United Kingdom VAT & Duties Tribunals (Excise) Decisions

You are here: BAILII >> Databases >> United Kingdom VAT & Duties Tribunals Decisions >> United Kingdom VAT & Duties Tribunals (Excise) Decisions >> Callaghan v Customs & Excise [2003] UKVAT(Excise) E00497 (29 August 2003)
URL: http://www.bailii.org/uk/cases/UKVAT/Excise/2003/E00497.html
Cite as: [2003] UKVAT(Excise) E497, [2003] UKVAT(Excise) E00497

[New search] [Printable RTF version] [Help]

Callaghan v Customs & Excise [2003] UKVAT(Excise) E00497 (29 August 2003)

EXCISE DUTY —non restoration of car used by appellant's husband to import tobacco goods claimed by husband and co-traveller as being for own use — car on hire-purchase — on change of Customs policy car restored to HP company —company sold car —whether Customs decision not to restore reasonable — appeal allowed

MANCHESTER TRIBUNAL CENTRE

MRS SHEILA MARIA CALLAGHAN Appellant

- and -

THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents

Tribunal: Mr J D Demack (Chairman)

Mrs G Pratt

Sitting in public in Manchester on the 19 August 2003

Mr L Loft, solicitor, for Mrs Callaghan

Miss K Huyton of counsel instructed by the Solicitor for the Customs and Excise for the Respondents

DECISION

This is an appeal by Mrs Sheila Maria Callaghan against a deemed decision on review whereby the Commissioners refused to restore to her a Rover 75 car reg no W447 NEN. The car had been seized on 23 June 2001 when being driven by her husband, John Callaghan, as having been used to carry excise goods liable to duty without it having been paid.

Following seizure, Mrs Callaghan sought restoration of the car. On 3 August 2001 the Commissioners by letter refused to restore saying that, when stopped on 23 June 2001 on returning to the UK from the continent Mr Callaghan and his travelling companion had been found to be in possession of 42 kilos of hand rolling tobacco and 10,000 cigarettes; and as they had failed to satisfy Customs that their tobacco products had not been imported for a commercial purpose, they and the car had been seized. The letter explained the Commissioners policy as one of restoring seized goods and vehicles only in exceptional circumstances, of which there were none in this case. Consequently, her car would not be restored. Mrs Callaghan did ask for the decision to be reviewed but the review was not carried out within the 45 day period provided by the Finance Act 1994. Consequently, the letter of 3 August 2001 became the deemed decision on review.

Mrs Callaghan then appealed against the deemed decision and her appeal took the ordinary course, except that it was delayed by the cases of Lindsay v CEC [2002] 1 WLR 1766 and R (Hoverspeed Ltd and others) v CEC [2002] EWCA 1804. But as recently as 9 July 2003 one of the Commissioners' review officers, Mr G A Murray, wrote to Mrs Callaghan saying that "the Commissioners . . . recently applied [to the tribunal] for a direction that your case be subject to a further review . . . , and . . . the application was allowed." So far as we can ascertain, the Commissioners made no such application, so that it could not have been allowed. Nevertheless, Mr Murray carried out a further review – albeit one of no legal effect – in which, in relation to the restoration of Mrs Callaghan's car, he said this:

"(i) In a letter dated 28^th June 2001 Mr Callaghan advised that the vehicle was subject to a hire purchase agreement. Mrs Callaghan advised in her letter dated 17 July 2001 that she was the legal owner of the vehicle and she financed the purchase from her salary as a teacher. In addition, the vehicle registration document shows Mrs Callaghan as the registered keeper.

I write to advise that the Rover vehicle was returned to the finance company in January 2002 and I need to make some comments on this. The position is that Customs are obliged to consider restoration of a vehicle to any affected party, that is, any party which has an interest in or title to the vehicle. The vehicle was subject to a hire purchase agreement, clearly the finance company had an interest in the vehicle and it was incumbent upon Customs to consider restoration to them at their request. After due consideration Customs restored the vehicle to the finance company and it was entirely a matter for them to consider whether they wished to return the vehicle to Mrs Callaghan and continue with the finance agreement with her.

(ii) On the basis that the vehicle was restored to the finance company the issue of restoration of the vehicle to Mrs Callaghan no longer has any practical relevance."

