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 >> Boardman & Anor v Customs and Excise [2004] UKVAT(Excise) E00705 (23 April 2004)
URL: http://www.bailii.org/uk/cases/UKVAT/Excise/2004/E00705.html
Cite as: [2004] UKVAT(Excise) E00705, [2004] UKVAT(Excise) E705

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

Mr Kevin Thomas Boardman and Mrs Phyllis Crosby v Customs and Excise [2004] UKVAT(Excise) E00705 (23 April 2004)

EXCISE DUTY – Restoration of seized motor vehicle –– the cigarettes and tobacco were sold for a profit –– the non-restoration was proportionate to the contravention –– no exceptional hardship –– no third party owner –– no reasons given for the deemed decision –– outcome of a further review inevitably the same –– non-restoration decision reasonable –– Appeal dismissed.

MANCHESTER TRIBUNAL CENTRE

MR KEVIN THOMAS BOARDMAN AND
MRS PHYLLIS CROSBY Appellants

- and -

THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents

Tribunal: Michael Tildesley (Chairman)

Mary Ainsworth (Member)

Sitting in public in Manchester on 18 March 2004

Appellants appeared in person

Miss Samanatha Holland Counsel for the Respondents

DECISION

The Appellants are appealing against the deemed decision on review of the Respondents dated 5 August 2002 not to restore a motor vehicle, a red Nissan Almera, registration number R113 KNW.

The Grounds of Appeal

The grounds of Appeal are set out in the Notice dated 13 January 2003 which states that

"As I wish my car to be returned, they found cartons of cigarettes in the vehicle but they were for myself. They took £600 but it wasn't from the sale of cigarettes so they gave it me back. I am in desperate need of this car as it is a mobility car in joint names myself and Mrs Crosby ".

Preliminary Matter

Miss Holland drew the Tribunal's attention to section 16(2) of the Finance Act 1994 which provides that the Tribunal can only entertain an Appeal from a person who has requested a review of the Respondents' refusal to offer restoration. Only Mr Boardman submitted a request for review of the Respondents' decision not to restore the motor vehicle. Thus as Mrs Crosby did not put in a request for a review, she has no right of Appeal and cannot be joined with Mr Boardman in the hearing of the Appeal. The practical impact of this ruling upon Mrs Crosby, however, was minimal because the Tribunal was required to consider the facts of Mrs Crosby's disability and her use of the vehicle in deciding whether the Respondents' decision to refuse restoration was reasonable.

The Issue

The function of the Tribunal is to determine whether the Respondents' decision not to restore the motor vehicle was a decision which no reasonable body of Commissioners could have arrived at. In order for the decision to have been reasonable the decision maker must have considered all relevant matters and must not have taken into consideration irrelevant matters.

The Evidence

The Tribunal heard evidence from Mr Boardman, the Appellant and Miss Logan for the Respondents. Mr Boardman did not call Mrs Crosby as a witness, however, Mrs Crosby was invited by the Tribunal to make representations. The Respondents served on the Tribunal six witness statements; Stephen Howard, Gerry Dolan, Kathryn Roberts, Peter Caffrey (14 March 2002), Peter Caffrey (29 April 2002) and Deborah Pennington. The Appellant raised no objections in writing to the admission of these statements in evidence. However, Mr Boardman advised the Tribunal that he was dyslexic. In those circumstances the statements, which contained the verbatim notes of his interview by the police and the Respondents were read out in full. He was asked to indicate whether he agreed with the contents of the interviews. A bundle of documents was considered by the Tribunal.

On 19 December 2001 DC Pennington and other police officers executed a search warrant issued under the Misuse of Drugs Act 1971 at 13 Hillcrest Avenue Leigh, the then home of Mr Boardman. The police seized amongst other things, £2,110 in Bank of England Notes and £223 in coins under the warrant. They also searched Mr Boardman's motor vehicle, red Nissan Almera, registration number R113 KNW, which was parked in the drive. In the boot the police found the following excise goods:

67 packets (50 grams) of Golden Virginia hand rolling tobacco

8 packets of Samson hand rolling tobacco

11 boxes of Hamlet cigars

5 sleeves of Lambert and Butler cigarettes (each sleeve containing 200 cigarettes)

1 sleeve of Benson and Hedges cigarettes

7 packets of 20 Regal cigarettes

1 packet of 20 Lambert and Butler cigarettes.

