United Kingdom VAT & Duties Tribunals (Excise) Decisions

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Cite as: [2003] UKVAT(Excise) E00483, [2003] UKVAT(Excise) E483

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Chamberlin v Customs & Excise [2003] UKVAT(Excise) E00483 (27 August 2003)

EXCISE DUTY – appeal from a review decision not to restore car used for the importation of hand rolling tobacco and other excise goods –reasonableness of the decision not to restore – appeal dismissed

LONDON TRIBUNAL CENTRE

FRANCIS WILLIAM EDWARD CHAMBERLAIN Appellant

- and -

THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents

Tribunal: Malcolm Gammie Q.C. (Chairman)

Mr Michael Silbert FRICS

Mr Ray Battersby

Sitting in public in London on 21st July 2003

Mr Chamberlain appeared in person

Mr Ben Collins of counsel, instructed by the Solicitor of Customs and Excise, for the Respondents

© CROWN COPYRIGHT 2003

DECISION

Introduction

This is an appeal by Mr Francis Chamberlain against a decision of the Commissioners taken upon review (as directed by the Tribunal), confirming the decision of 9^th May 2001 not to restore to Mr Chamberlain his seized excise goods and his Vauxhall Astra Estate registration number K659 ANV. The goods and car were seized at Dover Eastern Docks on 10^th April 2001.

At the hearing a bundle of documents was produced to us on behalf of the Commissioners. We also heard evidence on behalf of the Commissioners from Mr Paul Devlin, the senior officer of HM Customs and Excise who conducted the review directed by the Tribunal. We record below our findings based on the documents before us and the evidence that we heard.

The Facts

At approximately 4.30 p.m. on 10^th April 2001, Mr and Mrs Chamberlain were stopped and questioned by the Respondents' officers on their return from a shopping trip to France and Belgium. The goods that were subsequently seized comprised—

Beer 111 litres
Wine 4.5 litres
Spirits 1.4 litres
Hand Rolling Tobacco 26.5kg
Cigarettes 2440

In answer to the initial questions put to them, Mr and Mrs Chamberlain indicated that their purchases were for themselves, their two daughters and son and their respective spouses. Mr and Mrs Chamberlain admitted that their children had given them the money to buy the goods on their behalf. They also said that they had last travelled to France about three weeks previously and before that at Christmas. The Ferry records produced to us indicated that Mr and Mrs Chamberlain had made cross-Channel day trips on 2^nd December 2000 and on 10^th February, 10^th March and 24^th March 2001.

Following these initial exchanges, Mr and Mrs Chamberlain were given the option of leaving or staying for further interview. They opted to stay and were thereafter interviewed separately. In his interview Mr Chamberlain said that the goods cost approximately £1,300, which his wife had paid in cash. Of this he said that they had funded around £600 and their children the balance. The beer and wine were for his wife's and his own account but the hand rolling tobacco had been bought as follows—

Mr F Chamberlain	120 pouches of Golden Virginia
Mrs S Chamberlain	60 pouches of Samson mild and 60 pouches of Cutters Choice
1st daughter & son-in-law	120 pouches of Golden Virginia
2nd daughter and son-in-law	120 pouches of Drum
son and daughter-in-law	50 pouches of Old Holborn and 500 Lambert & Butler

He said that on their previous cross-Channel trips three weeks before and at Christmas they had only bought alcohol. They had made about 4 or 5 cross-Channel trips in the last 6 months but the last time that they had bought tobacco was on a trip in March 2000, when they had bought about the same amount as on this trip. He said that he smoked about 4 pouches of tobacco a week (at a rate of about 40 cigarettes per pouch) and his monthly income was around £1,100. Mr Chamberlain signed the interviewing officer's notebook as giving a true account of the interview.

