United Kingdom VAT & Duties Tribunals (Excise) Decisions

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URL: http://www.bailii.org/uk/cases/UKVAT/Excise/2003/E00510.html
Cite as: [2003] UKVAT(Excise) E510, [2003] UKVAT(Excise) E00510

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St George v Customs & Excise [2003] UKVAT(Excise) E00510 (15 October 2003)

EXCISE – Restoration refusal – Vehicle and goods – 11kg tobacco and 2400 cigarettes – Whether gift after benefit is "money or money's worth" in consequence – Excise Duties (Personal Reliefs) Order 1992, art 2 – Appellant's evidence not accepted – appeal dismissed

LONDON TRIBUNAL CENTRE

WILLIAM ST GEORGE Appellant

- and -

THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents

Tribunal: THEODORE WALLACE (Chairman)

MRS E M MacLEOD JP CIPM

Sitting in public in London on 18 September 2003

Mr Adam Pearson, counsel, instructed by Cooke & Sons, for the Appellant

Mr Julian Gregory, counsel, instructed by the Solicitor for the Customs and Excise, for the Respondents

© CROWN COPYRIGHT 2003


 


DECISION

1. This was an appeal against a review decision confirming the refusal to restore the Appellant's BMW 528i together with tobacco, cigarettes and alcohol which were seized at Coquelles on 23 April 2001.
2. The review was dated 30 January 2003 and was made following a direction by the Tribunal on 13 January 2003 on a directions hearing following the failure by the Commissioners to comply with an earlier direction released on 8 August 2002 on appeal LON/2001/8151; the earlier appeal was against a deemed confirmation of the initial non-restoration decision by reason of the failure to carry out the statutory review within the 45 day period.
3. The goods seized consisted of 11kg of hand-rolling tobacco being a 6kg box of Golden Virginia and a 5kg box of Old Holborn, 1600 Superkings and 800 Benson and Hedges cigarettes, 100 cigarettes, 3 litres of spirits, 22 bottles of wine and 72 litres of beer.
4. In his Review decision Mr Brenton concluded that "at the very least the tobacco was destined for commercial disposal for profit". The duty evaded was £1,391 and the retail cost in the UK £2,350.
5. The Appellant and the Reviewing officer, Mr Raymond Brenton, gave evidence and were cross-examined. A statement by Kenneth Fletcher, who intercepted and interviewed the Appellant and seized the vehicle and goods, was agreed.
6. The Commissioners put in evidence a bundle of documents and correspondence. This included notes by another officer of an interview with the Appellant's wife. No statement was served by that officer and the officer was not called. That interview should not have been included in the Statement of Case if no direct evidence was to be adduced. Although we cannot refuse the evidence merely because it would not be admissible in a court of law, we attach no weight to it.
7. Mr Fletcher intercepted the Appellant's vehicle at 11.00am on 23 April 2001 and spoke to the Appellant and his wife. The Appellant said that they had been to Veurne to pick up some portfolios and do some shopping buying two boxes of tobacco and about 2000 cigarettes. He showed the officer the goods listed above.
8. Mr Fletcher then requested Mr and Mrs St George to stay and answer further questions and read the old commerciality statement to the Appellant requiring him to satisfy Customs that the goods were not imported for a commercial purpose.
9. The Appellant said that he had paid £880 for the goods and that they belonged to him. Mr Fletcher noted that the Appellant said,

"Some of my relatives will assist me with the finance of the tobacco at cost price. I will also give some cigarettes away as presents and to give away to people who assist me such as a man who helped me with my garden a short time ago."

He said that he was going to drink the alcohol and give the Superkings to a friend of his wife for whom she did Age Concern. He smoked about 10 cigarettes a week himself.

10. The Appellant told Mr Fletcher that he had travelled about eight times that year but used to go to Belgium more; he bought alcohol and cigarettes each time but not tobacco. He said that he did not know the indicative levels for tobacco.
11. He said that he was not interested in cigarettes and tobacco although he bought some to give away as Christmas presents and birthday gifts. He said that he did not really know that excise goods were liable to duty. Asked why the goods were more expensive in the UK, he replied, "I don't know and probably you don't either." Asked whether he knew it was an offence to sell imported excise goods, he replied, "No I did not, but it is OK to sell at cost price to friends and family."
12. He said that he had last travelled abroad to Bruges just before Easter when he bought alcohol and 800 or 1000 cigarettes each for himself and his wife who travelled with him. He said that there were 1200 cigarettes in his garage; asked why he said that figure, he said, "I don't know".
13. Mr Fletcher told him that he was not satisfied that the goods were for the Appellant's own consumption, noting the following reasons:

"1. Favours + Gifts and payment at cost price.

Consumption rate.

Excess of mils

Previous opportunity to purchase."

