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United Kingdom VAT & Duties Tribunals (Excise) Decisions

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URL: http://www.bailii.org/uk/cases/UKVAT/Excise/2003/E00441.html
Cite as: [2003] UKVAT(Excise) E00441, [2003] UKVAT(Excise) E441
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Trapps Cellar Ltd v Customs & Excise [2003] UKVAT(Excise) E00441 (11 July 2003)
    APPEAL – Amendment to terms of approval of Appellant's warehouse as excise warehouse – Immediate prohibition on further deposits in warehouse – Request for review of decision – Before time for review expired decision withdrawn and new decision (not involving immediate prohibition) substituted – Whether Commissioners still obliged to review original decision – No – Whether original decision still appealable – No – Whether appeal should be struck out – Yes – VATA 1994, ss 14 to 16

    LONDON TRIBUNAL CENTRE

    TRAPPS CELLARS LTD Appellant

    - and -

    THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents

    Tribunal: ANGUS NICOL (Chairman)

    Sitting in public in London on 10 March 2003

    Andrew Young, counsel, instructed by Vincent Curley & Co, for the Appellant

    Avorres Khan of the Office of the Solicitor for the Customs and Excise, for the Respondents

    © CROWN COPYRIGHT 2003

     
    REASONS FOR DIRECTION
  1. This is an application by the Commissioners to strike out an appeal by Trapps Cellars Ltd in somewhat unusual circumstances, as will appear below. Since matters of principle are involved, the application was heard in public and the reasons for the direction will be published.

    2. Matters leading up to the appeal
  2. The Appellant carried on business in Tooley Street in London as warehousekeepers, and were until May 2002 approved excise warehousekeepers under section 92 of the Customs and Excise Management Act 1979 ("CEMA"). On 27 March 2002 the conditions of the warehouse approval were amended, under the power given to the Commissioner in section 92(7) of CEMA, by prohibiting the deposit of goods in the warehouse until such time as a premises security which was satisfactory to the Commissioners had been provided. In a letter dated 3 May 2002 from Mr Ian Berry of the Holding and Movements team of London Regional Business Services EICS, that condition was revoked, and a complete prohibition of deposit of goods in the warehouse was imposed with immediate effect. Mr Berry reminded the Appellant that the three-month notice period for revocation of the warehouse approval, which ran from 1 April 2002, was still applicable. No reasons were given for this prohibition save that the letter said that the Commissioners had a number of concerns regarding compliance by the Appellant with the terms and conditions of the warehouse approval. I assume that fuller reasons were given in the letter of 27 March or at some other time. In any case, I am not concerned with what those reasons may have been.

  3. In a letter (of which there was produced only an unheaded and undated draft, but which, I was told, was sent to the Commissioners on 7 June 2002 by solicitors on behalf of the Appellant), a request was made for a review of the decision contained in Mr Berry's letter of 3 May. It appears from that draft letter that there had been both meetings and correspondence between the Appellant, the writer of the letter, and Mr Berry. At some time in June Vincent Curley & Co were instructed by the Appellant.

  4. A letter dated 17 June 2002, from Vincent Curley & Co to Mr Berry, refers to a proposed meeting, and continues:

    5. "Thank you for your kind offer of a meeting. I would raise a principle point of concern. It appears that you wish to hold the meeting with a view to the closure of our clients' Customs Warehouse. The difficulty is that on 7th June 2002 a request was made for a formal departmental review. As far as we are aware the review has not yet been completed. The failure to complete the said review to date suggests that the Commissioners are far from certain that your decision will be upheld. On the facts we think that a Review Office ought to withdraw your decision. Further, you will be aware that our clients have the right of appeal to an independent VAT and Duties Tribunal.
    When you consider these circumstances I am sure you will agree with us that closure is premature.
    We suggest that a meeting be convened to discuss the following:
  5. Agreement that the Commissioners' decision will cause irreparable damage to our clients.

  6. Agreement that the disputed decision be suspended until after the outcome of the review and/or appeals procedures.

  7. . . ."

  8. On the next day, 18 June 2002, Vincent Curley & Co wrote to the Review Officer in Maidenhead. The letter included the following:

    9. "The Company wrote to you on 7th June 2002 making application for a review of the decision dated 3rd May 2002 to vary the terms of the Warehouse approval. We are now instructed by the Company to act in this matter.
    To date you have not replied to the application for a review and we assume that your failure to complete the review by now suggests that you may withdraw the original decision. On the facts we believe that you should indeed withdraw the decision."

