First-tier Tribunal (Tax)

[2011] UKFTT 97 (TC)

TC00973

Appeal number: TC/10/04308

Excise Duty – Hydrocarbon Oil Duties Act 1979 – non-restoration of vehicle found to contain red diesel – three previous offences though one of those found not to be Appellant’s fault – no exceptional hardship – no reasonable excuse – decision found to be reasonable.  Appeal Dismissed.

FIRST-TIER TRIBUNAL

EDWARD INGLE Appellant

- and -

THE COMMISSIONERS FOR HER MAJESTY’S

REVENUE AND CUSTOMS Respondents

TRIBUNAL JUDGE: Mrs N A Baird

(Member) Mr Peter Sheppard, F.C.I.S., F.C.I.B., ATII

Sitting in public at 126 George Street, Edinburgh on Wednesday 17 November 2010

Edward Ingle, for the Appellant

Ms Katie Miller, instructed by the General Counsel and Solicitor to HM Revenue and Customs, for the Respondents

© CROWN COPYRIGHT 2011

DECISION

1.       This is an appeal by Edward Ingle against the decision of the Respondents made on 8 January 2010 not to restore to him an Isuza Trooper Registration Number R332 MSA (hereinafter referred to as ‘the vehicle’, which was seized by the Respondents on 11 January 2010.  The Appellant was notified on 12 March 2010 that the vehicle would not be restored to him.  He requested a review of the decision.  A review was carried out and the decision upheld and confirmed to the Appellant on 4 May 2010. 

2.       In their Statement of case the Respondents say that the vehicle was seized by Customs Officers from the Road Fuel Testing Unit having been stopped on 8 January 2010 as it was being driven by the Appellant.  The officers suspected that the fuel in the vehicle contained marked rebated gas oil.  They took a formal sample of fuel from the tank and this tested positive for marked rebated gas oil.  The officers were satisfied that the vehicle was unlawfully fuelled and it was seized.

3.       On three previous occasions, 16 May, 12 June and 30 July, all dates in 2008, the Appellant had been found to have been using rebated or marked fuel in his vehicle.

4.       The relative legislation is the Hydrocarbon Oil Duties Act 1979.  In summary Section 1 defines the dutiable commodities including heavy oil.  Section 6 sets out the charging provisions.  Section 11 provides for a rebate on heavy oil liable to the excise duty on hydrocarbon oil delivered for home use.  Section 12 provides that the rebate is not allowed on fuel for vehicles and says that if heavy oil for home use is delivered and it is intended to use this for a road vehicle, a declaration has to be made to that effect in the entry for home use and no rebate for that oil shall be allowed.

5.       A Notice of Seizure was issued along with a Notice 12A explaining that the legality of seizure can be challenged in the Sheriff Court.  No such challenge has been made in this case.  The Appellant wrote to the Respondents on 18 January 2010 requesting a formal review and explaining that he was stopped by the police on a private road for having three children in the vehicle who were not wearing seat belts.  The police removed the vehicle and it was found to be fuelled with red diesel.

6.       The Respondents set out their general restoration policy which is to provide increasingly harsh restoration terms for the first two detections with a strict non-restoration policy on the third occasion.  Every case is decided on its own merits, and any mitigating circumstances and exceptional hardship taken into account.  The officers took the view that the Appellant did not have a reasonable excuse as his actions were within his control.  They took into account that the Appellant had been previously warned and concluded that the seizure did not cause exceptional hardship as the Appellant is not employed.  The decision not to restore the seized goods was in line with publicly stated policy and was reasonable in the circumstances.

7.       There are several lengthy handwritten letters from the Appellant explaining how the vehicle came to have red diesel in it.  He also makes representations about his own circumstances.  In each letter he asks that his Jeep be returned.  He says he had gone out in the vehicle to take his children sledging and they had had to drive further than anticipated to find some snow.  He was accompanied by his girlfriend, Alexa Hood who was at that time married to and living with someone else.  She was concerned that they did not have enough fuel to get home.  The Appellant disagreed but she was very worried and because their relationship was a secret, they could not phone anyone to ask for help.  While the Appellant was out sledging with the children, Alexa had remained in the vehicle and she stopped a farmer passing in a Land Rover and asked if he had any fuel.  He went away and came back soon after with a jerry can, the contents of which he poured into the tank.  The Appellant says that when he realised this had been done he was very annoyed.  He did not know it was red diesel.  He gave the man £5 for the fuel.  It was the day after this that he was stopped and the car taken for the fuel to be tested.  He had asked if he could be present when the test was done.  He was told he could but then it was done outwith his presence.