Mr Boardman was arrested and taken to Leigh Police Station. During interview Mr Boardman stated that he was selling the cigarettes on behalf of an unidentified third party. A sleeve of cigarettes would normally fetch £25. The money seized represented the proceeds from those sales. The hand rolling tobacco was for his own use. He smoked four packets of tobacco a week, although later on in the interview he stated that ten packets of hand rolling tobacco would sell for £30. Mr Boardman was bailed to reappear at Leigh Police Station on 30 January 2002.

Another search of 13 Hillcrest Avenue and Mr Boardman's vehicle by Customs Officers took place on 30 January 2002. The Officers found more excise goods, namely, 1,500 mixed cigarettes, 3.8 kilogrammes of hand rolling tobacco and 55 cigars and £600 in cash. At 15.07 hours on 30 January 2002 Customs Officers, K Roberts and A Long interviewed Mr Boardman under caution at Leigh Police Station. Mr Boardman explained that he was living at 13 Hillcrest Avenue, Leigh with his ex partner, Ms Julie Crosby and their two children. He received £380 a month in sickness benefit and disability allowance. Mr Boardman paid no board nor rent to Ms Crosby. He repeated to the Customs Officers that he sold cigarettes on behalf of a third party in return Mr Boardman would receive packets of tobacco. He sold the cigarettes from his home and from public houses. According to Mr Boardman this arrangement had been going on for about a month. He was not prepared to disclose the identity of the third party because of fear for his own safety. Mr Boardman was planning to return the cigarettes to the third party which was why they were found in the boot of his car. He got fed up with the arrangement because the third party was expecting him to sell the tobacco and the cigarettes at a higher price. Mr Boardman stated to the Customs Officers that the third party told him that the duty had already been paid on the cigarettes. Mr Boardman, accepted, however, that the price (£25) he was selling the cigarettes for was considerably less than the retail price (£40) in the shops.

When asked about the excise goods seized on the 30 January, Mr Boardman said that he had been given the cigarettes for his own use by the third party around Christmas despite the fact the third party had lost the £2,110 seized on the 19 December 2001. Mr Boardman stated that the £600 found on the 30 January had been saved from his benefits to pay for a headstone for his father's grave. The £600 was present in the property when it was searched by the police on the 19 December 2001. At the end of the interview Officer Roberts issued Mr Boardman with a Notice of Seizure for the excise goods found in his possession on the 19 December 2001 and 30 January 2002. Officer Roberts was satisfied that the duty had not been paid on these excise goods and that Mr Boardman was selling them albeit on behalf of an unknown third party. The vehicle was also seized because it had been used to transport or keep the excise goods upon which UK duty had not been paid.

On 4 February 2002 Gareth Hughes, solicitors acting on behalf of the Appellant informed the Respondents in writing that Mr Boardman wished to appeal against the seizure of his vehicle on the grounds that

• Having regard to the sums involved, seizure of the vehicle was disproportionate.

• The vehicle was a mobility car.

• Mr Boardman was dependent upon the vehicle for his mobility. He suffered from angina, asthma and kidney disease.

• Mr Boardman was entirely dependent upon State benefits and in no position to finance the acquisition of an alternative vehicle.

Mr Boardman amplified upon those grounds in a letter received by the Respondents on 12 February 2002. He explained that the car was for himself and Mrs Crosby who had given him the mobility tax so that he could take Mrs Crosby to the doctors as she suffered from arthritis and could not walk very far. He was under two specialists and required the vehicle to get to hospital because he was also unable to walk very far. In a further letter Mr Boardman stated that he needed the vehicle as well for his son, Jordan, who had behaviour problems and required transport to the educational psychologist and the family support unit. Mr Boardman produced a note signed by Dr Hans-Christian Raabe of the Family Practice, 95/97 Railway Road, Leigh, Lancs which confirmed that Mr Boardman required his car due to health problems. A further letter was produced by Dr Raabe stating that Mr Boardman required a lot of medication including asprin for his heart disease, Omeprazole for stomach disease, Salbutamol and Beclomethasone for asthma, Bendrofluazide and Fenofibrate for raised blood lipids, glyceryl trinitrate spray for angina and Zolpidem sleeping tablets.

