United Kingdom VAT & Duties Tribunals (Customs) Decisions

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Cite as: [2005] UKVAT(Customs) C00203, [2005] UKVAT(Customs) C203

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James Lodder v Her Majesty's Revenue and Customs [2005] UKVAT(Customs) C00203 (22 September 2005)

CO00203

CUSTOMS DUTY – importation of private motor car into European Community – application for temporary importation procedure made after importation – whether retrospective authorisation for temporary importation can be given more than 12 months after original importation – no – appeal dismissed – Community Customs Code, Reg (EEC) No.2913/93, Arts 84, 85 and 138 – Implementing Regulations, Commission Reg 2454/93 Arts 497, 507 and 508

LONDON TRIBUNAL CENTRE

JAMES LODDER

- and -

HER MAJESTY'S REVENUE AND CUSTOMS Respondents

Tribunal: MALCOLM J F PALMER (Chairman)

CAROL DEBELL

Sitting in public in London on 29 July 2005

The Appellant did not appear and was not represented

Andrew O'Connor, instructed by the Acting Solicitor for HM Revenue and Customs, for the Respondents

© CROWN COPYRIGHT 2005

DECISION

The Appeal

This is an appeal under s 16 Finance Act 1994 against a review decision dated 10 December 2004 by Miss D Park upholding the earlier decision of Ms Paula Temple dated 20 October 2004 refusing Mr James Lodder's application for authorisation for the earlier temporary importation of a private car. The principal issue is whether Mr Lodder's application could have been retroactively authorised more than 12 months after the importation of the vehicle on which duty and VAT of £4,525.80 was paid by Mr Lodder.

At the commencement of the hearing we considered Mr O'Connor's application that we hear the appeal in the absence of Mr Lodder or any representative acting for him. We have power under rule 26(2) of the Value Added Tax Tribunals Rules 1986 to hear an appeal where there is no appearance for the appellant at a hearing. We had a letter from Mr Lodder dated 12 January 2005 stating that it would be difficult for him to attend because he is now in Australia, giving the reasons for his appeal to be considered in case he were not required to attend and asking the tribunal to hear "the appeal with compassion". We accordingly directed that the appeal would be heard in spite of the absence of any appearance by or for Mr Lodder.

The Facts

In early 2003 Mr Lodder was a United Kingdom citizen resident in Australia. He accepted a job with, or otherwise contracted to work for, IBM in Nice in France. On 8 March 2003 he purchased in Australia a used silver Holden HAV Clubsport ("the Car") at the price of AU$54,473. He used Isabel Garcia, a representative of Avalon Overseas Movers, to advise him on the importation and clearance of his Holden into the European Union. On 21 March 2003 he completed a Form C104A covering the importation of the Car into the United Kingdom. In answer to question 10 " How long do you expect your stay in the European Community to last?" he had given the answer "Returning Resident". On Ms Garcia's advice he later also completed on 18 June 2003 a Form C384 application for release of his car. She advised that this C384 was needed "since you have not possessed the vehicle for at least six months". The car arrived in the United Kingdom on or shortly before 20 June 2003. On 23 June he was assessed to Customs Duty of £1,547.20 and VAT of £2,978.60, together totalling £4,525.80 for release of the car. On 20 June, when notifying Ms Garcia of his arrangements to fly from Nice to collect the Car, he had also asked her by e-mail of that date to advise him on whether, if he went back to Australia, he would be entitled to reclaim the Customs Duty and VAT he was paying.

By June 2004 Mr Lodder had completed his work for IBM. On 9 June 2004 he again contacted, or at least tried to contact, Ms Garcia. He told her that he wanted to know the procedure to reclaim the duty paid on importing the car. He got no response to his e-mail or to a follow up he sent on 26 June 2004. On 14 July 2004 he called for advice on the Customs information line to ask about a refund of duty. He was advised to complete a C108 form. He did this back dating the C108 to 18 June 2003, which was the date when he was asked by Avalon to provide the money for the duty and VAT payable on entry clearance. On July 19 2004 he wrote from Vence to Customs submitting the form C108, requesting a refund and that the importation should not be viewed as permanent import.

Eventually this request was considered by Paula Temple an officer of Customs EXCITS Services team at Dorset House, SE1. After an exchange of e-mails with Mr Lodder, who was then back in Australia, she wrote to him on 20 October 2004 refusing his request. She treated his request as an application for retroactive authorisation for a temporary importation of the car stating

"Unfortunately, any request for retrospective TI has to be made within a year (under Article 508.1 of EC Regs 2454/93) and there are strict guidelines which means that you cannot put in your claim for this."

