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United Kingdom VAT & Duties Tribunals (Excise) Decisions

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URL: http://www.bailii.org/uk/cases/UKVAT/Excise/2004/E00728.html
Cite as: [2004] UKVAT(Excise) E00728, [2004] UKVAT(Excise) E728

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Jane Day and Lee Faiers v Customs and Excise [2004] UKVAT(Excise) E00728 (24 May 2004)

Excise duty – beer – importation of over eight times guide level – whether for commercial purpose – whether goods and vehicle to be restored – reasonableness of review decision – on balance, reasonable – appeal dismissed

LONDON TRIBUNAL CENTRE

JANE DAY and LEE FAIERS Appellants

- and -

THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents

Tribunal: JOHN CLARK (Chairman)

SUNIL K DAS

Sitting in public in London on 11 March 2004

The Appellants in person

Miss Nicola Shaw of Counsel, instructed by the Solicitor's Office of HM Customs and Excise, for the Respondents

© CROWN COPYRIGHT 2004

DECISION

Mrs Jane Day and Mr Lee Faiers, the Appellants, appeal against the Commissioners' decision on review confirming the decision of the Commissioners not to restore a quantity of beer and a Toyota Landcruiser car seized on 14 January 2003.

The issue

The issue in this appeal is whether the decision of the review officer was reasonable.

The facts

The evidence consisted of the Commissioners' bundle of documents, which included witness statements made by three Customs officers and the review officer, Mr Rayden, and the oral evidence of Mr Rayden, Mr Day and Mrs Faiers. We set out the background as shown by the documents, and then refer to the oral evidence. Except in relation to matters that were disputed, which we consider separately, we find the facts to be the following.

At 20.45 on 14 January 2003, a customs officer (officer Wyatt) stopped a Toyota Landcruiser vehicle, registration mark H773 KGS at the Customs Controls Zone at Coquelles in France. The driver was Mr Lee Faiers. In response to the officer's questions, he said that he had been to Calais for about an hour to buy some beer. He had bought 33 cases of "Stella", for his birthday. When the officer commented that this was a bit early, as Mr Faiers' birthday was in June, he replied that his partner's fortieth birthday was in a few weeks and they were having a joint party. The officer asked whether he had a receipt for the beer, and Mr Faiers produced a receipt numbered 35 for 80 cases of Stella. The cost shown was 880.20, although the invoice did not specify whether this figure was Pounds Sterling or Euro. (Mr Faiers confirmed in his evidence that the amount was in sterling.) The officer asked how many cases the receipt was for, and Mr Faiers said: "They always put the wrong amount." The officer said "But you only have 33", and Mr Faiers replied, "Yes." In reply to further questions, he stated that the vehicle was his and was registered to him, and that he had owned it for about eight months. He had travelled about three times in three months, and had not had any contact with Customs before. He confirmed that he understood that he was in the UK Customs Control Zone and that UK laws applied, and that he understood that it was illegal to bring back certain categories of goods. The vehicle was then unloaded, and found to contain 80 cases of Stella. Two lists showing details of alcohol goods were also found, but did not refer to the type of excise goods found. (There was a dispute as to the nature of these lists; we consider this separately below.) The officer referred to excise goods in Mr Faiers' possession which appeared not to have borne UK duty, and proposed to ask him questions to establish whether the goods were held for a commercial purpose. (This statement is recorded as having been made both by officer Wyatt and by officer Redman; we find this odd, as the questioning was by officer Redman and not officer Wyatt.) Mr Faiers confirmed his understanding, and elected to stay for interview, recorded as commencing at 20.55.

Officer Redman asked Mr Faiers why he had misled officer Wyatt about the quantity of goods in the vehicle. He replied, "I couldn't remember how many I had, to be honest with you." He had guessed 33 cases as it was a number that had come into his head. The goods belonged to him. They were for his party, "personal use". He thought that they had cost him £740. The party was a shared fortieth birthday party for him and his girl friend. He had paid for the goods himself. The party was to be held in a community church in Hornchurch, the NALGO Community Club. It did not have a bar. He denied being a revenue trader. He had not made any other trips for this party and did not intend to do so. About 150 guests would be there. Officer Redman asked whether they would all be going to drink Stella Artois all night. Mr Faiers replied, "Yes. The girls will drink wine. My mate was going to bring a load of wine." When asked where from, he said that he did not know. No one had assisted him with the purchase and he did not expect to receive any money or favours for any of the goods. He was going to keep the beer in his house, in the hallway. He worked as a self-employed builder, earning about £250 a week. His financial commitments were that he lived with his girl friend, and they had six children between them, a mortgage, one car, insurance and utilities. He did not have any savings. He had financed this purchase by working. He had not had contact with Customs before and had never seen a Customs Notice 1. Officer Redman asked whether he knew that excise goods were liable to duty, and he replied, "If it was for your own use, no." He did not know that it was an offence to sell imported excise goods without first paying duty. He had last travelled abroad a year ago, to Spain. He had not travelled to France or Spain before to buy excise goods. The vehicle belonged to him. He had owned it for six months. His girl friend had had use of the vehicle. She had not been abroad in it. He had bought the car around the previous summer. Following the interview, Mr Faiers signed officer Redman's notebook. Mr Faiers is also recorded as signing officer Wyatt's notebook at 21.15, following the words "Mr Faiers given opportunity to agree initial questions."

