UAB Anetus v Director of Border Revenue [2011] UKFTT 833 (TC) (15 December 2011)
[2011] UKFTT 833 (TC)
TC01669
Appeal number: TC/2010/6660
EXCISE
DUTY – whether decision of UKBA to refuse to restore truck and trailer seized
at Dover having been used in attempt to smuggle drugs into UK was reasonable –
yes in circumstances – appeal dismissed
FIRST-TIER TRIBUNAL
TAX
UAB
ANETUS Appellant
-
and -
DIRECTOR OF BORDER REVENUE
Respondents
TRIBUNAL:
Mrs B Mosedale (Tribunal Judge)
Sitting in public at 45 Bedford Square, London WC1 on 1 December 2011
The Appellant was not
represented
Mr Lill, Counsel, instructed
by the General Counsel and Solicitor to HM Revenue and Customs, for the
Respondents
© CROWN COPYRIGHT
2011
DECISION
1. The
Appellant company appeals against a decision on review of the UKBA not to
restore to it an Iveco trailer truck registration number GPH 722 and trailer BJ
460. The original decision to refuse restoration was 15 February 2010. The
review decision was taken by Officer Mark Collins on 15 April 2010.
Non attendance of appellant
2. The
Appellant did not attend and was not represented at the hearing. On 26 October
2011 the sole director of the appellant company, Mr Arunas Tomkevicius, wrote
to the Tribunal Service and asked for the matter to be decided in the absence
of representation for the appellant as he could not attend due to financial
problems.
3. In
view of the Appellant’s request that the Tribunal hear the appeal in its
absence, I determined that it was in the interests of justice to do so.
Appeal out of time
4. The
appeal was lodged out of time. S 16 Finance Act 1994 (as amended) provides for
a 30 day time limit to appeal:
“16 Appeals to a tribunal
(1) An appeal against a decision on a review
under section 15(not including a deemed confirmation under section 15(2) may be
made to an appeal tribunal within the period of 30 days beginning with the date
of the document notifying the decision to which the appeal relates.
5. The
Appellant was notified of this with the review letter. The letter also
contained the address to which to send an appeal and directed the Appellant to
the website for the Tribunal Service.
6. Despite
this guidance, the Appellant dated a letter of appeal on 13 May 2010 and sent
it to “London Tribunal Centre”. Mr Tomkevicius’s case is that he sent the
letter to the wrong address, and I find that he did. We do not have the
envelope but it must have been sent to 45 Bedford Square (the address of the
VAT & duties Tribunal and still a current address for the FTT Tribunal
although no longer its processing centre): I find this because ultimately the
letter was forwarded to the Tribunal’s central processing centre in Birmingham
(to which all appeals should be sent) and forwarded without any covering memo:
it is unlikely that anyone other than someone in 45 Bedford Square would
realise that the letter should have been forwarded to Birmingham CPC.
7. The
appellant was not present to explain why he sent the letter to the old address
for the VAT Tribunal rather than the current address for the FTT Tax chamber.
I find that it seems more likely than not due to confusion in that some
versions of the legislation applicable to his appeal still refer to the VAT
& Duties Tribunal and a later letter from the Appellant actually refers to
the VAT & Duties Tribunal. I consider that it may well not have been
obvious to many persons outside the tax profession, and certainly not to
someone based in Lithuania that the FTT Tax Chamber is the successor to the VAT
& Duties Tribunal which no longer exists.
8. I
considered the possibility that the letter was not sent on the date with which
it was dated because it was not received by Birmingham until 20 July 2010.
Sadly however inefficiencies in Bedford Square are very well known to the
judiciary and it is only too likely that there would be a delay in forwarding
post. It would not have been in Mr Tomkevicius’s interests to delay making an
appeal he clearly wishes to make so my finding is that the letter was sent when
dated.
9. Even
making allowance for the mistake in the address, bearing in mind it had to come
from Lithuania and was only sent on 13 May, the letter of appeal was unlikely
to have been received even if correctly addressed, within the time allowed for
the appeal. Nevertheless, on the basis that Mr Tomkevicius clearly wished to
lodge an appeal, and HMRC would not have been prejudiced by what should only
have been a delay of a few days, and that Mr Tomkevicius is having to work in
an language that is not his own, and that it would not have been obvious to
someone unfamiliar with the law that the 30 days ended when the Notice of
Appeal is received rather than sent, I decided in the interests of justice to
extent the time limit and permit the Appellant to lodge this appeal out of
time.
10. I turn to deal
with the appeal itself.
