United Kingdom VAT & Duties Tribunals (Excise) Decisions

Warrilow v Customs and Excise [2004] UKVAT(Excise) E00681 (26 March 2004)

E00681

EXCISE DUTY - RESTORATION OF VEHICLE – 20 kgs of HRT – Mercedes Shogun with cherished number plate – Finding that part of tobacco for resale at profit – Non-restoration of vehicle not disproportionate

LONDON TRIBUNAL CENTRE

BARRY ALBERT THOMAS WARRILOW Appellant

- and –

THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents Tribunal: THEODORE WALLACE (Chairman) MRS J M NEILL ACA

Sitting in public in London on 27 January 2004

The Appellant appeared in person

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

© CROWN COPYRIGHT 2004
DECISION
1. This was an appeal against a Review decision refusing to restore a 1999 Mitsubishi Shogun Reg No BAZ 3733 seized from the Appellant at Dover on 20 April 2001 together with 20kg of hand-rolling tobacco, 6000 cigarettes, 150 cigarillos and 2.7 litres of spirits.
2. The delay since 2001 was primarily because there was an earlier appeal following which the Tribunal directed a further review on 2 October 2002 to be carried out within 6 weeks of the decision of the Court of Appeal in R (Hoverspeed Ltd) v Customs and Excise Commissioners [2003] STC 1273. This appeal is against the further review which confirmed the decision.
3. The vehicle in question was bought by the Appellant for £28,000 (before finance charges) in part exchange for a Range Rover under a finance agreement with Capital Bank on 15 July 1999. The Appellant was allowed £13,400 on the Range Rover; however £8,400 was outstanding on the Range Rover, so that £23,000 was financed by hire purchase. At the time of seizure he had paid 20 instalments of £492.72.
4. The first Review Decision was given on 2 July 2001. The vehicle was released by the Commissioners to Capital Bank on 2 August 2001, at which date although the appeal had been served it had not been notified to the Commissioners.
5. In a skeleton argument served at the Tribunal's direction before the hearing Mr Gregory submitted that the Tribunal has jurisdiction to hear the appeal although restoration of the vehicle and goods is not now possible. He said that on Review the Commissioners could decide to pay compensation. If an Appellant considered that the level of compensation offered was inadequate, he could appeal again to the Tribunal. The appeal proceeded on this basis.
6. There were two witnesses, the Appellant and the Review Officer, Carl Penfold.
7. The Commissioners had served statements by a further eight witnesses, including the intercepting and interviewing officers. Not one of these was served within 21 days of the Statement of Case as required by Rule 21. No application had been made before the hearing for late service under Rule 21. The Appellant did not agree to them being admitted and we excluded them except insofar as the Appellant accepted them in evidence.

