First-tier Tribunal (Tax)

[2011] UKFTT 299 (TC)

TC01161

Appeal number TC/2010/02789

EXCISE DUTY – Restoration appeal – whether refusal to restore a valuable vehicle was disproportionate in circumstances where the vehicle’s owner (the Appellant) had not himself attempted to import excise goods illegally – this had been done by his passenger (his stepson) – the vehicle’s value was about 10 times the  duty sought to be evaded – the Appellant had misled the Officer at the time of the importation in a misguided attempt to protect his passenger – the Appellant knew at the time of the attempted importation that he was facilitating his passenger’s attempt at smuggling – held the refusal to restore was not unreasonable and the sanction suffered by the Appellant was not disproportionate – Lindsay v C&E Commissioners [2002] EWCA Civ 607 followed – appeal dismissed

FIRST-TIER TRIBUNAL

TAX CHAMBER

ANTHONY YATES Appellant

- and -

THE DIRECTOR OF BORDER REVENUE (Excise Duty) Respondent

TRIBUNAL: JOHN WALTERS QC

JOHN AGBOOLA MBA FCCA

Sitting in public in Norwich on 1 3 April 2011

The Appellant in person

Miss D. Riley, Counsel, instructed by the Solicitor for HM Revenue and Customs, for the Respondents

© CROWN COPYRIGHT 2011

DECISION

1.     Mr. Anthony Yates (“the Appellant”) appeals against the UK Border Agency’s refusal to restore to him a motor car, a BMW 320D, registration number AY59ZNU (“the Vehicle”), which was seized at Coquelles on 23 November 2009.

2.     The refusal was communicated in a letter dated 4 January 2010 to the Appellant from Officer A. Harvey of the UK Border Agency’s Post Seizure Unit.  Metcalfe, Copeman & Pettefar, Solicitors, wrote to the Agency on the Appellant’s behalf, requesting a review of Officer Harvey’s decision.  Mr. R. Brenton, a Review Officer, wrote to the Solicitors in reply on 19 February 2010 confirming the decision not to restore the Vehicle.

3.     The Appellant was intercepted on 23 November 2009 in the UK Control Zone at Coquelles.  He was driving the Vehicle and Mr. Ben Thompson (his stepson) was his passenger.  He was questioned by an officer and initially told him that he had been to France to get wine and beer.  On being questioned further he admitted that he had been to Belgium.  Mr. Thompson volunteered that a substantial quantity of hand-rolling tobacco had been purchased.  Initially Mr. Thompson said it was for him and his wife and then the Appellant volunteered that he was ‘having half’, although he admitted that he smoked very little and that some of the tobacco would be for ‘family’. Mr. Thompson then volunteered that the tobacco was not for sale.  They said, in response to questioning that they had last travelled 6 months previously.

4.     Commercial records available to the Border Agency showed that the last time the Appellant had crossed the Channel with the Vehicle was 4½ months previously (on 1 July 2009) and that he had travelled with his previous car on 3 March 2009 and 15 October 2008.

5.     On examination of the Vehicle a small drum shaped container was found in the passenger footwell, which contained a small amount of money, some receipts and a hand-written shopping list showing purchase prices, selling prices and profit, for Cutters Choice, Golden Virginia and Old Holborn hand-rolling tobacco (a profit of £684 was noted).  An invoice for the purchase of these goods (320 pouches (16 kilograms) from P&J Tobacco at Adinkerke, Belgium (for a total of £1,154.50) was also found.

6.     The Appellant at interview told Officers that Mr. Thompson had paid for the tobacco and that he would settle up with him later.  Mr. Thompson at a separate interview, however, admitted that he was going to sell at least some of the tobacco.

7.     The Officer was satisfied that the tobacco goods were held for a commercial purpose and the tobacco goods, the other excise goods in the Vehicle (alcohol), and the Vehicle itself were all seized.

8.     The Appellant did not challenge the legality of the seizure and the goods and the Vehicle were condemned as forfeit to the Crown under the Customs and Excise Management Act 1979.