Law
11. Section 3(1) of
the Misuse of Drugs Act 1971 provides:
“(1) Subject to subsection (2) below—
(a) the importation of a controlled drug; and
(b) the exportation of a controlled drug,
are hereby prohibited.”
12. Sub-section (2)
is not relevant. Section 49(1) of the Customs and Excise Management Act 1979
(“CEMA”) provides that
“(1)
Where—
...
(b)
any goods are imported, landed or unloaded contrary to any prohibition or
restriction for the time being in force with respect thereto under or by virtue
of any enactment; ...
those
goods shall…. be liable to forfeiture.”
4.
Section 139(1) of CEMA provides that
“Any thing liable
to forfeiture under the customs and excise Acts may
be seized or detained by any officer or constable or any member of Her Majesty's armed forces or coastguard”.
5.
Section 141(1) of CEMA relevantly provides that:
“(1)
Without prejudice to any other provision of the Customs and Excise Acts 1979,
where any thing has become liable to forfeiture under the customs and excise
Acts—
(a)
any ship, aircraft, vehicle, animal, container (including any article of
passengers' baggage) or other thing whatsoever which has been used for the
carriage, handling, deposit or concealment of the thing so liable to
forfeiture, either at a time when it was so liable or for the purposes of the commission
of the offence for which it later became so liable;
...
shall
also be liable to forfeiture.”
13. The effect of
these provisions is that if a controlled drug is imported it is liable to
forfeiture and then seizure by UKBA officers: anything which transported the
goods at the time of the importation is also liable to forfeiture and seizure.
14. The Appellant
does not challenge the legality of the seizure and indeed he cannot do so:
that has already been determined by default by his failure to challenge the
seizure in the magistrates’ court. Nor do there appear to be any grounds on
which the forfeiture could have been challenged.
15. HMRC have power
under s 152 of CEMA to restore anything forfeited or seized subject to such
conditions as they see fit:
“the Commissioners may, as they see fit –
….
(b) restore, subject to such conditions (if any) as
they think proper, anything forfeited or seized under the Customs and Excise
Acts.”
16. HMRC refused to
excise that power in favour of the Appellant in this case. The Appellant asked
for that decision to be reviewed, which under s 16 Finance Act 1994 it must do
in order to appeal it. Mr M Collins, an officer of UKBA, carried out the
review on behalf of UKBA and the Appellant has the right to appeal that decision.
17. Section 16 of
the Finance Act 1994 also provides that:
“(4) 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 review or
further review as appropriate] 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
review or further review as appropriate], 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.
….
(6) On an appeal under this
section the burden of proof as to—
(a) the matters mentioned in
subsection (1)(a) and (b) of section 8
above,
(b) the question whether any
person has acted knowingly in using
any substance or liquor in
contravention of section 114(2) of
the Management Act, and
(c) the question whether any
person had such knowledge or
reasonable cause for belief as is
required for liability to a penalty to arise under section 22(1) or 23(1) of
the Hydrocarbon Oil Duties Act 1979 (use of fuel substitute or road fuel gas on
which duty not paid),
shall lie upon the Commissioners;
but it shall otherwise be for the appellant to show that the grounds on which
any such appeal is brought have been established.”
9.
Section 16(8) Finance Act 1994 and Schedule 5 paragraph 2(1)(r) provides that
an “ancillary matter” includes:
“any decision under section 152(b) as to whether or
not anything forfeited or seized under the customs and excise Acts is to be
restored to any person or as to the conditions subject to which any such thing
is so restored”
18. The effect of
this provision is that this Tribunal is limited to considering the reasonableness
of HMRC’s decision on review to uphold the original officer’s decision not to
restore the trailer and truck to the Appellant.
Facts
19. The Appellant is
a company registered in Lithuania and its business is haulage. The only
director of the company is Mr Arunas Tomkevicius.
20. The Lithuanian
registered truck and trailer, owned by the Appellant, were intercepted at Dover on 29 November 2009. It was driven by Mr Saulius Katleris.
21. It carried two
loads. One was a load of Ikea furniture, with its own CMR, and no question was
raised in respect of this load which was ultimately allowed to continue to its
destination. The other load, according to the separate CMR which accompanied
it, was described as children’s paint sets destined for Splosh Paints in Bury.
However, on examination there was found to be distributed inside the various
boxes marked Splosh, small boxes marked “Testoviron”. These was tested and
found to contain anabolic steroids (testosterone) which is a Class C drug
(Schedule 2 Part III Misuse of Drugs Act 1971). In total the vehicle was
carrying 222.5kgs of anabolic steroids.
