United Kingdom VAT & Duties Tribunals (Excise) Decisions

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Cite as: [2003] UKVAT(Excise) E444, [2003] UKVAT(Excise) E00444

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Pratt v Customs & Excise [2003] UKVAT(Excise) E00444 (25 June 2003)

RESTORATION OF GOODS AND VEHICLE — reasonableness of decision not to restore — Finance Act 1994 s.16(4) — proportionality — appeal partly allowed

MANCHESTER TRIBUNAL CENTRE

FRANK PRATT Appellant

- and -

THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents

Tribunal: Miss J Warburton (Chairman)

Mrs R Dean

Sitting in public in Manchester on 15 May 2003

Mr N Talbot of Pearson Hinchliffe, Solicitors for the Appellant

Mrs L Walmisley of counsel instructed by the Solicitor for the Customs and Excise for the Respondents

DECISION

This is an appeal by Frank Pratt against a decision to refuse to restore 145 kilos of hand rolling tobacco, 5,600 cigarettes, 725 cigars, 99.5 litres of wine, 25 litres of beer, 1 litre of brandy and a Ford Galaxy car registration number V467 EDB seized by the Commissioners at Hull Docks on 5 December 2001.

The Commissioners were represented by Mrs L Walmisley of counsel instructed by the solicitor for the for the Customs and Excise. The Commissioners put in a bundle of copy documents. The Appellant was represented by Mr N Talbot of Pearson Hinchliffe Solicitors who also put in a bundle of documents.

The original decision by the Commissioners to refuse to restore the goods and vehicle was in a letter dated 15 January 2002. The Appellant was not informed of his right to request an independent review. On 7 October 2002 the Respondents replied to a letter from the Appellant's solicitors seeking details of the decision not to restore. Both parties requested that the case proceed as an appeal against a decision on review by the Commissioners not to restore that decision being contained in the letter dated 7 October 2002.

We heard evidence on oath from the Appellant. There were also agreed witness statements from Janet Rands and Gerry Dolan, both officers of HM Customs and Excise. From the oral and written evidence, including the documents, submitted we find the facts to be as follows.

The Facts

The Appellant is disabled from osteo-arthritis which severely affects his mobility. He had a Ford Galaxy car under the Motability Scheme which meant that he did not have to pay tax or insurance for the vehicle and that, after taking account of his mobility allowance of £147, he only had to pay about £18 a month for the vehicle from his war pension. The Appellant has a son in Holland whom he visits frequently.

The Appellant lives on a caravan park and in December 2001 arranged to purchase tobacco and alcohol for neighbours on the caravan site on his next trip to Holland. He had price lists of various shops and he was given orders and the correct money. Some friends also asked him to show them where they could buy cheap tobacco and alcohol and they accompanied him on a trip to Holland via Hull in their own vehicles. The Appellant showed his friends where to shop and told them where to meet up with him after he had been to see his son. He also bought the goods his neighbours on the caravan site had ordered and some tobacco and alcohol for his family. When they all met again at the ferry in Zebrugge his friends said that they did not have sufficient room in their cars for their purchases so they asked to put some bags in his vehicle. He agreed as there was room in the Ford Galaxy and took receipts for the goods they placed in his car.

The Appellant was stopped by Customs officers at Hull Docks on his return from Holland on 5 December 2001. The officers found 145 kilos of hand rolling tobacco, 5,600 cigarettes, 725 cigars, 9.5 litres of wine, 25.26 litres of beer and 1 litre of brandy in the car. The Appellant, on being questioned, told the officers that goods were for neighbours on the caravan site but not that some goods belonged to friends in other vehicles. He produced receipts and gave details of payment. He informed the officers that the car was obtained through Motability. One of the officers contacted Motability and then seized both the goods and the vehicle.

