United Kingdom VAT & Duties Tribunals (Excise) Decisions

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URL: http://www.bailii.org/uk/cases/UKVAT/Excise/2003/E00502.html
Cite as: [2003] UKVAT(Excise) E00502, [2003] UKVAT(Excise) E502

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Fraser v Customs & Excise [2003] UKVAT(Excise) E00502 (02 October 2003)

EXCISE DUTIES — seized goods and car — car offered for restoration on payment of sum equivalent to duty payable on goods — part only of goods to be sold at cost to traveller's daughter — whether payment demanded should reflect duty due only on those goods — whether payment demanded should reflect delay of 18 months between seizure and offer of restoration — yes — appeal allowed and further review directed.

MANCHESTER TRIBUNAL CENTRE

IAN FRASER Appellant

- and -

THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents

Tribunal: Colin Bishopp (Chairman)

Norman Phillips

Sitting in public in Manchester on 12 August 2003

Brian Leach, relative, for the Appellant

Mark Kellet of counsel instructed by the Solicitor for the Customs and Excise for the Respondents

© CROWN COPYRIGHT 2003


 


DECISION

1. This is an appeal by Ian Fraser against the Commissioners' decision regarding the terms upon which his motor car , seized from him on 23 July 2001 at the UK Control Zone of the Channel Tunnel at Coquelles, was offered for restoration.
2. On that day, Mr Fraser arrived at the control zone accompanied by two passengers, his wife and son. They had with them 1 kilogram of hand rolling tobacco, 10,000 cigarettes and 126 litres of wine. Those goods were seized together with the car. Mr Fraser later sought restoration of his car and of the goods but restoration was refused. The decision not to restore was upheld on review, and Mr Fraser appealed to this tribunal. The outcome of that appeal was a direction by the tribunal that a further review be carried out, following the release of the decision of the Court of Appeal in the case of R (Hoverspeed Limited) v Customs and Excise Commissioners [2003] QB 1041. That review was carried out by David Leavesley, who gave evidence at the hearing before us. His decision is set out in a letter of 15 January 2003, and it is against that decision that this appeal has been brought.
3. The initial decision, as it stood when the first appeal was heard, was that neither the car nor the goods should be restored. Mr Leavesley, however, came to the conclusion that while the goods should not be restored the car should be offered for restoration on payment of a fee equivalent to the United Kingdom duty which the goods would have attracted, that is £1,665.70. Mr Fraser has paid that sum and has recovered his car but he protests that the fee should not have been levied at all, and that his goods should have been restored, because, in essence, the respondents' actions are disproportionate in the circumstances of the case; and no account has been taken of the additional expense and hardship to which he has been put by reason of being deprived of his vehicle for a prolonged period.
4. Mr Fraser did not give evidence and indeed did not even attend the hearing. Brian Leach, a relative who attended on his behalf, told us, however, that Mr Fraser lived with his wife and two adult children, all of whom were smokers. Mr Fraser was in employment, as were his children; his son was earning well but his daughter was in low paid employment. In June 2001 Mr and Mrs Fraser took a short break in Kent, and took the opportunity of making a day trip to France through the tunnel. They did not go with the intention of buying any excise goods, though they did buy a moderate amount at the terminal shops as they were returning. They realised then how much cheaper excise goods were on the continent and when they were back at home agreed with their children that they would make a further trip together for the express purpose of buying excise goods. The intention was that all four should travel but at the last minute their daughter was unable to do so.
5. As they arrived at the control zone on 23 July 2001 they were stopped by a Customs officer, Karen Clarke. She asked them a number of questions about their journey and its purpose. She asked how many cigarettes they had with them and the answer given, as Mr Leach conceded, was that they had 5,000; in fact they had 10,000. The cigarettes were of mixed brands, but the occupants of the car were able to explain which brand belonged to whom. Mr Fraser is recorded by Ms Clarke to have said that some of the cigarettes were for his daughter and that she would be paying for them. Mr Leach accepted that the comment had been made and that the daughter would indeed be paying for the cigarettes she consumed, although at no greater price than that at which they had been bought. He told us that Mr Fraser's statement that they had 5,000 cigarettes with them was no more than a guess – he had answered too hastily before adding up properly the purchases which he, his wife and son had made – and that there would obviously have been no point in seeking to mislead the officer since the cigarettes were in full view on the back seat of the car. It was, he said, by then clear that Ms Clarke intended to search the car. He also drew our attention to the fact that Mr Fraser had quite openly acknowledged that some of the goods were for his daughter, and that she would be paying for them; he said (as indeed Mr Fraser's correspondence with Customs reveals) that Mr Fraser was under the impression that he was entitled to bring in goods for his daughter on that basis.