Mrs Chamberlain said that she had had the cash to pay for the goods but was initially unable to recall how much they had cost or how much her children had contributed. She said that her husband had worked out their contribution with the children. She also explained to the officer that she had difficulty with short-term memory. Later in the interview she said that they had about £1,000 - £1,100 cash for the goods. She confirmed that the beer and wine was for Mr Chamberlain and herself and that her share of the hand rolling tobacco comprised 6 packs of Samson mild and 6 packs of Cutters mild. (Mr Chamberlain pointed out that this amounted to 60 pouches, each pack containing 10 pouches.)

Mrs Chamberlain said that she smoked about 2 pouches a day, each pouch producing about 40 cigarettes. She was not employed and was in receipt of benefits amounting to about £100 a fortnight. She said that in the last 12 months they had made cross-Channel trips two or three times before Christmas, in December and twice since Christmas, although she added that she was unsure about this. (Apart from the 4 previous trips noted in paragraph 4 above, records produced at the hearing by the Respondents indicated that Mr and Mrs Chamberlain had also travelled through the Channel Tunnel on 28^th May, 22^nd June (returning on 26^th June), 30^th July, 24^th August and 4^th November 2000.) Mrs Chamberlain signed the interviewing officer's notebook as giving a true account of the interview.

Following their interviews their vehicle and the goods were seized. The reasons specified for the seizure were that the goods were not solely for their own use, the number of previous cross-Channel trips they had undertaken and the conflicting accounts they had given to the interviewing officers. As regards the last of these, there are some differences in the accounts given by Mr and Mrs Chamberlain in their interviews. In correspondence and at the hearing Mr Chamberlain explained the discrepancies on the basis that the interviews were a stressful process for both of them and particularly so for his wife who is registered disabled and was in pain at the time. He said that the slight inconsistencies suggested that they were answering the questions to the best of their recollection in the circumstances and that if they had been smuggling they would be more likely to have had a word perfect story prepared.

We do not think that the last point would necessarily be correct. Nevertheless, on the interview records we do not consider the discrepancies significant in the circumstances and not much weight should accordingly be given to that factor. A more important aspect of their answers may be that neither Mr Chamberlain nor his wife readily admitted when interviewed that they made regular trips to France. Those substantiated by the Respondents suggested that they travelled almost every month.

Mr Chamberlain wrote to the respondents on 22^nd April 2001 seeking restoration of his vehicle (but not the excise goods). In his letter he noted that his wife was registered as disabled and was clearly unwell at the time of the interview and seizure. Following the events on 10^th April his wife had been admitted to hospital and he would need the car "so that I can get to work and back without having to rely on other people, and to drive my wife around when she comes out of hospital". Mrs Chamberlain may well have been in hospital sometime between 10^th and 22^nd April. We note from the ferry records produced by the Respondents, however, that she was well enough make the journey to France with her husband and some friends on 21^st April 2001. That journey, as several of the others we have mentioned, was made in Mrs Chamberlain's car.

As this indicates, although disabled, Mrs Chamberlain was not dependent on the availability of Mr Chamberlain's car. She had the use of a motability vehicle (although Mr Chamberlain could only use it himself if Mrs Chamberlain was with him or he was undertaking an errand for her). In both June and July 2001 Mr Chamberlain wrote asking that his car be restored, "so that I don't have to rely on the goodwill of other people to get to work". In a letter of 24^th April 2002 he said that he had been dependent upon a friend in the motor trade to lend him a vehicle to travel to work until he had been able to save sufficient to purchase a new vehicle. At the hearing, he appeared to say that he had bought a new vehicle about three weeks after the seizure.

Mr Chamberlain made the point that although they had accepted money from their children to purchase goods (and could not have afforded to purchase the quantities in question without doing so), their children's contribution was only intended to meet the actual cost of the goods. Mr Chamberlain would have accounted for any surplus funds and there was no profit involved. Again in correspondence and at the hearing he had stressed the financial hardship caused by the seizure, although he said that he had since repaid the family their contributions. He drew attention to their financial circumstances and suggested that those circumstances would be much better if they were importing tobacco for resale. They had had to sell their house to pay off their debts and had moved to rented accommodation. Whatever the financial hardship caused by the seizure or more generally, the ferry records indicate that their financial circumstances did not prevent Mr and Mrs Chamberlain continuing their regular cross-Channel shopping trips, including trips on 21^st April, 19^th May and 17^th August 2001.