As we were aware that the Commissioners had previously had a policy of restoring cars on hire purchase to finance companies conditionally on them agreeing not to return the cars to hirers, Mr Murray's decision as to restoration indicated a considerable change in policy. Having confirmed that the Commissioners had indeed changed their policy, and had restored Mrs Callaghan's car to her finance company, we enquired whether the company had seen fit to restore the car to her. On reflection, we were perhaps premature in so asking for the car would appear to have been restored prior to the Commissioners' change in policy, so that it was probably restored conditionally on it not being returned to Mrs Callaghan. We were shown a letter from the company, M G R Capital, dated 16 August 2002, i.e. considerably before Mr Murray's letter, in which in refusing to restore the car to her, it said:

"Under the terms of the agreement your client signed to state that she would not allow the vehicle to be seized by any of her creditors or allow any person to claim rights over the vehicle. By handing the vehicle over to HM Customs and Excise your client is in breach of the terms and conditions of the contract and the vehicle was treated as abandoned and thus recovered accordingly."

MGR Capital then went on to sell Mrs Callaghan's car, and she continued to pay the hire purchase instalments until her agreement expired.

Against the background of the Commissioners' change in policy, which we were told resulted from advice from counsel indicating that the previous policy could have been open to criticism, and that the new one was that which should always have been applied, we took the view that the deemed decision of 3 August 2001 could only be considered unreasonable so that Mrs Callaghan's appeal must be allowed. Having taken instructions, Miss Huyton, counsel for the Commissioners, agreed. We therefore allow the appeal by consent.

Mr Loft, the solicitor for Mrs Callaghan, nevertheless maintained that we should take oral evidence from Mr and Mrs Callaghan so that our findings of fact might be before the new reviewing officer. We agreed to do so. On the basis of that evidence, we find the following facts to have been established.

In June 2001 Mr and Mrs Callaghan were considering going to France by car. They had not been before. Mr Callaghan mentioned the idea to his friend Mr Hardy. Mr Hardy suggested that he and Mr Callaghan make an exploratory trip taking advantage of a special day return fare of £12 being offered by the Daily Mirror. Initially they planned to travel in Mr Hardy's car, but later changed their plans and in fact travelled in the Rover 75 registered in Mrs Callaghan's name. Before the trip, Mr Callaghan mentioned his plans to his father and either directly or indirectly to his 9 brothers and sisters. As most of them were smokers, they asked him to obtain cigarettes for them.

Mrs Callaghan knew nothing about the change in travel plans. She went to stay with her daughter shortly before her husband set out, and only became aware that they had travelled in the Rover when he telephoned her with details en route to Dover to ensure that she would not worry about the absence of the car.

Mr Callaghan took over £2000 in cash with him. He and Mr Hardy travelled to France and Belgium on 23 June 2001. Whilst there Mr Callaghan bought 6 kilos (1 box) of tobacco and 10,000 cigarettes. Mr Hardy bought 36 kilos of tobacco. On their return the two were stopped by Customs officers at the Eastern Car Terminal, Dover. They disclosed what they had bought and, under the domestic legislation as it then stood, were required to satisfy Customs that the goods were not held or to be used for a commercial purpose. They claimed to have bought the goods with their own money, and said that they did not intend to sell them, knowing that it was illegal to do so. In so far as Mr Callaghan is concerned we find that he did buy his goods with his own money.

The Rover 75 was a family car, but as we mentioned earlier, was registered in Mrs Callaghan's name. The Callaghans bought the car for £14,200, obtaining £10,000 on hire purchase. The deposit was paid out of the couple's joint bank account. But Mrs Callaghan was the sole hirer under the hire purchase agreement. The car was bought new in April 2000 and, at the date it was seized, had travelled no more than 3000 miles. On the basis of an extract from Glass's Guide produced to us, had the mileage been 15,000 the trade value of the car would have been £11,625 when seized. We find that at the date of seizure the car was worth at least that figure.

The UK duty on the tobacco imported by Mr Callaghan, assuming it was for a commercial purpose, would have been £581, and, on the same basis, on the cigarettes, £1,383 – a total of £1,964. (Even taking account of the duty on Mr Hardy's 36 kilos of tobacco (£3,485) the total duty involved would only have been 5,449).

Having allowed the appeal, we direct:

1) that the Commissioners conduct a review of their decision to refuse to restore to Mrs Callaghan the Rover 75 reg no W447 NEN seized on 23 June 2001;

2) that the review be conducted by an officer not previously involved in the matter (such definition to include Mr Murray), shall take account of our findings of fact, and shall state clearly the facts on which the decision is based, the matters considered and the reasons which shall specifically include the question of proportionality;

3) that the review shall be completed by 30 September 2003 and if adverse shall give rise to a right of appeal;

4) that a copy of the review decision be served on the Manchester Tribunal Centre in addition to being served on Mrs Callaghan.

David Demack

Chairman

Release Date:

MAN/02/8036