The goods and the vehicle were recorded as seized at 21.25, for the following reasons. The quantity of beer was excessive, over eight and a half times the guidance levels. Mr Faiers misdeclared the quantity of beer, initially declaring only 33 cases despite the fact that he had a receipt for 80. When offloaded it was confirmed that the vehicle contained 80 cases of Stella. Mr Faiers told officer Wyatt that he had made three previous trips in the last three months, yet during the interview he told the officer that the last time he travelled was a year ago to Spain. Also during the interview he stated that h e had owned the vehicle for six months, yet he had initially told officer Wyatt that he had owned it for eight months. He stated that the beer had cost him £740, yet he had earlier given office Wyatt a receipt showing that the beer had cost £880. It was implausible for him to spend £880 on beer for a party, to which nobody else was to contribute, when he earned only £250 a week.

On 16 January 2003 the Commissioners received a letter from Mrs Day, Mr Faiers' partner, referring to an earlier telephone conversation. She explained that the circumstances were extremely urgent. A large party was to take place to following weekend; it had been arranged for some time. It was due to this that her partner Mr Faiers had gone to Calais to purchase beers. The party was to celebrate both their fortieth birthdays and her daughter's birthday; this was the reason for a large amount of drink. She enclosed an invoice for the invitations that they had had printed, as proof. They therefore needed the drink for the weekend and without it the party would have to be cancelled, as they had no other money to buy more.

In her letter Mrs Day also requested the return of the vehicle as a matter of extreme urgency. She explained that she was in the late stages of pregnancy and had been unwell. She had an infection which could bring on labour at any time; they needed their car to get to hospital straight away, and the worry of not having it to hand was causing her a lot more stress. She was at home unable to go anywhere until the baby was born; she enclosed copies of her hospital notes showing the expected date of birth as 3 March 2003. Mr Faiers was having to do a lot of running around for her and her children were unable to get to school on time because of the loss of the car. With her letter she also enclosed an invoice for the sale of the vehicle to her for £3,000. (This invoice was neither numbered nor dated. We understand from the correspondence that at some later stage Mrs Day provided the Commissioners with a similar invoice that was numbered and dated 24 September 2002; no copy of this invoice was included in the Commissioners' bundle, even though it is referred to in the review officer's letter.)

The Commissioners' letter acknowledging Mrs Day's fax was dated 23 January 2003. On 4 February 2003 Mrs Day faxed a further letter enclosing the Vehicle Registration Document V5 and two MOT certificates relating to the vehicle, one current and one that had expired on 10 April 2002. The date of sale or transfer of the vehicle as shown on the copy V5 document was 4 October 2002.

A brief acknowledgment of this letter was sent on the day of receipt. On 26 February 2003 an officer in the Commissioners' Post Seizure Unit wrote to respond to Mrs Day's first letter. The Commissioners indicated that the vehicle would not be offered for restoration. A number of circumstances had been taken into account when considering the request for restoration. The vehicle had been used in the carriage of a large quantity of excise goods; quantities such as this were likely to damage legitimate trade. When asked by officers on the day of seizure Mr Faiers had claimed that he owned the vehicle, and had done so for eight months, and that it was registered in his name. Later he had claimed that he had owned the vehicle for six months. The receipt provided from the garage gave the date of 24 September, and when Mrs Day had sent in a copy of the V5 document, she had hand written a date of 4 October as the date when she had bought the vehicle. Mr Faiers had misled the officer with regard to the quantity of goods that he had purchased; this had been a deliberate attempt to deceive the officer and an indication that Mr Faiers had known that what he was doing was wrong. The letter explained the Commissioners' normal policy in such cases, which was to refuse to restore vehicles in such circumstances. The officer had seen no evidence of exceptional circumstances in this case which would justify a departure from this policy.

Solicitors acting for the Appellants wrote to the Commissioners on 9 April 2003 requesting that the vehicle and contents be restored to their clients in the near future and indicating that a review of the current position would be required. They referred to the reasons set out in the Commissioners' letter dated 26 February 2003. They understood that the goods involved were a quantity of beer valued at £750. They suggested that in the general scheme of things £750 was not a "large quantity", nor indeed a quantity that should necessitate the involvement of the Commissioners. They suggested that the alleged discrepancy as to the length of time for which the vehicle had been owned by the Appellants was entirely irrelevant. The vehicle had either been used for the avoidance of excise duties or it had not. The reason for the purchase of the beer had subsequently explained to the Commissioners, and an invoice relating to invitations also provided to them. All the beer that Mr Faiers had purchased had been openly on display in the vehicle; they were not aware of any suggestion that any attempt had been made to secrete any of his purchases. The result had been that all the goods were instantly available for inspection, and the determination of the quantity involved was not dependent on any discussion between Mr Faiers and Customs officers. They suggested that in all the circumstances the seizure of the vehicle and its contents had probably been unlawful and certainly disproportionate.

The Commissioners acknowledged this letter in a letter dated 10 April 2003, informing the Appellants' solicitors that the Commissioners had 45 days in which to complete their formal review. Mr Rayden on behalf of the Commissioners subsequently carried out the review, and notified the Appellants' solicitors of his conclusion and his reasons in his letter dated 20 May 2003. This letter is the decision against which the appeal is made.

