First-tier Tribunal (Tax)

[2010] UKFTT 278 (TC)

TC00567

Appeal reference: TC/2009/10327

EXCISE DUTY – non-restoration of vehicle – importation of tobacco already held by earlier tribunal to be a commercial importation – earlier tribunal allowing appeal and ordering re-review on single ground of hardship – reviewing officer finding hardship not exceptional and upholding the non-restoration – appeal dismissed

FIRST-TIER TRIBUNAL

TAX

                                                       DAVID WOODMORE                                       Appellant

- and -

THE COMMISSIONERS FOR

                                      HER MAJESTY’S REVENUE AND CUSTOMS         Respondents

Tribunal:        Lady Mitting (Judge)

                        Rayna Dean FCA (Member)

Sitting in public in Birmingham on 19 March 2010

The Appellant appeared in person

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

© CROWN COPYRIGHT 2010

DECISION

1.           The decision under appeal is that of the Respondents dated 22 December 2008 to refuse restoration of a Vauxhall Astra motor vehicle AJ03 YWN which had been seized together with 20kg of hand-rolling tobacco on 8 December 2007.

2.           The seizure had taken place at the UK Control Zone at Coquelles.  The Appellant and a Mr. John Palmer were travelling in the vehicle which was found to contain 20kg of hand-rolling tobacco which they claimed they had purchased jointly in Adinkerke, Belgium.  The vehicle and the goods were seized.  The Appellant did not apply for condemnation proceedings but sought restoration of the vehicle which was refused.  His appeal against the refusal to restore came before the VAT and Duties Tribunal on 29 September 2008, the released decision being dated 24 November 2008.  The tribunal found that the Appellant had no valid reason for not challenging the seizure and held that he was not entitled to present arguments of own use before the tribunal.  The goods were deemed to have been a commercial importation.  The tribunal went further in fact and concluded:

“Regardless of whether the Appellant was entitled to advance arguments of own use, we consider that the evidence presented in this appeal overwhelming pointed to the Appellant being involved in a commercial importation.”

3.           Despite this finding, the tribunal did allow the appeal on the ground that the reviewing officer had “failed to have full regard to the facts of exceptional hardship in relation to the Appellant and his mother”.  A re-review was therefore ordered, the new reviewing officer to take account of the tribunal’s findings of fact as set out in their decision.  The Appellant was also directed to make further representations within 14 days of the release of the decision.  Following the release of the decision, the Respondents wrote to the Appellant on 2 December 2008 informing him that a further review was to be carried out and asking him to provide what further evidence or paperwork he wished them to consider.  No response was received from the Appellant and Mr. G Crouch carried out the review, upheld the refusal to restore and notified the Appellant of this by letter dated 22 December 2008. 

4.           The earlier tribunal did not make any finding that the loss of the vehicle had caused exceptional hardship but expressed themselves in the following terms:

“24. At the hearing we heard fresh evidence about the effect of the seizure on the Appellant’s mother.  She was unable to visit her relatives, and lost her investment in the vehicle, having paid a substantial proportion of the loan instalments.  Mr Brenton in his evidence before the Tribunal did not consider that the mother’s evidence and the Appellant’s difficulties with his loan repayments constituted exceptional hardship.  Respondents’ counsel submitted that there was nothing in the Appellant’s evidence which took the facts beyond the ordinary consequences of having a car seized.  He pointed out that the Appellant’s mother was still able to visit her relatives, albeit by other means.

25. The issue we are deciding, however, it whether Mr Brenton considered all relevant matters in refusing restoration.  We find that the impact of the non-restoration of the vehicle on the Appellant’s mother was a relevant consideration, which may constitute exception hardship, in particular the loss of her investment in the vehicle and the restriction on her mobility.

26. We are satisfied that the Appellant’s plea of exceptional hardship in relation to his children attending school or collecting his son from Mansfield lacked substance.  However, we consider that the Appellant’s dire financial situation, and his inability to repay his loan for the vehicle were factors to which Mr Brenton should have had regard in assessing the proportionality of the penalty to the Appellant’s contravention.  Whilst we accept that a finding of smuggling would normally take the Appellant beyond the threshold of a lesser penalty than non-restoration, it were still necessary to consider whether the personal circumstances of the Appellant were exceptional to justify departure from non-restoration.  We find that Mr Brenton did not pay sufficient attention to the Appellant’s personal circumstances in reaching his decision.”

5.           The issue before us therefore is a very narrow one.  We are to consider whether or not Mr. Crouch was reasonable to conclude that the Appellant had not suffered exceptional hardship and to refuse restoration.  We will be looking at the effect of the refusal to restore on the Appellant’s mother and the financial impact upon the Appellant himself.  We consider that the Appellant’s claim (not mentioned before us) that he had difficulty taking his children to and from school had already been considered by the earlier tribunal and dismissed.

