[2010] UKFTT 145 (TC)

 

TC00451

 

Appeal number: LON/2008/8035

 

EXCISE DUTY – seizure of goods – refusal to restore – whether reasonable? Yes on the facts – Appeal dismissed

 

 

 

FIRST-TIER TRIBUNAL

 

TAX

 

 

                                                    VDS UK Ltd                                   Appellant

 

 

                                                                      - and -

 

 

                                 THE COMMISSIONERS FOR HER MAJESTY’S

                                       REVENUE AND CUSTOMS (Excise Duty)    Respondents

 

 

 

 

 

                         TRIBUNAL:             TRIBUNAL JUDGE:       ADRIAN SHIPWRIGHT

                                                             TRIBUNAL MEMBER: ELIZABETH BRIDGE

                                                                       

                                                                       

 

 

Sitting in public in London on 24 September 2009

 

 

Andrew Young, Counsel, instructed by Vincent Cully for the Appellant

 

Rupert Jones, Counsel, instructed by the General Counsel and Solicitor to HM Revenue and Customs for the Respondents

 

© CROWN COPYRIGHT 2010

DECISION

 

Introduction

1.     This is an appeal by the Appellant, VDS UK Ltd. (“VDS”), against a decision on review (“the Decision”)  by the Respondents (“HMRC”) not to restore 16,139.76 litres of beer attracting £2,212.76 of Excise Duty and 16,393.5 litres of wine attracting £29,180.43 in Excise Duty which had been seized.  The Decision was contained in a letter dated 7 April, 2008 (“the Decision Letter”).  

The Issue

2.      The issue in this case is whether or not the Tribunal should exercise its powers under Section 16 Finance Act 1994 to alter HMRC’s decision set out in the Decision Letter not to restore the Vehicle.  To do this requires the Tribunal to be satisfied “...that the Commissioners or other person making that decision could not reasonably have arrived at...” that decision i.e. it is not within the range of possible reasonable decisions.

3.     The essential question then is was the decision set out in the Decision Letter outside the range of possible reasonable decisions. It does not matter whether we would have reached the same or a different decision. 

4.     Mr. Young very properly confirmed that he was not seeking to challenge the legality of the seizure.

5.     Mr. Jones also very properly confirmed that HMRC were not suggesting VDS was complicit in any crime. 

 

The Law

6.     The legislation in this area is well known and is found principally in Sections 49, 100 and 152 of the Customs and Excise Management Act 1979 (“CEMA”).  There are also a number of relative regulations including the REDS regulations applicable here.

7.     Broadly goods are liable to forfeiture if duties should have been paid but have not been so paid.  The Commissioners are given power to restore seized goods subject to such conditions (if any) that they think proper.   

8.     We also note and take into account Section154 CEMA. It is headed “Proof of certain other matters” and provides:

“(1)     An averment in any process in proceedings under the customs and excise Acts—.....

(d)     that the Commissioners have or have not been satisfied as to any matter as to which they are required by any provision of those Acts to be satisfied; or...

shall, until the contrary is proved, be sufficient evidence of the matter in question.

(2)     Where in any proceedings relating to customs or excise any question arises as to the place from which any goods have been brought or as to whether or not—

(a)     any duty has been paid or secured in respect of any goods; or

...

then, where those proceedings are brought by or against the Commissioners, a law officer of the Crown or an officer, or against any other person in respect of anything purporting to have been done in pursuance of any power or duty conferred or imposed on him by or under the customs and excise Acts, the burden of proof shall lie upon the other party to the proceedings”.

 

The Evidence

9.     We were provided with a volume of documentation.  This was an agreed bundle of documents. The documents were all admitted in evidence no objection having been taken to any of the documents.

9.   We heard oral evidence from

(1)   Deborah Carole Hodge

(2)  Paul John McGregor

10.  Witness statements were provided and they were cross-examined.

 

Findings of Fact

11.  From the evidence we make the following findings of fact.

(1)    On 31 May, 2007 HMRC officers detained a quantity of excise goods at the premises of East End Foods Limited in Smethwick.

(2)    On 23 July, 2007 the case officer decided to seize the detained goods.  The appropriate notices etc. were given.

(3)    The goods seized included the beer and wine referred to above.

(4)    The HMRC officer was satisfied that the wine and beer had not borne appropriate UK excise duty.

(5)    On seizure East End Foods Limited were issued with a seizure information notice and customs notice 12A “Goods and Vehicles Seized by Customs”. 