Mr Rayden's letter refers at the beginning only to the decision not to restore the vehicle, but later refers to "the contested decision not to offer restoration of the excise goods or vehicle". (We comment later on this discrepancy.) In reviewing the exercise by the Commissioners of their discretion as to whether or not to restore, Mr Rayden indicated that he had taken a fresh look at all the information available to him. He had examined the officers' notebooks and the correspondence following the seizures. He had also considered both the changes in the Commissioners' policy that had occurred subsequently, and the various challenges that had been made against some aspects of the applicable legislation. He set out the factual background, together with extracts from the applicable legislation. He also set out the Commissioners' restoration policy for excise goods, and their restoration policy for private vehicles. For the reasons set out in his letter he exercised his option to confirm the contested decision not to offer restoration of the excise goods or vehicle. His reasons were the following. Mr Faiers had been stopped by a customs officer in uniform and must have known that he was expected both to answer question truthfully and to disclose the full quantities of any excise goods carried with him in the car. In disclosing only 33 cases when he had 80 cases, Mr Faiers failed to disclose all of his excise goods, thus misleading the officer about the true quantity of goods. If the goods were for Mr Faiers' own use, there was no need to mislead the officer; on these grounds alone, Mr Rayden had reason to doubt that they were for Mr Faiers' own use. Furthermore, Mr Rayden considered that, as Mr Faiers was carrying receipts for the full quantity, he clearly knew that he was misleading the officer. Mr Rayden did not believe that Mr Faiers just declared 33 cases because that number had just come into his [Mr Faiers'] head. The fact that he claimed that the invoices always showed the wrong amount when, in fact, the invoice showed the correct quantity, indicated a readiness on Mr Faiers' part to obscure the true quantity.

As to the quantity of excise goods involved, it was not unreasonable for the officers to take account of the guide levels specified in the Beer Regulations 1993 (110 litres), as well as the other criteria in those regulations and the Excise Goods (Holding, Movement, Warehousing and REDS) Regulations 1992, as amended, in establishing whether or not the goods were held for a commercial purpose. Mr Faiers was importing 960 litres of beer, which was more that eight and a half times the guide level in the regulations. He was importing this quantity of beer, claiming that it was all for a party for 150 people, but that the women guests would drink wine. (The actual number invited was disputed in oral evidence, as considered below.) Even if all the guests were to drink the beer, that would amount to 6.4 litres or 11 pints each. Mr Rayden did not believe that 150 guests would drink 11 pints each at a party. Further, making the reasonable assumption that roughly half the guests would be women, the male guests would have to drink more than 20 pints each; Mr Rayden considered this an even more unlikely and unbelievable proposition. It also seemed implausible to Mr Rayden that Mr Faiers would hold a joint birthday party with his partner in January, some five months before his own birthday in June.

Mr Faiers had told the officers that he was a self-employed builder earning about £250 a week, with a partner, six children between them, a mortgage to pay for, and no savings. (In his letter Mr Rayden used the word "welder"; this appears to be a mistake, although not important to his reasoning.) Mr Rayden did not believe that Mr Faiers would spend £880 on beer, equivalent to three and a half weeks' wages, only to give it away at a party without receiving money in return, as he had claimed.

In response to initial questions, Mr Faiers had said that he had travelled abroad three times in three months, but during the formal interview he had later told another officer that he had last travelled abroad a year previously, to Spain. At first Mr Faiers said that he had owned the car for six months, then later he said eight months, and subsequently Mrs Day had claimed that the car was hers. These inconsistencies caused Mr Rayden to doubt the credibility of Mr Faiers' statements.

In the car, the officers had found lists showing names and quantities of excise goods, and names (ie of people). Taking into account all the circumstances, Mr Rayden concluded that these were most probably lists of goods that had been obtained on a previous trip for customers in the UK who had either paid for them or would do so subsequently. He concluded that the beer for this trip had also been obtained for sale at a profit.

Taking into account all the circumstances that he had considered, Mr Rayden was satisfied that the beer was not for own use, and that it was held for commercial purposes. In his opinion the beer was liable to forfeiture under both regulation 16 of the REDS regulations and section 49(1)(a) of the Customs and Excise Management Act 1979 ("CEMA 1979") and was liable to seizure under section 139(1) CEMA 1979. The car used to carry the beer was therefore also liable to forfeiture and seizure under sections 141(1) and 139(1) CEMA 1979 respectively. The seizures were therefore lawful. Unless there had been a successful appeal to a Magistrates Court contesting the legality of the seizure, and he was unaware of any such appeal, the excise goods and the car were condemned as forfeit to the Crown by the passage of time.

Mr Rayden then considered the question of restoration of the excise goods and the car. He concluded from Mr Faiers' attempts to mislead the officers that he had clearly known that what he was doing was wrong. Mr Rayden considered the solicitors' and Mrs Day's letters to see whether a case had been presented for disapplying the Commissioners' policy of non-restoration. Their policy dated 18 April 2002 relating to private vehicles provided that vehicles would be considered for restoration when the traveller could demonstrate that the excise goods were to be supplied at purchase price and not for profit. As that had not been shown, he declined to offer restoration under that part of the policy. He referred to the decision of the Court of Appeal in Lindsay v Customs and Excise Commissioners [2002] EWCA Civ 267 (reported at [2002] STC 588), relating to the use of vehicle for commercial importation, and concluded that the seizure of the car had been proportionate in all the circumstances. The Commissioners' policy from 29 October 2002 provided that, for first offences involving small quantities of excise goods, vehicles would be considered for restoration. However, as 960 litres of beer did not qualify as a small quantity, he had not applied this policy. He then referred to the Commissioners' change in policy following the decision in R (on the application of Hoverspeed Ltd and others v Customs and Excise Commissioners [2002] EWHC 1630 (Admin) and [2002] EWCA Civ 1804 (reported at [2003] STC 1273). They had amended their policy of not generally restoring seized motor vehicles to owners who were not present at the time of seizure. Restoration could be considered in such circumstances if such owners could show that they were either "innocent and blameless" or "innocent but blameworthy". However, as Mrs Day was Mr Faiers' partner, Mr Rayden did not regard Mrs Day as a genuine "arm's length" third party. Also, to restore the car to Mrs Day would be tantamount to restoring it to the smuggler himself. In these circumstances, he would not offer restoration to her.