6.           In the absence of any further representations from the Appellant, all Mr. Crouch had before him to support a claim of hardship was the evidence which the Appellant had given to the previous tribunal.  This is set out in paragraphs 18 and 19:

“18. The Appellant in his original application for restoration stated that he required the vehicle to take his children to school, and fetch his son from Mansfield.  In his evidence before the Tribunal he accepted that his children were able to attend school without recourse to his vehicle.  The Appellant either borrowed a vehicle or relied upon his nephew or girlfriend to pick up and return his son from Mansfield at the weekend.

19. The Appellant had been unemployed for five years.  He secured a loan of £9,124.03 which included the cost of credit to purchase the vehicle.  The monthly instalment of the loan was £151.17 which was roughly half his monthly income.  His mother helped him with the loan payments by contributing £100 each month.  In return the Appellant would take his mother in the vehicle to visit members of her family.  Since the vehicle was seized, his mother had not seen her relatives who were in poor health and unable to visit her.  His mother had not thought about taking taxis because she had always gone with her son.  She also stopped making her contribution of £100 towards the loan repayment.  The Appellant had been unable to maintain the loan instalment payments and was now being chased by bailiffs.”

7.           Mr. Crouch took the view that the Appellant had been able to borrow an alternative vehicle and he also managed to ascertain that the Appellant had been the registered keeper of a Ford Focus car since 17 August 2008, a fact which he had not brought to the attention of the earlier tribunal at the hearing on 29 September.  Mr. Crouch took the view that the Appellant’s grave financial situation was as a consequence of his attempt to improperly import tobacco into the UK and was something which he should have considered before undertaking the smuggling attempt.  He also believed that any hardship suffered was not exceptional.

8.           We heard certain additional evidence from the Appellant.  The seized vehicle had been purchased in 2006 / 2007 with a loan of £9,100.  The repayments had been £151 per month of which his mother contributed £100.  She made this contribution as recompense to her son who used the vehicle to a significant degree in transporting his mother on twice-weekly shopping trips and to see her sister, who lived about 25 miles away.  Once the vehicle was seized and the Appellant was no longer able to drive his mother around, she quite understandably withdrew her contribution to the loan instalments.  The Appellant confirmed that his mother was under no legal obligation to make any contribution to the instalments and there was no understanding with her son that it was a loan to him which he would repay.  In our view, and so we find, it was purely and simply an indirect means of paying for being transported around.  This is not a case of his mother having made a financial investment into the vehicle which she lost on its seizure.

9.           We also heard that the Appellant had had access to a number of different vehicles.  Shortly after the seizure, a friend of his lost his mother and he inherited her vehicle which, as he didn’t have a license, he allowed the Appellant to use. This vehicle was not reliable so the friend exchanged it for a Ford Focus which he again allowed the Appellant to use.  Shortly after that the Appellant’s mother lent him some money to buy a Ford Escort which was written off in a road traffic accident.  The Appellant was not at fault for this accident and having recovered the insurance money he repaid his mother.  After that he started to use his brother’s car, which we understand he still does.  The Appellant was very vague about dates and it was difficult for us to ascertain with any degree of certainty precisely when and over what duration the Appellant had access to or no access to a vehicle, but suffice it to say that although he was clearly inconvenienced by the loss of the vehicle, we do not find that the hardship suffered by the Appellant was so exceptional as to render Mr. Crouch’s refusal to restore unreasonable.  We accept that the Appellant was unable to maintain the loan instalments without his mother’s contribution, but that is an inevitable consequence of his mother’s very reasonable decision to withhold further contributions.  We were given to understand by the Appellant that in May or June 2009 he did in fact declare himself bankrupt. 

10.        The earlier tribunal were also concerned at the impact upon the Appellant’s mother’s mobility.  We were told by the Appellant that his mother was age 75, in reasonably good health and with no physical mobility problems which would prevent her from taking public transport.  Given the cessation of her contribution to the loan, she also has funds available to take taxis.  The Appellant also has a brother and sister who, although they work during the week, are available at weekends to help out.  We have every sympathy with the Appellant’s mother who has found herself, through absolutely no fault of her own, very seriously inconvenienced by the loss of the vehicle but given the factors which we have outlined in this paragraph, we do not believe that this inconvenience is such as to amount to exceptional hardship.

11.        We believe that Mr. Crouch took into account all relevant factors and the conclusion that he drew that there was no exceptional hardship was a reasonable one.  It is inevitable that inconvenience and hardship will be caused to a traveller who has his vehicle seized and indirectly to his family, but to justify departure from the policy of non-restoration in these circumstances, the hardship suffered does have to be exceptional and in this case we find that it is not and that Mr. Crouch was perfectly reasonable to conclude likewise.

12.        The appeal is therefore dismissed.

13.        The Respondents made no application for costs and no order is made.

The Appellant has a right to apply for permission to appeal against this decision in accordance with 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.

LADY MITTING

JUDGE~ Release Date: 18 May 2010