On 5 August Mr Howard of Customs and Excise refused restoration of the vehicle because he could find no exceptional circumstances to depart from the Respondents' policy not to restore seized vehicles. Mr Boardman was advised of his right to an independent review. In response Mr Boardman and Ms Crosby on behalf of her mother, Mrs Crosby, sent letters dated 8 August complaining about the decision not to restore. The letters pointed out that Mr Boardman had not travelled out of the UK to fetch the excise goods. Mrs Crosby had not committed any offences whatsoever and she was struggling without the use of a car. On 4 September 2002 Mr Boardman followed up his letter of 8 August by requesting an independent review of the decision not to restore the vehicle. Ms Logan of Customs and Excise replied on 6 September 2002 informing Mr Boardman that she had been appointed to carry out the independent review which should be completed within a maximum of 45 days from the 4 September 2002. Unfortunately the Review was not carried out because of workload pressures. Thus the decision of Mr Howard was deemed to be the decision on review in accordance with section 15 of the Finance Act 1994.

Mr Boardman purchased the Nissan Almera for £7,495 from Firsway of Leigh on 5 February 1999 as evidenced by the invoice. The vehicle was registered at DVLA Swansea in the joint names of Mr Boardman and Mrs Crosby. Mr Boardman in evidence explained that he had borrowed the money to purchase the car from his father. However, he had also owed Mrs Crosby money and had given her the log book as security.

Mr Boardman produced "Certificates of Entitlement to Disability Living Allowance" issued by the Benefits Agency for Mrs P Crosby and himself. The "Certificate" for Mrs Crosby stated that she was entitled to the higher rate of Disability Living Allowance for help with getting round for the period from 5 June 2000 to 4 June 2002. The "Certificate" for Mr Boardman stated that he was entitled to the higher rate of Disability Living Allowance for help with getting round for the period from 18 May 2000 to 17 May 2004. Mr Boardman also provided a copy of an "Application for exemption from paying for a vehicle licence", which revealed that Mr Boardman had ticked the box which read: "I am the person who gets Disability Living Allowance. The vehicle will only be used by me". The "Application" related to the vehicle, registration number R113 KNW.

Mr Boardman in his sworn evidence did not challenge the contents of the interviews with the police and Customs and Excise officers. He accepted that the cigarettes were in his vehicle on the 19 December 2001. However, he said he was taking them back to his supplier and did not realise that his vehicle was liable for forfeiture because of simply storing the cigarettes in the vehicle's boot. Further this was the only time when cigarettes were kept in his vehicle. He could not explain why cigarettes were also found in the boot of his vehicle on the 30 January 2002. According to Mr Boardman he lent his car to a third person who gave him a lift to Leigh Police Station on the 30 January 2002 for his interview with the Customs and Excise Officers. Mr Boardman could not give a reason why the vehicle was found parked near to Leigh Police Station on 30 January 2002 by Customs and Excise Officers. Mr Boardman testified that he never used his car to go to the pub where he sold the cigarettes because he did not drink and drive. He agreed, however, that he could not walk very far. He would get somebody to give him a lift or hire a taxi to travel to the pub.

Mr Boardman told the Tribunal that the vehicle had been seized before by the police in connection with a criminal charge of conspiracy with his brother. The police held the vehicle for about 12 months before returning it to him. He bought the vehicle to help Mrs Crosby to get around since she could not drive. Mr Boardman was unaware that Mrs Crosby was entitled to her own mobility car because of her high level Disability Living Allowance. He agreed that the Nissan Almera, registration number R113 KNW was a "normal" car exempt from road tax because of his disability. It was not a "mobility" car. About two weeks after the 30 January 2002 when the vehicle was seized by Customs and Excise Officers he purchased a Fiesta motor car to get around. Recently he bought another Nissan Almera on hire purchase. During the time the vehicle had been in the possession of Customs and Excise Mr Boardman had not asked Social Services for a mobility car because he was not entitled to high rate Disability Allowance. Mr Boardman made five offers to pay Customs and Excise the outstanding excise duty on the cigarettes and tobacco in order to recover his vehicle.