Mr Chamberlain explained that they made frequent cross-channel trips because this was what they enjoyed and they frequently took friends who wanted to see and enjoy the hypermarkets in France. Their friends would share the cost of the journey. Certainly the ferry records indicate that of 8 trips between December 2000 and August 2001, Mr and Mrs Chamberlain were accompanied by members of the Goss Family on three occasions and by a Mr White on three other occasions. (Similar details are not available for the Channel Tunnel trips in 2000 as these rely solely on an automatic number plate reader.) Mr Chamberlain estimated that the journey from Taunton in Devon, where they lived, and Dover took approximately 3.5 to 4 hours. Although the majority of their cross-Channel trips were day trips, the time spent driving did not affect their enjoyment as he worked as a lorry driver.

In correspondence and at the hearing Mr Chamberlain reaffirmed that the goods were for the family's use and were not for resale. In his letter of 24^th April 2002 Mr Chamberlain had said that he was enclosing letters from his children confirming the money that he said they had given him to make the purchases. Those letters were not, however, forthcoming as his children declined to provide any such confirmation. Mr Chamberlain said that this was because they feared they would suffer repercussions from the Respondents if they did so. We do not know why they thought that or what repercussions they feared.

As regards his and his wife's smoking habits, Mr Chamberlain said that they smoked two and more often than not three pouches per day. They made their own cigarettes using ready-made king size tubes with a built-in filter tip and filling them with tobacco with a purpose-made machine. He estimated that they would get between 40 and 43 cigarettes per pouch. If that is correct, at an average consumption rate of 2.5 pouches per day, the purchases they claimed on 10^th April would have lasted approximately 96 days. Mr Chamberlain said that they had not purchased any tobacco on their regular cross-Channel trips since March 2000, when they bought approximately the same amount. If they had bought 530 pouches in March 2000 and assuming that on that occasion the purchase was entirely for their own account, the purchase would have lasted for some 212 days. But Mr Chamberlain said that such a large purchase was beyond their means in April 2001. Could they have financed such a purchase in March 2000 and why buy in bulk once a year when making almost monthly cross-Channel trips?

It would be wrong to attempt to be unduly scientific about this. Nevertheless, we think that there is an obvious difficulty in making sense of the frequency of visits, of the amount of tobacco purchased in April 2001 and their financial resources for such purchases, of their children's refusal to corroborate the contribution that Mr and Mrs Chamberlain claimed their children had made towards the cost and, finally, of Mr and Mrs Chamberlain's stated smoking habits.

The Law

The relevant legal provisions are now contained in the Tobacco Products Regulations 2001 ("the 2001 Regulations"), as amended by the Excise Goods, Beer and Tobacco Products (Amendment) Regulations 2002. So far as they bear upon this appeal. The provisions are as follows:

"12 Excise duty point

…

(1A) In the case of tobacco products acquired by a person in another Member State for his own use and transported by him to the United Kingdom, the excise duty point is the time when those products are held or used for a commercial purpose by any person.

(1B) For the purposes of paragraph (1A) above –

…

(b) 'own use' includes use as a personal gift;

(i) transferred to another person for money or money's worth (including any reimbursement of expenses incurred in connection with obtaining them), or

(ii) the person holding them intends to made such a transfer, those products are to be regarded as being held for a commercial purpose.