On 17 December 2001 the vehicle was restored to Motability by Customs and Excise. On 18 December Motability terminated their agreement with the Appellant in relation to the Ford Galaxy. The vehicle was sold at auction and the Appellant paid the balance owing of £1,239.16 from his mobility allowance and a small amount from his war pension. As a result of the seizure of the Ford Galaxy the Appellant is no longer entitled to a car under the Motability scheme and will not be allowed to go back into the scheme for at least 5 years . He acquired a specially adapted Citroen car in about February 2002 for which the monthly payment is £269.89. The Appellant still receives his monthly mobility allowance of £147 but he has to pay the tax and insurance on the Citroen.

On 21 December 2001 the Appellant requested that Customs and Excise restore the goods to him. The decision not to restore the goods or vehicle was communicated to the Appellant by letter dated 15 January 2002. Following a request for information from the Appellant's solicitors dated 27 August 2002, Mr J R Rushforth, an officer of Customs and Excise reviewed the papers and wrote to the Appellant's solicitor on 7 October 2002. The letter refers to the interview with the Appellant on 5 December 2001 and the relevant law. The Commissioners had regard to their policy of non-restoration but did consider whether exceptionally restoration should be made on humanitarian ground because of the Appellant's physical condition although they determined, after speaking to Mobility, not to restore the vehicle to the Appellant. In the letter of 7 October 2002 the Commissioners indicated that restoration would be possible on payment of the revenue involved, £15,200. The Appellant has not paid the duty and has no interest in doing so.

The policy of Customs and Excise where goods are brought in for a not-for-profit basis is to seize vehicles but to offer restoration, on first detection, or payment of 100% of the revenue on value of the vehicle; whichever is lower.

The Law

The law as it applies in this case has been the subject of recent review by the Divisional Court in Regina (Hoverspeed Limited) v Customs and Excise Commissioners [2002] 3WLR 1219 ("the Hoverspeed case") and to a more limited extent in relation to seizure by the Court of Appeal in Commissioners of Customs and Excise v The Queen on the application of Hoverspeed Limited [2002] EWCA Civ 1804. These cases make it clear that under the Excise Directive 92/12 EEC goods are either held for personal use and subject to excise duty in the member state of acquisition, Article 8, or held for a commercial purpose and subject to excise in the member state in which they are held, Article 9 (see the Hoverspeed case para 105 and the Court of Appeal at para 65). The Divisional Court in Commissioners of Customs and Excise v Ian Newbury [2003] EWHC 702 (Admin) has confirmed that duty is only payable in the country of origin under Article 8 if goods are acquired by a private individual for their own use which does not include purchase as an agent (see para 32).

The Commissioners are empowered by the Customs and Excise Management Act 1979 (CEMA) section 49 to forfeit dutiable goods which have been imported or held without payment of duty. A vehicle used to carry goods liable to forfeiture is itself liable to forfeiture by section 141(1) of CEMA. All such goods are liable to seizure pursuant to section 139 of CEMA. Such powers, must however, be exercised with due regard to proportionality as they involve the deprivation of a person's property. In the case of goods imported on a not-for-profit-basis for friends or neighbours regard should be had to scale of importation, whether it is a 'first offence', any attempts at concealment and hardship in determining whether to forfeit goods – see Linsday v Customs and Excise Commissioners [2002] STC 588 paras. 52 and 64.

Section 152(b) of the 1979 Act allows the Commissioners as they think fit to restore any goods which have been seized. A review and appeal procedure from decisions of the Commissioners is set out in sections 15 and 16 of the Finance Act 1994. A holder of goods may appeal against a review decision of the Commissioners taken under section 15 to the Tribunal. The Tribunal's powers on appeal are, however, limited by Section 16(4) to directing that the Commissioners' decision shall cease to have effect, to directing that a further review be carried out or, if the latter is no longer possible, declaring the decision to have been unreasonable. On appeal it is for the Tribunal to decide de novo whether the goods were imported for a commercial purpose, the burden being on the Commissioners to prove on a balance of probabilities that the goods were imported for a commercial purpose. It is also for the Tribunal to consider that the response is proportionate in any case (see the Hoverspeed case paras. 130(10) and 196).

Submissions

Mr Talbot for the Appellant submitted that the Appellant had no commercial motive and was wholly innocent. The goods were for social distribution to his family and neighbours and belonged to his co-travellers. Mr Talbot submitted that the seizure of the vehicle was disproportionate in view if the hardship suffered by the Appellant. He now had to fund his vehicle without the assistance of the Motability Scheme. The Commissioners did not act reasonably in seizing the vehicle when termination of the Mobility arrangement was discretionary in these circumstances.

Mrs Walmisley for the Commissioners submitted that the Commissioners acted reasonably in seizing the vehicle and that seizure was proportionate in the light of the guidance given in the case of Lindsay. The vehicle had been restored to Motability who had terminated the agreement. The Appellant no longer had legal title to the vehicle. There was no evidence of extreme hardship suffered by the Appellant as a result of the seizure.

Mrs Walmisley further submitted that the Tribunal's jurisdiction was limited to a review of the decision not to restore. Even if an irrelevant matter had been considered or no account taken of a relevant matter, the overall evidence would make it inevitable that the result of any further review would be the same. On the authority of John Dee Limited v Customs and Excise Commissioners [1995] STC 941 the appeal should be dismissed.

Reasons for Decision

The Tribunal's jurisdiction under section 16(4) of the Finance Act 1994 is not one to try again the original decision to forfeit but to consider whether the decision on review not to restore goods is one that the Commissioners could not reasonably have come to.

It is generally accepted that the test of reasonableness requires the Tribunal to ask:

Is this a decision which no reasonable panel of Commissioners could have come to?

Has some irrelevant matter been taken into account?

Has some matter which should have been taken unto account been ignored?

Has there been some error of law?

(see Customs and Excise Commissioners v J H Corbitt (Numismatists) Ltd [1980] STC 231; Associated Provincial Houses Ltd v Wednesbury Corporation [1948] 1KB 223)

When Mr Rushforth reviewed the decision he clearly reviewed all the evidence available to him and did not consider any irrelevant matters. Mr Rushforth had no information about the effect of the seizure of the vehicle on the Appellant's relationship with Motability Finance or details of the Appellant's financial situation.

Hardship is one of the criteria which should be considered in determining whether a decision to seize goods is proportionate. Accordingly we find that Mr Rushforth failed to take account of some relevant matters before setting out his decision in his letter of 7 October 2002.

Having determined that the decision on review was not a reasonable one, the question remains as to what decision the Tribunal itself should make. The potential orders that can be made are limited to those set out in section 16(4) of the Finance Act 1994. Our decision has to be seen in the context of the quantity of goods seized, including 154 kilos of hand-rolling tobacco, the fact that the goods were not for personal use within Article 8 of the Excise Directive 92/12/EEC and the Appellant's personal circumstances.

In relation to the goods, i.e. excluding the vehicle, in view of the quantity involved albeit import was on a not-for-profit-basis, it is inevitable that the Commissioners' decision not to restore would be the same if a further review was carried out. In the circumstances, the case of John Dee Ltd permits the Tribunal to dismiss the appeal in the relation to the goods.

The vehicle has been sold. Accordingly, by section 16(4)(c) the only order which we can make is that the decision was unreasonable. We also give directions that in cases involving Motability vehicles the Commissioners should seek information about the effect on the owner of seizure of the vehicle before coming to any decision. The appeal is thus allowed in relation to the vehicle.

Whilst not strictly part of our decision, in view of the stance being taken by Motability Finance and the position as to costs, we make the following comment. If the Commissioners were to undertake a further review in the light of all the evidence now available and to confirm their decision to restore (if that were possible) on payment of the duty of £15,200 we would not anticipate that such a decision would be found by a Tribunal to be unreasonable and disproportionate having regard to the guidance in the case of Lindsay.

At the end of the hearing Mr Talbot made an application for costs in the event of the Appellant's appeal being successful. Mrs Walmisley made no application for costs. Having regard to our comments in paragraph 24, we make no directions as to costs.

MISS J WARBURTON

CHAIRMAN

RELEASE DATE: