genuine.  I would submit that a £28,000 fine imposed without due representation is unjust and an excessive penalty to have to pay in these circumstances.”

In support of what he sees as an unreasonable decision he says that not having the motor-home would mean he would be unable to travel overseas which would exacerbate his arthritic medical condition resulting from a crumbling spine.  He cites medical reasons in support of his application for restoration.  He acknowledges that he had done something wrong and been foolish.  He said,

“I am 66 years of age and of previous good character.  It appears I have been somewhat stupid in agreeing to obtain the tobacco items as a favour to associates and I wish to apologise for my stupidity and panic responses to the officers concerned”.

7.         He says the tobacco was acquired as a result of requests from some friends and members of his family and was to be distributed accordingly on his return home.  Due to the confined space in his motor-home, the tobacco was stored in various compartments to facilitate daily living requirements.  It was not meant to be concealed or hidden from the Customs.

8.         The Appellant drew reference to Article 1, Human Rights Act 1998, which he says gives a right to property. He says the right to peaceful enjoyment of possessions means public authorities cannot interfere with property and any such interference must be in proportion to the circumstances.  The confiscation of his possessions is an out of proportion penalty and a violation of the Human Rights Act.

THE RESPONDENTS’ CASE

9.         The Respondents contend that the review decision as contained in the letter to the Appellant of 19 June 2008 is reasonable and proportionate.  In support of this argument they make the following points:

a)     The Appellant had not challenged the legality of the seizure and had not contended that the goods would be passed on to others on a “not for profit basis”.  The Respondents concluded that the goods were being held for profit, even if it is a small profit.

b)     The cigarettes and tobacco were concealed in a number of different places throughout the vehicle and is liable to forfeiture.

c)     The Appellant failed, on four occasions, to disclose the amount of tobacco in his possession and he failed to co-operate with the officers involved.  He deliberately tried to deceive the officers.

d)     The Appellant had with him an imitation gun (the Tribunal understand this was the subject of a separate charge and fine).

e)     The Appellant’s version of events differed from the version of events given by his wife.

f)      He said that the tobacco was for himself and his wife. He later asserted (letter 19 April 2008) that the tobacco was for friends and family and was hidden  to facilitate daily living requirements.

g)     The Respondents say that given these deceptions, there are indications of offences of improper importation of excise goods under Section 50 CEMA and a fraudulent evasion of duty under Section 170 CEMA and therefore the seizure of the vehicle was in the public interest, reasonable, acceptable and proportionate.

h)     The Respondents do not see a case for hardship caused to the Appellant.  In particular they presented evidence at the hearing to show that the Appellant has a new camper van, bought by his son, and is the keeper of a Honda Civic motor car as a motorbike.  It is accepted that the seizure of the vehicle would cause hardship but the hardship is not exceptional.

10.       The Tribunal would now look at the submissions of the parties. For completeness the Tribunal shall record that the sole witness was Mr D Cawthraw, Review Officer. He gave oral evidence that the decision was reasonable and proportionate. He did not feel this was a case of exceptional hardship.  The Tribunal heard from the son of Mr Hemms, Mr S Hemms, who assisted with the presentation of his father’s case.  He confirmed that he had bought a new camper van for his father, which was purchased for cash.  He confirmed that his father had a medical condition, although the Tribunal did not receive any medical certificates to support this assertion and explained that his father would be severely inconvenienced by not having his confiscated camper van.  He said his father was a man of limited financial means and had worked his whole life to be able to afford few luxuries and the camper van was one.

11.       The function of the Tribunal is to determine whether the respondent’s decision not to restore the vehicle to the Appellant was a decision which no reasonable body of Commissioners could have arrived at.  In assessing whether the decision is reasonable, the decision maker in this case, the Review Officer Mr Cawthraw, must have properly considered all relevant matters and not have taken into account irrelevant matters.

12.       The Tribunal looked at the sole question as to whether the decision not to restore the car was a decision that the person making it could not reasonably have arrived at.  We do not consider that the decision was one that could not reasonably have been arrived at.  There is not evidence of exceptional hardship given that the Appellant had the camper replaced by his son at no cost to him.  He has a camper van, as before, and would be able to have holidays in warmer climates in Europe as he did previously.