Mr Lodder promptly appealed against this decision by letter dated 21 October 2004 requesting a review of the decision. The essential reasons he gave in this letter why the decision of Paula Temple should be reversed were that he had been told by the Customs call centre that it was possible to reclaim the duty, that he had asked Avalon whether he would be entitled to a recovery well before the end of the twelve month period, that if he had known of the time limit then he would have pressed his claim more urgently and that if he had been aware about the possibility of relief for temporary imports at time of importation he would have applied for it.

The Review Officer who conducted the review of Paula Temple's decision was Miss D Park. She gave her conclusions to Mr Lodder by letter dated 10 December 2004. She upheld Paula Temple's decision. The principal reasons she gave for upholding the earlier decision were

(1) that Mr Lodder's statement in the original form C104A that he was a "returning resident" did not alert Customs to the fact that the car could have been a temporary importation;

(2) as Mr Lodder had not owned the car for more than six months he did not qualify for transfer of residence relief;

(3) the fact Mr Lodder believed that Avalon did not advise him correctly was a matter of commercial liability between him and Avalon;

(4) under the terms of Article 508 EC Regulation 2454/93 authorisation for retrospective relief of this nature cannot take effect more than 12 months before the application; and

(5) Mr Lodder's first enquiry to Customs, which he made to the information call centre, was not made until 14 July 2004, which was more than 12 months after the original import declaration.

Mr Lodder appealed from that review decision of 10 December 2004 by notice to the tribunal dated 30 December 2004. His notice of appeal stated

"My grounds for appeal do not seem to have been considered at all – The main reason for appeal (besides paying VAT and duty of £4,525.80 needlessly) was that I was unaware of the limit on claiming a refund and was not actually communicated to this fact until after the time limit had lapsed."

The Legislative Background

Relief from import duties on permanent importations of personal possessions can be available under the terms of Articles 2 and 3 of Council Regulation 918/83/EEC, which so far as relevant provide as follows

"Article 2

Subject to Articles 3 to 10, personal property imported by natural persons transferring their normal place of residence from a third country to the customs territory of the Community shall be admitted free of import duties.

Article 3

The relief shall be limited to personal property which-

(a) except in special cases justified by the circumstances, has been in the possession of and, in the case of non-consumable goods, used by the person concerned at his former normal place of residence for a minimum of six months before the date on which he ceases to have his normal place of residence in the third country of departure;"

An equivalent relief from VAT on importations is provided under EC Council Directive 83/181.

A number of provisions of Council Regulation 2913/92 ("the Code") and of Commission Regulation 2454/93 ("the Implementing Regulations") relate to relief from import duties on motor vehicles such as the Car temporarily imported into the European Community.

Relief from import duties on temporary importation of a motor vehicle requires authorisation from Customs at the request of the user. This follows from the following provisions of Articles 84, 85 and 138 of the Code

(1) Article 85 provides

"The use of any customs procedure economic with impact shall be conditional upon authorisation being issued by the customs authorities."

(2) Article 84 (1)(b) provides that

"where the term 'customs procedure with economic impact' is used, it is understood as applying to the following arrangements-

…

temporary importation;"

(3) Article 138 provides

"Authorisation for temporary importation shall be granted at the request of the person who uses the goods or arranges for them to be used."

Article 137 of the Code makes provision for the relief on temporary importation as follows in so far as relevant

"The temporary importation procedure shall allow the use in the customs territory of the Community , with total or partial relief … from import duties … of non-Community goods intended for re-export without having undergone any change except normal depreciation due to the use made of them."

Article 554 of the Implementing Regulations provides

"Temporary importation with total relief from import duties (hereinafter 'total relief from import duties') shall only be granted in accordance with Articles 555 to 572."

Of these Articles 555 to 572 in the Implementing Regulations setting out the conditions for relief on temporary importation those relevant here are Articles 558 and 562, which in so far as relevant provide as follows

(1) Article 558

"1. Total relief from import duties shall be granted for means of road… transport where they

are … owned by a person established outside the customs territory of the Community."

(2) Article 562

"… the periods for discharge are the following:

…

(c) for means of road transport privately used:

- …

- by persons fulfilling assignments of a specified duration: the period this person stays in the customs territory of the community for the sole purpose of fulfilling their assignment;

in other cases … six months;"

For the purpose of Article 562 the period for discharge is in effect the period within which the relevant item is to be re-exported.

The Implementing Regulations in Articles 497, 507 and 508 include provisions relating to the method of making application for and the issue of the authorisation required by Articles 84 and 85 of the Code.

(1) Article 497 provides in effect that application for authorisation for temporary importation may be made in writing, by electronically using the normal procedure or, provided proper documentation is duly presented, orally.

(2) Article 507 provides, expressly without prejudice to Article 508, that an authorisation shall take effect on the date of issue "or at any later date given in the authorisation.

