First-tier Tribunal (Tax)

[2010] UKFTT 420 (TC)

TC00692

Appeal number TC/2010/02187

EXCISE DUTY- Goods deemed condemned – appellant did not apply for the case to be heard by the Magistrates’ Court as he had been advised he would have to pay the costs of £1700 immediately – goods therefore deemed condemned Tribunal no jurisdiction to hear argument as to own use – application on grounds of hardship for return of vehicle - appellant able to obtain another vehicle - case dismissed

FIRST-TIER TRIBUNAL

TAX

CLIVE REDMOND Appellant

- and -

UK BORDER AGENCY

(Customs Duty) Respondents

TRIBUNAL: DAVID S PORTER (  Judge)

MOHAMED FAROOQ (Member)

Sitting in public in Birmingham on 6 August 2010

The Appellant in person

Miss Alison Graham-Wells, of counsel, instructed by the General Counsel and Solicitor to the Border Agency

© CROWN COPYRIGHT 2010

DECISION

1.     Mr Clive Redmond (Mr Redmond) appeals against the review by Mr Raymond Brenton, (Mr Brenton) the reviewing officer, contained in a letter dated 1 February 2010 refusing to restore 7 Kilograms of hand rolling tobacco, 186.15 litres of beer, 208.5 litres of wine, and 4.42 litres of spirits (the goods) and also refusing to restore the Appellant’s Ford Galaxy motor vehicle (the vehicle), registration number AF 56 RXV. The goods attracted duty of £1,458.27. The Appellant says that the goods were purchased with his friend, Mr Andrew Partridge (Mr Partridge), who owned half of them and they were only marginally over the limit of 3 Kilograms of hand-rolling tobacco. They had purchased the goods for their own use. Customs should not have seized the goods and the vehicle should have been returned to him. The Respondents (Border Agency) say that, as the goods had been deemed forfeit under paragraph 5 of Schedule 3 of The Customs and Excise Management Act 1979 (“CEMA”), Mr Redmond could not claim before the Tribunal that the goods were for his own use. As a result, neither the goods nor the vehicle should be returned. Further more there were no hardship grounds under which the vehicle could be returned.

2.     Miss Graham-Wells appeared for the Border Agency with Mr Brenton in attendance as a witness. Copies of the Border Agency bundle were made available to the Tribunal. Mr Redmond appeared in person with his daughter, Mrs Lisa Redmond Noble (Mrs Noble) and Mr Partridge, who is his daughter’s boyfriend.

3.     We were referred to the following cases:

Lindsay v Customs and Excise Commissioners [2002] 3 ALL ER 118

Gasgoyne v Customs and Excise Commissioners [2005 CH 215

Customs and Excise Commissioners v Albert Smith CH [2005] APP 0117

Revenue and Customs Commissioners v Dawkin [2008] ALL ER (D) 83 (Aug)