9.     We heard evidence from the Appellant and from the Review Officer, Raymond Brenton.

10.  The Appellant has acknowledged that he misled the Officers at interview.  We find that none of the tobacco goods were purchased for or for the use of the Appellant.  They were all purchased by Mr. Thompson for his own purposes which included commercial purposes (onselling at a profit). The total amount of tobacco goods which Mr. Thompson attempted to import was 17 kilograms.  The guidance level given by the Border Agency for importation of tobacco products for own use is 3 kilograms per person.

11.  The duty sought to be avoided on the importation of the tobacco goods was £2,115.66.

12.  The Vehicle at the time of seizure was of a value in the region of £28,000.

13.  The Appellant attempted to settle the matter by obtaining restoration of the Vehicle on payment of the duty sought to be avoided plus an amount of £5,000.  This was rejected by the Border Agency.

14.  The Appellant submitted that the decision not to restore the Vehicle to him was unreasonable and disproportionate.  He states, and we accept, that he has no previous criminal convictions and has not been cautioned, interviewed or challenged on any prior importation of goods liable to be charged to excise duty.  The story he told to the Officers regarding his own intention to purchase and use tobacco products, which he admits was not true, was, we accept, a misguided attempt to protect and shield his stepson, Mr. Thompson.

15.  The Appellant is 70 years old, a retired senior local authority officer.  He has not been in very good health since February 2010 (some 3 months after the seizure of the Vehicle).  He has apologised for his actions and states that while he knew that the importation of so much tobacco without paying duty was illegal, and that his stepson was planning to sell some of the tobacco to his friends, he was not aware of the severity of the consequences of being caught.  He claims he has suffered a disproportionate penalty in the loss of his expensive motor car – disproportionate to the offence, to his responsibility for it and to the duty sought to be evaded.

16.  Officer Brenton’s evidence was that the attempted importation was clearly in pursuance of a profitable venture.  Furthermore he regarded the Appellant’s attempts to mislead the Officers as to the truth about the purchase of and intentions for the tobacco goods as ‘a façade of deceit deliberately engineered to facilitate his stepson in the attempted smuggling of 17 kilograms of tobacco goods into the UK for distribution to the illicit UK market’.

17.  We find that the Appellant misled the Officers because he knew that his stepson intended to sell on some of the tobacco at a profit.  To that extent the Appellant attempted to facilitate smuggling of tobacco into the UK.  Officer Brenton, while suspicious that the Appellant may also have facilitated smuggling of tobacco into the UK by his stepson on previous visits had not taken this into account in applying the Border Agency’s policy in this case.

18.  That policy is that private vehicles used for the improper importation of excise goods should not normally be restored. The policy is intended to be robust (severe) in order to protect legitimate UK trade and revenue and prevent illicit trade in excise goods.  Vehicles may, however, be restored at the Border Agency’s discretion if the quantity of excise goods sought to be illicitly imported is small and it is a first occurrence. 

19.  Officer Brenton did not regard the quantity of excise goods sought to be illicitly imported as ‘small’.  Officer Brenton considered whether non-restoration of the Vehicle would cause exceptional hardship to the Appellant and concluded that it would not.  We find that these conclusions were not unreasonable.  We mention that the Appellant’s health problems postdated the seizure of the Vehicle and we find (having regard to his offer to pay the duty and make an additional payment of £5,000 for the restoration of the Vehicle) that he could, if he wished, purchase an alternative motor car.

20.  We also consider that the Appellant’s professed ignorance of the consequences of being apprehended in an attempt to import excise goods illegally is not a fact which can affect the reasonableness of the Border Agency’s decision.  There are many public notices warning travellers of the policy to seize vehicles used for smuggling attempts.

