United Kingdom VAT & Duties Tribunals (Customs) Decisions

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Cite as: [2006] UKVAT(Customs) C209, [2006] UKVAT(Customs) C00209

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Halifax (Hampshire Chruistian Trust v Revenue and Customs [2006] UKVAT(Customs) C00209 (21 February 2006)

CO00209

CUSTOMS DUTY — REPAYMENTS under Article 239 (errors made by authorities) – error not shown – appeal dismissed

LONDON TRIBUNAL CENTRE LON/2005/7058

JAMES HALIFAX

(HAMPSHIRE CHRISTIAN TRUST) Appellant

- and -

HER MAJESTY'S REVENUE AND CUSTOMS Respondents

Tribunal: ADRIAN SHIPWRIGHT (Chairman)

ALEX McLOUGHLIN

Sitting in public in London on 13 January 2006

James Halifax in person

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

© CROWN COPYRIGHT 2006

DECISION

Introduction

This is an appeal by James Halifax ("Mr Halifax") as the representative of the Hampshire Christian Trust ("the Trust") against the refusal by Her Majesty's Revenue and Customs ("HMRC") to make a repayment of import duties to the Trust under Article 239 of the Customs Code communicated in a letter (following an internal review) dated 27 July 2005.

Issue

The issue in this case is whether or not, in the particular circumstances, the Trust is entitled to repayment of import duty under Article 239 of the Customs Code (errors made by authorities).

In essence, this depends on whether it can be established by the Trust that certain representations were made to Mr Halifax acting as managing trustee of the Trust. The burden of proof is on the Trust.

The Law

The starting point is Article 239 of the Customs Code and the procedure set out in the Implementing Regulations (Commission Regulation 2454/93 (EEC)). The effect of this is that repayment is to be made where:

(a) there is a "special situation";

(b) resulting from circumstances in which "no deception or obvious negligence may be attributed to the person concerned". This has a special technical meaning.

We were referred to and provided with copies of the following cases:

Hewlett Packard France v Directeur General des Douanes (1993) C250/91

Viva Mexico v CCE (2000) C00130

Gunzier Aluminium GmbH v EEC (1996) T75/95

CCE v Invicta 97/1056 CMS4

Gm Impax Ltd v CCE (1998) LON/97/7088

The Evidence

A bundle of documents was produced. No objection was taken to any of the documents and they were all admitted.

Oral Evidence was given by Mr Halifax and Clare Summers, a Classification Officer working for HMRC's Tariff Classification Hotline. Witness statements were not produced.

Findings of Fact

From the documents and oral evidence we can make the following findings of fact:

(a) Mr Halifax is the managing trustee of the Trust. He is semi-retired but had previously been an accountant for Cunard, the shipping line.

(b) The Trust is a charity.

(c) The Trust owns land in Hampshire and runs camps on the land for children during the summer holidays.

(d) On 5 March 2005 the trustees decided to buy new tents for the camps. Mr Halifax was authorised by buy tents from a Russian supplier on the assumption they cost less than £5,000.

(e) Mr Halifax wished to discover the proper VAT and Duty treatment of the importation of the tents.

(f) On 9 March 2005 Mr Halifax made three calls to HMRC.

(g) At about 2.30pm on that day he called the National Advisory Service ("NAS"). Mr Halifax has no written record of the conversation. The NAS Computerised Note records that the caller said he would like to know if they would get relief on importing tents as they were a charity? He was advised that he needed "to meet the conditions in Notice 317… No further questions were asked or advice offered."

(h) At about 3.10pm Mr Halifax spoke to the Tariff Classification Hotline ("TCH"). Again Mr Halifax has no written record of this conversation. The TCH Computerised Note shows that a "Comcode" was given. No entry was made in the Comments box. The NAS box was ticked showing that the caller had been transferred to the NAS. The User's name was given as "C Summers".

(i) We heard evidence from Miss Summers. She confirmed that she was the user in question. She had no recollection of the particular call. She said her practice if she gave further information was to note this in the comments box. She confirmed that the tick in the NAS box meant that she had transferred the call to NAS.

(j) The third phone conversation on that day was with NAS. Again Mr Halifax has no record of the conversation. The NAS Computerised Note Records that a publication was sent, presumed to be Notice 317.

(k) On 13 March 2005 Mr Halifax sent an email to Simon Madgwick, another trustee. Insofar as is relevant it read:

"They also state import will be duty free, but VAT will have to be paid at point of import."

(l) On 28 March 2005 the tents were ordered from the Russian supplier and a deposit was paid on 1 April 2005.

(m) On 8 April 2005 Port Clearance Services ("PCS") were appointed to deal with the importation. PCS asked for sufficient money to be sent to them to cover the duty and VAT on importation of the tents.

(n) Mr Halifax represented to PCS that only VAT was payable. PCS insisted duty was payable as well and faxed the relevant page from the Tariff to Mr Halifax.

(o) Mr Halifax had four telephone conversations with the NAS and TCH on 11 April 2005.

(p) At about 2.25pm he spoke to NAS. The Computerised Note records:

"Caller wanted to know if he had been given the correct information as they are a charity importing tents from Russia with the commodity code of 6306210000 he was told it was free from duty but they will have to pay the vat."

I checked on the tariff and told caller they will get the goods free of duty if they have a GSP certificate from the seller in Russia."

(q) At about 4.15pm he again spoke to NAS. Mr Halifax has no record of this conversation. The NAS Note records:

"Caller rang several months ago with regard to importing tents from Russia for their charities summer camps. They were told at the time they will not need to pay duty but VAT is liable as they are purchasing the tents, not being gifted. Caller now expects the tents to arrive this week and his agents say that is liable. Caller rang earlier today and again was told that with a GSP cert duty is not liable, but his agents say is [only] reduced.

Caller cleared as I checked the TARIC website, but he is correct, duty is liable at 9.6% even with the GSP for A cert."

(r) At about 4.40pm he spoke to TCH. The Computerised Note does not give a user name. It does record in the Comments box "checking on info given on 9 March re – tents from russia" (Sic).

(s) At about 4.50pm he spoke for the third time that day to NAS. Mr Halifax has no record of the conversation. The NAS Computerised Note records:

"caller is importing goods from Russia with tariff code 6306210000, what is the duty with a GSP?

advised caller it was 12% duty & 9.6% with GSP + 17.5% VAT.

caller has been advised by NAS that it was free of duty with GSP, caller also believed he was misinformed by tariff help line as to the GSP rate of duty.

advised I had no records of calls to the Tariff help line. gave number 01702366077

advised caller could pay the charges & apply to the duty repayment centre for a refund on a c285.

caller wanted to be passed to tariff help line.

passed over."

(t) No evidence was led by either party that Mr Halifax had been told by NAS or TCH before the tents were ordered that the tents would be free of duty other than Mr Halifax's recollection of what is likely to have been said to him. He had no written records of the conversations. He was not able to state with certainty who had said this and in what precise terms and when. We have no doubt that Mr Halifax believed that the tents were to be free of duty. However, there is no corroborated evidence before us which allows to find that it was represented to Mr Halifax on behalf of HMRC before the order was placed that the tents would be free from duty. Accordingly, we do not make such a finding notwithstanding that we entirely accept that Mr Halifax genuinely believed that the tents would be duty free and that he has acted throughout in a bona fide and proper way.

Correct Treatment

It was common ground that the correct treatment of the importation of the tents was that it attracted both duty and VAT. It could not attract the full relief for donations to charity described in Notice 317 as there was a sale and purchase rather than a gift. Accordingly, the only relief available was the reduction in the rate of duty from 12% to 9.6% under the General System of Preference where an appropriate certificate was produced.

Parties Submissions

Mr Halifax ably and forcefully put forward the argument that he was entitled to rely on what HMRC had told him. In more detail, in effect, he contended that:

(a) he was told that the tents could be imported free of duty by an advisor on one of HMRC's helplines;

(b) it was on the basis of this advice that the Trust took the decision to purchase the tents;

(c) Accordingly, there was an entitlement to repayment of the duty on the tents under Article 239 of the Customs Code.

Mr O'Connor made the following submissions on behalf of HMRC:

(a) The onus was on the Trust to show that a representation that the importation of the tents would be duty free had been made to Mr Halifax by HMRC. If this is not shown then the question of an Article 239 payment does not arise.

(b) Even if it could be shown that such a representation had been made, no entitlement to an Article 239 repayment arises as:

(i) the circumstances do not amount to a "special situation" within the meaning of Article 899 of the Implementation Regulation; and/or

(ii) there was "obvious negligence" within the special meaning of the Implementation Regulations as every trader was deemed to be aware of the contents of the Official Journal (see Hewlett Packard and Gunzler). Trader here included the Trust. They are deemed to have such knowledge. It is "serious negligence" in the special meaning if they do not.

Discussion

The onus is on the Trust to show that a representation was made on behalf of HMRC that the importation of the tents would be duty free. As noted above at 8(t) we have no doubt that Mr Halifax believed that the tents were to be free of duty. However, there is no corroborated evidence before us which would allow us to find that such a representation was made. Accordingly, the Trust has not established that such a representation was made. Consequently, whilst we have much sympathy for Mr Halifax and the Trust, in those circumstances no entitlement to repayment under Article 239 can arise and the appeal must be dismissed.

Whilst it is unnecessary for us to do so, it may be helpful to note what we would have been minded to say on the other arguments advanced by HMRC without actually deciding them.

As this case involved non binding advice on the telephone, this could not amount to a special situation – see

(a) The Commission Information Paper on Articles 220 and 239 at pages 15 and 4-7;

(b) Commission case 13/92 particularly the Recitals; and

(c) paragraph 41 of the Viva Mexico case.

Any trader is deemed to be aware of the contents of the Official Journal. The true position was capable of ascertainment through the Official Journal though this would have involved somewhat of a paper chase. It was accordingly not a "complex" matter involving, for example, divergent legal interpretations (see the Commission Information Paper and Invicta Poultry). There would then technically have been "obvious negligence" within the special meaning of these provisions. This is in no way to denigrate the actions, belief or bona fides of Mr Halifax.

Conclusion

As the Trust had not shown that there was a representation by HMRC that the tents would be free form duty the appeal is dismissed.

HMRC did not seek costs in the event of their being successful. Accordingly, we make no order as to costs.

ADRIAN SHIPWRIGHT

CHAIRMAN

RELEASE DATE: 21 February 2006

LON/2005/7058