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Cite as: [2013] UKFTT 167 (TC)

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Logistical Transportation Ltd v Revenue & Customs [2013] UKFTT 167 (TC) (06 March 2013)
EXCISE DUTY SUSPENSION
Excise duty suspension

[2013] UKFTT 167 (TC)

TC02583

Appeal number TC/2010/4263

Excise Duty – duty suspended movement –whether alcohol left the UK

FIRST-TIER TRIBUNAL

TAX CHAMBER

LOGISTICAL TRANSPORTATION LIMITED Appellant

- and -

THE COMMISSIONERS FOR HER MAJESTY’S

REVENUE & CUSTOMS Respondents

TRIBUNAL: JUDGE CHARLES HELLIER

JAMES MIDGLEY

Sitting in public at 45 Bedford Square, London WC1 on 18 February 2013

Timothy Brown instructed by Vincent Curley & Co LLP for the Appellant

Ewan West, instructed by the General Counsel and Solicitor to HM Revenue and Customs, for the Respondents

DECISION

1. This appeal relates to the dispatch of a consignment of Gallo wine from Edwards Beers and Minerals Ltd ("Edwards") in Leighton Buzzard on 15 July 2009 for delivery to Contrama Logistique in Bologne in France.

2. HMRC say that the consignment did not leave the UK; the appellant that it arrived at its destination. If the appellant can show that it is more likely than not that the assignment did arrive it will succeed in this appeal.

3. The appellant company is owned by Mr. Tahir Aziz. He set up the company in 2008 and managed its operations on a part-time basis while he remained in employment elsewhere. He told us that his object was to develop a logistical business for the company.

4. Mr. Aziz found a customer for his transport services in the form of Century Trading in Belgium. That company wished him to transport consignments of alcoholic drinks from the UK to France.

5. The alcohol was held in bond in the UK (i.e. with the payment of duty suspended - see below) and was to be transported to a bonded warehouse in France. Mr. Aziz was required by Century to provide an excise duty guarantee to HMRC. He applied to HMRC for the approval of a form of guarantee, and a guarantee in the sum of £20,000 was agreed in February 2009.

6. The company then started arranging the transport of the consignments for Century. Between 6 April 2009 and 18 January 2010 the company arranged the transport of 41 consignments for Century. By 12 October 2009, 23 consignments had been transported from Edwards, all but six of which had been to Contrama. In almost all cases Mr. Aziz arranged for Fast Haul Limited to pick up and deliver the goods. But in a few cases the transport was carried out by Accelerate 2000.

7. HMRC made a visit to Mr. Aziz in November 2009. They selected four movements of goods for further checking. They asked for details of the lorries which transported the goods - the registration number of the tractor unit and the number of the trailer.

8. Having obtained this information they checked with their internal databases which recorded the movements of vehicles across the Channel to France.

9. Eventually HMRC satisfied themselves that three of the four consignments had left the UK on the trailers ascribed to them, although pulled by tractor units which were different from those which had picked up the goods from Edwards.

10. But for one consignment of wine, picked up on 15 July 2009, HMRC’s records indicate that the tractor unit which Mr Aziz had told them was taking the wine across the channel, WLZ 2046 ("WLZ") with its accompanying trailer, 112 (“112”) had left the UK empty. After visits to Fast Haul and Accelerate, HMRC's officers concluded that the wine had not left the UK, and on 15 March 2010 assessed the appellant for the excise duty on the wine, at £26,251.

11. The appellant sought a review of the decision to assess, and on 26 April 2010 Allan Donnachie of HMRC wrote to the appellant setting out his conclusion that the decision to assess should be upheld. The appellant appeals against the decision.

The relevant law.

12. Alcoholic liquor produced in, or imported into, the UK becomes in principle liable to excise duty when it is produced or imported. But the liability to pay the duty is delayed and arises only at the "excise duty point". This is usually the point at which the alcoholic liquor is released for consumption. But the duty point may be postponed and the duty ‘suspended’ if the liquor is taken to an approved excise warehouse (a “bonded warehouse”). The outline for the management of the duty was at the relevant time provided for in Directive 92/12/EC.

13. Article 15 of that Directive provides for arrangements permitting the movement of excise goods between tax warehouses. These are "duty suspended movements". Article 15(30 and the UK regulations require that an intra-community movement of excise goods be covered by guarantee provided by the warehouse keeper or the transporter. Such movements of goods are required to be accompanied by an "Authorised Administrative Document” ( an “AAD”) This is a form prescribed by the Directive and regulations. It contains a number of boxes most of which must be filled in by the consignor. Four copies are prepared: one of the consignor, one for the consignee, one to be receipted by the consignee (and if required also by the fiscal authorities of the destination state) and returned to the consignor, and the fourth for those fiscal authorities. All but the first copy must accompany the goods whilst in transit.

14. In this appeal the AAD for the movement in question was prepared by Edwards and specified the guarantor as the appellant. It also provided in box 11, ‘Other transport details’ the registration number P6 DHT, a trailer number “112” and a seal number for the consignment. The appellant produced a copy of the AAD receipted by Contrama, and indicating that the consignment had been checked (as required by Art 19(2) of the Directive).