    I pause to observe that this letter was written only eleven days after the request for a review, for which 45 days are allowed by statute. The letter continued:

    "For the avoidance of any doubt, the effect of the decision will be to close down the warehouse and the decision will cause irreparable damage to the business. We have written to Mr Berry to point this out and to seek his agreement that the disputed decision be suspended until after the outcome of your review and/or appeals procedures. We are awaiting his reply but must also say that in these circumstances the Company is entitled to an expedited reply to the review."

    The letter then went on to deal with the reasons for the prohibition.

  9. Mr Berry wrote on 20 June 2002 directly to the Appellant. He referred to a meeting on 19 June which had been cancelled by the Appellant and was the cause of his writing the letter. He referred to a meeting with the Appellant and its solicitors on 14 May 2002, and letters from (or on behalf of) the Appellant of 24 May and 7 June 2002 which explained how the Appellant proposed to comply with the terms of the warehouse approval. The letter continued:

    10. "As a result of this, the Commissioners are prepared to allow you a further period of two months in which to prove that you can fulfil your obligations under the terms and conditions of your approval and any other relevant legislation.
    Consequently the Commissioners' three months notice of intent to revoke the warehouse approval and your authorised warehousekeeper's registration from the 1st of April 2002 has been amended - the three months notice of intent will commence from the 21st of June 2002."

    Twelve conditions of allowing the two-month extension, relating to the conduct of the warehouse, were laid down in the letter, which continued:

    At the end of the two-month extension period, which will end on the 21 August 2002, Customs and Excise will conduct a review of your business. If by that time you have met our conditions and your procedures have improved to an acceptable standard, then your warehouse approval and authorised warehousekeeper's registration will remain in force and the notice of revocation will be withdrawn. If the situation is still considered to be unsatisfactory, the revocation for both the approval and registration will be effective from the 21st September 2002.
    My letter dated the 27th of March 2002 amending your approval prohibiting the receipt of any duty suspended goods into the warehouse, is therefore withdrawn with effect from the date at the top of this letter."

    The letter requested acknowledgement and acceptance of the conditions, and then advised the Appellant that if it did not agree with the decision in this letter a review could be requested within 45 days from the date of the letter, and further informing the Appellant that if it was not satisfied with the outcome of such a review an appeal lay to this Tribunal.

  10. The review officer, Mr Farmer, wrote to Vincent Curley & Co on 21 June 2002, acknowledging their letter of 18 June, and saying,

    11. "I understand that Issuing Officer, Ian Berry, has written to you on 20th June 2002 dealing with this matter and I would hope that you could resolve it through discussion between yourselves. In the event that this does not appear to be the case, please can let me know so that I can start the review process."

    Vincent Curly & Co replied on 27 June 2002, saying,

    "The communication you refer to is in fact a new decision by Mr Berry, which is subject to a separate application for a mandatory review. The application for a review of the decision of 3rd May 2002 remains extant and please can you continue with your review of this decision."

    Mr Farmer replied on 11 July 2002. The first paragraph states as follows:

    Thank you for your letter dated 27th June 2002. I am writing to clarify the position with respect to Ian Berry's letter to Trapps dated 3rd May 2002, relating to the amendment to their warehouse approval that, with immediate effect no further goods may be deposited in their warehouse. Mr Berry's view is that his letter to Trapps dated 20th June 2002 lifts all restrictions relating to duty suspended goods being deposited in their warehouse including the amendment imposed in his letter dated 3rd May 2002. As that decision has been withdrawn it is not appropriate to proceed with a review of it."

    The letter goes on to accept Vincent Curley & Co's request in the letter of 27 June 2002 for a review of the decision contained in Mr Berry's decision in his letter of 20 June 2002.

  11. That letter was answered by Vincent Curley & Co on 25 July. The relevant parts of his letter are as follows:

    12. "Mr Berry issued a decision dated 3rd May 2002. We made application for a review of this decision in our letter of 18th June 2002. Your reply is to say that the restrictions were lifted by Mr Berry and that as the decision has been lifted it is not appropriate to proceed with your review. I am afraid we cannot agree.
    The decision was in place up until receipt by the Company of Mr Berry's letter of 20th June 2002 and whilst the decision was in place it severely impacted upon the business. The fact that at a later date the decision no longer applies does not alter the impact of the decision during the time it was in place. This was a decision and applied for a period of time in its own right and our clients still require a review of this decision.
    The application for a review was dated 18th [sic] June 2002 and you acknowledged receipt in your letter dated 21st June 2002. We will assume the 45 days period commences from the date of your acknowledgement letter. By our calculation the review period expires on 4th August 2002 and we look forward to your reply by that date."