(3) Article 508 so far as relevant as follows

"1. Except for the customs warehousing arrangements, the customs authorities may issue a retroactive authorisation.

Without prejudice to paragraphs 2 and 3, a retroactive authorisation shall take effect at the earliest on the date on which the application was submitted.

…

In exceptional circumstances, the retroactive effect of an authorisation may be extended, but not more than one year before the date the application was submitted, provided a proven economic need exists…"

Our decision and the reasons for it

Mr Lodder would have faced one, and possibly two, significant difficulties if he had sought to claim entry of the Car as one of his personal possessions eligible for relief from import duties and VAT on his move to the European Community in the first half of 2003. In the first place he had not owned the Car for more than three months when it was imported into this country and the Community. He, therefore, had not had possession and used it in Australia for at least six months before importing it. The Car was a "non-consumable" item for the purposes of paragraph (a) of Article 3 of Council Regulation 918/83/EEC set out in paragraph 9 of this decision. He, therefore, could not satisfy the condition of length of time of possession and use required by that paragraph (a). Secondly, it also possible that he could not have satisfied the requirement that he was transferring his "normal place of residence" from Australia to the Community if his only intention then was to stay in the Community long enough to complete his assignment with IBM.

Mr Lodder, therefore, would have to base any claim for relief from payment of import duties and VAT on a claim that the importation of the car was only temporary. We accept that when he first imported the Car it may have been possible for him to claim this relief. But it is clear from Article 85 of the Code that he needed authorisation from Customs for this relief. This requirement seems eminently practical and understandable: Customs need to know when an item is imported that the relief is to be claimed so that the conditions for relief can be properly monitored.

None of the communications made to Customs at the time of the importation in 2003 can by any stretch of the imagination be regarded as an application for authorisation for temporary importation relief. The Form C104A used to cover the importation is the form used according to its heading "on a transfer of normal home from outside the European Community". In response to the question in the form "How long do you expect your stay in the European Community?" Mr Lodder responded "Returning Resident". This has no implication of any temporary nature of the importation: the implication to us is rather the reverse. It did not put Customs on notice in any way that he might be entitled to the temporary importation relief.

We accept that Mr Lodder raised with Isabel Garcia of Avalon Overseas Movers as early as 20 June 2003 whether the duty could be reclaimed if he went back to Australia. But this was a request to only his agents: it was not a request to Customs for any relief or about the possibility of any relief. Similarly his question by e-mail to Ms Garcia on 9 June 2004 cannot be treated as an oral request for any authorisation: it was not made to Customs.

The first time that any information was given to Customs that the importation of the car was temporary was not until Mr Lodder spoke on the telephone to the Customs information call centre on 14 July 2004. 14 July 2004 was more than 12 months after the date of the original importation. Even if that telephone call could be treated as an oral request for a retroactive authorisation it would have been ineffective. It would have been ineffective because Customs, under the terms of paragraph 3 of Article 508 of the Implementing Regulations, can only issue a retroactive authorisation which takes effect "not more than one year before the application was submitted". And the importation and payment of duty was in June 2003.

Mr Lodder in his notice of appeal gives as his main reason for appealing that he did not know of the one year time limit until after that time limit had expired. We accept that. If he had known earlier we have no doubt that he would have pressed his claim earlier and hard. But whoever was at fault in not making that time limit known to Mr Lodder it was not Customs. They had not yet got any information or request that might have put them on notice that the time limit was relevant. Notice 200 issued by Customs on "Temporary Importations" (which is on Customs website www.hmce.gov.uk), in its paragraph 10.1 covers the question "Can I apply for a retrospective authorisation?" It states in it final paragraph

"Any period of retrospection cannot be dated beyond year one year from the date your completed application is received."

This time limit is laid down by paragraph 3 of Article 508 of the Implementing Regulations. It is thus a time limit intended to apply to and be followed by all countries within the European Community. To ensure uniformity throughout the community it is to be followed. We also note that it is a time limit to the period before the date of application for retroactive relief in which relief can be given. That extension can only be granted "in exceptional circumstances".

Mr Lodder in his request that we hear this appeal in his absence asked that the tribunal "reviews the appeal with compassion". However we cannot accept that the review by Miss D Park was unfair. We sought at the hearing, notwithstanding the absence of Mr Lodder, to require Customs to justify the action they have taken in refusing a late application for retrospective relief. We are satisfied that Customs were justified in rejecting that application and thereby complying with the Implementing Regulations.

For these reasons we dismiss the appeal.

Mr O'Connor at the end of the hearing made it clear that Customs were not making any application for costs.

MALCOLM J F PALMER

CHAIRMAN

RELEASE DATE: 22 September 2005

LON/2004/7058