13.       In making its decision the Tribunal looked closely at the considerations taken into account by the Review Officer and in particular the following:

1.        The circumstances giving rise to the events on the date of seizure, whether the questions posed by the HMRC officers to the Appellant were answered truthfully and a full disclosure made at the outset.

2.        The quantity of tobacco (22KG) which was over seven times the allowed limit.

3.        The Appellant’s initial statement that the tobacco was for own use which was later changed to the tobacco being for friends and family.  The fact that there were 440 pouches of tobacco which would have lasted over two years  beyond which tobacco is usable.

4.        The Appellant initially stated that the tobacco was stored and hidden because of thieves in Spain.  He later said that the storage was to “facilitate living conditions.”

5.        The tobacco was bought in Gibraltar (outside EC) where the allowance into the EC is 250 grams.  The goods should have been declared on entry into the UK and failure to do so made the goods liable to forfeiture.

6.        In seizing the vehicle, HMRC policy, the Human Rights Act, the first offence and the quantity of tobacco were considered. There was also consideration of inconvenience and hardship to the Appellant caused by the loss of the vehicle and the expense in providing other means of transport or replacing the vehicle.

7.        The Tribunal was also provided with evidence at the hearing that the Appellant was in possession of a new camper van purchased by his son in replacement of the seized camper van. The official records showed that the Appellant also had a car (Honda Civic) and a motorbike.  

14.       In reaching this decision, the Tribunal considers that the Appellant was economical with the truth when dealing with HMRC officers.  The manner of the concealment of the tobacco and the replies to questions suggest that the tobacco was purchased for a commercial purpose.  The Appellant’s case was not helped by the fact that he gave conflicting explanations at the interview stage and later when writing to the Review Officer as the reasons for purchasing and concealing the cigarettes and tobacco. 

15.       HMRC operates a policy of non-restoration of vehicles used for commercial smuggling.  This was explained in the case Lindsay v Commissioners of Customs and Excise [2002] EWCA Civ 267, para 63 where the  Court of Appeal stated:

“Those who deliberately use their cars to further fraudulent commercial ventures in the knowledge that if they are caught their cars would be rendered liable to forfeiture cannot reasonably be heard to complain if they loose their vehicles.  Nor does it seem to me that, in such circumstances, the value of the car used needs to be taken into consideration. Those circumstances will normally take the case beyond the threshold where that factor can carry significant weight in the balance.  Cases of exceptional hardship must always of course be given due consideration.”

We must look to see whether the decision is proportionate and reasonable and whether it causes exceptional hardship. 

16.       It is correct to say that hardship would be caused. The Tribunal has looked at the age of the Appellant and the potential financial hardship which maybe caused as a result of the forfeiture.  There is no doubt that there would be some hardship to the Appellant and his wife. 

17.       Through the kindness of his son, he has been able to replace the camper at no cost to himself.  He also has a private car for his use as well as a motorbike.  These are all vehicles purchased without debt financing.

18.       No evidence has been presented to show that the Appellant has the medical conditions (arthritis and crumbling spine) which he indicated in his correspondence. Further, no independent evidence was presented to show the value of the vehicle. The Tribunal has accepted the valuation between £28,000 - £30,000 which has been presented and which remains unchallenged by the Respondents.

19.       The Appellant acted in reckless and deceptive manner.  The fraudulent evasion of excise duty was exacerbated by an even more grave offence of possessing an imitation fire-arm.  The Appellant had been fined by a separate court on this offence/

20.       Considering all the circumstances of the case the Tribunal does not believe there is a lack of proportionality in the decision of the Review Officer.  We believe that the decision did strike a fair balance between showing compliance with the UK revenue law and protecting the Revenue and the rights to enjoyment of property under Article 1 of Protocol One of the European Convention on Human Rights.

21.       The Tribunal does believe that Mr Hemms is genuinely sorry for his actions.  He showed remorse and acknowledged what he did was stupid and out of character.

22.       Where people attempt to evade excise duty and try to deceive HMRC officers, with conflicting explanations as to why items were purchased and proceed to give half truths and feeble explanations for the reason for the importation of goods, in such circumstances, those people would not have a right to complain when the vehicle being used for smuggling is confiscated.

23.       The Tribunal therefore finds the decision was a reasonable and proportionate one and could have been arrived at in the circumstances. The Appeal is accordingly dismissed.  We make no orders as to cost.

DR K KHAN

TRIBUNAL JUDGE

RELEASE DATE: 9 December 2009