22. The drugs,
trailer and truck were seized. As mentioned above, the Appellant did not
challenge the seizure in the Magistrates Court and therefore under paragraph 5
of Schedule 3 to CEMA they were deemed as to be duly condemned as forfeited.
23. The Appellant’s
case is that prior to the shipment a Mr Rytis Strioga came to the Appellant’s
office and offered it the job of transporting the paints to Bury. Mr
Tomkevicius’s original statement to UKBA was that Mr Rytis Strioga was a
representative of a Lithuanian company UAB Sidabrinis Medis (a stationary
seller). Mr Tomkevicius said before accepting the work he had checked UAB
Sidabrini Medis was a legitimate company on the internet. At his interview
with UKBA he produced a document which post dated the seizure which he said
showed the kind of information he would have obtained on the company before he
accepted the work. HMRC do not challenge UAB Sidabrinis Medis’ status as a
legitimate company.
24. The Appellant
having agreed to transport the goods, the driver Mr Katleris went to collect
them. In Mr Katleris’ statement to UKBA he explained that the Splosh load
comprised some 25 boxes which had to be taken off their pallet and handed up to
the lorry. Mr Tomkevicius says, however, that the drivers are never allowed to
handle the load as they would be liable if the packaging was damaged. There was
no CMR for the goods so Mr Katleris handwrote the CMR on the basis of
information provided to him.
25. In his interview
with UKBA, Mr Tomkevicius stated that after the seizure he had contacted the
Director of UAB Sidabrinis Medis (whose name he could not recall) who had
confirmed Mr Rytis Strioga was an employee. Later, in a letter dated 2 March
2010 Mr Tomkevicius said that he had now discovered that in fact Mr Strioga did
not work for UAB Sidabrinis Medis but had merely used their logo. There is a
possible explanation for this inconsistency in a letter from Mr Tomkevicius
which hints that the director of UAB Sidabrinis Medis may originally have given
Mr Tomkevicius mistaken information as Mr Tomkevicius says there is an employee
at Medis with a similar name to Mr Rytis Strioga. I find Mr Tomkevicius made
no checks into the bona fides of Mr Strioga before the transportation and at
best was not very careful in the initial check he made after the event.
26. I am satisfied
that UAB Sidabrinis Medis did not make any consignment because, firstly, of the
improbability that a legitimate business would compromise its position by
supplying drugs as a sideline using its own name and, secondly, because Mr
Tomkevicius now says Mr Strioga was not a legitimate employee of Medis, and
thirdly, because Mr Katleris’s statements in interview were vague on precisely
from where he collected the goods and the way the driver loaded the goods and
completed the CMR were irregular. In any event, this point does not appear to
be in dispute: Mr Tomkevicius no longer maintains the case that Mr Strioga was
genuinely acting on behalf of UAB Sidabrinis Medis.
27. Mr Tomkevicius
also said in interview that he never checked the consignee: he only checked
the people who were paying the company. However, in a letter after the
interview and dated 2 March 2010 to HMRC he said “we check offloading address
and company” and it is clear from the context of the letter he meant the
consignee (the company taking delivery). Nevertheless, I find that in this
case he did not check with Splosh that they had ordered the goods, because if
he had he would have discovered that they had not (see below).
28. Mr Tomkevicius
now accepts that the Appellant’s procedures were not adequate to protect it
from a smuggling attempt as he said in his letter to the Tribunal of 26 October
that “great changes” had been made to prevent repeat incidents in the future.
29. Although we had
no direct evidence, hearsay evidence from Mr Collins, who had spoken to the
officers concerned, was that the criminal investigation team were quite
satisfied that although Splosh was a genuine company based in Bury, it had not
ordered the paints in the trailer and was not expecting a delivery. They were
satisfied Splosh was not the intended recipient of the drugs either. Mr
Collins’ evidence was not challenged: the Appellant had not suggested in his letters
to the Tribunal that Splosh was involved in the smuggling. Nevertheless we
have considered whether the evidence is reliable: I found Mr Collins to be a
credible witness and I accept that he did speak to the criminal investigation
team and was told they are satisfied Splosh were not involved.
30. I consider
whether the view of the criminal investigation team is likely to be
well-founded. I take into account that on the basis of the evidence I have
that more likely than not that the real smuggler chose to disguise his identity
by using that of an unconnected third party UAB Sidabrinis Medis as the
consignor: it is therefore more likely than not that Splosh was also a genuine
business picked to hide the true identity of the smuggler. For these reasons I
find as a fact that Splosh was not involved in the smuggling attempt and had
not ordered a consignment from Lithuania.