15. The Excise Duty Points (Duty Suspended Movements of Excise Goods) Regulations 2001 provided for the occurrence of an excise duty point where there was an "irregularity" in the course of the duty suspended movement.

16. Regulation 3 provides:

"(1) This regulation applies where:

(a) excise goods are:

(i) subject to a duty suspended movement starting in the United Kingdom ...and

(b) in relation to those goods and that movement there is any irregularity which occurs or is detected in the United Kingdom.

(2) Where the Commissioners are satisfied that the irregularity occurred in United Kingdom, the excise duty point shall be the time of the occurrence of the irregularity or, where it is not possible to establish when the irregularity occurred, the time when the irregularity first comes to the attention of the Commissioners

(3) Where it is not possible to establish in which member states the irregularity occurred, the excise duty point shall be the time of the detection of the irregularity or, where it is not possible to establish when the irregularity was detected, the time when the irregularity first comes the attention of the Commissioners.

...

17. The regulations define “irregularity” to mean “an irregularity or offence within the meaning of Article 20 of the Directive. Article 20 is not particularly informative:

"1. Where an irregularity or offence has been committed in the course of a movement involving the chargeability of excise duty, the excise duty shall be due in the Member State where the offence or irregularity was committed from the natural or legal person who guaranteed payment of the excise duties in accordance with article 15 (3), without prejudice to the bringing of criminal proceedings."

18. However it seems clear that a movement of excise goods so that they are released into free circulation when they should have been moving between warehouses under duty suspension arrangements is an irregularity. If alcohol destined for France did not leave the UK there must have been an irregularity which occurred in the UK.

19. Regulation 7 provided:

"7. (1) Subject to paragraph (2) below, where there is an excise duty point as prescribed by regulation 3 ... above, the person liable to pay the excise duty on the occurrence that excise duty point shall be the person shown as the consignor on the accompanying administrative document or, if someone other than the consignor or is shown in box 10 of that document as having arranged for the guarantee, that other person."

20. In this appeal the appellant had arranged to give a guarantee and its name was in box 10. Thus if an excise duty point occurred the appellant would be liable for the duty which had thitherto been suspended.

21. Sections 14 to 15F of the Finance Act 1994 provide that the commissioners may be required to review certain decisions including certain decisions to assess excise duty. Section 16 permits an appeal in relation to such decisions of the commissioners on review. Section 16 (6) provides:

"On an appeal under this section the burden of proof …as to [certain matters not relevant to this appeal] shall lie upon the commissioners; but it shall otherwise be for the appellant to show the grounds on which any appeal is brought have been established."

22. In this appeal the appellant’s grounds of appeal are:

(1) The review officer was asked for information about the reasons for the assessment but did not reply. The officer thus closed his mind to the information the appellant could have provided in response;

(2) The assessed consignment was properly discharged at the approved warehouse in France.

23. So far as concerns ground (1) the Commissioners deployed their evidence before us and the appellant was able to reply to it. In the context of this appeal therefore there was no need to consider this ground further. So far as concerns (2) by reason of section 16(6), the burden is on the appellant to show that the wine did get to the warehouse in France. .

24. To summarise: if the goods do not arrive at the warehouse in France then there must have been an irregularity. If the irregularity occurred in the UK then a duty point arises and the appellant is liable for the duty as guarantor. If it is not possible to determine where the irregularity occurred, a duty point nevertheless occurs and the appellant as guarantor is liable.

The Decision Letters.

25. In the original decision which gave rise to the assessment, and in Mr Donnachie’s review, the reason for the assessment is given as being because the goods did not leave the UK. As the guarantor of the movement of the goods, the appellant was liable for the duty.

The Evidence and Our Findings of Fact.

26. We heard oral evidence from Mr. Aziz, from Mrs Gurbahsh Donanjh, the officer of HMRC responsible for the assessment under appeal, from Mr. Donnachie, and from Karen Buckthorpe of P&O who provided evidence of the records and procedures at P&O ferry terminals.

(1) Evidence relating to the dispatch of the goods.

27. Mr. Aziz told us that on 14 July 2009 he was contacted by Century and asked to move a consignment from Edwards to Contrama.

28. On the same day a "release note" was sent by Coral Management Limited of Isleworth to Edwards asking Edwards to release from goods held for Coral:

(1) 150 cases Gallo red Zinfandel

(2) 1120 cases Gallo W/Grenache

(3) 224 cases Gallo Shiraz Rose

(4) 1232 cases Gallo White's internal.

to Contrama, and indicating that Coral’s customer Century would arrange their own transport. That was a total of 2726 cases.

29. Mr. Aziz told us that on the same day he telephoned Fast Haul to ask them to move the wine, but he was told that they had no driver. Fast Haul recommended that he tried Accelerate 2000. He called Accelerate and was told that they could do the job.

