First-tier Tribunal (Tax)

[2010] UKFTT 615 (TC)

TC00857

 Appeal number: TC/2009/12898

RED DIESEL –Heating Oil brought back from France in 2007 – Can left at back of garage – jerry can found and used to fill up ‘Espace’ for holiday trip to Newport, Wales -tank filled for trip- vehicle checked on return – contained red diesel –appellant had forgotten jerry can had heating oil in it - case dismissed- reviewing officer acted reasonably.

FIRST-TIER TRIBUNAL

TAX

                                    JOHN FRANCIS O’MULLANE                   Appellant

                                                                      - and -

                                 THE COMMISSIONERS FOR HER MAJESTY’S

                                                   REVENUE AND CUSTOMS               Respondents

                        TRIBUNAL: DAVID SPORTER (TRIBUNAL JUDGE)                                                                                                

Sitting in public at 11 Albion Street, Leeds on 4 November 2010

The Appellant in person

Mr Josh Shields, of counsel, instructed by the General Counsel and Solicitor to HM Revenue and Customs, for the Respondents

© CROWN COPYRIGHT 2010

DECISION

1.       The Appellant (Mr O’Mullane’) appeals for a refund of the £500 paid for the  restoration of his Renault Espace car arising from the review decision refusing the repayment on the basis that the vehicle had been correctly forfeited and the penalty of £500 properly raised when he had been stopped. He says that when he filled his car with fuel, he was unaware that the jerry can contained heating oil, which he had used in his house in France. He had brought the jerry can back in October 2007 and he had found it when cleaning out his garage. He had not realised it contained red diesel as it was dark when he put the fuel in his vehicle. The Respondents (HMRC) say that he must have realised that the red diesel was the heating oil that he had taken to France and that the penalty of £500 for the return of the vehicle was reasonable and the reviewing office had acted properly.

2.       Mr Josh Shields ( Mr Shields), of counsel, appeared for HMRC and produced a bundle of documents for the tribunal. Mr O’Mullane gave evidence under oath and represented himself.

Preliminary Issue

3.       Mr O’Mullane was concerned that Mrs Julie Wiggs was unable to attend the tribunal. Mr Shields told the Tribunal that she had been ill and as she was still unwell, she had retired from the department. Mr O’Mullane was concerned that in her review letter of 30 June 2009 Mrs Wiggs had written:

         “ In addition to this I find your explanation less than plausible. In particular;

·       Why you would take red diesel to France instead of using the more common heating fuel.

·       You never used the remaining 20 litres even though you thought it would come in useful in 2007.

·       You claim that although you thought to pick up the jerry can and smell it to find it was diesel you did not recall how it came to be there.

·       The added coincidence that you fuelled the vehicle at night and were unable to see the colour.

Mr O’Mullane was concerned that Mrs Wiggs did not appear to understand the way in which heating oil was purchased in France. Due to her lack of comprehension, she had thought he was fabricating the story, which prejudiced her against him. In view of Mrs Wiggs poor health, and her retirement, a decision was made not to call her to give evidence. The case would be decided on the basis of Mr O’Mullane’s evidence. Mrs Wiggs had done no more than look at the evidence, which had been presented to her. It would be for the Tribunal to decide whether they believed Mr O’Mullane’s evidence or not. The case had been called to deal with that direction, but as both parties were present, I asked if they wished me to hear the case. They both agreed that I should.

The Facts

4.       Mr O’Mullane told the tribunal that he had been selling a house he owned in Franc. He had bought the house some 5 years earlier and when he took possession he had been upset to find that the previous owner had used all the heating oil. He was concerned that the same should not happen to his purchaser. He did not want to buy any heating oil in France, because he could only purchase 500 litres at a time and he did not need this quantity. In any event heating oil in France, at that time, was dearer than in the UK. He, therefore, filled up 3 plastic containers, which held 30 litres each. When he arrived at his home in France he discovered that there was already some heating oil in the tank and he put in another 40 litres and brought home the remaining 50 Litres in a jerry can which he had had at the house. When he got home he put the jerry can in the garage and forgot about it. Some 18 months later he had been cleaning out his garage and found the jerry can. He was taking his family to Newport, in Wales, and decided to put fuel in the ‘Espace’ after he had been gardening. As it was dark, he did not realise that the diesel was in fact red diesel and he put 50 Litres into the ‘Espace’. He knew that red diesel could not be used in a vehicle, but had forgotten that the diesel was the heating oil from his former house in France.  The next day he took the family on holiday and filed the tank up at the garage with ordinary diesel. He took the ‘Espace’ to Newport and back without filling up again. On his return, and a few days later, he was returning from the local council tip, towing a trailer, on 14 May 2009, when his vehicle was selected for inspection by customs officers at Bankside, Hull. A sample of fuel was taken from the running tank of the vehicle and was found to be red in colour and tested positive for rebate fuel. Mr O’Mullane stated that the fuel was only slightly red as it had been diluted by the addition of the diesel when he filled up for the holiday trip. Mr O’Mulanne had to pay £500 and the vehicle was returned to him. The £500 was made up of £250 for putting the red diesel in the vehicle and £250 for using the vehicle. Under cross-examination by Mr Shields, Mr O’Mullane said that he did keep a spare tin of diesel, which he purchased from time to time, so that he did not run out of fuel on his various journeys. He was unclear how often this occurred. Mr Sheilds suggested that he would only have had one can in any event. Presumably, Mr O’Mullane filled up a can; left it in the garage until he needed it; filled up his tank and took the can to fill it up again. Mr O’Mullane appeared confused as to both the use of the spare can and how often he used it.