…

(e) without prejudice to subparagraphs (c) and (d) above, in determining whether tobacco products are held or used for a commercial purpose by any person regard shall be taken of –

(i) that persons reasons for having possession or control of those products,

(ii) whether or not that person is a revenue trader (as defined in section 1(1) of the Customs and Excise Management Act 1979),

(iii) that person's conduct, including his intended use of those products or any refusal to disclose his intended use of those products,

(iv) the location of those products,

(v) the mode of transport used to convey those products,

(vi) any document of other information whatsoever relating to those products,

(vii) the nature of those products including the nature and condition of any package or container,

(viii) the quantity of those products, and in particular, whether the quantity exceeds any of the following quantities

3,200 cigarettes

4,000 cigarillos …

200 cigars

3 kilogrammes of any other tobacco products

…

(ix) whether the person personally financed the purchase of those products,

(x) any other circumstance that appears to be relevant."

In this case, Mr and Mrs Chamberlain have both admitted that they were purchasing the tobacco for other family members and had been paid for them. The goods were therefore not for their own use and must be regarded as held for a commercial purpose.

Accordingly, Mr and Mrs Chamberlain were liable to pay duty on the goods and, having failed to do so, the goods were liable to forfeiture and could be seized by the Respondents (ss.49(1) and 139 Customs and Excise Management Act 1979). Under section 141(1) the liability to forfeiture extended to Mr Chamberlain's car, subject to the Respondent's power to restore the vehicle if they see fit to do so. Under section 15(1) Finance Act 1994, the Respondents may be required to review any decision as to restoration and on that review may confirm, withdraw or vary their decision.

The Reviews

Mr Chamberlain requested a review of the decision to seize his car by letter on 22^nd April 2001. The outcome of the initial review refusing restoration was communicated on 9^th May 2001. A further review was never carried out due to lack of resources and the decision not to restore was therefore deemed to be upheld. An appeal against that deemed decision was due to be heard by the Tribunal on 17^th April 2002 but following the Court of Appeal's decision in Lindsay v Commissioners of Customs and Excise [2002] EWCA Civ 267, the Respondents agreed to re-review Mr Chamberlain's case.

Under the Respondent's revised policy following Lindsay, the Respondents in general allowed restoration of vehicles on the first occasion of 'not for profit' smuggling against payment of a fee equal to 100 per cent of the duty. The further review in the light of this new policy was conducted by Kathryn Philpott and her decision was communicated to Mr Chamberlain on 15^th May 2002. Ms Philpott set out the facts in some detail and then her conclusions. Briefly, these related to—

• whether the details of Mrs Chamberlain's smoking habits tallied with the amount of tobacco that she claimed as her own and with her income;

• the consistency of what Mr and Mrs Chamberlain had each told the Respondents' officers regarding their previous cross-Channel trips and their previous purchases of tobacco;

• the frequency of their previous trips; and

• the fact that their children had refused to confirm that part of the goods were being purchased on their behalf.

Ms Philpott also dealt with the points raised by Mr Chamberlain regarding the circumstances of his wife's interview and the availability to her of a motability vehicle. In the light of the above she was not satisfied that the goods represented 'not for profit' smuggling and confirmed the previous review decisions.

Ms Philpott's decision was re-reviewed at the direction of the Tribunal following the decision of the Court of Appeal in R (on the application of Hoverspeed Limited and Others) v Commissioners of Customs and Excise [2002] EWCA Civ 1804. The re-review was conducted by Mr Paul Devlin and his refusal to restore the vehicle was communicated to Mr Chamberlain on 18^th December 2002. Having set out the Respondent's revised policies in the light of the Lindsay and Hoverspeed cases, Mr Devlin's conclusions were as follows—

• In relation to the application of the Lindsay restoration terms, Mr Devlin noted that the contributions claimed to be made by the children would have allowed Mr and Mrs Chamberlain to make a small profit. Leaving this aside, however, he concluded that the Lindsay terms did not apply given the size of the importation, the frequency of cross-Channel trips and the fact that the children had declined to support their parents' case.

• As regards the Respondent's restoration policy adopted in October 2002 after the Hoverspeed decision, he concluded that the size of the importation involved did not meet the criteria of that policy.

• Finally, given the availability to Mrs Chamberlain of a motability vehicle, he concluded that restoration should not be given on the basis that serious distress would be caused to a person with special needs who is dependent on the use of the seized vehicle on a regular basis.

In his evidence, Mr Devlin said that he would have read the interviewing officers' notebooks and looked at matters in the round. Drawing on his experience of other cases, he would have had regard to the facts that Mr and Mrs Chamberlain were doing someone else's shopping, how much tobacco they were bringing back, how they would have financed the purchases and the frequency of their trips. He accepted that records of interview were not always 100 per cent accurate. We note, however, that he did not specifically rely upon any inconsistencies in the interview in reaching his decision.

He said that he would have expected a pouch of tobacco to produce about 80 hand-rolled cigarettes although it would always depend upon who was making the cigarette and by what method. He accepted that the method of preparation mentioned by Mr Chamberlain would produce significantly fatter cigarettes. Nevertheless, he regarded their stated daily consumption as large. In his review letter Mr Devlin had doubted whether the Chamberlains could have consumed around 25 kilos of tobacco in the 13 months since March 2000 when they last claimed to have bought tobacco. He therefore thought it likely that some of the tobacco was not for their use. As we have noted, if we accept Mr and Mrs Chamberlain's account, 25 kilos would not have been enough tobacco to last them 13 months and it is not clear how they could have financed such a purchase.

Mr Devlin said that he regarded the frequency of Mr and Mrs Chamberlain's trips to France as "highly significant". He noted that with one exception the trips were day trips. Given the travelling time from Taunton, these would be long and expensive trips for such a short time on the Continent. It was consistent with their being shopping trips. He rejected the suggestion that based on the frequency of trips he had made the assumption that Mr and Mrs Chamberlain had been smuggling tobacco. In dealing with this aspect in his review letter, Mr Devlin had noted that, "If a traveller is indeed obtaining excise goods to pass on at cost, such a transaction is likely to be something of a one-off and I would not expect that person to be a regular traveller. I say that because regular and ready access to cheap continental excise goods removes the need to make a large expenditure on bulk such as happened in (sic) this occasion."

Conclusion

As we explained to Mr Chamberlain at the hearing, our jurisdiction in this matter is limited. Our jurisdiction is set out in section 16(4) of the Finance Act 1994:

"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 persons 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

This case falls within the definition of "ancillary matter" as defined in Schedule 5 to that Act.

The terms of section 16(4) means that it is not our role to substitute our view of the matter for that taken on the review by the Respondents. The question is whether Mr Devlin could not reasonably have arrived at the decision that he communicated on 18^th December 2002. This requires that the decision should comply with the requirements of the Convention for the Protection of Human Rights and Fundamental Freedoms and that those concerned have not taken into account some irrelevant matter or disregarded something to which they should have given weight or made some other error of law (see Lord Phillips in Lindsay at para 40). It is also legitimate for us to review the reasonableness of the restoration policy adopted by the Commissioners and to determine whether there are genuine exceptions to that policy such that the policy itself does not fetter the discretion of the officer who has to determine how to exercise the review power.

It is nearly always possible to find something to criticise in the way in which another person arrives at or expresses their conclusion on a matter such as this. Our impression of Mr Devlin's evidence is that he attached too much significance to the number of cross-Channel trips that Mr and Mrs Chamberlain were making. He denied that he was assuming that the Chamberlains were smuggling tobacco because of the number of trips they had made. Indeed, in our view the review procedure should never involve such an assumption. We regard the number of trips as having no significance of its own. It is just another factor to be taken into account in considering the appellant's explanations and in arriving at the decision that flows from that. As is apparent from what we have noted in previous paragraphs, in particular in paragraphs 15 and 16, and taking everything into account, we think that there was more than enough material in this case to support Mr Devlin's conclusion. This appeal is therefore dismissed.

MALCOLM GAMMIE QC

CHAIRMAN

RELEASED:

LON/02/8237