The facts

4.     Mr Redmond, who lives in Redditch, was stopped by Customs and Excise on 23 November 2009 on his return to Coquelles France with his friend Mr Partridge. They had travelled to Calais and Belgium and purchased the goods. Mr Redmond failed to disclose that there was further 1 Kilo of hand rolling tobacco in the vehicle and he was unable to produce any receipts for the purchase of the goods. Both Mr Redmond and Mr Partridge agreed to stay for an interview at Coguelles. Mr Redmond confirmed that the majority of the goods were for him and he had paid around £500 for them. Mr Partridge would settle his share of the costs on their return home. The alcohol was purchased by him for Christmas and his birthday. Mr Partridge and his daughter would be given some of the alcohol. He also confirmed that he shared the tobacco with his son, who was severely handicapped as a result of a motor cycle accident many years ago. Mr Redmond could not recall how many times he had travelled abroad, but the last time he bought any tobacco was some 6 months previously. Miss Graham-Wells produced evidence of reports from the Dover Ferries and Channel Tunnel, which revealed that Mr Redmond’s vehicle had crossed the channel at least 14 times on day returns between 30/1/2008 and 23/11/2009. Mr Redmond told the tribunal that he took his wife abroad to give her a break from looking after their son. Mr Redmond was also unsure of his consumption rate of hand rolling tobacco. He thought that he smoked about one pouch each week. He also confirmed that he was retired and that he had a pension of £130 per week and a total income of about £200 per week. He had been able to save sufficient money to enable him to go on the trip. Mr Redmond confirmed that he had signed the interview notes as identified to the tribunal. He told us that he had left his glasses in the car and that he could not read the notes but he had not asked the Officer to read the notes back to him, as he had been in the interview a long time. He had a sore back and had been uncomfortable sitting on a hard chair, he was very stressed and wanted to get home. Mr Partridge did not give evidence at the Tribunal, but his interview notes revealed that 3 Kilograms of GV and ½ kilogram of Cutters’ Choice tobacco was for him. The 10-15 boxes of wine were Christmas presents for about 10 people and they had cost him about £200. The beer was for him. He had made no contribution to the travel costs. He did not appear to know how much money he owed Mr Redmond, but said that he would pay his share when they returned home. He was employed as a welder with no other money than his wage. He had been abroad on several occasions with Mr Redmond. The goods were seized and Mr Redmond was given notice C156, Customs Warning Letter, and Seizure of Vehicle Notice 12A. The notice explained that he could challenge the legality of the seizure in the Magistrates Court, which would have been in Dover. Mr Redmond told us that the Officers had told him that it would cost him £1700 if he went to the Magistrates’ Court and that they would require payment ‘upfront’. They also told him that if he paid £400 to the Border Agency the vehicle would be returned to him. We think it is unlikely that he was told that the payment would have to be made ‘up front’ by the Officers. We believe that they may well have told him that it might cost him £1700 if he lost his case. The Notice indicates that there can be a cost consequence in those circumstances. As to the £400; Mr Redmond referred to that in his Notice of Appeal, although Miss Graham-Wells thought he had only raised this for the first time at the hearing. Either way it is surprising that Mr Redmond has never contacted the Border Agency to offer the £400 for its return. Again we suspect that the Officers had told him that it would cost about £400 to bring the car back to the United Kingdom.

5.     In a letter received  by the Border Agency on 26 November 2009 from Mr Redmond stated :

“Car: This should be restored because it is used for transport for my son. The car has exemption tax. My son has a head injury and unfortunately falls over most days. I have to go to him immediately to sort him out. We live 6 miles from him and worry that without a car that an ambulance might be called and eventually due to inconvenience he might be denied the opportunity to live independently”

Mrs Noble gave evidence and confirmed that her brother was severely disabled and that he was 50 years of age and weighed about 15 stone. He was able to live on his own, but the family kept in touch with him and assisted him as much as possible. After her father’s car had been forfeited, he had returned home in a vehicle that was not fit for purpose in relation to his son, who needed a wheel chair, which could not be accommodated in the car. Mrs Noble confirmed that she had a car, but it was not regularly available for her father to use. , they now had a car for her brother ,which had been purchased with the help of he brother’s mobility allowance.

6.     Miss Graham-Wells said the Tribunal needed to decide, as a preliminary issue, whether it would be ‘an abuse of process’ for Mr Redmond to raise the defence before this Tribunal that the goods were purchased for his own use. She referred us to the four cases mentioned above and specifically to Revenue and Customs Commissioners v Dawkin [2008] ALL ER (D) 83 (Aug). Under section schedule 3 of CEMA, it is not possible for Mr Redmond to argue that he purchased the goods for his own use in the Tribunal. This was particularly the case where Mr Redmond had stated that he did not want to contest the legality of the seizure. As a result the case had not gone before the Magistrate’s Court and the goods were deemed forfeit after the period of one month. Mr Redmond had the opportunity to attend at the Magistrates Court to justify his purchase of the goods and, if he chose not to attend, he could not then raise the defence in the Tribunal that he had bought the goods for his own use. It would be an ‘abuse of process’ for the Tribunal to allow him to do so. Paragraph 5 of Schedule 3 of CEMA goes a step further, however, and provides that if there is no actual hearing before the Magistrates Court the goods are deemed to be forfeit. The cases referred to have decided that in those circumstances an appellant cannot raise the argument that he purchased the goods for his own use in the Tribunal as that would be an abuse of process. There may be an opportunity for an appellant to raise a defence of ‘own use’ before the tribunal  but there must be exceptional reasons as to why the  appellant either did not ask for a hearing before the Magistrate’s court or had good reason for not attending, such as ill-health. Buxton LJ in Gasgoyne v Customs and Excise Commissioners [2005 CH 215 was concerned for the appellant’s convention rights and said:-

“ 54. As it seems to me, for an importer to be completely shut out in the only Tribunal before which he has in fact appeared from ventilating the matters that are deemed to have been decided against him because of paragraph 5 of schedule 3 does not adequately enable him to assert his convention rights.

55. In my view, therefore, in a case where the deeming provisions under paragraph 5 are applied, the Tribunal can reopen those issues; though the Tribunal will always have very well in mind considerations  of, or similar to, abuse of process in considering whether such issues should in fact be ventilated before it.

56.  The mere fact that the applicant has not applied to the commissioners ( now the Border Agency), and therefore there have been no condemnation proceedings, would not in my view, be enough (emphasis added).  But, in my judgment, it goes too far to say that the deeming provisions have always, in every case, got to be paramount.”

In Customs and Excise Commissioners v Albert Smith CH [2005] APP 0117

 Lewison J considered and applied the observations of Buxton J and stated:

“ 20……………………. There must, therefore, be something more than a failure on the part of the applicant to invoke condemnation proceedings before the Tribunal is empowered to question the legality of the forfeiture.

22.         It is, in my judgment, clear from that passage that in the run of the mill cases where there has been a failure to give a paragraph 3 notice invoking the condemnation proceedings the deeming provisions will operate against the applicant in any subsequent appeal to the Tribunal . The Tribunal’s function, therefore, is analogous to a sentencing court once a defendant has been convicted. No matter that the defendant still protests his innocence of the charge against him, the functioning of the sentencing court is to accept mitigation but not to question the original conviction.

23.        …. So the relevant questions will always be, first, could the applicant have raised the question of lawfulness of forfeiture in other proceedings and, if the answer to that question is yes, why did he not do so. In light of his reasons for not raising the matter of condemnation proceedings the Tribunal can then answer the question should he have done so and if they answer that question ‘yes’ then it will be, in most cases, an abuse of process for him to raise the question before the Tribunal.”

7.     Miss Graham-Wells identified the law. Duty is payable on tobacco products imported into the United Kingdom by operation of section 2 (1) of the Tobacco Products Duty Act 1979[8] and regulation 4 (1) of the Excise Goods (Holding, Movement, Warehousing and REDs) Regulations 1992 [8-9]. By virtue of Council Directive 92/12/EC products acquired by private individuals for their own use and transported by them may be exempt from payment of excise on importation into the United Kingdom when the duty has been paid in the Member State in which they were acquired. Articles 8 and 9 refer [9-10]. The Excise Goods, Beer and Tobacco Products (Amendment) Regulations 2002[10-12] brings the Council Directive into effect in domestic legislation and set out matters to which reference may be had when determining whether excise goods are held  for a commercial purpose.[11]

Section 49 CEMA provides that goods imported without payment of duty are liable to forfeiture

Section 141 CEMA provides as follows-

(1)…where anything has become liable to forfeiture under the Customs and Excise Acts –

(a) any ship, aircraft, vehicle…which has been used for the carriage handling  deposit….of the thing so liable for forfeiture…and

(b) any other thing mixed, packed or found with the thing so liable shall also be liable to forfeiture.

Section 152(b) CEMA  provides that the Commissioners may as they see fit , restore, subject to such conditions (if any) as they think proper, any thing forfeited or seized.

Schedule 3 to CEMA lays down the procedure relating to forfeiture:

3. Any person claiming that any thing seized as liable to forfeiture is not so liable shall, within one month of the date of the notice of seizure or, where no such notice has been served on him, within one month of the date of the seizure, give notice of his claim in writing to the Commissioners at any office of customs and excise.

