United Kingdom VAT & Duties Tribunals (Excise) Decisions

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Cite as: [2003] UKVAT(Excise) E496, [2003] UKVAT(Excise) E00496

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Pratt v Customs & Excise [2003] UKVAT(Excise) E00496 (15 September 2003)

EXCISE DUTIES – appellant seeking restoration of cigarettes and tobacco seized at Manchester Airport on his return from Spain – goods found not to have been held for own use because they were financed by members of the appellant's family not traveling with him – review decision of Customs held to be reasonable – appeal dismissed

MANCHESTER TRIBUNAL CENTRE

PATRICK JOSEPH PRATT Appellant

- and -

THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents

Tribunal: Mr M S Johnson (Chairman)

Mrs M Crompton

Sitting in public in Manchester on the 24th July 2003

The Appellant appeared in person

Mr D Mohyuddin, counsel instructed by the Solicitor for the Customs and Excise, for the Respondents

DECISION

This is an appeal under section 16 of the Finance Act 1994 against a review by the Commissioners of Customs and Excise ("Customs") upholding a decision not to restore certain excise goods ("the goods") seized from the appellant. The goods were the following:

8,400 Super Kings cigarettes

200 Fortuna cigarettes

200 g of St Bruno pipe tobacco.

The goods were seized at Manchester Airport on the appellant's return to the UK from Spain on 22 December 2001. He had been on holiday in that country.

The goods were seized because Customs formed the view that they were held for a commercial purpose. The appellant's case is that they were for his own use. In his notice of appeal the grounds of appeal are stated as follows:

"I wish to appeal on the following grounds, that my reasons for having the items were for family Christmas presents, and I do not feel that I have gone against rules. My intentions were genuine. I cannot afford to lose that kind of money. My children had clubbed together to pay for my holiday for my birthday and I wanted to return the favour to say thank you".

At the hearing the appellant represented himself. He was the only witness to give oral evidence to the tribunal. However the tribunal had the benefit of an unchallenged witness statement dated 26 February 2003 from the reviewing officer of Customs, Miss Julie Marie Logan. We were also assisted by a bundle of relevant documents made available to us by counsel for Customs, Mr Mohyuddin.

We find the facts of this case to be as follows.

The appellant went to Spain on holiday with £800 spending money. Most of that was provided by his large family. The appellant has 10 children. He spent about £600 on cigarettes and tobacco in Spain. He intended to give away about half the goods as presents and keep the rest for himself. The appellant is said to smoke of the order of 40 to 50 cigarettes per day.

The appellant had purchased excise goods on the continent on three previous occasions. This appears from the facts found in Tribunal Decision No E00408 (released 6 May 2003) in which the appellant unsuccessfully appealed against a review decision upholding a decision not to restore excise goods seized from him on 17 February 1999. It was put to the appellant and confirmed by him in cross-examination in the present case that he had previously been to the continent and brought back excise goods to the UK as follows:

Date Excise goods

November 1998 40 pouches tobacco +

alcohol

February 1999 13.25 kg hand-rolling

tobacco + cigarettes

and spirits

August 2000 10 kg tobacco

4,200 cigarettes

720 l beer.

It appears from the earlier tribunal decision mentioned that there are inconsistencies between what the tribunal then found and what the appellant informed Customs in interview in the present case. These included the following:

• That he was transporting 2,000 cigarettes, not 4,200, on the occasion in August 2000. The appellant's explanation of this is that only half the cigarettes were his.

• That he had been unemployed for a couple of years, whereas at the previous hearing it was found that he had indicated to Customs that he had been out of work for six months as at February 1999.

The appellant's case at the previous hearing was similar to that put forward in the present case, namely that half of his purchase of excise goods was to be shared amongst his family, and that the family looked after one another. His children often went abroad and bought him cigarettes and he did the same thing when he went abroad.

On the earlier occasion, the tribunal concluded that the quantity of excise goods brought back was substantially greater than could possibly have been for the appellant's own use.

Of the money taken to Spain by the appellant on the occasion with which the present tribunal is concerned, £700 is said to have been a birthday present to the appellant from his family, given to him "to cheer him up and to have a holiday". The appellant, who lives alone, is in receipt of invalidity benefit of about £90 per week, and has his council rent paid for him. He has outgoings of £3 per week in respect of water, and £6 per week in respect of electricity.

The appellant has no other stated source of income.

The information before the tribunal is unspecific as to the precise reasons why the goods were seized, apart from the general conclusion that the goods were thought to be held for a commercial purpose.