(6)    East End Foods challenged the legality of the seizure in the magistrates’ court.

(7)    East End Foods also sought a review of the decision not to restore the goods.  Restoration was refused on the basis that East End Foods did not hold title to the goods .

(8)    On 21 December, 2007 a request was made on behalf of the appellant for the restoration of the goods on the basis that as a result of the seizure East End Foods had repudiated the contract of sale and title had therefore reverted  to the Appellant. 

(9)    The goods were found to be contaminated and were therefore disposed of on health and safety grounds.

(10) The review was carried out then by Mrs. Deborah Hodge (nee Gillespie).  She also gave oral evidence and we found her a convincing witness who was trying to do things properly.

(11) She set out HMRC’s approach in the decision letter. She said “the Commissioners’ general policy is that seized excise goods should not normally be restored.  However, each case is examined on its merits to determine whether or not restoration may be offered exceptionally”. 

(12) She made it clear that while she may be guided by this policy she was not fettered by it and  she considers every case on its individual merits.  We accept that she did this.

(13) In reaching her conclusion she considered amongst other things:

(a)    Whether VDS had legal title to the goods at the time of seizure

(b)    Whether the duty had been paid on the goods

(c)    Whether there would be undue hardship

(d)    Whether there were any other circumstances or matters that she should take into account.

(14) These seemed perfectly reasonable considerations to us.  In particular, VDS had not shown that duty was paid on the goods.  Mrs. Hodge said in the Decision Letter “…  There is no evidence that duty had been paid on the goods.  It is not unreasonable to expect anyone involved in the licensed trade to ensure that  excise goods are purchased  from a legitimate source…” We agree with this.

(15) The question of legal title is a complex one but again the onus would have been on VDS to show it.

(16) At the time of the review VDS had not shown that it had made payment in respect of the goods.

(17) Invoices were produced from VDS to East End.  Bank statements and Bill Payment Histories were produced in respect of Top Deal Services Limited, Cube Cash and Carry Limited and Parched Parrott.  HMRC accepted that this showed some payments had been made but did not show precisely what they related to and so it could not be shown that particular goods had been paid for such that title passed.

(18) We do not consider that we had sufficient evidence to be able to decide that the appellant had discharge the burden of showing that title had passed.

(19) We agree with Mrs. Hodge that VDS has not “…  suffered any exceptional hardship concerning this matter…” when considering the degree of hardship caused by the seizure.

(20) Accordingly, we consider that the decision that Mrs. Hodge reached was within the range of proper decisions that could be reasonably arrived at and we so find. 

 

The Submissions of the Parties

The Appellant’s Submissions in outline

12.  In essence, the Appellant submitted that the decision not to restore the goods was unreasonable and disproportionate.

13.  In particular, HMRC have not taken into account all the circumstances including the vires for the seizure.  This showed the disproportionality of what HMRC had done by refusing to restore the goods to a taxpayer pursuing business.  This was just a rubber stamping exercise.  The appellant found it very hard to get information and was not involved in any evasion.  The officer should  have made more enquiries to make sure that the appellant understood the position.

14.  This was an exceptional case

15.  And the appellant’s objection to evidence should be borne in mind. 

HMRC’s Submissions in outline

16.  In essence, HMRC submitted that the seizure was lawful and could not be challenged and that the decision not to restore the goods was reasonable and proportionate. 

17.  In particular, the burden was on the Appellant to show that the decision not to restore the goods was unreasonable.  The Appellant had not discharge that burden. 

Discussion

18.  We said at the beginning of this decision that “the essential question then is, was the decision set out in the Decision Letter outside the range of possible reasonable decisions”?

19.  We have found already that “... the decision that Mrs. Hodge reached was within the range of proper decisions that could be reasonably arrived at ..”

18.  Accordingly, there is no basis on which we can change the decision under section 16 Finance Act 1994.

Conclusion

21. We have found that the Decision was a decision that could be reasonably arrived at and accordingly the appeal is dismissed.  We make no order as to costs

 

The Appellant has a right to apply for permission to appeal against this decision pursuant to Rule 39 of the Rules.   The parties are referred to “Guidance to accompany a Decision from the First-tier Tribunal (Tax Chamber)” which accompanies and forms part of this decision notice.

 

 

 

 

   ADRIAN SHIPWRIGHT

TRIBUNAL JUDGE

                 RELEASE DATE: 1 April 2010