14. The officer issued a copy of the seizure information (C 156). The Appellant then initialled the note. There was no note of the Appellant being asked whether he wished to add anything further.
15. The officer made a further small addition to the note and signed it at 1.30pm.
16. The Appellant told us that he was a self-employed training consultant advising companies in the engineering sector. For about two years before the interception he had been advising a company in Luton in respect of Ford plants in Germany and Belgium because they had introduced National Vocational Qualifications for maintenance staff working abroad.
17. He visited the continent at least twice monthly, sometimes weekly during the contract. Sometimes he went by air, sometimes by Eurostar to Brussels and sometimes he went by car. When he went by car he invariably bought some alcohol and around Christmas brought cigarettes and tobacco back, mainly as gifts. His wife was involved in Help the Aged and always brought some cigarettes for a little old lady. At Christmas 2000 he bought a box of tobacco for Christmas presents.
18. On the day of the seizure he was returning from Veurne, 30 miles into Belgium, where he had swapped over portfolios relating to NVQ training. On the way back his wife had done some shopping, buying shoes, a jumper, a sweater, a large flower pot and some fish. After that they bought tobacco, cigarettes and cigars at Adinkerke and beer and wine in Calais.
19. He said that the alcohol was for home consumption, the rest was for presents apart from a few cigarettes for himself. Lots of people helped him on the shop floor and gifts of cigarettes worked wonders "oiling the wheels."
20. The Golden Virginia tobacco was for his sister who was going to pay him what he had paid; she had pestered and pestered him.
21. The other box was for a friend, Tristan, who had taken down three leylandii firs in his garden and put down the base of his patio but would not accept a penny for it although the Appellant had offered to pay; that was in the autumn. Tristan did not know about it to this day.
22. The Golden Virginia box had been visible on the back seat of the car.
23. He had crossed over leaving Dover at 6.00am arriving by tunnel at 8.00am local time. He was returning at about lunch time.
24. Cross-examined, he said that a letter from his solicitors dated 21 June 2001 was correct in stating that he had been stopped just before Christmas and allowed to keep 6 kg of tobacco for Christmas presents. He said that the officer had said, "I don't blame you" and had not asked his name or taken down the vehicle number. He had not mentioned this when stopped in April because it was a nervy situation and he remembered about the earlier occasion when he got home. He said, "My brain was a bit fuzzy in the situation – it was not the friendliest of people." The officer in 2000 was very friendly. He said that they were given two plastic bags for the other goods and the flower pot took one.
25. He said that he did not know he was breaking the law in selling to his sister. He had given gifts to his son, daughter-in-law and nephew; a box of fags was "just the job". At Christmas his sister would have had some and also people with whom he worked in Wales. In April it was the first time he was going to sell to his sister at cost.
26. The Appellant said that he had been stopped about 50 per cent of the times he went by car. He was aware that there was then a guideline of 800 for cigarettes.
27. He said that the 5kg box was for Tristan Coles who would not take any payment. He had not used tobacco in that way in the past. Tristan had done the work in autumn 2000 by the had not thought of giving him tobacco at Christmas. It was a different type of tobacco.
28. He said that in May or June 2001 three officers from Reading visited his house to see if he was conducting a business selling excise goods from his home; two came in and an officer said that he was completely satisfied that he was not doing so.
29. He said that he had read the reviews and did not remember anything striking him as wrong but that he should have read Miss Hepburn's review more closely : the tobacco was not payment for work done. He had not used it before for work done.
30. The Appellant said that his car was four years old, being top of the range and produced a valuation at June 2001 of £12,500.
31. Mr Brenton told the Tribunal that he did not regard it as credible that the Appellant was waved through in December 2000 with a 6kg box of tobacco. He had been an anti-smuggling officer all his career. Customs' practice was always to issue Notice 1 and record the interception. It was clear policy to stop travellers with 6kg. The guideline then was 1kg of tobacco.
32. He told Mr Pearson that the items raising his suspicious were the boxes of tobacco both because of the quantity and the answers in the interview. He accepted that there was no indication that the alcohol was for commercial use or that the cigarillos were; he was not 100 per cent satisfied that all cigarettes were for own use or gifts. Supplying at cost to friends or family was commercial but he would have considered proportionality in respect of the vehicle. He said that he saw any goods given in respect of work done as being a commercial transaction even if payment had been refused earlier. He had felt that he did not need to consider the gardener's explanation because he considered that it involved a sale for profit in his view. He did not consider proportionality because of his view of commerciality.
33. He said that it was always possible that an officer did not record the stop in December 2000. He said that he always recorded the material when he stopped a vehicle and there was no reason why another officer would not have done so.
34. He told the Tribunal that he had identified some earlier trips by the Appellant in commercial records but none where there was any record of being stopped. He could not believe that the Appellant had been stopped 50 per cent of the time when he travelled by car without there being any record.
35. Mr Gregory for the Commissioners submitted that the Tribunal should rely on the transcript of Mrs George's interview as if it were a witness statement saying that she had initialled it.
36. He submitted that since part of the goods were for family at cost the vehicle was liable to forfeiture under section 141(1)(a) of the Customs and Excise Management Act 1979 and the goods were all liable to seizure. The seizure had not been challenged and the goods and vehicle were deemed to have been duly condemned as forfeiture.
37. He said that excise goods seized were only restored in exceptional cases. Lindsay v Customs and Excise Commissioners [2002] 1 WLR 1766 did not concern excise goods usually meet any question of proportionality. He submitted that non-restoration of the goods was proportionate even if the Appellant's evidence was accepted because he was a frequent traveller who should have discovered the law and the quantity of tobacco was eleven times the guidelines.
38. He submitted that the Appellant's evidence as to the tobacco and cigarettes being in return for favours this was commercial : the tobacco for Mr Coles was in return for work down. The gift of cigarettes in exchange for favours was also commercial : the Appellant was treating tobacco as a form of currency. He accepted that genuine presents to people who had helped him would not be for commercial profit.
39. Mr Gregory invited the Tribunal to reject the Appellant's evidence as to goods being for help in the garden and other help. He said that the burden of proof as to proportionality was on the Appellant, although that as to a commercial purpose was on Customs.
40. We observe here that Mr Gregory had not in fact directly challenged the Appellant's evidence, however Mr Pearson when asked did not request that the Appellant be recalled to be formally cross-examined as to the truth of his evidence. We accept that the implication of the cross-examination was that the Appellant's evidence as to the December 2000 importation and as to the use intended for the tobacco was that it was untrue.
41. Mr Gregory submitted that the Appellant had made up the story of purchasing for his sister for repayment at cost, the stop in December 2000 and the tobacco being a gift for help in the garden. He said that the 6kg which the Appellant said he bought in December 2000 added to the 11kg seized indicated that he was a commercial smuggler. He also pointed to a letter received on 2 May 2001 from the Appellant shortly after the seizure when he wrote, "I had purchased some for my family, some for gifts and the rest to use as payment for various refurbishments recently done in my home."
42. Mr Pearson for the Appellant submitted that beyond the admitted purchase for his sister at cost it was for the Commissioners to prove a commercial intention.
43. He said that Mrs St George's interview should be treated with great caution. No witness statement had been served to which the Appellant could object. He pointed out that neither Mr nor Mrs St George had been asked whether they wished to add anything to the interview notes before signing them. Mrs St George was questioned separately and the Appellant could not comment on the accuracy of the note.
44. As to the December 2000 stopping the Appellant had been adamant. Since his name had not been asked it was not surprising that there was no record.
45. He said that his evidence that part was for his sister was plausible. It preceded Lindsay and was a bad excuse if he was going to lie. There was no legal obligation to pay Mr Tristan Coles who had refused payment : the tobacco for him was a gift and not commercial. He submitted that o the basis of Lindsay the decision infringed the principle of proportionality at least as regards the vehicle the value of which was £12,500 compared with duty of only £1,400.