    Mr Farmer replied on 31 July 2002, saying that he had been advised that he was not required to conduct a review of the decision in Mr Berry's letter of 3 May 2002 because that decision was no longer extant.

  12. The Appellant served a notice of appeal dated 18 August 2002 stated to be against

    13. "a decision of the Commissioners of Customs and Excise (The Respondents) contained in a letter dated 3rd May 2002 ... to vary the terms of the warehouse approval. In a letter dated 31st July 2002 ... the Respondents refused to conduct a statutory review of this decision and it is therefore assumed for the purposes of the Appeal to the tribunal that the Respondents have confirmed the original decision in accordance with paragraph 15(2) of the Finance Act 1994."

    There followed grounds of appeal, most of which had to do with the effect of the decision on the Appellant's business, rather than why the decision was wrong. The fourth ground was:

    "4. The business is a normal commercial operation and like all organisations is prone to occasional human error. Any concerns raised by the Respondents, whether reasonable or not, were dealt with by Appellant within a reasonable period of time."
  13. The Commissioners served a notice of application dated 11 October 2002 for a direction that the appeal be struck out as there was no longer any appealable matter relating to that appeal (LON/02/8240). On 28 October 2002, the Tribunal directed that the Appellant should provide to the Tribunal a copy of the notice in writing requiring the review and of the Commissioners' acknowledgement of it, and that the Commissioners should give particulars of why they asserted that there was no appealable matter, and that they should provide a copy of the letter containing the decision by reason of which the decision of 3 May 2002 was no longer extant. Covered by a letter dated 11 November 2002 from Vincent Curley & Co, the decision letter of 3 May 2002 and the letter from the Appeals Officer of the Commissioners refusing to complete a review (Mr Farmer's letter of 31 July 2002). On 7 November 2002 the Commissioners sent to the Tribunal a copy of their letter of 20 June 2002, under cover of a letter from Ceri Jenkins in which she said:

    14. "[The letter of 20 June 2002] replaced the decision given in the letter of 3 May by extending by two months the period in which the Appellant could establish that it would be able to fulfil its obligations under the terms and conditions of its approval.
    In the letter of 20 June, the Commissioners invited the Appellant's representative to seek a formal Departmental review of this letter if it disagreed with the decision. No such request was forthcoming. There being no review requested, there could be no decision to which section 16 of the Finance Act 1994 [sic]. No appeal therefore lies to the Tribunal."
    The contentions
  14. Mr Avorres Khan, for the Commissioners, maintained that the decision that was under consideration was that of 20 June 2002. Since no request for a review of that decision had been received, there was no appealable decision, nor would there be until such time as a request for a review had been made and had culminated in a decision adverse to the Appellant. Since the first decision had been revoked, the Appellant was debarred from appealing until a fresh request for a review of the decision of 20 June 2002 had been made and the review completed. The revocation of the first decision also revoked the deemed upholding of the original decision. It appeared from the notice of appeal, he said, that the main concerns of the Appellant were in connexion with its business, and there were other remedies for dealing with that.

  15. Mr Andrew Young , for the Appellant, said that the Commissioners had arrived at the decision of 3 May 2002, which was to have immediate effect. That had caused commercial damage to the Appellant. The right to a review of a decision arose as a matter of law: sections 14 to 16 of the Finance Act 1994. The Commissioners could not take that right away simply by amending the decision. The decision against which the Appellant sought to appeal was that which had already taken effect. Mr Farmer's letter of 21 June 2002 was a recognition by the review officer that there should have been a review. Mr Young queried whether the letter of 20 June 2002 had the effect that Mr Berry thought it had. The true effect was outlined in Vincent Curley & Co's letter of 25 July 2002. It was just Mr Farmer's view that the decision of 3 May 2002 was no longer extant: it was not in fact the case.

    16. Conclusion
  16. It will be useful to look at this matter chronologically. The first thing that happened was, apparently, the decision to amend the conditions of the Appellant's warehouse approval contained in the letter of 27 March 2002. There appear to have been meetings and correspondence relating to that, but evidently there was no request for a review. Nor has it been suggested that that decision continues to have effect.