8.       In his letters the Appellant says he works as tree surgeon and needs the vehicle for his work.  He suffers from depression and Post-traumatic Stress Disorder caused by the murder of his father and the death of his brother in a house fire shortly after that.  He is a single parent with five children.  He was badly assaulted in February this year.  The vehicle cost about £600.  He only drives diesel vehicles because he was previously in a very serious accident as a passenger in a petrol car.  The last time he was caught with red diesel in the vehicle his ex-wife’s boyfriend had put it in.  He says he has learned his lesson.

9.       There is a transcript of an interview of the Appellant on 18 January 2010 by two officers of HM Revenue and Customs.  It is noted in particular that the Appellant was very vague about his employment status, ie whether he is employed or self-employed as a tree surgeon.  It seems that he is self-employed.

10.    The requested review was carried out by Maria Finelli, a Higher Officer employed by the Respondents in their Inland Detection Reviews and Appeals Team.  She stresses that it is an independent review.  She has been employed by the Respondent for 31 years.  She provided a statement and a report.  She summarises the letters submitted by the Appellant and in a letter to the Appellant dated 4 May 2010 she sets out the policy of the Commissioners on restoration and the penalties.  She gives the following reasons for upholding the decision to seize his vehicle:-

(1)        He did not offer a reasonable excuse for fuelling his vehicle with red diesel because his actions were not out of his control.

(2)        This was the fourth time he had been caught using red diesel.

(3)        He had been previously warned of his conduct and was aware that tougher sanctions would be applied should he be found to have rebated fuel in his vehicle.

(4)        As regards exceptional hardship, she took into account that he was trying to get back into tree surgery but said the difficulties caused to him by the loss of his vehicle are a natural consequence of having it seized and she does not consider in this case that either the inconvenience or expense is over and above what he should expect as a result of having red diesel in his tank.

Evidence at the Hearing

11.    The Appellant attended the hearing but had apparently thought that he was coming to the building to get his vehicle back.  He did not appreciate that an appeal hearing was to take place.  We explained that the Respondents had determined that he should not get his vehicle back and we would hear his account of what had happened and his explanation and make an independent decision on the return of his vehicle.  He said he would like Ms Hood to give evidence so we asked her to leave the courtroom in the meantime.

12.    All of the witnesses gave their evidence on oath.

13.    Mr Ingle was asked by Mr Sheppard if he was not worried about what the driver of the Land Rover had given him, since he had been in trouble before for having red diesel in his car.  He said of course he was worried about that but it was apparent that when paying for the fuel he did not raise any query as to whether it was red diesel.  He said it was Alexa who asked for the fuel, not him.  We asked him whether she is aware that he has been in trouble before for having red diesel in his vehicle and he said he does not know but her ex-husband works with the Environmental Health Department.

14.    We then heard evidence from Alexa Hood.  She said she was worried that there was not enough fuel to get them home.  A man came along in a Land Rover and she peeped the horn to attract his attention and asked him if he had any fuel.  No-one told her it was red diesel.  The Appellant was outside playing with the children.  She does not like the cold so sat in the Jeep.  She was asked if the loss of the vehicle caused hardship for Mr Ingle and said he was attacked in February and badly hurt.  He does tree surgery and cannot manage this without the vehicle.  He has his children most of the time.  She said he was very angry with her for stopping the Land Rover and they had a row about it.  He said to her that she should have known not to do it.  She did not know that he had three previous convictions for having red diesel in his car but she did know that he had been in trouble with the police.  He had been stopped lots of times.  She said there was only a small amount of fuel in the bottom of the jerry can – perhaps a quarter full.

15.    Maria Finelli gave evidence.  She adopted her statement and her report.  Mr Ingle had no questions for her.

16.    We asked her why she reached the conclusion she did and she said it is the Appellant’s vehicle and he is responsible for fuelling it.  It was not out of his control.  He said he had flagged a man down and bought red diesel from him.  She said she had taken into account that he was with a married woman and so could not phone for assistance but it was his responsibility to ensure he had enough fuel in the vehicle.  It had been submitted in her report that he should have cleaned the tank out as soon as he got home and when questioned about this she maintained this submission as reasonable.  She said too that she still does not have the results of the tests carried out on the vehicle so does not know how much red diesel was in it, only that it was present.  We asked her whether there is a visible difference between red and white diesel and not surprisingly she said they are different colours but she did, when pressed, accept that if red diesel was being poured from a jerry can into a tank in the dark, it would probably not be possible to tell the difference.

17.    She conceded that the Appellant had never denied that this was the fourth time he had been caught with red diesel in his vehicle but pointed out that he had benefited from flexibility in the past.  His vehicle should have been seized after the third incident, in line with practice, but he was spared this because it was his ex-wife’s partner who had put the fuel into the vehicle.  She said four offences are a lot.  He had been told that the sanctions would be more severe the next time.

18.    We asked her about the penalties he had had imposed and she said the first time he paid £250 in May 2008 to get his vehicle back and in July £500.  There were receipts for these two amounts but no documentation relative to the offence in June 2008.  She could not explain why this was so.  The Appellant was asked how many fines he had paid and said he has no idea – it would be whatever Ms Finelli said.

19.    She said she had taken into account a letter from his GP.

20.    Mr Sheppard asked the Appellant if he could confirm that it was not he who had stopped the Land Rover and asked for fuel but Ms Hood.  The Appellant said it was Ms Hood.  He said he would have tried to get home with the fuel they had.  It was not he who put the fuel into the tank.  The farmer did it.  It was a genuine mistake.  We asked him if he is in the habit of letting his fuel get so low and he said he is not really but he did run out last week.  He said that two weeks ago he was stopped by the police and his tank checked.  Mr Sheppard asked him if he thinks he is being targeted by the police and he said he is.  He has been stopped many times by officers of both the Dunbar and Border forces.  So far as flushing out the tank is concerned, he would not have thought of doing that.  He thought it would be sufficient to top it up with white diesel.

21.    In her submissions Ms Miller said the Appellant is liable because there was red diesel in his Jeep.

22.    She referred us to Section 16(4) of the Finance Act 1994 which says:

“In relation to any decision as to an ancillary matter, or any decision on the review of such a decision, the powers of an appeal tribunal on an appeal under this section shall be confined to a power, where the tribunal are satisfied that the Commissioners or other person making that decision could not reasonably have arrived at it, to do one or more of the following, that is to say—

(a)        to direct that the decision, so far as it remains in force, is to cease to have effect from such time as the tribunal may direct;

(b)        to require the Commissioners to conduct, in accordance with the directions of the tribunal, a further review of the original decision; and

(c)        in the case of a decision which has already been acted on or taken effect and cannot be remedied by a further review, to declare the decision to have been unreasonable and to give directions to the Commissioners as to the steps to be taken for securing that repetitions of the unreasonableness do not occur when comparable circumstances arise in future.

23.    In short, in this case the power of the Tribunal is to consider whether or not the decision of the Respondents was unreasonable.

24.    Ms Miller went on to submit that the Appellant was aware that the fuel had come from an un-credited source.  He had offered £400 in May but that is not enough.  She submitted that we should take into account that his brother gave him a car to use so there is no hardship.  He has transport.  He has failed to show any reason why the Respondents should depart from their stated policy.

25.    Judge Baird explained the submissions to Mr Ingle and asked if he had anything to say in reply.  He said it was not within his control.  It was Alexa who stopped the man and took the fuel.  She would not have known the difference between red and white diesel.  We asked him if what he was saying was that he does have a reasonable excuse and he said that is so.  He did not realise that it was red diesel.  He did not put it into the tank and was not there when it was put in. 

Decision and Reasons

26.    We have given careful consideration to all the evidence before us in this case.  We have taken note of the fact that Maria Finelli said in her report that it was the Appellant who stopped the Land Rover and asked the driver if he had any fuel which we now accept not to have been the case.  Ms Finelli did however feel able to maintain her position on the grounds that the vehicle was being driven by the Appellant and was his responsibility.

27.    We have taken account of the information contained in the Appellant’s letters, of his submissions at the hearing and of the evidence of Ms Hood, who said she is to blame for the offence.  We do have some sympathy with the Appellant in this case and accept that he personally did not put the rebated fuel into his vehicle.  He did however pay for it.  We must take into account that this is his fourth offence and it is important too to note that the last time red diesel was found in the vehicle, it was someone else who had put it in.  On that occasion leniency was shown by the Respondents.  We do not therefore think that on this occasion their decision can be said to be unreasonable, even in light of the fact that it was Ms Hood who arranged to have the fuel put into the tank.  The Appellant was there and paid for the fuel and despite his history of difficulties and the warning received he did not question the nature of the fuel.  We find there is therefore no reasonable excuse for his misdemeanour.

28.    We find, taking into account the evidence before us, particularly in relation to his employment, that the Appellant has not established that the seizure of the vehicle has caused him exceptional hardship.

29.    We find that in all these circumstances the decision of HMRC was not unreasonable.

Decision

30.    The appeal is dismissed.

31.    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.

MRS NORMA BAIRD

TRIBUNAL JUDGE

RELEASE DATE:  31 JANUARY 2011