The Law.

5.       The Excise Goods (Holding, Movement, Warehousing and REDS) Regulations 1992 (known as the REDS regulations) provide that under Regulation 16 excise goods on which duty has not been paid when it should have been are liable to forfeiture.

Section 6 of the Hydrocarbon Oils Duties Act 1979 ( “HODA”) provides for the levy of excise duty on hydrocarbon oil delivered for home use and by virtue of section 11 a rebate of duty is allowed at the time of delivery.

Section 12 of HODA prohibits the taking in or use of that heavy oil in road vehicles.

Under section 13 where such heavy oil is taken into or used in a road vehicle with the intent of contravening section 12A the Commissioners may assess an amount equal to the rebate on like oil at the rate in force at the time of contravention as being excise duty due from any person who used the oil or is liable for it being taken into the road vehicle.

An assessment is issued pursuant to the provisions of section 12A.

The Customs and Excise Management Act 1979

Section 49 provides: Goods are liable to forfeiture; if duty should have been paid but it has not been……..

Section 139 provides: Any thing liable to forfeiture under the customs and excise acts may be seized by an officer.

For the first offence, the restoration terms are as follows: seizure of the vehicle and restoration for an amount equal to the civil penalties for the offence, 100% of the revenue evaded on the occasion and any removal and storage costs incurred by the department. Where the value of the vehicle is less that the potential restoration fee, civil penalties should be used in conjunction with or instead of restoration.

Submissions

6.       Mr Shields submitted that the car had bean properly found to contain red diesel and had been rightly forfeited. HMRC’s policy deals with a first offence and allows restoration on the payment of a penalty. The policy is fair and is designed to discourage the use of red diesel in a vehicle. Mr O’Mullane had at the least been reckless. Mr O’Mullane knew that red diesel could not be used in a vehicle. He must have remembered that the jerry can came from France and contained heating oil. He chose not to examine the conents even though he accepted that he had found the can at least a day before he chose to put the contents into the vehicle. It must have been a surprise for him to have found the jerry can. In the circumatances, Mrs Wiggs had acted reasonable and the requirement to pay £500 for the restoration of the vehicle was reasonable.

7.       Mr O’Mullane said that he had not put the contents of the jerry can into his vehicle deliberately. The onus was on him to show that the use of the red diesel was purely accidental and t the restoration fee should be returned to him.

The decision

I have considered the law and the facts and I have decided that Mrs Wiggs acted reasonably in requiring a payment of £500 for the restoration of the vehicle. Mr O’Mullane was very concerned that the purchaser of his house in France should not be without heating oil, as he had been when he purchased the property some 5 years earlier. The lack of heating fuel had clearly caused him considerable distress for him to be concerned that his purchaser should not suffer the same inconvenience. I have no doubt that he took red diesel to France from England because of the price differential. I am also satisfied that he brought 50 litres back in the jerry can, which he put in his garage on his return in October 2007. However, when he found the jerry can I cannot believe that he did not recognise that it was the heating fuel, which he had brought back from France. The original incident over the lack of heating fuel had remained with him for some 5 years to the extent that he went to a great deal of trouble to see it did not happen again. If he had genuinely not remembered that the jerry can contained diesel he would undoubtedly have checked it. He would not have wanted to put fuel in his vehicle, which might damage the engine. The fact that the fuel was only slightly pink makes no difference. The offences are the taking in of the fuel and the use of it on the road, both of which he has done. I therefore find that Mrs Wiggs acted reasonably and I dismiss the appeal

8.       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: 30 November 2010