He had also paid particular attention to the degree of hardship caused by the loss of the car. Considerable inconvenience had to be expected as a result of having a car seized by the Commissioners, and perhaps a large expense of making other transport arrangements or even in replacing the car. As the inconvenience was the intended penalty for being caught smuggling excise goods and the extra expenses were the alternative to that inconvenience, he did not regard either the inconvenience or the expense as exceptional hardships. He had some sympathy with Mrs Day's difficulties due to the complications of her pregnancy. However, he was aware from official records that she was shown as the keeper of a Ford Orion car since 1990, and a Vauxhall Sofia Comfort car since 27 January 2003. (The position relating to these vehicles was considered in oral evidence, which we consider below.) In the circumstances of having one or even two cars available for her use, Mr Rayden did not regard Mrs Day as having been subjected to exceptional hardship. In his opinion, the application of the Commissioners' policy in this case treated the Appellants no more harshly nor leniently than anyone else in similar circumstances, and he could find no reason to vary the Commissioners' policy of non-restoration in this case.

The oral evidence

Mr Rayden confirmed that the information relating to the vehicles shown as registered in Mrs Day's name had come from the DVLA, to which the Commissioners had access via the Police National Computer. Mrs Day stated that the Ford Orion had been sold between seven and eight years before, and that the Vauxhall had been purchased after the seizure, under a hire purchase contract, and after three months it had been repossessed because she had not been able to keep up the payments; there was an outstanding claim against her by the finance company for about £6,600. Mr Rayden confirmed that he had not had this information at the time of his review. If he had done, he would have taken it into account. He did not think that he would have changed his decision in the light of this information; there was no evidence of exceptional hardship beyond that suffered by anyone as a result of the seizure of a vehicle. At the time of the review, he had not believed that there was any exceptional hardship; the position had been ameliorated by the car that the Appellants had had at the time. He confirmed that the duty on the beer amounted to £593.55.

Mr Faiers confirmed that his answer concerning the quantity of beer when he had initially been stopped had not been true. The beer had been stacked up. He had given the number and laughed; this had been a joke. It had been about 10 pm, and freezing cold. He had said that it was only a joke. He had made a joke because they were making hard work for him. He had not said later that this had been a joke, because the officers could see the quantity. His comment about putting the wrong number on the invoice had also been a joke. He could have given the correct answer if he had not been "larking about". It had been meant to be a joke and had turned into a difficult situation. He had meant to buy varieties of beer, but he had become lost, and went to one place. He had bought the beer at a special price because of the quantity of that one type. He explained that a friend had been going to buy the wine, then said that it was a brother of Mrs Day who was going to do so; this had been the plan until the seizure, but they did not want the same thing to happen with the wine. If the party had gone ahead after all, the brother would have purchased the wine from the off-licence. The amount of beer that he would normally buy for a party was eleven pints a head. The invitations had been to 150 couples, not to 150 people. The NALGO hall catered for about 250 people; they were not catering for 300 people, even though they hoped everyone would be coming. He had spent all his money on the beer. It had been £880 sterling. This money had been savings from when he had sold his house. Miss Shaw commented that this was a lot to spend on lager, and asked why Mr Faiers should be so generous with his money; his reply was that he wanted to buy as much beer as he could. He had had absolutely no intention to sell the beer.

Miss Shaw referred to the lists found in the car. They referred to two individuals, Sonny and Terry. Who were they? Mr Faiers said that they were local newsagents; he had asked them how much it would cost if he had bought that many. He said that the word "paid" referred to what would have to be paid. Sonny's mobile phone number was included for contact purposes. These were not shopping lists.

Mr Faiers confirmed that his initial answer, that he had travelled three times in the last three months, had been correct. In the interview with Mr Redman, he had thought that the question was about travel to Spain. He confirmed that he had signed the interview notes as correct, but had some difficulty remembering what had happened fifteen months ago. When referring to 33 cases for his birthday, he had been "laying it on"; there was to be a joint fortieth birthday party. [Mrs Day pointed out that in his case this would be six months after the event.] He could not remember the wording of the invitation. The party had also been for a daughter, whose birthday was within seven days of Miss Day's. The invitations had been about to be sent out. He confirmed that Mrs Day had been happy for him to take the car; the use of the savings did not bother her. He had said that the car belonged to him, meaning that it belonged "to us". He had not been able to remember the exact date when they had bought it, and first had said eight months, then six.

He confirmed that the party had been arranged for about three weeks, but it had been planned for about six months. The invitations had been sent out at short notice because of Mrs Day's pregnancy problems, although the party had previously been mentioned by word of mouth. He had decided what beer to buy on the basis of what money he had had. At the place where he had bought it, they did not speak English, and he had agreed a deal with them for a pallet of Stella, amounting to 80 cases.