30. Mr. Aziz sent a collection note to Accelerate to pick up 2726 cases of mixed wines on 15 July 2009 from Edwards and deliver them to Contrama on 16 July 2009.

31. A Movement Guarantee fax from the appellant to Edwards dated the next day, 15 July 2009, confirms that the appellant had arranged for Accelerate to collect at 12 o'clock on 15 July 2009 a ‘full load’ of wines from Coral's account for delivery to Contrama, and that the wines would be collected by tractor number P6 DHT ("P6") and trailer FH 112. [There was some uncertainty over the date of this fax since the fax header looks as if its date was two days later, 17 July at 13.19, but it was possible that the fax machine had been set wrongly].

32. Tractor unit P6 belonged to Fast Haul.

33. It appears that Edwards prepared an AAD showing P6 as the tractor and 112 as the trailer, and specifying the wines noted at [28] above as collected on 15 July 2009.

34. Mr. Aziz also told us that after 12 o'clock on that day he would have phoned Edwards and asked if the load had been taken. He would then have been given the vehicle number. Later he would have confirmed with Accelerate that they had picked up the goods and been told where they were. That would have been between 4 and 5 pm. He could not however remember what Accelerate told him about where the goods were. He said that on 16 July he would have rung Contrama to check that the goods have arrived. He would then have awaited the CMR which came in due course.

35. But it seems that after collection the tractor unit was switched to WLZ which belonged to Accelerate. The evidence in relation to this is somewhat confused:

(1) HMRC’s enquiries of Fast Haul resulted (in March 2010) in a telephone call in which a caller identifying herself as the director of Fast Haul confirmed that they had been asked to transport the goods on 15 July 2009 but had not been able to do so, and that Logistical Transportation had asked Accelerate to do it. But she said that Fast Haul had lent its truck (P6) to Accelerate and that the truck had been picked up from Fast Haul by Accelerate’s driver;

(2) HMRC’s enquiries of Accelerate resulted in a discussion with a Mr. Goldsworthy who said that they had only one tractor unit, WLZ, and had only done one alcohol movement which was for Fast Haul. He said that he had been asked by Fast Haul to do a job and his driver (Mayfield) had met Fast Haul at junction 9 on the M1, swapped trailers (presumably to take 112 on W LZ) and gone to France and returned the same trailer. He had charged Fast Hall for the job.

(3) A copy (sent, we believe, by Accelerate to HMRC) of a fax from Fast Hall to Accelerate asks for Accelerate to collect 112 from P6 at junction 9 M1 lorry park on 15 June 2009 (without a time) and deliver to Contrama;

(4) Mr. Aziz produced an invoice from Accelerate for the movement and evidence of the appellant’s payment of it.

(5) P&O's records (to which we shall return below) indicate that WLZ travelled to France on 15 July with trailer 112, and that the driver's name was Gould (not Mayfield). They also indicate that WLZ returned the next day with a different trailer.

(6) Mr. Aziz said that the tractor and trailer numbers (P6 and 112) on the movement guarantee fax he had sent to Edwards were given to him by Accelerate.

36. We had difficulty making sense of this evidence. We could not understand why Accelerate should borrow P6 to pick up a load from Edwards, but then switch tractor units to WLZ after picking up the wine. We could not work out, if First Haul did not have a driver, who was driving P6 when it arrived to do the trailer swap at junction 9. We could not understand why, if Mr. Aziz commissioned Accelerate directly, First Haul should have written to Accelerate asking them to do a swap. We could not understand why WLZ was recorded as returning with a different trailer.

37. The only clear conclusion we could derive was that P6 was not intended to be the tractor which took 112 across the Channel on 15 July, and that it was likely that it was intended that WLZ should. That WLZ took 112 across the Channel so was confirmed by the P&O records (and also by an annotation on the CMR). There was no suggestion that P6 went to France that day.

(2) The evidence in relation to the journey across the Channel.

38. Mrs Buckthorpe produced a copy of the waybill from P&O's computer records. The bill showed for a sailing at 5:30 pm on 15 July 2009:

(1) WLZ with trailer 12,

(2) driven by D Gould with no other passengers,

(3) weighing 15,740 kg,

(4) described as "empty", and

(5) for the haulier ‘ACCELERATE’.

39. Mrs Buckthorpe explained that lorries would go to a weighbridge on arrival at the terminal and obtain a weight ticket. Then they would go to the booths. As they arrived their registration numbers would be taken and when they stopped the number would be confirmed with the driver. The booth operator would enter the weight, registration number, driver's name, the haulier and whether the vehicle was empty or not into the computer. The booth operator would normally take the driver's word for whether or not the vehicle was empty unless there was some discrepancy. The booth operators dealt with many hundreds of lorries in a year.

40. Mrs Buckthorpe told us that a tractor weighed 9 to 12 tons, and an empty trailer about 6 tonnes: together some 15 to 17 tonnes. She explained the weights of the lorries were important to P & O for safety in the loading of their ships.

41. Mrs Buckthorpe was frank and straightforward. We accepted her evidence.