  17. Next came the letter of 3 May 2002, amending the decision of 27 March 2002. That was a serious decision which clearly had the effect of putting an end to the Appellant's excise warehousing business, at least for a time. There were apparently further meetings and correspondence. Then on 7 June 2002 solicitors on behalf of the Appellant sent a request in writing to the Commissioners for a departmental review of the decision of 3 May 2002. Under section 15(2) of the Finance Act 1994, the Commissioners are obliged to carry out the review within 45 days, and if they do not the decision under review shall be assumed to have been upheld. The Commissioners therefore had until 22 July 2002 to complete the review. Even though Vincent Curley & Co may have been justified in considering that the Commissioners ought, in the circumstances of this case and the Appellant's business, to have expedited the review, there appears to be no means whereby they could oblige them to do so. I do not think that the Commissioners' failure to complete the review by 17 June 2002 suggests that the Commissioners were unsure that the decision would be upheld, or indeed suggests any particular reason for the review not having been completed. The situation immediately before 20 June 2002 was, therefore, that the decision of 27 March had been made, and had been amended by the letter of 3 May into a more severe decision, and that decision was the subject of a request for a review.

  18. There followed the letter of 20 June 2002. The decision contained therein considerably softened the effect of that of 3 May. This was no doubt the effect of the Commissioners' concerns having already been dealt with : see ground 4 of the notice of appeal (paragraph 9 above). That letter also specifically withdrew the decision contained in the letter of 27 March. It did not, however, withdraw the decision contained in the letter of 3 May, as Vincent Curley & Co point out expressly in their letter of 27 June 2002. However, Mr Farmer's letter of 11 July 2002 does two things. First it says that Mr Berry considered that his letter of 20 June lifted all restrictions relating to duty suspended goods being deposited in the Appellant's warehouse, including the amendment contained in the letter of 3 May to the amended terms of approval. Secondly, it states expressly that the decision contained in the letter of 3 May had been withdrawn. Vincent Curley & Co disagreed with that letter, as stated in theirs of 25 July.

  19. Lastly, Mr Farmer's letter of 31 July 2002 states categorically that the decision of 3 May was no longer extant. It was not until 18 days after that that the Appellant put in its notice of appeal. That notice of appeal is against the decision of 3 May 2002, and not against any other decision.

  20. In my judgment, looking at the sequence of events and the wording of the letters containing the decisions, from 7 June 2002 the Commissioners were under an obligation to carry out a review of the decision of 3 May. They had not done so by 20 June, and cannot be criticised for that since the statute allowed them another 22 days in which to do so. No right of appeal had accrued to the Appellant at that point. Then came the letter of 20 June, and the crux of this matter is, as it appears to me, what was the effect of that letter and the letters of 11 July and 31 July.

  21. The letter of 20 June specifically stated that the letter of 27 March was withdrawn. It made no mention of the letter of 3 May. However, the earlier paragraphs of the letter, allowing a further two months for compliance, and amending the period of notice of intent to revoke, are so inconsistent with the letter of 3 May that it might reasonably be inferred that withdrawal of the letter of 3 May was intended. It is surprising that the Appellant or those representing it did not inquire if that was what the letter meant. But if that were not so, or if that is not a correct inference to draw, in my view the letter of 11 July first, made it quite clear that it had been the intention to withdraw the letter of 3 May, and secondly, stated in clear terms that that letter was withdrawn. If at no other time, then, from 11 July 2002 the letter of 3 May was withdrawn. It follows that the decision contained in it was withdrawn. That decision therefore no longer existed. There was no such decision of which the Appellant could request a review, and no obligation remained upon the Commissioners to review that, now non-existent, decision. Consequently, when the notice of appeal was served, on 18 August, there was no decision in being against which the Appellant was able to appeal.

  22. It is impossible not to sympathise with the Appellant if the decision of 3 May damaged its business. It is easy to see how that may have resulted. I am aware that the Appellant had the misfortune to go into administration. But it has to be said that an appeal to this Tribunal is not really a suitable forum for airing such understandable grievances. For one thing, among others, this Tribunal has no power to offer the Appellant any redress for any such damage as it may have suffered.

  23. For the above reasons, the Commissioner's application must be granted. The Commissioners made no application at the hearing for costs, and accordingly I give no direction as to costs.

    24. THIS TRIBUNAL THEREFORE DIRECTS

    1. That the Commissioners' application be granted and that this appeal be struck out

  24. That there be no direction as to costs

    25. ANGUS NICOL
    CHAIRMAN
    RELEASED:

    LON/02/8240

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