Conclusion

46. This as not an easy case since the interview was carried out on the basis of the burden of proof under article 5(3B) of the Excise Duties (Personal Reliefs) Order 1992 declared incompatible in R (Hoverspeed Ltd) v Customs and Excise Commissioners [2002] 3 WLR 1219. So that questions which might have been followed up were not. Furthermore it was carried out before the decision of the Court of Appeal in Lindsay as to proportionality.
47. If we accepted the Appellant's evidence that the purchases which were not for personal consumption but were for his sister at cost and for gifts to people who had helped him, the decision to refuse restoration of the car would be disproportionate and the decision as regards the goods would need careful analysis. On his evidence the tobacco would have been gratuitous transfers made after any benefit and in relation to the gifts the Appellant would not have been a person who "receives in consequence any money or money's worth" within article 2 of the Excise Duties (Personal Reliefs) Order 1992. It would be quite different if there had been agreements and possibly even understandings.
48. In the event after careful consideration we have concluded on the balance of probabilities that we do not accept the Appellant's evidence.
49. The wording of the Appellant's letter of 2 May 2001 "some for gifts and the rest to use as payment for various refurbishments" is wholly inappropriate if the tobacco was to be a gift for work for which payment had been refused. The Appellant was clearly not unintelligent : he would not have been a training consultant if he was. In the passage just referred to, he contrasted gifts with payment. If the work had been done for no payment whatsoever, we would have expected some evidence from Mr Coles to that effect. A further difficulty with the explanation by the Appellant is the fact that he did not give the tobacco at Christmas four months earlier although he imported tobacco then.
50. The Appellant's evidence that 6kg of tobacco was for his sister at cost was also uncorroborated. It would have been simple to produce evidence from her, particularly given that his valuable car was at stake. That amount of tobacco might be expected to produce around 10,000 cigarettes. That is a very large amount for one lady to buy for herself.
51. We found the Appellant's evidence as to December 2000 highly improbable. Even given the Christmas rush, we find it difficult to believe that an Officer would have waved through 6 kg of tobacco without any record and without giving out Notice No.1. Furthermore a box of tobacco seems to be unsuitable for presents in the plural; it was not suggested that the Christmas purchase was for his sister. Cigarettes would have been much more likely. Having seen him as a witness, we find the evidence that he forgot about the Christmas interception when stopped in April to be unconvincing.
52. In summary we find too many difficulties with the Appellant's evidence and reject it. Given the amount of tobacco the inference is that it was a commercial import for profit and we so find. The quantity involved was several times the new indicative guidelines. We conclude that the refusal of restoration was not unreasonable.

THEODORE WALLACE

CHAIRMAN

RELEASED:

LON/03/8054