Mrs Day explained that the venue had been booked for a couple of months, on a provisional basis, because she had been unwell due to pregnancy problems. The family were to do the catering. The maximum numbers were to be 300. This involved a lot of food, so they were collecting together supplies over time; her cousins were doing the catering. There was no specific budget for food; they bought food that would keep, out of weekly housekeeping. They had not set a budget for alcohol; these were landmark birthdays, and they had been together for a couple of years, so they had decided that they should "go for it big time". She had not wanted Mr Faiers to buy wine; she was eight months pregnant, and thought that buying Stella would be easier. Quite a lot of wine would have been needed. At the time of the seizure, they had still been working out how much would be needed for the party. The invitations were sent out on the Monday before the weekend of the party. The numbers of guests would not have been split equally between male and female; some families would have been attending. There had been 150 invitations. She thought that some women would have drunk beer. She had been happy for Mr Faiers to go to France; this had been with her full knowledge and consent. He had had to go, as she had not been well. He had been worried about her. The party had been arranged for January because it would be before the baby arrived. It had not been known whether she would make the party. [She referred to the stress and worry after the car had been seized.] The party had been organised quite a few months before, six months. As it was a fortieth party, they would have regretted not holding it. Mr Faiers' money had been purely for the party; they had not intended to keep it for the baby, and would manage on their means. She was sure that Mr Faiers had not bought the beer to sell. They had missed out on the party.

She confirmed that the Ford Orion had been sold eight years before. She had not previously mentioned this, as she thought that the hearing was the point at which to deal with it. She had not known about the DVLA and the Orion. She had not mentioned the Vauxhall, as this had been bought at the end of January, three or four weeks after the seizure. She explained that hospitals did not allow a new-born baby home without a baby seat. There had been correspondence with Vauxhall, as she had missed one payment. A default notice had been issued on 13 May 2003.

She did not think it embarrassing for the party to be for the daughter as well; she had been happy. This did not involve extra guests; the daughter had had a Friday "sleepover". Mrs Day confirmed that the invoice in the bundle had been for the issue of party invitations, and was dated 6 January 2003. The number of invitations was 150, but to more than one person each. There had been no invoice from the NALGO Community Club for the venue; they had reserved the date for a deposit of £50, which they had lost. The other costs that they had incurred were for food, but nothing for wine. If there was no extra money, they could not buy wine or more beer.

Arguments for the Commissioners

(By agreement, Miss Shaw presented her case first.) The goods were dutiable goods liable to forfeiture. The Commissioners had a discretion to restore them [under section 152 CEMA 1979]. Under the Beer Regulations liability to duty depended on whether the importation was for a commercial purpose. The Commissioners' case was that Mr Faiers had lied about the reason for the importation. His story was inconsistent in several places, and did not "stack up". If his purpose had been legitimate, Mr Faiers would have given truthful and honest answers. The issue under section 16 of the Finance Act 1994 was whether the reviewing officer's decision was reasonable. Was it one that no reasonable officer could have come to? Miss Shaw argued that it was perfectly reasonable. Mr Rayden's letter set out clearly the conclusions from his review. In Lindsay the distinction had been made between "social" smugglers and "for profit" smugglers. In the latter case the policy was to be applied strictly, other than in cases of exceptional hardship. Where the smuggling was "social", extra factors had to be taken into account. However, the latter was not relevant in the Appellants' case. The difference between the parties' contentions was that the Commissioners considered that the importation had been for profit, whereas the Appellants argued that Mr Faiers had been going to give all the beer away.

Although the amount paid for the beer had been referred to in the letter from the Appellants' solicitors as £750, the evidence had shown that the amount was £880. This was a large quantity, and, contrary to the solicitors' argument, it did involve the Commissioners, who had a concern and interest in regulating all excise goods. The solicitors had said that the alleged discrepancies in the information provided by the Appellants in relation to the ownership of the vehicle were irrelevant. Miss Shaw argued that the misinformation was not irrelevant; it cast serious doubt. The inconsistencies showed that the Appellants were being economical with the truth. They had been found smuggling goods for profit, and were having problems in trying to cover this up. The solicitors had referred to the party being for both of Mr Faiers and Mrs Day and for Mrs Day's daughter. This was the version of events finally contained in Mrs Day's letter, but it could have been expected to be said when Mr Faiers had been asked what the party was for. On the question of Mr Faiers having misled the officers as to the amount of excise goods involved, the solicitors had said that no attempt had been made to secrete the goods, which had been available in the vehicle for inspection, and that the determination of the quantity had not been dependent on any discussion between Mr Faiers and Customs officers. Miss Shaw commented on this. Mr Faiers had been asked the question "How much?" In reply he had given incorrect information. He had said in evidence that he knew the quantity. She questioned why anybody would give an incorrect answer in such circumstances. She also asked how the officer could count 80 cases stacked in the car; why should the officer do so, having asked the question? In his evidence, Mr Faiers had referred to a "joke"; he had made no such reference on the day of the seizure. The remaining point that the solicitors had made was that the decision was "probably unlawful and certainly disproportionate". The Commissioners submitted that it was reasonable and proportionate; Miss Shaw referred to Mr Rayden's consideration of all the relevant factors. She agreed that the information relating to the vehicles had not been available to Mr Rayden. However, she questioned whether the tribunal should rely on Mrs Day's word; there was no other registration recorded for the Ford Orion. Repossession of the Vauxhall by the finance company would require notice. At the time of Mr Rayden's decision, he knew of the other vehicle. He had been considering only one vehicle.