Mr Boardman was imprisoned for four months by the magistrates in relation to the offences uncovered by the search on 19 December 2001. He considered that he had already been punished for these offences and that it was unfair to punish him again by confiscating his vehicle.

Mr Boardman accepted he had previous offences for selling cigarettes and tobacco upon which no excise duty had been paid. The previous offences were:

~ 29 January 1999: 39,200 cigarettes, 0.48 kilogrammes of hand rolling tobacco, excise duty evaded: £6,859.02.

~ 9 January 2000: 68,780 cigarettes, 1.75 kilogrammes of hand rolling tobacco, excise duty evaded: £8,066.38.

Ms Logan gave evidence for the Respondents about what decision she would have reached had she conducted the Review within the stipulated 45 days. She would have considered the facts of this case against the Respondents' policy on restoration of vehicles which incorporated the principles in the Court of Appeal decision in Lindsay. She informed the Tribunal that the evidence showed that Mr Boardman was selling the cigarettes and that it was his third offence. In her opinion these two sets of facts would militate against restoration of the vehicle. Ms Logan did not consider this was a case of exceptional hardship. Mr Boardman was not entitled to the high rate of Disability Living Allowance at the time the vehicle was seized. The vehicle was not a mobility car, had it been so it would have been returned to the Benefits Agency. Mrs Crosby was entitled to her own mobility vehicle because of her high rate of Disability Living Allowance. She was, therefore, not reliant upon Mr Boardman's vehicle for getting around. Ms Logan explained to the Tribunal that claimants in receipt of the high rate Disability Living Allowance were entitled either to a motor car insured and exempt from road tax or to a sum of money for paying somebody to drive them on their various journeys. Ms Logan estimated the amount of excise duty evaded was £1,250 compared with the estimated value of £5,000 for the vehicle at the date of seizure. Ms Logan concluded that in all the circumstances the deemed decision to refuse restoration of the vehicle was reasonable.

Mr Boardman did not challenge the forfeiture and seizure of the excise goods before the magistrates' court.

Jurisdiction of the Tribunal

The Respondents' powers regarding restoration of goods which have been forfeited or seized is set out under section 152(b) of the Customs and Excise Management Act 1979. Once the power is exercised whether in the form of a positive decision to restore on terms or a refusal to restore, the person affected has a right of appeal to the Tribunal. The powers of the Tribunal are limited in the terms set out in section 16(4) of Finance Act 1994 which provides that:

"confined to a power, where the Tribunal are satisfied that the Commissioners or other person making the decision could not reasonably have arrived at it, to do one or more of the following, that is to say –

a) to direct that the decision, so far as it remains in force, is to cease to have effect from such time as the Tribunal may direct;

b) to require the Commissioners to conduct, in accordance with the directions of the Tribunal, a further review of the original decision;

c) in the case of a decision which has already been acted on or taken effect and cannot be remedied by a further review, to declare that decision to have been unreasonable and to give directions to the Commissioners as to the steps to be taken for securing that repetitions of unreasonableness do not occur when comparable circumstances arise in future.

The precondition to the Tribunal's exercise of one or more of its three powers, namely, that the person making a decision could not reasonably have arrived at it falls within the guidance given by Lord Lane in the decision in Customs and Excise v JH Corbitt (Numismatists) Ltd [1980] STC 231 at page 239:

"…..if it were shown the Commissioners had acted in a way in which no reasonable panel of commissioners could have acted; if they had taken into account some irrelevant matter or had disregarded something to which they should have given weight".