5. If on the expiration of the relevant period under paragraph 3 above for the giving of notice of claim in respect of any thing no such notice has been given to the Commissioners, or if, in the case of any such notice given, any requirement of paragraph 4 above is not complied with, the thing in question shall be deemed to have been duly condemned as forfeited. (Our emphasis)

If an appellant claims in the Notice of Claim that the thing seized is not liable to forfeiture condemnation proceedings must be commenced in the Magistrates Court or High Court. If the deciding Court is satisfied that the thing was not liable to forfeiture and therefore the seizure was unlawful it will decline to condemn it as forfeit. If no Notice of Claim is given within the period of one month then the thing shall be deemed to be forfeit. The Border Agency may consider restoring any thing liable to forfeiture. Any refusal will be reviewed upon a proper request being made and if the refusal to restore is confirmed then an appeal may be lodged for a decision by the Tribunal. Under section 16 of the Finance Act 1994 the Tribunal is constrained to consider the reasonableness of the Border Agency’s decision to refuse restoration. For the Tribunal to allow Mr Redmond to raise the issue that he purchased the goods for his own use, when he should have raised the issue in the Magistrates Court, would be an abuse of process. Further, the vehicle has been condemned by passage of time and it is deemed forfeit and the seizure was lawful.

8. We have decided that it would be an abuse of process for us to allow Mr Redmond to claim that the goods had been purchased for his own use. In Revenue and Customs Commissioners v Dawkin [2008] ALL ER (D) 83 (Aug) Richards J stated the position with regard to ‘abuse of process’ at paragraph 40:

“40……………….. The prima facie position of HMRC ( now the Border Agency) is the same as that of the Tribunal. They are bound by the deeming effect of paragraph 5 of the 3 schedule to CEMA. However, where it would not be an abuse of process for the importer to raise the issue as to whether he imported the goods for his own use, HMRC like the Tribunal are bound to consider it. Unless it would not be an abuse of process, it cannot be a criticism of HMRC or a factor in favour of permitting the importer to raise the issue before the Tribunal that HMRC did not consider it on review. There may be other exceptional cases. such as the existence of incontrovertible evidence that the goods were for the importer’s own use, which would require the reviewing officer to consider the issue, but this is not the present case. It is hard to see how a reviewing officer, who is to conduct a review of an administration decision not to restore goods and is not conducting a hearing at which the parties can appear and witnesses can give evidence, could give an importer an opportunity to test the evidence of seizure.

In the light of that decision, and on the basis that this is not an exceptional case, we cannot allow Mr Redmond to give evidence to the effect that he purchased the goods for his own use. Mr Redmond had the opportunity to attend at the Magistrates Court and he chose not to do so. Whether that was because he thought the costs of £1700, including his cost in attending, were too great or that he believed he could recover his vehicle by paying £400 we do not know. It should not have been too much of a difficulty to travel to the Magistrates Court even if the Court was located on the south coast. He had been quite prepared to travel to Belgium on a regular basis to purchase the goods. We therefore uphold Mrs Graham-Wells’ objection.

9.     In relation to any hardship which Mr Redmond might have suffered as a result of his need to look after his handicapped son, the review letter set out the Border Agency Policy in that regard. Their general policy in relation to the restoration of private vehicles used for the improper importation or transport of excise goods, states that they should not normally be restored. The policy is intended to be robust so as to protect legitimate UK trade and revenue and prevent illicit trade in excise goods. However vehicles may be restored at the discretion of the Border Agency subject to such conditions (if any) as they think proper (e.g. fees) in circumstances such as the following:

• If the excise goods were destined for supply on a “ not for profit” basis, for example,  for re-imbursement
• If the excise goods were destined for supply for profit, the quantity of  excise goods is small, and it is a first occurrence
• If the vehicle was owned by a third party, who was not present at the time of the seizure, and can show that they were both innocent of and blameless for the smuggling attempt, then consideration m ay be given for restoring the vehicle for a fee: if in addition to being both innocent and blameless the third party demonstrates that they have taken reasonable steps to prevent the smuggling in the vehicle then consideration may be given to restoring it free of charge.

“ Not for profit”

From 28 March 2006 the Commissioners’ and now Border Agency’s policy for seized vehicles involved in smuggling excise goods which are not for own use, but are to be passed onto others on a “not for profit” reimbursement basis, has changed:

In non-aggravated cases vehicles will not normally be seized (but a warning letter will be issued). The meaning of “aggravated” is explained below.

Aggravated cases depend on how many aggravated offences have occurred within the previous 12 months:

(1)  For a first aggravated detection vehicles will normally be seized and restored for 100% of the revenue involved

(2)  For a second aggravated detection vehicles will normally be seized and restored for 200% of the revenue involved

(3)  For a third aggravated detection vehicles will normally be seized and not restored unless there are exceptional circumstances.

The 100% and 200% restoration fees are subject to a maximum of the trade buying price of the vehicle in Glass’ Guide.

In all cases any other relevant circumstances will be taken into account in deciding whether restoration is appropriate. A vehicle will not normally be restored to a third party in a situation where that would be tantamount to restoring it to a person responsible for the smuggling.

The meaning of “Aggravated” in “Not for profit” cases

Aggravating circumstances include-

• Any previous offence by the individual
• Large quantities, for example more than:

6kg of hand rolling tobacco or

6,000 cigarettes or

20 litres of spirits or 200 litres of wine or 225 litres of beer.

• Any other circumstances that would result in restoration not being appropriate

10.   Mr Brenton took the view that the goods had been purchased for commercial purposes and, in view of the number of trips Mr Redmond had taken to the continent, he clearly knew that he was doing wrong. As a result, he upheld the decision not to return the goods nor to restore the vehicle.

The decision

(1)            We have decided that Mr Brenton acted reasonably in not returning the goods or restoring the vehicle. We have been referred to Lindsay v Customs and Excise Commissioners [2002] 3 ALL ER 118. Lord Phillips at paragraph 63 stated:

“63.  …….. I would not have been prepared to condemn the commissioners’ policy had it been one that was applied to those who were using their cars for commercial smuggling, giving that phrase the meaning that it naturally bears of smuggling goods in order to sell them at a profit. Those who deliberately use their cars to further fraudulent commercial ventures in the knowledge that if they are caught their cars will be rendered liable to forfeiture cannot reasonably be heard to complain if they lose their vehicles. Nor does it seem to me that, in such circumstances, the value of the car used need be taken into consideration. Those circumstances will normally take place beyond the threshold where that factor can carry any significant weight in the balance. Cases of exceptional hardship must always, of course, be given due consideration.”

 Mr Redmond must have been aware that if he used his car for the purposes of smuggling he would have it taken off him. There are signs to that effect at all the ports.

11.  As far as the hardship was concerned we accept that Mr Redmond must have found it difficult to look after his son. Mr Brenton has, howver, decided that this is an aggravated case in which restoration is not appropriate. He has for that purpose considered al the facts and he has rightly decided that Mr Redmond had bought the goods for commercial purposes .He based that decision on the fact that Mr Redmond failed to disclose the other goods, which were in the vehicle, when asked if he had any other tobacco. Mr Redmond also failed to advise the officer, at his interview, that he had been to the continent on a regular basis. Mr Redmond appears to have signed the notes of his interview on several occasions. We do not believe that he did not know what appeared in the notes. He told us that he had left his glasses in the car. As he must have realised that the interview was a serious matter he could, either have asked the officers to get his glasses for him, or asked the officer to read the notes back to him. As the notes appear to have been signed on each page it would not have been difficult for each page to be read back to him. As a result we must assume that the content of the notes is accurate. Fortunately, Mr Redmond has been able to secure a car for his son using his son’s right to a mobility allowance. This is something we believe could have been done much sooner. The hardship is not in any event Mr Redmond’s but arises from his inability to assist his son, who lives a reasonably independent life, although he clearly needs attention from the wider family. We have therefore decided that Mr Brenton acted reasonably when reviewing the matter and we refuse the appeal.

12.   This document contains full findings of fact and reasons for the decision. Any party dissatisfied with this decision has a right to apply for permission to appeal against it pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009. The application must be received by this Tribunal not later than 56 days after this decision is sent to that party.  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.

TRIBUNAL JUDGE

RELEASE DATE: 7 September 2010