The Appellant's Evidence

8. He told us that he had travelled to Le Panne in Belgium for the day on 20 April 2001 with his son, Spencer, who was over from New Zealand with his girl friend, Jocelyn Lynton. It was for a day out. They crossed at about midday returning at midnight having missed the 10.30pm boat because they spent too long at a restaurant. They had walked on the beach. He produced photographs.
9. He said that he went to a tobacco shop in Le Panne and bought the cigarettes and tobacco for £1,360 using his credit card. All the purchases were by him, the others did not have a large amount of money. He was buying for all the family including his father and two other sons and their girl friends, all of whom smoked. The 2000 Superkings were for the women. One of his sons smokes 60 cigarettes daily. The tobacco was for his father, for Spencer and for another son Wayne, all of whom roll cigarettes. There were three bills because the guy in the shop asked if he wanted three separate bills, so that was done; it looked as though the others purchased some but in fact he purchased it all to share out among the family. He was not going to make any gain but would give them for what he had paid. The cigarillos were a bonus from the shop.
10. He said that at 2.30am when they were questioned they had been asleep on the boat and were not ready for what happened. He told the young lady they had cigarettes. He said that they were scattered round the vehicle because he did not want to leave them on show while in the restaurant. He said, "We have got our quota" but did not know actually what it was. He explained that the tobacco was in bags. The officers were tipping out everything in the vehicle and even looked under the bonnet. He said that the lady accused him of hiding some but he had actually slung his coat in the back seat and it was across some cigarettes in a bag on the floor. He had said that he thought he had 15 sleeves which would be 3000 cigarettes.
11. When asked whether they wanted to go, leaving the tobacco behind, or make statements when they might get it back if Customs were satisfied, they had agreed to be questioned. They had nothing to hide. They were questioned separately for about an hour.
12. Cross-examined by Mr Gregory, he accepted that the notes of an interview with Mr Gear on the night had been read to him and signed by him. He accepted it as accurate.
13. We summarise the notes. The Appellant said that a third of the goods were his, there were three of them. He did not know what he paid for, he did have a receipt, the others had theirs. The goods were for his father, his other two sons and Spence. No one had given him money towards the cost. He did not expect to receive any money or favours for the goods. He smoked 60 Bensons a day on average and expected the cigarettes to last a good nine months. He was not really aware of the guidance levels but knew that he could not sell the goods without paying duty first. Asked when he last travelled abroad, he said that the young lady had said the 5^th, he thought it was with his son but he could not remember coming over because they spent too long in the restaurant. He had not brought any cigarettes back. He could not remember how many times he had travelled in the last three months. The car was the Finance Company's. He worked as a freelance rep selling anything, hence the bags. His net monthly income was somewhere in the region of £1,600.
14. He agreed that the signature on notes of an interview with Miss Lynton was her signature and accepted the note as accurate.
15. He agreed that he had signed a statement taken by a member of the Bar Pro Bono Unit dated 7 October 2002. In that statement he said that he had made trips on 21 February, 6 and 15 March and 11 April 2001. The first of those had been to the makers of Castle Dior, a sparkling wine, which he hoped to buy and resell to Cash and Carry Stores.
16. He said that this statement was wrong when it said that he was working for GAP Healey's as a freelance representative when he was stopped. He should have read it more carefully. He had stopped working for them and went in a personal capacity.
17. He told Mr Gregory that he could not remember whether he had bought cigarettes on the earlier trips in 2001, if he had done so it was not the same quantity. When he had been recorded on being stopped as saying that he had not made any recent trips to the EC, what he meant was that he did not go abroad to buy cigarettes and tobacco.
18. He said that the signature on the note of an interview with his son, Spencer, did not look like his son's signature.
19. He said that he had already admitted that the bill was split into three to make it look as if the purchases were split. He said that he was trying to make it that he had the right amount for each person. He did not know the guidelines. Everyone had told him that you can have as much as you want for your own consumption. He agreed that he had spoken of "our quota" when stopped. He wished he had never used the word. By quota he meant what he wanted, it was cockney. He denied hatching a plan. He said that his family was going to pay him as and when they wanted the goods.
20. He said the car was a big estate car with windows. He put the goods in the back in bags and a holdall so that they would not be seen when they were in the restaurant. It was easier to carry them in a bag. He denied putting them in bags to conceal them from Customs.
21. He accepted that he had written and signed a letter in his ex-wife's name and had said in the statement that she wrote the letter. He said that he was ill-advised by friends. At the time the vehicle was registered in her name and he knew that he had no chance of getting her to sign a letter requesting the return of the car. He said that he had bought the car and the letter said wrongly that it was given to her on the divorce.
22. The Appellant denied that he lied until he was caught. He denied that he was going to sell the goods for profit to business contacts. He disagreed when it was put that it was not plausible that he was going to sell to his family at cost. He disagreed when it was put that he did not need to buy so much in April given the earlier trips.
23. When asked whether he knew he was doing wrong and tried to deceive Customs he said, "Would I have jeopardised a £28,000 vehicle for £1,360 worth of tobacco?" He pointed out that the number plate BAZ 3733 had an additional value because of his nickname.
24. Mr Penfold, the Review Officer, said that the duty involved was £2,819. He said that as a smoker and from experience as an officer he knew that it is possible to roll 80 to 100 cigarettes from a 50 gram pouch of tobacco. 20 kg would produce upwards of 32,000 cigarettes. He agreed that rolling thicker cigarettes it might be only 50 cigarettes from 50 gr but said that it might be possible to get as many as 150. He said that when stopped the Appellant said he had 200 pouches whereas in fact he had 400.
25. Mr Gregory submitted that the Appellant knew that the full quantity was well over any guidelines and split the receipts because it would look bad if all was for one person. His actions were the result of a plan. While it was plausible to hide the goods from view when in the restaurant, that was hours earlier. When initially stopped he denied any recent trips. He faked a letter from his ex-wife asking for the car back. The sheer quantity of goods indicated sales at a profit. The cost was almost a month's salary. The explanation of sale at cost to relations was too easy to put forward.
26. He submitted that even if the Tribunal concluded that the goods were for family at cost, non-restoration of the car was proportionate in the light of the quantity involved and the deliberate plan to deceive. The purpose of non-restoration was to prevent use in the future for inputs without duty.
27. The Appellant said that he had been accused of all sorts of things. There was no evidence that he had offered goods to any Cash and Carry stores. The shop had offered to provide three bills and he had admitted falsifying the letter but the goods were not for resale. Although the £1300 spent was large in relation to his monthly income, he had used his credit card and paid it off over a period of time. He spent £40-£80 a week on cigarettes at £5 a packet. The goods would have lasted his family 8-9 months. He repeated that he would not have risked the £28,000 vehicle which had a personalised number plate – his nickname was "Bazza". He said that the loss of the vehicle had financially ruined him : in addition to the down payment of £5,000 he had paid instalments of £10,000.