In advance of the hearing, Miss Shaw had prepared a summary of factors relied upon by the Commissioners; she submitted this at the beginning of the hearing. Having heard the evidence, she argued that this summary still held good despite the additional information provided in evidence. The quantity of beer was more than 8.5 times the Guide Level of 110 litres set out in the Beer Regulations 1993. Mr Faiers had declared only 40 per cent of his actual purchase. He had stated in interview that he could not remember the quantity and that the figure of 33 had just come into his head. The Commissioners did not believe that contention; Mr Faiers had only purchased the lager an hour earlier. In evidence he had referred to making a joke; this was unlikely, given that he had found the experience nerve-wracking, and that he described himself as "shaking". Miss Shaw argued that he had been aware of the seriousness of the situation, and that he "knew his number was up". He had been perfectly well aware of the quantity; the Commissioners considered that he had deliberately lied.

On the party, Mr Faiers had initially claimed that the beer was for his birthday, but subsequently stated that it was for a joint party for him and Mrs Day, whose birthday was in a few weeks. Mrs Day had then stated that the party was for her, Mr Faiers and her daughter. In the Commissioners' view, insufficient details of the party had been given (for example, the date and confirmation of venue hire). The invoice for printing was unspecific. The Commissioners maintained that it was unusual to have a joint birthday party between people whose birthdays were in January and June, and noted that details of the persons for whom the party was to be thrown had changed twice. The evidence had still not made it clear how many people were to be attending. Miss Shaw suggested that the venue would want to be very clear about the number of guests. The vagueness indicated that the event was not as well planned as the Appellants would have one believe. It had been said that the event had been planned for six months, but the trip for the beer took place only on the Monday before it was to take place. The invitations had only been ordered on 6 January 2003. When Mr Faiers had gone to buy the lager, he did not actually know how many were coming. The Appellants' contentions at the hearing had only been based on the number invited. Miss Shaw argued that one would need to be very sure how many people were expected to attend.

Notes listing names of people ("Sonny" and "Terry"), and setting out quantities of excise goods and amounts (some noted as "paid") had been found in the car being driven by Mr Faiers. Mr Faiers' explanation in evidence had not been credible. A person wishing to compare costs would be more likely to go to a supermarket, off-licence or similar establishment. It was also odd to keep a record of a mobile phone number for a trader being used as a comparison. It was also not credible for the word "paid" to refer to what would have to be paid. The notes raised a suspicion that Mr Faiers had smuggled goods on previous occasions.

Mr Faiers' differing answers concerning the ownership of the vehicle were a further reason not to believe his account of events. In relation to previous trips, he had changed his story. In evidence he had said that he thought Mr Redman had been asking him about Spain. This was not borne out by the officer's notebook, which showed the question to have been, "When did you last travel abroad?" In relation to Mr Faiers' financial position, he had stated at the interview that he had no savings and had funded the purchase by working. However, he had said in evidence that he had had savings. Miss Shaw argued that his income of £250 a week put him on a tight budget; it beggared belief in his circumstances that he would spend his entire savings on lager for a party and give it all away. This was simply not credible, taking into account his commitments. The Commissioners contended that he was going to make a profit. His failure at the interview to give details of the exact amount spent, when it was so significant and the purchase had only been an hour earlier, was difficult to explain. She referred to the quantity of drink per guest. On the basis of the original reference to 150 guests, this would have amounted to 11 pints per head. If the women drank wine as Mr Faiers said at the interview, and so half the guests drank lager, this would have amounted to 22 pints per head. In evidence it had been suggested that the number of guests might be 300, which would reduce the average by half. Mrs Day had referred to the possibility of some women drinking lager. Miss Shaw questioned why there would be only one type for everyone to drink. On the provision of wine, she argued that it was unlikely that Mrs Day's brother would have paid UK prices subject to duty for the quantity needed. One would expect to see a range of drinks being bought; it would be easy to fill up a trolley. There was no specific evidence on the wine. One would want to ensure that all were being catered for; when hosting a party, the host would not provide just one type of drink.

On the vehicles, it had to be considered what evidence was available to Mr Rayden. As at the time of the review, police records showed that another vehicle was available to Mrs Day. This removed the argument based on exceptional hardship. Mrs Day was not "innocent and blameless". She had allowed Mr Faiers to take what was said to be their only car, at a time when she might have had to be rushed to hospital. She had permitted him to spend all his savings on one brand of lager for a party. Miss Shaw argued that it did not make sense for Mrs Day, as a woman eight months pregnant, with a difficult pregnancy, to allow Mr Faiers to go to France. The Commissioners contended that Mrs Day knew that the return would be significant, as Mr Faiers would be able to sell the beer on at a profit. Miss Shaw argued that the tribunal should be highly sceptical about the party, taking into account Mrs Day's condition and the concern as to whether she would be able to attend. Miss Shaw submitted that Mrs Day was implicated in Mr Faiers' smuggling.

The seizure of the goods and vehicle had not been challenged under Schedule 3 to CEMA 1979, and the goods were therefore deemed to have been duly condemned as forfeit pursuant to paragraph 5 of that Schedule; the issue of seizure was closed, the Appellants having requested restoration.

Miss Shaw argued that Mr Rayden's decision had been predicated on the conclusion that Mr Faiers was a smuggler, and had been doing so for profit. It had therefore been appropriate to apply the Commissioners' harshest policy. The decision was reasonable and proportionate. Mr Rayden's conclusion was reasonable and justified. Mr Faiers had given inaccurate information on a series of factors. He had lied about five factors on which he had been asked questions; Miss Shaw argued that this had been to cover up for his smuggling for profit. Mrs Day had known about it, or turned a blind eye. A financial benefit would have been expected. Miss Shaw also referred to Mr Faiers' income as compared with his financial commitments. She drew attention to the sheer volume of beer compared with the number of guests. The only drink that had been provided was lager; no specific details had been given of the wine intended to be provided. Miss Shaw also referred to the "shopping lists". Taking everything into account, Mr Rayden's decision had been entirely reasonable.