6. In his letter setting out the outcome of his review, Mr Leavesley developed at some length the Commissioners' policy in cases of this kind, and the changes in that policy which had occurred over time, partly because of differences in Customs' perceptions and partly because of decisions of the courts. We heard evidence from Leslie Smith, a senior policy advisor of Customs and Excise, about the policy, the reasons for it and the changes. Mr Leach attacked the policy, upon the basis that it did not have proper ministerial approval and was not adequately publicised. Since his attack was based in large part on the decision of the Divisional Court in the Hoverspeed case, which was significantly modified when the appeal was pursued to the Court of Appeal, we intend to deal with his attack quite briefly. Whether or not the policy has ministerial approval is, for the purposes of this tribunal, an irrelevance; we can determine only whether or not the Commissioners' decision in this particular case is one at which they could reasonably have arrived. Despite what Mr Leach said, we have no doubt, from what we heard from Mr Smith and from the other material before us, that the Commissioners' policy was in fact well publicised. In any event, and irrespective of the Commissioners' policy, both European and British law provide that the reliefs available in respect of excise goods transported by travellers from one Member State to another attach only to goods transported for the traveller's own use and any want of publicity of the law cannot assist Mr Fraser.
7. Mr Leavesley's reasoning, as it is set out in his letter and as he explained it to us, depended primarily upon his conclusion that this was not wholly a transportation of goods for the traveller's own use, since some were to be paid for by the non-travelling daughter, but that there was no intention to make any profit – in other words, he concluded that Mr Fraser's daughter would pay for some of the goods at cost. He accepted therefore that this was an importation similar to that described by the Court of Appeal in Lindsay v Customs and Excise Commissioners [2002] STC 588 and that he must take into account the question of proportionality - that is he must ensure that the Commissioners' actions were proportionate to the mischief. While he accepted that the importation was not being made for profit motives, and moreover that it had been readily acknowledged that Mr Fraser's daughter would pay for some of the goods, he was uneasy about the attempted concealment, as he saw it, of the true quantity of cigarettes which were in the car. It is conspicuous that these goods were not bought, as is often the case, from an outlet in Belgium, but from the shop at the terminal at Coquelles. While that factor supports the conclusion that this was a simple family outing, we can understand Mr Leavesley's surprise that Mr Fraser was unable to say how many cigarettes he, his wife and son had bought only a few minutes before Ms Clarke asked them the question. He regarded the incorrect answer as an attempt to conceal, and also took the view that, once Mr Fraser had been caught out in that attempt, he had recognised that it was futile to dissemble further and it was for that reason that he had been open about his daughter's being expected to reimburse the cost of the cigarettes she consumed.
8. The Commissioners' policy at the time he made his decision was that in cases such as this, and in the absence of exceptional circumstances, the goods should not be restored but the vehicle should be offered for restoration on the payment of a sum equivalent to the United Kingdom duty on the entire consignment, and not merely that proportion of the goods for which later reimbursement was expected. He saw no exceptional circumstances in this case, and it was upon that basis that his offer to Mr Fraser was made.
9. Mark Kellett of counsel, who appeared for Customs, argued that Mr Leavesley's decision represented a proportionate response. He emphasised the attempt to conceal the true quantity of cigarettes, as he described it, and went further by suggesting that the statement that Mr Fraser's daughter was to pay for some of the cigarettes might itself be an attempt to conceal his true purpose for bringing in the goods. We reject that contention, however; it is not supported by any evidence, nor did the possibility form any part of Mr Leavesley's thought process.
10. Mr Leach told us that, had Customs forfeited the goods and offered the vehicle for restoration for a fee of £1,665.70 in July 2001, Mr Fraser would have accepted that decision, albeit reluctantly. The position when Mr Leaveseley made his offer however, was significantly different. A period of 18 months had gone by, during which period Mr Fraser had not only had to continue paying for the vehicle which had been seized, which was the subject of a hire purchase agreement, but also to incur the cost of obtaining a replacement car. Thus the penalty he had suffered was far greater than the excise value of the goods (which he had lost in addition) but no account had been taken of that factor; thus the response must be disproportionate since the overall cost to Mr Fraser far exceeded the penalty for which the Commissioners' policy, assuming it was a valid policy, provided.
11. He relied too upon the decision of the President of this tribunal in Rainbow v Commissioners of Customs and Excise (2003 Decision E 00838). There, Mr Rainbow entered the country with quantities of excise goods substantially greater than those with which we are concerned which, as the tribunal accepted, he was to share with his travelling companion but upon the basis that the travelling companion, who had not so far contributed more than a trivial amount to the cost of the goods, would pay for them as and when he consumed them. While expressing the view that it could not be disproportionate to forfeit the entirety of the goods – a conclusion with which we agree, and which is consistent with the conclusion of the Court of Appeal in Lindsay – the tribunal went on to say that the decision to restore the car on payment of a sum equivalent to the duty on the entirety of the goods was disproportionate and that the restoration fee should be reduced by one half, that is to reflect the fact that only half of the goods were to be sold to the travelling companion. The question of the hardship which was occasioned to Mr Rainbow by reason of his being deprived of his car for a period of about a year was not an issue in that case.
