United Kingdom VAT & Duties Tribunals (Excise) Decisions

Kett v Customs and Excise [2003] UKVAT(Excise) E00386 (19 February 2003)

E00386

EXCISE – Practice – Extension of time – Direction by Tribunal on Customs' application for review under FA 1994, s.16(4)(b) – Failure to comply with time directed – Whether Tribunal has power to extend time limit after s.16 direction – Yes – Trib Rule 1986 r.19(1) – Appellant awarded £400 costs

LONDON TRIBUNAL CENTRE

GARY JOHN KETT Appellant

- and -

THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents

Tribunal: THEODORE WALLACE (Chairman)

Sitting in public in London on 12 February 2003

P W Moody, Solicitor, for the Appellant

Christopher Mellor, Counsel, instructed by the Solicitor for the Customs and Excise for the Respondents

© CROWN COPYRIGHT 2003

DECISION

1. This was a directions hearing arising out of the failure by the Commissioners to comply with a Direction by the Tribunal to carry out a new review of a decision to refuse restoration of a car and goods seized from the Appellant.
2. It involved consideration of the powers of the Tribunal and how they should be exercised. Counsel provided written submissions and the hearing was in public.
3. The Appellant's car and a substantial quantity of excise goods were seized at Dover on 13 February 2002. The Appellant had a passenger. Both stated that the goods bought by them were for their own use. Restoration was refused. The Appellant asked for a Review by letter on 17 April 2002. A review was carried out by letter dated 11 June, outside the 45 day period. It incorrectly stated that the Appellant could appeal against the review. In fact the appeal lay against the deemed confirmation under section 15(2) of the Finance Act 1994. The Appellant appealed late having not received the review originally. The appeal was registered and was notified to the Commissioners on 6 September. The Appellant served a List of documents on 26 September.
4. On 4 October, just before the Statement of Case was due, the Commissioners applied for a direction for a further review under section 16(4)(b) "as soon as possible, but in any event no later than 6 weeks following the promulgation of the judgment of the Court of Appeal in the Commissioners of Customs and Excise v Hoverspeed & others." The notice was served on the Appellant's solicitor. He did not object and a direction was released on 24 October in the following terms:

"THIS TRIBUNAL HEREBY DIRECTS under Section 16(4)(b):

(1) that the Respondents do conduct a further review of the decision to refuse to restore to the Appellant car registration No. N774 JGO and excise goods seized on 13 February 2002

(2) that the said review be conducted by an officer not previously involved in the matter and shall state clearly the facts on which the decision is based, the matters considered and the reasons

(3) that the review shall be completed not less than 6 weeks after the judgment of the Court of Appeal in Commissioners of Customs and Excise v. Hoverspeed and Others

(4) that a copy of the review shall be served at the Tribunal Centre in addition to being served on the Appellant

(5) that the Appeal be determined on the above basis and that any application for costs be made within 28 days of the release of this Direction"

5. Judgment in Hoverspeed was given on 10 December 2002. Six weeks therefore expired on 21 January 2003. Meanwhile the Appellant wrote to the Tribunal asking whether the matter had been resolved and his letter was notified to the Commissioners on 15 January 2003. The Review was not carried out and had still not been carried out at the date of this hearing.
6. An application for a further review under section 16(4) was served by the Commissioners on 22 January 2003. Since a Direction had already been given it is not clear what this was supposed to achieve. Mr Mellor's instructions were that it was intended to obtain an extension of time for the Review, although it was not appropriately worded.
7. On 28 January 2003 I directed that the matter be listed for consideration of the non-compliance with the Direction and for consideration of the application dated 22 January 2003. I also directed that by 4pm on 3 February the Commissioners submit written submissions:

"(a) as to the consequences of non-compliance with a Direction which determines an appeal

(b) as to the powers of the Tribunal in such circumstances and

(c) as to the jurisdiction of the Tribunal to consider the application of 22 January 2003 which relates to an appeal which has already been determined.

On 7 February 2003 the Commissioners asked for an extension to 10 February 2003. The Appellant's solicitor only received the submission at the hearing. Mr Moody did not however complain that he was prejudiced by this.

Legislation

8. The provisions governing appeals to the Tribunal are contained in sections 14 to 16 of the Finance Act 1994. Section 14(4) requires the Commissioners when so requested to give written notifications of decisions including decisions under section 152(b) of the Customs and Excise Management Act 1979 as to whether anything forfeited or seized is to be restored or as to the conditions of restoration. Section 14(3) requires the Commissioners to review decisions if given written notice within 45 days of the decision. Under section 15, where the Commissioners are required to review a decision under Chapter II of Part I of the Act, which covers appeals and penalties, it is their duty to do so, and under section 15(2) if they fail to do so within 45 days they are assumed to have confirmed the decision.
9. Section 16(1) provides that an appeal lies against a review decision under section 15, a deemed confirmation or a decision on a review which the Commissioners have agreed to carry out on a late request. Section 16(4) provides as follows:

"(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 further review 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 further review, 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."

A decision as to restoration is a decision as to an ancillary matter. The appeal is to a VAT and Duties appeal established under the VAT Act 1994.

10. Under Schedule 12, paragraph 10 of the VAT Act, a person who fails to comply with a direction issued by a VAT tribunal is liable to a penalty not exceeding £1,000. Under Rule 19(4) of the Tribunals Rules, if any party fails to comply with a direction, the Tribunal may allow or dismiss the appeal.

Submissions

11. Mr Mellor submitted, firstly, that in spite of the wording of the Direction the Tribunal had not determined the appeal. He said that the effect of the Direction was that the appeal remained alive until the further review has been issued and disposed of. The requirement to serve the Review on the Tribunal showed that it had not "washed its hands" of the matter. The Direction had not allowed the appeal nor did the breach of the Direction have that effect. He submitted that with the consent of the parties the Tribunal could give a direction which had the effect of converting the original appeal with an appeal against the further review and that the Direction had in effect done so.
12. Alternatively, he submitted that the Tribunal has power under Rule 19 to extend the time to complete the review. Even after a decision, the powers of a Tribunal are not exhausted because it can award costs or take action for non-compliance with a direction. If it can take action over non-compliance, it can waive it also.
13. He submitted that in the present case the Tribunal should extend the time. He said that the Commissioners had not forgotten about the re-review but had been unable to carry it out because of the volume of work. He was instructed that some 300 reviews are outstanding at present, once original reviews under section 15 are added to reviews directed by the Tribunal. He said that there are only two dozen review officers. The present matter had been allocated to a Review officer at the beginning of the previous week. Managers had taken a decision to work through cases chronologically. Travellers were asking for reviews all the time. The Commissioners had realised that there was a problem and had made the application dated 22 January 2003 before the non-compliance listing.
14. He said that it was the first breach of a direction in this case and it would be disproportionate to allow the appeal. Furthermore to allow the appeal would leave a vacuum – the Tribunal could not direct the Commissioners to return the car. The inference must be that the Tribunal can extend time. He said that the Commissioners could complete the Review by 21 February.
15. Mr Moody said that it was very depressing. The appellant had a disabled child and his car was impounded. The first Review was out of time, now this Review was out of time. He submitted however that the Tribunal must have power to extend time and should do so. He asked for costs.

Conclusion

16. The issue facing the Tribunal is whether the Direction of 24 October 2002 exhausted its powers so as to render it "functus officio", to use the Latin term which is difficult to translate.
17. Since the Tribunal is purely statutory, unlike the High Court it does not have inherent powers.
18. On an initial reading, the restriction on the powers of the Tribunal under section 16(4) is absolute. However section 16(4) clearly does not exclude the exercise of powers under the rules of procedure since those rules are expressly referred to in section 7(5) which refers to the generality of the power to make rules. It seems to me that section 16(4) applies to the powers on determining an appeal but does not apply to procedural or administrative powers. Section 16(4) clearly does not prevent the Tribunal issuing witness summonses, directing discovery, allowing leave to appeal out of time or giving any direction under Rule 19(4) to ensure that speedy and just determination of the appeal.
19. Rule 19(1) provides as follows,

"A tribunal may … extend the time within which a party to the appeal or application or any other person is required or authorised by these rules or any decision or direction of a tribunal to do anything in relation to the appeal or application … upon such terms as it may think fit."

20. In the present case the Commissioners were required by a direction to carry out the review written a specified time. On a literal reading Rule 19(1) applies in the present case. If Rule 19(1) did not refer to "decision" as well as to "those rules" and "direction", the inference might be that it is limited to preliminary or interlocutory directions. However the word "decision" is used and the primary occasion on which a decision is given is on determining an appeal. It is not at all unusual for a Tribunal to impose a time limit in a decision determining an appeal, in particular when as here the outcome is a direction for a further review.
21. If Rule 19(1) does give power to extend the time for the Review, then the Tribunal's powers are not exhausted because of the existence of the power. This argument is in a sense circular; however so also is the reverse argument that Rule 19(1) does not cover the present situation because the powers are exhausted.
22. It is quite clear that the Tribunal can entertain a costs application after a decision whether or not there has been a formal application at the hearing. Since written decisions are regularly given up to two months after the hearing, particularly in complex cases, it would be impractical to confine applications and submissions on costs to the hearing itself.
23. Furthermore the Tribunal can, and on occasion has given, directions under the Act imposing penalties for non-compliance with directions under section 16(4)(b). If the Tribunal had no power to impose a penalty after issuing a section 16(4)(b) Direction and no power to extend that direction, it would follow that it could give no sanction or remedy to an appellant in circumstances such as the present where the Commissioners have failed to comply. Furthermore it is arguable that a late Review would not be a review under Chapter II of Part I of the Act and therefore would not itself be appealable.
24. I do not consider that Parliament can have intended such a result. I conclude that the Tribunal does have power to extend time under Rule 19(1).
25. In the present case Mr Moody for the Appellant asked me to do so and I accordingly have directed in a Direction released on 14 February that the Review be carried out by 4pm on 21 February.
26. The Appellant is clearly entitled to the costs of this Application and I direct that within 21 days the Commissioners do pay the £400 for which Mr Moody asked. I also extend the time for an application for costs of the appeal so as to allow an application with 21 days of the Release of this Direction.
27. I considered imposing a penalty for non-compliance with the original direction and would have done so if there had been no costs to award. This is not an isolated case, being one of eighteen similar cases listed before me on 12 and 13 February for non-compliance. It seems clear that the number of officers employed by the Commissioners to carry out reviews of excise non-restoration decisions is wholly inadequate. In a number of other cases I have imposed penalties on the Commissioners, however I do not do so in this case. It will be another matter if the Commissioners do not comply with the new deadline.

THEODORE WALLACE

CHAIRMAN

RELEASED: 19 February 2003

LON/2002/8248