31. In his interview
Mr Tomkevicius also stated (through the interpreter) that “we didn’t suspect
anything, well because it’s the money” and also “the job is money”. In a later
letter he says that this was badly translated and he did not mean that the
Appellant would take on any work as long as it was paid because, he said, his
company would not risk its reputation by involvement in illegal activities.
Nevertheless, I find Mr Tomkevicius was clearly aware of the risk of his
vehicles being used for smuggling because it had happened once before (see
below) and because he gave his drivers a printed instruction sheet telling them
how to avoid being inadvertent smugglers. And I find that despite this
knowledge, Mr Tomkevicius was prepared to accept loads without checking that
they were genuinely from and to the companies they were purported to be from
and to.
32. In a letter
dated14 January 2010 to HMRC Mr Tomkevicius said:
“our company is always trustable and nothing like it
happened before.”
33. I find this is
not true. On 28 March 2009 the same truck and trailer, driven by the same Mr
Katleris, and owned by the Appellant was stopped at Dover. Some 44,000
cigarettes were found hidden in a secret compartment adapted from the vehicle’s
fuel tank. The truck and trailer, although seized, were restored to the
Appellant on payment of a fee.
34. In summary I
find some of the statements made by Mr Tomkevicius in his interview and in
letters in respect of this appeal to be unreliable: at least one is
demonstrably not correct and others are inconsistent, leaving some doubt as to
which statement is correct (if any).
35. I find it
instructive to look not at what Mr Tomkevicius says but what he did. I find he
continued to employ the driver who had been driving one of the Appellant’s
vehicles with a fuel tank converted to smuggle cigarettes, despite that driver
being in his probationary period with the Company. Mr Tomkevicius’ explanation
for keeping on Mr Katleris (even at the date of his letter in late 2010 after
the second discovered attempt at smuggling) was that Mr Katleris was contrite,
would pay any fines and ensure it didn’t happen again. However, I find Mr
Tomkevicius was either in collusion with Mr Katleris over the smuggling of the
cigarettes or indifferent to the risk that Mr Katleris might again adapt his
lorry and continue to smuggle in the future because otherwise he would simply
have terminated Mr Katleris’ employment in the probationary period.
36. In addition to
this I find Mr Tomkevicius agreed to transport goods in November 2009 without
checking that the stated consignor was actually making the consignment or that
the consignee wanted the consignment. He did not check that Mr Strioga was an
employee of the “consignor”. This suggests either complicity or a disregard of
the risk of his vehicle being used for smuggling.
37. As Mr
Tomkevicius was well aware of the risk of smuggling, failed to check out that
the named consignor was supplying the goods to the UK, or that the named
consignee, was expecting delivery of the load, and used a driver only 8 months
previously found to have adapted to Mr Tomkevicius’ company’s vehicle for
smuggling and kept him on even after two failed smuggling attempts, I find
that the only possible conclusion is that Mr Tomkevicius was culpably involved
in the smuggling of the drugs: either he was a knowing party to the smuggling
attempt or he was indifferent to the risk that it might happen and failed to
take basic safety precautions.
Was UKBA’s decision reasonable?
38. As
non-restoration involves depriving the Appellant of its vehicle, the HMRC
officer is bound to consider whether such a sanction is proportionate in all
the circumstances.
39. It is the
Appellant’s case the loss of the company’s truck and trailer has meant a
substantially reduced income for the Appellant and that the loss of the truck
and trailer is unfair and disproportionate as the Appellant is an innocent dupe
of smugglers.
40. I find that Mr
Collins did take into account the hardship caused to the Appellant by the loss
of its truck and failure but nevertheless concluded that in the particular
circumstance of the case, the forfeiture was proportionate. Of particular
relevance was his conclusion that “I am forced to conclude your leniency shown
towards Mr Katleris points towards your complicity in the smuggling attempt”
and that “I am forced to conclude that you as the owner of the haulage firm are
culpable in this attempted smuggle.”
41. I am satisfied
that Mr Collins’ decision was reasonable and proportionate. I find he
considered the matters he should have considered and I have not formed the view
that he considered anything which he should not have. His decision not to
restore the truck and trailer was in accordance with the law and, based on the
findings of fact which I have made, plainly right.
42. I dismiss the
appeal.
43. 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.
Barbara Mosedale
TRIBUNAL JUDGE
RELEASE DATE: 15 December 2011