12. There are other differences between the two cases. First, in Rainbow, the person intending to buy the goods from the appellant was his travelling companion. Here the intended purchaser was not a traveller but was a close relative. The tribunal concluded in Rainbow that it was a commercial, even if not for profit, importation; but the circumstances of the case were unusual and in our view it is significant that there, but not here, the person for whose benefit the goods had been bought was himself a traveller. Secondly, in Rainbow there was no suggestion that any attempt had been made to conceal the true quantity of goods within the vehicle. The tribunal described the quantity of goods found in Mr Rainbow's possession as "not large"; the goods here were of a lesser quantity although the revenue values of the two consignments, because of the different make-up of the goods, were almost identical.
13. Mr Rainbow's case was heard on 16 January 2003 and its outcome could therefore not possibly be known to Mr Leavesley when he made his decision, which is set out in a letter dated 15 January 2003. He obviously cannot be criticized for not taking into account the considerations with which the tribunal dealt in that case. Nevertheless we, looking at the matter now, must do so. The jurisdiction of the tribunal in cases of this kind is granted by section 16 of the Finance Act 1994. By subsection (4) we can allow the appeal only if we are satisfied that Mr Leavesley "could not reasonably have arrived at" his decision. It is not sufficient that we would, if left to ourselves, have come to a different conclusion; we must be persuaded that Mr Leavesley's decision is unreasonable because he has taken into account the irrelevant, has left out of account the relevant, or has misdirected himself in law and, in particular in the context of this case, has failed to take into account, adequately or at all, the question of proportionality.
14. In deliberating on that issue, we disregard the incorrect reply about the quantity of cigarettes. That factor is significant when one comes to consider whether or not this was a commercial importation but once that conclusion has been reached, its force is, in our view, spent. Indeed, despite his misgivings about that reply, Mr Leavesley was satisfied that only some of the goods were to be purchased by Mr Fraser's daughter and that the remainder would be consumed by the three travellers. In that we think he was correct; though it is certainly unfortunate that Mr Fraser did not give evidence before us, we accept that the available material does point to that conclusion, and there is nothing to suggest otherwise.
15. Rainbow suggests that the sum required for restoration of a vehicle used to transport goods should be equivalent to the excise value of the goods which it is intended to sell on but as we have mentioned, that was the conclusion in a case in which the intending purchaser was himself a traveller. We have no precise information in this case about the quantity of goods which Mr Fraser's daughter would be likely to have purchased; indeed, Mr Leach was somewhat evasive on the point, though we accept that he may not himself have known. If, for the sake of argument, one assumes that she would consume one quarter of the total, the proper restoration fee would be in the order of £420 if this case were to be regarded as identical to Rainbow. We do not, however, consider that it is, and it cannot be said, in our view, that a decision is unreasonable because it does not reflect the unusual features of that case, when it is made in context of another case which does not share those features.
16. We are, however, attracted by Mr Leach's argument that account should be taken of the period of time which elapsed between seizure of the vehicle and its being offered for restoration. It has to be remembered that the decisions of the Court of Appeal in Lindsay and Hoverspeed did not have the effect of changing the law, but instead revealed that the United Kingdom's implementation of European law, and Customs' interpretation of the law, were incorrect. Had the law been properly implemented and interpreted in the United Kingdom in July 2001, the Commissioners' policy would have been as it was when Mr Leavesley made his decision in January 2003, and Mr Fraser would have been offered restoration of his car for a fee soon after it had been seized, or, indeed, immediately. In our view the additional expense to which Mr Fraser has been put is a material factor, and one which Mr Leavesley ought to have taken into account when he came to review the matter. He did not do so. Had he taken it into account we strongly suspect he would have concluded that Mr Fraser's car should be restored to him, without the payment of a restoration fee. We are not persuaded that it was unreasonable of the Commissioners not to have offered him compensation in addition; that, we think, would be going too far. As we have indicated, there is no material before us which indicates that the refusal to restore the goods is disproportionate, or in any other way unreasonable; on the contrary, it is in line with both Lindsay and Rainbow.
17. Accordingly we allow the appeal and direct that the Commissioners' decision should be reviewed again. In the circumstances of this case, as he has heard such evidence as was given and the representations which were made at the hearing, we think it appropriate that the further review should be carried out by Mr Leavesley. He is to take into account this tribunal's view that the expense that Mr Fraser has incurred by reason of being deprived of his vehicle for about 18 months is a material factor bearing on proportionality. The review is to be concluded within six weeks of the release of this decision, and is to be communicated in writing to Mr Fraser, with a copy sent to the tribunal.
18. There will be no direction in respect of costs.

COLIN BISHOPP

CHAIRMAN

Release Date: