United Kingdom VAT & Duties Tribunals (Excise) Decisions

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URL: http://www.bailii.org/uk/cases/UKVAT/Excise/2004/E00718.html
Cite as: [2004] UKVAT(Excise) E00718, [2004] UKVAT(Excise) E718

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Alan Keats v Customs and Excise [2004] UKVAT(Excise) E00718 (17 May 2004)

EXCISE DUTY — innocent third party allegedly the owner of vehicle transporting excise goods to the UK from the continent - goods seized and forfeited for evasion of duty - vehicle also seized by Customs - restoration sought on the ground that innocent third party ignorant of trip to continent - review decision confirming decision not to restore vehicle - third party found to have permitted driver to have the use of the vehicle and to be bound by circumstances of wrongful importation - result of review not unreasonable - appeal dismissed

MANCHESTER TRIBUNAL CENTRE

ALAN KEATS Appellant

- and -

THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents

Tribunal: Mr M S Johnson (Chairman)

Mr J D Kippest (Member)

Sitting in public in Birmingham on 31st March 2004

The Appellant appeared in person

Mr N Smith, counsel instructed by the Solicitor for the Customs and Excise, for the Respondents

DECISION

This is an appeal under section 16 of the Finance Act 1994. It concerns a Nissan Terrano motor vehicle Registration No L123 KRP ("the vehicle"), said to be the property of the appellant. The vehicle was seized and forfeited in Dover by the Commissioners of Customs and Excise ("Customs") on its return to the UK from France on 21 September 2002. The vehicle was at the time being driven by Mr Brian Pagett, a friend of the appellant.

The seizure came about because Mr Pagett and three other persons travelling with him, a Mr Stanton, a Mr S Webster and Mr B Webster, had in their possession certain excise goods ("the goods"), purchased on the continent. The goods consisted of 35 Kg of hand-rolling tobacco, which Customs were not satisfied were for the travellers' own use. Customs formed the view that the goods were dutiable in the UK as being held for commercial purposes, and that the travellers were seeking to evade UK excise duty by contending that they would be smoking the goods themselves. So Customs seized and forfeited the goods, and they also seized the vehicle, as it was being used to transport the goods.

The appellant was not present at the time of the seizure. His case is that he knew nothing about Mr Pagett using the vehicle to go to the continent. He says that the trip was against his wishes, and that he would never have sanctioned any course that would result in his being deprived of the vehicle. He admits that Mr Pagett was rightfully in possession of the vehicle. But he says that Mr Pagett had been provided with the vehicle just in order to carry out repairs to it, and for no other purpose.

The appellant gave oral evidence in support of his case, and he also called Mr Pagett to give oral evidence on his behalf. Both were cross-examined by Mr Smith, counsel appearing for Customs. Mr Smith helpfully provided the tribunal with a bundle of copy documents relevant to the appeal. Mr Smith called no witness to give oral evidence on behalf of Customs, relying upon the contents of the bundle he had produced, and the witness statements contained in it. Those statements consisted of one dated 8 February 2003 from the reviewing officer of Customs, Ms Helen Belinda Perkins, and an undated statement from another officer of Customs, Mr Gerry Dolan, dealing with Customs' policy.

We find the facts to be as follows.

The vehicle was used by Mr Pagett, Mr Stanton, Mr S Webster and Mr B Webster to drive from Walsall to Dover and, after taking the cross-channel ferry, from Calais to Belgium, where the goods were purchased. On their return to Dover, just after midnight on 21 September 2002, Mr Pagett, Mr Stanton and Mr S Webster were separately interviewed by Customs. Mr B Webster was not interviewed, as he was a minor. The goods having been found in the possession of the travellers, they were asked to give an explanation.

Mr Pagett told Customs that the vehicle was his and that he had owned it about 10 months. He produced receipts for 10 sleeves of "Drum" tobacco @ £197 and 12 sleeves of "Drum" @ £236.40, all purchased by him in Belgium. He said that the tobacco he had purchased was for himself. He said that he smoked an average of 70 cigarettes a day, and had funded the tobacco he had purchased from that week's wages from his job as a fencing contractor. His average weekly earnings were about £500. He had little in the way of savings, which had gone into his business.

Mr Pagett said that the purpose of the trip to the continent was to visit his cousin, who was in hospital in Ostend. He said that he had last been to see his cousin 2 weeks previously. He said that he had purchased a large amount of tobacco on his present trip because 2 weeks before he had lacked the money to do so, and on this occasion he thought that his cousin might soon be discharged, so that the opportunity to buy would not arise again.

At the end of his interview, Mr Pagett was asked, "Does anyone else have use of the vehicle?" He replied, "Alan Keats" (that is to say, the appellant). The Customs officer then asked, "Does he travel abroad in it?" Mr Pagett replied, "No, it's only ever been abroad with me".

Mr Stanton told Customs that he had purchased 24 packets of "Drum" whilst in Belgium costing £472, for which he produced a receipt. He said that he smoked 3 or 4 packets a week, and he expected his purchase would probably last him a year or so. He had been abroad on two other occasions in the previous 2 weeks, but he did not buy anything on those occasions, because he had no money. The purpose of the trips had been to visit his relation in hospital in Belgium. Mr Stanton said that he was a fencer by occupation. He claimed to take home about £240 a week, and to have savings of about £3,000. The tobacco, was, he said, all for his own consumption.

Mr S Webster told Customs that 2 boxes of the tobacco being transported belonged to him, for which he said he had a receipt. The tobacco had cost £472.80. It was bought exclusively for his own consumption. He had travelled to Belgium to visit a relative of Mr Pagett who was in hospital and had bought the tobacco whilst he was there. Mr Webster said that he smoked 4 to 5 pouches of tobacco a week, obtaining 40 to 50 rolled-up cigarettes from a pouch. His purchase, he said, would therefore last him about a year. His occupation was that of self-employed plumber. He had sometimes earned upwards of £800 a month, sometimes less. He did not presently enjoy an income from that source. His current disposable income was £100 to £120 a week, and his savings amounted to about £300. He had last been abroad about 2 weeks previously, for the same reason, that is to say, to visit the individual in hospital, but had lacked the money to purchase tobacco on that occasion.

Customs were not satisfied that the goods were for the travellers' own use. The goods were seized and forfeited. It has not been contended before the tribunal that this should not have happened. The appellant's only interest has been in relation to the vehicle, which was seized by Customs on the basis that it was the property of Mr Pagett and had been used by him and his companions to transport the goods.

Contrary to what Mr Pagett had told Customs when interviewed, the appellant thereafter claimed to be the owner of the vehicle. He did this initially in an undated letter to Customs received by them on or about 31 October 2002. In that letter, he claimed that Mr Pagett had had the vehicle in order to do repairs to it. The appellant wrote that he had been to Wales to visit a sick nephew and that Mr Pagett had been left the vehicle for repair whilst the appellant was away. Subsequently the nephew died, and the appellant had needed the vehicle to attend the funeral. Mr Pagett had said that he was having difficulty obtaining parts, so the appellant hired another vehicle instead. However, the appellant wrote, Mr Pagett used the vehicle to go to the continent – a trip about which the appellant was totally ignorant. When Mr Pagett had confessed to the appellant about the seizure, they had had a row and the appellant had accused him of having no right to take the vehicle abroad. So the appellant in his letter asked Customs to sort the matter out for him.

Customs treated that letter as a request for restoration of the vehicle. Restoration was refused, having regard to the quantities of tobacco imported, the fact that the vehicle had previously been used to go abroad in circumstances when excise goods might have been imported, and the fact that Mr Pagett and the appellant, when travelling abroad together on a previous occasion, had had excise goods seized.

The appellant then sought a review of the decision to refuse restoration, by a letter to Customs dated 14 January 2003. In his letter requesting the review, the appellant stated that the vehicle had previously been owned by Mr Pagett, and that, if excise goods had been imported during that period, it was not the affair of the appellant. He also said that it was impossible for him to have imported excise goods on a previous occasion, because he had only travelled on a ferry once before. He said that he was an innocent party, had not been treated fairly and was being penalised for the acts of others.

Ms Perkins' letter containing her decision on review is dated 26 February 2003. This is the decision under appeal.

Ms Perkins began by summarizing the information given in interview by the three interviewed travellers, and the contents of the correspondence between the appellant and Customs. She then made reference to the applicable legislation, and Customs' restoration policy for private vehicles. Then, under the heading "Consideration", she took "a fresh look at the facts of this case". She considered the changes in Customs' policy from time to time, noting the criteria specified for establishing whether excise goods in the UK purchased elsewhere in the EU are held for a commercial purpose or for own use. She referred to the stated circumstances of the travellers' trips to Belgium to visit the sick individual in hospital, and she noted that the vehicle had travelled abroad on at least three occasions since the appellant became the registered keeper of the vehicle on 28 June 2002. She then wrote as follows:

"It is extremely unlikely in my view that you [i.e. the appellant] would not be aware of these three trips to the continent undertaken in your vehicle particularly as the mileage recorded would significantly increase and the absence of the vehicle for some considerable time would be noticeable. You have explained your reasons for not being aware that your vehicle travelled when intercepted on 21 September 2002 as being that it was with Mr Pagett for repairs but that does not explain the other two trips where it was used to travel abroad. It is extremely doubtful in my view that travel occurred without your knowledge and if it did then the appropriate action in this matter would have been to report it to the police, particularly if the vehicle was taken without your consent. Collectively these factors lead me to believe that you were fully aware that Mr Pagett was using your vehicle as was Mr Stanton in the importation of excise goods for commercial purposes".

She went on to state her belief that excise goods must have been imported on the other occasions on which the vehicle was used abroad. She stated that the goods were condemned as forfeit to the Crown. She also drew attention to an occasion on 27 September 2001 when the appellant and Mr Pagett were interviewed by French authorities in Dunkirk, when 7,200 cigarettes were found concealed in video boxes in a vehicle in which they were travelling.

Ms Perkins concluded that restoration of the vehicle should not be offered.

During the course of the oral evidence received by the tribunal, it became abundantly apparent that, although the appellant did become the registered keeper of the vehicle in June 2002, in succession to Mr Pagett, it thereafter continued to be used by Mr Pagett just as much as, if not more than, the appellant. Mr Pagett claimed to have sold the vehicle to the appellant. However we find that, at the time of the seizure, the vehicle was effectively being shared by the two of them.

Mr Pagett's continued use of the vehicle revolved round his need to transport fence panels to be erected in the course of his business. The panels would be put on a trailer which would be pulled by the vehicle. When the appellant allegedly bought the vehicle from Mr Pagett, he did so on the basis that Mr Pagett could use it as often as required for that purpose. Consequently, Mr Pagett would "borrow" the vehicle two or three times a week, as it constituted his only means of transporting the fence panels essential to his job. At the time the vehicle was seized, Mr Pagett did not own another vehicle that he could use for that purpose.

We find that in practice the vehicle spent the majority of its time being driven by Mr Pagett. It was normally parked at his premises every night. We were told that the appellant had bought the vehicle from Mr Pagett for £4,000. A bill of sale to that effect was produced. The purchase price was allegedly paid by the appellant and placed in the bank account of Mr Pagett's business. However notwithstanding the sale, Mr Pagett continued to use the vehicle as much as he needed, allegedly without paying the appellant anything for the privilege. We find that the only real use that the appellant had of the vehicle was for leisure purposes, principally to go fishing in it.

The appellant admitted the incident on 27 September 2001 referred to by Ms Perkins in her review letter. He claimed no responsibility for the hidden cigarettes. The fact is, however, that the incident involved Mr Pagett and the appellant in colourable circumstances. It underlines what we find to be the reality of the situation, which was that Mr Pagett and the appellant were very close – which they both admitted.

Consequently we find that the explanation given by the appellant for having left the vehicle with Mr Pagett in September 2002 – that is to say, that he handed it over in order to be repaired – is a contrived one. As between the appellant and Mr Pagett, we find that Mr Pagett was normally responsible anyway for the vehicle, having it in his possession for long periods in any event. Indeed, Mr Pagett drove the vehicle to Belgium having replaced the brake pads on one side of the vehicle only, intending to finish the job in Belgium when he got a moment, which he did. That was very much in his own interests, we are sure, as well as those of the appellant.

We received no explanation as to how the vehicle could have been used for previous trips abroad without the appellant having given his permission. We find that the appellant had put it into the power of Mr Pagett to make use of the vehicle in that way, in such circumstances that the appellant's permission falls to be implied. The appellant reserved no practical control over Mr Pagett's use of the vehicle.

Making his submissions on behalf of Customs, Mr Smith said that the true position had only emerged in tribunal. The truth was that both Mr Pagett and the appellant had had the use of the vehicle. Whether the bill of sale for the vehicle was genuine or not, the use was shared. Mr Pagett had not sought to obtain an alternative vehicle, even three months after the alleged sale, although according to him he had had the money to do so. Customs were, Mr Smith submitted, correct to assume the appellant's complicity in the various trips made by the vehicle to the continent. The closeness of the relationship between Mr Pagett and the appellant was demonstrated by the incident in 2001 when they were questioned in Dunkirk. Mr Smith invited us to dismiss the appeal on the basis that the appellant was not an innocent third party as he claimed.

For his part, the appellant protested his innocence. He said that he was truly ignorant of the trip to Belgium resulting in the seizure of the vehicle, and should not be saddled with the consequences flowing from the forfeiture of the goods. He could not understand how the vehicle had not been restored to him, given that he had not authorized the trip undertaken by Mr Pagett and his fellow travellers. He disowned all responsibility for the incident in 2001. He asked us to allow the appeal.

In our opinion the facts that have emerged in this case present a different picture from the one contended for by the appellant in his correspondence with Customs. The picture that emerges is one of the appellant having facilitated the final trip to Belgium, by virtue of his having allowed Mr Pagett sufficient freedom to use the vehicle for that purpose.

We think that it is unnecessary for us to make a finding as to whether Mr Pagett had really sold the vehicle to the appellant. We note that Mr Pagett initially claimed to Customs that he owned the vehicle. He told a different story in tribunal. We are satisfied that the truth is that he was using the vehicle as if he still owned it, wherever the technical ownership of the vehicle might reside.

The upshot is that Mr Pagett was properly treated by Customs as if he were owner of the vehicle, looked at both from the perspective of Mr Pagett and from that of the appellant. The appellant lacks the status of innocent party for which he has contended. He is, in our view, responsible for the consequences of the fatal trip to the continent, because he did not exercise sufficient control over the use of the vehicle to prevent that happening. The case might have resulted differently if we had found that the appellant imposed, and Mr Pagett accepted, strict conditions governing the use of the vehicle, excluding trips to the continent, and if we had found that the appellant had no reason to suppose that Mr Pagett might breach such conditions. But that is not this case.

We accordingly conclude that Ms Perkins acted entirely reasonably in upholding the previous decision of Customs not to restore the vehicle to the appellant. This appeal is therefore dismissed. We make no order as to costs.

M S JOHNSON

CHAIRMAN

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