By a form returned to Customs dated 9 February 2002, the appellant sought the restoration of the goods. This was refused by a decision letter dated 12 February 2002. The appellant then sought an independent review of that decision by a letter to Customs dated 27 March 2002. The formal review letter, notifying the outcome of the review, is dated 25 June 2002. That letter is therefore out of time, having regard to section 15(2) of the Finance Act 1994, and Customs are to be assumed to have confirmed the earlier decision not to restore.

We have nevertheless looked at the review letter, and at Miss Logan's witness statement, which explains it. The crux of the review letter is contained on the penultimate page, where it is stated:

"You have not submitted any evidence to support your claim, in particular, relating to the money used to fund these goods and your birthday gift from your family. Based on your income, you alone would not have been able to fund this trip and the goods".

This appears to have prompted a letter dated 19 January 2003 written to Miss Logan by Mrs Joanne Pratt, daughter-in-law of the appellant, in which she states that all the appellant's children put in money to send him on holiday, as he needed one, and that generous gifts from them of that kind were not out of the ordinary. Mrs Pratt did not give evidence to the tribunal, but we are content to accept the contents of her letter at face value.

Miss Logan deals with Mrs Pratt's letter in her witness statement. Miss Logan points out that the appellant stated in interview, as was the case, that the gift of the £700 was not normal, whereas Mrs Pratt's letter gives the opposite impression. It remained the case, Miss Logan says, that the appellant's income was inconsistent with that kind of expenditure, and that he had had previous brushes with Customs.

On behalf of Customs, Mr Mohyuddin submitted that the origin of the money spent on the goods was all-important. Was there a proper, acceptable explanation of the derivation of that money? He submitted that there was not. The appellant was a man of straitened financial circumstances. It was not unreasonable on the part of Customs to consider that expenditure of some £600 on the goods, not derived from the appellant's own resources, indicated that the goods were not for the appellant's own use.

The appellant, for his part, submitted that the money was his, having been given to him. What he chose to do with it was up to him. He chose to give part of it back in the form of cigarettes and tobacco. The goods were for his own use, because he would be taking no money for the gifts, and would keep the rest of the goods for himself.

We can see the logic of the appellant's case, but in our opinion his case is artificial and unacceptable. The definition of "own use" in article 2(1) of the former Excise Duties (Personal Reliefs) Order 1992 SI 1992/3155 ("the Order"), on which Customs rely ^[1], was as follows:

" 'own use' includes use as a personal gift provided that if the person making the gift receives in consequence any money or money's worth … his use shall not be regarded as own use for the purpose of this Order".

It follows from this that "own use" would similarly not include the situation where, having made a gift of money to the traveller, the donor of the money nevertheless expects that in consequence the traveller will in turn make a gift to him or her of excise goods bought using the money. The purport of the Order is that the recipient of the goods, not being the traveller, shall not have financed the goods, either directly or indirectly.

So we ask ourselves the question, on what would the appellant be spending the £700 given to him? The only tenable answer to that, on the evidence before the tribunal, is on excise goods. In our view, on a balance of probabilities, it must have been apparent to both the appellant and his family from the outset, i.e. from the gift of the £700 onwards, that he would be bringing back excise goods accounting for the majority of that money; further, that the family would be receiving part of the goods.

We therefore hold that the appellant's case is fatally flawed. His was manifestly not an importation for own use. In effect, he had been armed with the wherewithal to purchase excise goods for his family, which of course included himself. Seeing that it is reasonable for Customs to be unclear to what extent he would be smoking the goods, as distinct from members of his family who had paid for them, it was a reasonable stance for Miss Logan to adopt that it appeared as though the appellant had simply been financed by his family to buy the goods, so that the importation would not be for his own use.

We agree with Miss Logan that this analysis is not affected by the contents of Mrs Pratt's letter.

For the above reasons we reject the appellant's case and we dismiss this appeal.

M S Johnson

Chairman

Release Date:

MAN/03/8028

Note 1 The Order was revoked as defective in law following the decision of the Divisional Court of the Queen’s Bench Division in R (on the application of Hoverspeed Ltd and others) v C & E Comrs [2002] 4 All E R 912, on appeal at [2003] 2 All E R 555, but the definition of “own use” in the Order was expressly approved by the Divisional Court as in accordance with article 8 of Council Directive (EEC) 92/12 (known as the “Excise Directive”): see [2002] 4 All E R 912 at 941, paras [104], [105]. [Back]