22. The Tribunal is entitled to make its own findings on the primary facts which are to be taken into account by the Commissioners when exercising their powers regarding restoration of goods. The finding of facts includes blameworthiness, the intended use for the excise goods: private or commercial, the proportionality of the penalty imposed to the policy aims pursued having full regard to the individual circumstances of the case and exceptional hardship. The Tribunal, however, has no fact finding jurisdiction for the purpose of challenging the legality of the seizure and forfeiture of the goods. The Tribunal will then apply its findings of fact to determine whether the Commissioners acted reasonably in refusing restoration.

The Tribunal's Findings of Fact

Were the cigarettes and tobacco for private or commercial use?

Mr Boardman admitted that he was selling the cigarettes albeit on behalf of an unnamed third party. We do not accept his explanation that the third party had already paid the duty on the cigarettes because he knew that the selling price for the cigarettes was considerably less than the normal retail price for cigarettes in shops.

We do not believe that Mr Boardman was acting on behalf of a third party. In our view the evidence clearly indicates that he was running the commercial operation himself, in particular we rely upon:

• The substantial amount of money including £221 in coins for change found at his premises on the 19 December. Mr Boardman accepted that the money represented the proceeds from the sale of cigarettes.

• Mr Boardman continued to trade after 19 December 2001 which was inconsistent with his statement that he was taking the goods back on the 19 December because he no longer wished to work for the third party.

• According to Mr Boardman the third party gave him further excise goods to sell just after the third party lost over £2,000 confiscated by the police following the search of the Mr Boardman's premises on 19 December 2001. The third party's benevolence does not in our view stack up with Mr Boardman's depiction of him as a person to be feared.

• Mr Boardman ran a significant risk of detection when he sold the cigarettes in public places. We consider it implausible that he would take this risk for a third party who was only giving him in return a few packets of cigarettes or tobacco.

• Mr Boardman's previous record for commercial dealings with excise goods upon which no UK excise duty had been paid.

We conclude that Mr Boardman was selling the cigarettes to the public and that he was retaining the illicit profits from these sales.

Was the Decision Not to Restore the Vehicle Proportionate to the Aims Pursued?

Article 1 of the First Protocol of the European Convention of Human Rights dealing with peaceful enjoyment of possessions was engaged when the Respondents deprived the Appellant of his red Nissan Almera, registration number R113 KNW. The aim pursued by the Respondents is to deter those people who deal commercially with smuggled tobacco and alcohol in the UK. This caused a massive loss of revenue to the Government after the introduction of the Single Market. In 2000 the revenue evaded for tobacco was estimated at £3.8 billion, which has been significantly reduced in subsequent years due to the Respondents adopting a rigorous policy of forfeiting motor vehicles involved in excise fraud. The policy, however, has been modified to distinguish between commercial (for profit) cases and cases of non-profit smuggling. Also genuinely innocent and blameless owners who were not present at time of detection should have their vehicles restored free of charge.

Lord Phillips MR in Lindsay v Customs and Excise Commissioners [2002] 1 WLR 1766 has ruled that persons caught using the excise goods for a commercial purpose for profit generally take themselves beyond the threshold whereby a lesser penalty than forfeiture can be considered. In this case we have found that Mr Boardman was selling the cigarettes and the tobacco to the public for profit. It was also Mr Boardman's third known "offence" of selling excise goods without first paying the correct amount of duty. These two factors outweigh the fact that the revenue evaded on this occasion was considerably less than the value of the vehicle seized. We are, therefore, satisfied that non restoration of the vehicle was a proportionate response to Mr Boardman's contravention and previous record.

Did the Non-Restoration of the Vehicle cause Mr Boardman Exceptional Hardship

Mr Boardman suffered from a range of illnesses which severely restricted his mobility. He required a vehicle to visit the hospital and to take his son to the educational psychologist and the family support unit. The Nissan Almera, however, was not funded through the Disability Living Allowance as a mobility vehicle.

Mr Boardman was in receipt of Disability Living Allowance. There was a conflict between the oral and documentary evidence about his entitlement to the higher rate allowance for help with getting round. The "Certificate of Entitlement" produced by Mr Boardman stated he was in receipt of the higher rate at the date when his car was seized, whereas according to his evidence he was only entitled to the lower rate. If the Certificate was correct Mr Boardman could have avoided the consequences arising from the seizure of his vehicle by applying for a mobility car which was his entitlement under the higher rate allowance.