21.  The Appellant’s main argument is that the loss of the Vehicle is a disproportionate penalty, having regard to (a) the fact that it was not he, but his stepson, who intended to smuggle tobacco products into the UK and (b) that the Vehicle (at a value of £28,000) is more valuable than most vehicles seized in similar circumstances and is worth over 10 times the excise duty sought to be evaded,

22.  We reject this argument.  Although the Appellant did not, we accept, himself intend to smuggle tobacco products into the UK, he knowingly facilitated the attempt to do so by his stepson.  The attempt might not have been made at all, and certainly would not have been made in the way in which it was made, if the Appellant had not made it possible by using the Vehicle for the purpose.  The Appellant certainly facilitated the attempted illegal importation of the tobacco products.

23.  We cannot regard the seizure of or the refusal to restore so valuable a motor car as the Vehicle as disproportionate, because the point is explicitly dealt with in an authority, binding on us, namely the decision of the Court of Appeal in Lindsay v Commissioners of Customs and Excise [2002] EWCA Civ 607.

24.  In that case (at [63] and [64]) Lord Phillips MR (as he then was) said this:

63. Having regard to these considerations, 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 those 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 the case beyond the threshold where that factor can carry significant weight in the balance. Cases of exceptional hardship must always, of course, be given due consideration.

64. The Commissioners’ policy does not, however, draw a distinction between the commercial smuggler and the driver importing goods for social distribution to family or friends in circumstances where there is no attempt to make a profit. Of course even in such a case the scale of importation, or other circumstances, may be such as to justify forfeiture of the car. But where the importation is not for the purpose of making a profit, I consider that the principle of proportionality requires that each case should be considered on its particular facts, which will include the scale of importation, whether it is a ‘first offence’, whether there was an attempt at concealment or dissimulation, the value of the vehicle and the degree of hardship that will be caused by forfeiture. There is open to the Commissioners a wide range of lesser sanctions that will enable them to impose a sanction that is proportionate where forfeiture of the vehicle is not justified.

25.  Lord Justice Judge (as he then was), agreeing with Lord Phillips said this (at [71] and [72]):

71. I agree with the judgment of the Master of the Rolls on the issues of principle and their application to this appeal. My brief observations are by way of emphasis only. There is usually a marked distinction between those who smuggle alcohol, cigarettes and tobacco for profit and those who, without profit, smuggle amounts in excess of the permitted limits for their personal use and occasional distribution to family members and close friends. The vehicles used by those whose activity falls into either category are liable to be seized.

72. Given the extent of the damage caused to the public interest, it is, in my judgment, acceptable and proportionate that, subject to exceptional individual considerations, whatever they are worth, the vehicles of those who smuggle for profit, even for a small profit, should be seized as a matter of policy. However, the equal application of the same stringent policy to those who are not importing for profit fails adequately to recognise the distinction between them and those who are trading in smuggled goods. Accordingly the policy is flawed.

26.  It appears from these passages (to which we have added the emphases) that the real question of proportionality arising in cases such as this, where there is an attempted importation for commercial purposes, is not whether the value of a seized vehicle is disproportionate to the offence, or the amount of duty sought to be evaded, but whether the seizure of a valuable vehicle intentionally used to further a fraudulent commercial venture is disproportionate to the damage caused to the public interest by such ventures.  The Court of Appeal has made it clear that in the absence of exceptional circumstances it is not. 

27.  We find that the Border Agency’s decision that there were no relevant exceptional circumstances in this case was reasonable and also that the Border Agency’s decision to refuse restoration of the Vehicle, even given its relatively high value, was not disproportionate or otherwise unreasonable.

28.  We therefore dismiss the appeal.

29.  We add that it is unfortunate that the matter took so long to get to an appeal hearing.  We know the Appellant has been aggrieved by the delay and we understand this.  However it is not a matter that is relevant to our decision on the question of the reasonableness of the Border Agency’s decision against which the Appellant has appealed.

Right to apply for permission to appeal

30. 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.

JOHN WALTERS QC

JUDGE OF THE FIRST-TIER TRIBUNAL

RELEASE DATE: 09 May 2011

© CROWN COPYRIGHT 2011