Conclusions

28. We approach the evidence on the footing that in accordance with the decision of the Divisional Court in R (Hoverspeed Ltd) v Commissioners of Customs and Excise [2002] 3 WLR 1289 the burden of proof as to commerciality is on Customs. Among the factors to be considered under regulation 12(1)(e) of the Tobacco Products Regulation 1992 are the Appellant's intended use and whether the quantity exceeds 3,200 cigarettes or 3kg of tobacco.
29. The quantity of tobacco is more than six times the guidelines. The Appellant's case is that it was for his father and Spencer and another son and that none was for resale at a profit. We do not accept his evidence on this aspect. He paid out £1,360 which is 85 per cent of his monthly salary, of which £492 was required for the monthly instalments on the car. We do not find it credible that he financed the purchase himself in the way in which he claimed. In weighing the Appellant's evidence we cannot ignore the purported letter from his ex-wife and the split invoices. Although a small part of the tobacco may have been a gift for his father and some may have been for Spencer, we are satisfied that most of the tobacco was for resale at a profit.
30. We are prepared to accept that the cigarettes were for the Appellant himself and for his family at cost, although we do not accept that the Appellant smoked as heavily as he claimed. However we find it incredible that he could not remember whether he had bought cigarettes on his four earlier trips in 2001 (see paragraphs 15 and 19 above).
31. On our finding as to the tobacco, the Appellant was evading a sum approaching £2000 in tobacco duty and must have hoped to make a considerable part of this in illicit sales. While we did not overlook his argument that he would not have risked his car, we did not accept it.
32. The only question that remains is whether the decision to refuse to restore the car was disproportionate. We accept that the vehicle was of considerable value and that the number plate had some value to him personally. He had bought the vehicle two years earlier so that its value may have been around £18,000. If he had not lost the vehicle he would have had almost £20,000 in further instalments to pay: as it was he paid two instalments only after seizure. We assume that the finance company sold the car for an amount sufficient to cover the outstanding liability. His actual loss taking account of the future instalments which he did not have to pay was not great in financial terms.
33. The fact is that the Appellant took a calculated risk in using his car. In Lindsay v Customs and Excise Commissioners [2002] STC 588, Lord Phillips MR said at paragraph 63 that the fact of use for commercial smuggling will normally take the case beyond the threshold were the value of the car can carry significant weight in the balance of proportionality, although cases of exceptional hardship must always be given due consideration.
34. In his statement dated 7 October 2002, referred to at paragraph 15 above, he said that he needed a car for his work and had been forced to buy cheap cars on his credit card following the seizure of the Mercedes. Those cars had broken down and he had lost his job. He stated that he was being treated for depression and had been living on incapacity benefit for two years. Either his statement was wrong or he was on incapacity benefit at the time when he was stopped. He produced no evidence in support of those assertions. This is particularly relevant in view of the manufactured evidence from his ex-wife.
35. In all the circumstances we are not satisfied that the refusal to restore the vehicle was in any way disproportionate or unreasonable.
THEODORE WALLACE CHAIRMAN RELEASED: 26 March 2004

LON/03/8044