The evidence, however, indicated that Mr Boardman did not suffer exceptional hardship from the non restoration of his vehicle. He was able to purchase another vehicle within two weeks of the seizure of his Nissan Almera. Mr Boardman did not approach Social Services for help with getting round. Thus, Mr Boardman demonstrated that he was able to mitigate the hardship from the loss of his vehicle from within his own resources and without the help of the statutory bodies.

Mrs Crosby relied upon Mr Boardman for lifts to town and to the doctors. However, she was entitled to the higher rate Disability Living Allowance for getting around which gave her the right to a mobility car. Thus she had the means to avoid any hardship occasioned by her loss of access to Mr Boardman's vehicle.

We are, therefore, satisfied that Mr Boardman and Mrs Crosby did not suffer exceptional hardship from the non restoration of the Nissan Almera.

Was Mrs Crosby an Innocent Third Party Owner of the Vehicle?

Mrs Crosby was not involved with any of Mr Boardman's activities concerning the sale of excise goods. She was the joint registered keeper with Mr Boardman of the Nissan Almera motor vehicle, registration number R113 KNW. However, the vehicle registration document (V5) issued by DVLA Swansea clearly stated that the registered keeper is not necessarily the vehicle's legal owner. The evidence regarding the purchase of the vehicle in the form of the invoice and Mr Boardman's testimony supports the conclusion that Mr Boardman was the sole legal owner of the vehicle. This conclusion is also supported by the "Application for exemption from paying for a vehicle licence", completed by Mr Boardman which read: "I am the person who gets Disability Living Allowance. The vehicle will only be used by me".

We are satisfied that Mrs Crosby had no legal rights of ownership in the Nissan Almera. Although completely innocent of any wrongdoing associated with the sale of excise goods, she did not meet the criteria for an innocent third party owner.

Summary of our Findings of Fact

We find that

• Mr Boardman sold the cigarettes and tobacco to the public for the purpose of making a profit.

• Mr Boardman had two previous "offences" for selling excise goods without paying first the correct amount of duty.

• The non-restoration of the vehicle was proportionate to Mr Boardman's contravention and the Respondents' policy aim of deterring smuggling.

• Mr Boardman and Mrs Crosby did not suffer exceptional hardship from the non restoration of the vehicle.

• Mrs Crosby has no legal rights of ownership in the Nissan Almera.

Was the Respondents' Review decision Reasonable?

We are in difficulty in comparing our findings on the primary facts with those supporting the Respondents' deemed decision on review of 5 August 2002. Mr Howard of Customs and Excise put forward no factual basis for his refusal to restore the vehicle to Mr Boardman.

Commissioners of Customs and Excise v Alzitrans [2003] EWHC 75(Ch) is the legal authority which allows the Respondents to rely on reasons in support of their decision further to, and other than, those set out in their decision on review. In this respect the evidence of Ms Logan was relevant for providing the reasons for the refusal. Essentially had she carried out the review she would have found that the commercial nature of the transaction and Mr Boardman's previous "offences" would have militated against restoration. Further, Mrs Crosby did not suffer exceptional hardship because she was entitled to a mobility car or allowance. Our findings of fact are broadly in line with those relied upon by Ms Logan

We consider that the Respondents' decision making process in this Appeal was deficient. Mr Howard failed to give his reasons for refusing restoration. The Respondents did not carry out an independent review of Mr Howard's decision within the required time limit. Despite the deficiencies in the process and having regard to Ms Logan's evidence, we are of the opinion that if we ordered a new review based upon our findings of fact, it would inevitably produce the same outcome: non restoration of the vehicle.

Our Decision

In all the circumstances we have decided that the Respondents' deemed decision on review of 5 August 2002 not to restore the red Nissan Almera, registration number R113 KNW to Mr Boardman was reasonably arrived at within the meaning of section 16(4) of the Finance Act 1994. We, therefore, dismiss the Appeal. We make no order for costs.

MICHAEL TILDESLEY

CHAIRMAN

MAN/03/8020