Arguments for the Appellants

The Appellants relied on the arguments put in correspondence, including the letter from the solicitors. Mrs Day could not understand why the car had not been restored. Mr Faiers had gone to get beer for the party at the weekend. She had had the vehicle for fifteen months. Mr Faiers had been harshly treated, having been detained for four hours. The officers had left him to get home. He had had to take a taxi at a cost of £150. Mrs Day had been extremely worried and stressed by the experience. They had been under the impression right up to lunch time on the day of the party that there was a possibility of the goods being restored, so they had kept the arrangements for the party going until then. The Commissioners had made assumptions relating to the guests. Their whole case was based on assumptions, with no proof. Mrs Day pointed out that there was proof of the party, the bill for the invitations. She also mentioned the cost of the phone calls to Customs.

In reply to Miss Shaw's arguments, Mrs Day maintained that the Appellants were telling the truth. The party had been arranged. They had had contact with the Commissioners for the whole time up to the hearing, and no further evidence had been asked for relating to the party. In relation to the cars, she had stated in her letter to the Commissioners that she had no other vehicle. She argued that different people arranged parties in different ways; she had been pregnant, so she questioned what was the correct way to arrange a party in the circumstances. There was no need to apologise for arranging a party at a late stage. The Commissioners were broadening petty points to arrive at their conclusion. It was totally false for the Appellants to be regarded as smugglers. Why would it have been acceptable to have a variety of lagers? They had chosen to do it differently. She accepted that it had been wrong for Mr Faiers to joke; however, this was his personality. The question was how people reacted under pressure. He had panicked. She could not see that he had done anything wrong. She pointed out that pregnant women did irrational things. Mr Faiers had explained that it had been a joke. She stressed the importance of the birthday occasion, that being the actual weekend of the birthday. It would not have been easier to arrange the party for a later stage, as the baby would have been born by then. The Appellants were not smugglers, nor liars, and had been treated terribly from the beginning.

Discussion and conclusions

Under section 16 Finance Act 1994, our functions on appeal are limited. We can only take action in relation to the review decision if we are satisfied that the decision on behalf of the Commissioners set out in Mr Rayden's review letter was one that he could not reasonably have arrived at. To show unreasonableness, it must be demonstrated that the Commissioners reached a decision which no reasonable body of Commissioners could have made, or that the Commissioners did not take into account all relevant considerations, or that they did not leave out of account all irrelevant considerations. This follows from JT Bowd v Customs and Excise Commissioners [1995] V&DR 212 at 224. Section 16(4) Finance Act 1994 does not give the tribunal jurisdiction to substitute its own decision for that of the Commissioners.

In reviewing Mr Rayden's decision, certain matters do cause us some concern. The first relates to the cars. Mrs Day referred in her letter faxed to the Commissioners on 16 January 2003 to "having no car". When Mr Rayden became aware as a result of the information from the DVLA that there appeared to be two other vehicles registered in Mrs Day's name, he concluded without further enquiry that both vehicles were available to her. Mere registration in a person's name is not evidence that the vehicle is available to that person. We find as a fact that the Ford Orion was not available to Mrs Day; she had failed to notify the DVLA, but the absence of registration of that vehicle in any other person's name could equally have been because the vehicle had been scrapped by that stage. At the time of this letter, Mrs Day did not have the Vauxhall. It was not mentioned in the solicitors' letter, but they were arguing more generally for restoration, so did not have occasion to refer to hardship. It would have been better if the availability of this car had been mentioned at that stage, but equally it would have been preferable for Mr Rayden to request information about both these vehicles before issuing his decision on review. Instead, the Appellants' explanation was not given until the hearing. We accept that replacing a vehicle can make the argument as to hardship more difficult to maintain, although in Mrs Day's case the history of the replacement vehicle has proved to be a significant further hardship.

In relation to the number of guests, Mr Faiers gave the answer at the interview that there were to be about 150. At the hearing, the number 300 had been referred to, the explanation of the difference being that the invitations would be to couples or more than one person. If the greater number had been attending, this would have affected the calculation of the average consumption being allowed per individual. However, no attempt was made to put this information in front of Mr Rayden before he arrived at his decision. On this issue we conclude that the information came too late to affect the reasonableness of Mr Rayden's decision.

Mr Rayden made no comparison in his review letter between the value of the vehicle and the amount of duty at stake. However, we accept that in Lindsay, Lord Phillips MR indicated that in the case of persons deliberately using their cars to further fraudulent ventures, it was not necessary for the value of the vehicle to be taken into consideration; the circumstances would normally take the case beyond the threshold where that factor could carry significant weight in the balance. If the conclusion as to commercial smuggling was correct, this would mean that it was not disproportionate to seize the vehicle, even though the amount of duty was modest when compared to the price recorded as paid for the car. We consider below the other factors relating to this conclusion.

We were concerned that the review letter initially referred only to the vehicle and not to the goods. However, after giving the background facts and the applicable legislation, Mr Rayden sets out both the restoration policy for excise goods and that relating to private vehicles. His consideration of the restoration question relates both to the goods and to the car, and in his conclusion he refers to confirming the contested decision not to offer restoration of the excise goods or the vehicle. We are therefore satisfied that he fully considered both questions on review.

The other factors taken into account in Mr Rayden's review were the inconsistencies in the information given to the Commissioners. When stopped, Mr Faiers declared that he had 33 cases of beer, although the correct number was 80 cases, and the receipt was for 80 cases. Mr Faiers' original explanation for this was that he had guessed at 33 cases because it was a number that had come into his head. However, at the hearing he had said that it had been a joke. We do not accept that these explanations are consistent. He said that he had negotiated a special deal for the purchase of a whole pallet of Stella; we do not think it likely that he would have forgotten the details so shortly after the transaction. We also doubt whether, under the strain of questioning by a customs officer, anyone would make a joke about the very point on which the officer was seeking information. We therefore find that the answer was not a joke. It was clearly inconsistent with the true position. As the transaction had been so recent, we think it reasonable for Mr Rayden to conclude that the answer was an attempt to mislead the officer. Mr Faiers also gave the amount spent as £740, although the receipt was for £880. His initial explanation for buying the beer was that it was for his birthday, and only later did he say that the party was to be a joint one for Mrs Day as well. Mrs Day said in her letter that the party was for both their birthdays and for that of her daughter as well. The birthday dates for the Appellants were six months apart. The only evidence to substantiate the arrangement for a party was the receipt for the purchase of 150 party invitations; there was no record of the arrangement to hire the hall, nor any guest list, nor sample invitations. The number of guests that the hall could hold was less than the 300 mentioned, so the latter figure cannot be regarded as definite.

There were further inconsistencies. Mr Faiers said that the car was his, when it was Mrs Day's. We do not accept that this amounted to saying that the car belonged to the Appellants. He first said that he had owned it for eight months, then at the later interview said six months, and that he had bought the car around the last summer. (Mrs Day referred at the hearing to having owned it for fifteen months, but it had been registered in her name in October 2002, about three months before the seizure, and the invoice that we did not see was dated 24 September 2002). Mr Faiers first said in relation to trips abroad that he had travelled three times in the last three months, but in the later interview said that he had last travelled abroad a year before, to Spain, and that he had not travelled to France or Belgium before to buy excise goods. He said that his weekly income was £250, and his financial responsibilities were for six children, with another expected, yet he was financing the purchase by working. He told the officer that he had no savings, yet at the hearing he stated that he had had the money on the sale of a house. This information was not available to Mr Rayden, but we are not satisfied that someone in Mr Faiers' position, with such substantial responsibilities, would use savings for buying a large quantity of beer rather than keeping them for necessities, particularly with a further child about to be born. In relation to the lists found in the car, we do not accept Mr Faiers' explanation that these were to guide him as to the prices to expect; we regard it as reasonable for Mr Rayden to take into account that these might suggest involvement in other acquisitions of excise goods for other persons.

As Miss Shaw indicated, there is also an inconsistency between the proposal to have a party to celebrate Mrs Day's fortieth birthday and her state of health at the time. In her letter sent two days after the seizure, Mrs Day referred to having an infection which could bring on labour at any time, and said that she was at home unable to go anywhere until the baby was born. It seems to us unlikely that a lavish party would be arranged for someone in her condition, with the risk that pregnancy complications could have prevented her from attending. It also appears strange to us that the invitations for what the Appellants saw as such a significant occasion were not purchased until 6 January 2003, less than two weeks before the Saturday set as the date for the party. We also take into account that the expected consumption rate for the lager would have been high even if the number of guests had turned out to be 250 or 300, the latter being a greater number than the hall was capable of taking. We accept that not all the guests at a party would want to drink Stella Artois lager, so this would make the allowance per lager drinker even greater. There was no satisfactory explanation of what other drinks were to be provided and how these were to be paid for; if the arrangements for the party were continuing to be made until midday on the day it was to take place, we would have expected to see some evidence that arrangements for providing other drinks had been made. We do not find the evidence for the existence of the proposed party convincing, and we accept that it was reasonable for Mr Rayden to conclude that it was unlikely that Mr Faiers, given his circumstances, would spend such a large amount on beer only to give it away at a party without receiving money in return.

In the light of the comments in the Hoverspeed decision, the burden of proof as to commerciality falls on the Commissioners. This does not require them to establish the precise intention of the importer, but merely to show, on the balance of probabilities, that the importation must have been commercial. In arriving at their conclusion on commerciality, it is reasonable for them to take into account inconsistencies in the information that the importer provides. In the absence of a satisfactory explanation for the importation, it is reasonable for the Commissioners to conclude, on the balance of probabilities, that the motive was commercial. We have considered Mr Rayden's review decision in the light of the further evidence given at the hearing, and our view is that on balance (taking into account our reservations already mentioned) he has taken all relevant considerations into account, and has disregarded all irrelevant considerations. On the evidence that he considered, it was reasonable to conclude that the importation of a quantity of beer significantly in excess of the guidelines was commercial. (It was appropriate to interpret the lists found in the car as a material indication of Mr Faiers' intentions.) There is thus no basis for us to interfere with Mr Rayden's decision not to restore the goods.

We also conclude on balance that his decision relating to the car did meet the reasonableness test. It is clear that Mrs Day did agree to Mr Faiers' use of the car to go and buy and then transport the beer. She did therefore involve herself in the venture. This removes her from the categories of "innocent and blameless" and "innocent but blameworthy", in respect of which the Commissioners' amended policy allowing restoration might have applied. It is clear from Lindsay that involvement in commercial smuggling renders the question of proportionality irrelevant. While we acknowledge that Mrs Day has suffered considerable hardship, we do not consider that there is any basis to question Mr Rayden's decision not to offer restoration of the car.

The appeal is therefore dismissed; we make no order as to costs.

JOHN CLARK

CHAIRMAN

LON/03/8176

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