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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 >> Crofton-Sleigh v Customs and Excise [2004] UKVAT(Excise) E00747 (21 June 2004)
URL: http://www.bailii.org/uk/cases/UKVAT/Excise/2004/E00747.html
Cite as: [2004] UKVAT(Excise) E747, [2004] UKVAT(Excise) E00747
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Crofton-Sleigh v Customs and Excise [2004] UKVAT(Excise) E00747 (21 June 2004)
    E00747
    Excise Duty Appeal – Application to re-instate Notice of Appeal –Time Limits under rule 26(3) not complied with – Application without Merit - Application Dismissed.

    LONDON TRIBUNAL CENTRE

    MR MARK RICHARD CROFTON-SLEIGH Appellant
    • and –

    THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents

    Tribunal: MICHAEL TILDESLEY (Chairman)

    Sitting in private in Lowestoft on 25 March 2004

    Appellant appears in Person

    Mr Christopher Mellor Counsel for the Respondents

    © CROWN COPYRIGHT 2004

     
    DECISION
  1. On the 6 October 2003, the Appellant made application for reinstatement of his Notice of Appeal dated the 11 September 2001, in respect of the Respondents' assessment of excise duty due on rebated fuel improperly used in the sum of £98,745.

  2. The Application was heard before me sitting in private in Lowestoft on the 25 March 2004, when I made the following directions in relation to the Application:

    3. •    The Respondents produce an opinion on whether the Appellant has a reasonable prospect of success in relation to the Appeal based on the "draft further and better particulars" of the grounds of Appeal which have now been confirmed by the Appellant.

    •    The Respondents' opinion should address the issues about whether they can raise the assessment on the company which sold the fuel and the proportionality of proceeding against the Appellant in view of his acquittal at the Crown Court and the financial damage caused to his company.

    •    The Respondents' opinion to be served on the Tribunal and the Appellant by the 22 April 2004.

    •    The Appellant will have a right of response to be served on the Respondents and the Tribunal by the 7 May 2004.

    •    The Tribunal will make its decision on the Application to reinstate by the 21 May 2004.

  3. The Respondents were given an extension of time in which to serve their opinion. It was served on the Tribunal on the 5 May and posted to me on the 25 May 2004.

    4. The Appeal and Chronology of Events
  4. On the 11 September 2001, the Appellant lodged a Notice of Appeal which stated simply that he did not owe HM Customs and Excise any excise duty.

  5. The Appeal proceedings were stood over until the 1 August 2002, to await the outcome of the criminal proceedings against the Appellant in connection with the Appeal.

  6. On the 1 August 2002 the Respondents served notice on the Appellant requesting a list of documents within thirty days and to provide further and better particulars of the grounds of appeal.

  7. On the 3 April 2003, the Tribunal Directed that the Appellant supply further and better particulars of his appeal to the Respondents within two months after the date of release of the Direction (released on the 7 April 2003).

  8. On the 14 August 2003, the Tribunal issued a further Direction stating that unless the Appellant supplies further and better particulars of his Appeal within 28 days of the date of release of this Direction [released on the 15 August 2003] the Appeal will be struck out without further hearing.

  9. On the 25 September 2003, the Tribunal informed David Hanman Associates, Appellant's solicitors, that the Appeal has been struck out because of the Appellant's failure to comply with the Direction issued on the 14 August 2003.

  10. The detailed chronology of events is set out in Schedule One attached to the Decision.

    11. The Appellant's Explanation and Further and Better Particulars
  11. The Appellant's explanation for not complying with the Directions of the Tribunal was that his solicitors did not keep him informed of the various hearing dates and that they failed to finalise the "draft further and better particulars" submitted on the 12 August 2003. The Appellant confirmed the "draft further and better particulars" which are summarised below:

    12. •    He purchased the rebated fuel in good faith.

    •    He was charged with a criminal offence in relation to the use of the rebated fuel.

    •    He was acquitted of the criminal offence by the Crown Court.

    •    The ring leader of the conspiracy to sell rebated fuel pleaded guilty and was sentenced to a term of imprisonment.

    •    The Appellant was singled out for prosecution. He was the only purchaser who was charged and tried for a criminal offence.

    •    Some of the purchasers of the rebated fuel were not subject to civil assessment and penalty.

    •    At the criminal trial the Crown conceded that part of the fuel deliveries contained in varying proportions duty paid fuel suitable for diesel engines.

    •    The Crown could not establish the proportion of duty paid road fuel in each delivery of rebated fuel to the Appellant. Therefore the amount of excise duty lost on the heavy oil could not be accurately quantified.

    •    The Crown should seek reparation from those who received the benefit of payment from the Appellant.

  12. The Appellant stated that he suffered severe financial difficulties as result of the criminal prosecution and was on the verge of bankruptcy. His lorries had been seized by Customs and when they were returned to him he had problems in re-establishing his business because of the stigma associated with criminal proceedings.

    13. The Respondents' Submissions
  13. The Respondents' submissions on the draft further and better particulars were as follows:

    14. The Appellant purchased the rebated fuel in good faith and was acquitted of a criminal offence in relation to the use of rebated fuel.
  14. The fact that the Appellant alleged that he bought the fuel in good faith and was acquitted in criminal proceedings were irrelevant to the present appeal. There was no requirement with the current Appeal for the Appellant to have known that the fuel was illegitimate. The Appellant was liable for such excise duty under the assessment simply because he used heavy oil and was responsible for the heavy oil being taken into his road vehicles.

    15. Those that supplied the rebated fuel to the Appellant pleaded guilty to the criminal offences and that the Appellant was the only purchaser to be prosecuted and some purchasers have not been subject to civil proceedings.
  15. Criminal proceedings were commenced against three suppliers of the fuel, namely, Jonathan Gray, Trevor Watts and David Snelling. No evidence was offered in respect of the charges against Mr Gray. The Crown failed to establish its case against Mr Watts who was released following the submission of no case to answer. Mr Snelling was the only supplier who was convicted and sentenced to eighteen months imprisonment by the Crown Court. The Respondents prosecuted the Appellant because they considered that there was evidence to prove intent, namely, the price paid by the Appellant, the method of ordering and delivering the fuel and the method of payment. In the Respondents' view there was no strong evidence of intent in respect of the other purchasers to bring criminal proceedings against them. However, all the purchasers except for two have been assessed for excise duty on their use of the rebated fuel and have had civil penalties imposed against them.

    16. The Crown conceded that part of the deliveries of rebated fuel contained duty paid fuel and, therefore, the Respondents cannot properly quantify the amount of excise duty due.
  16. The Respondents accept that the Appellant was supplied with a mixture of kerosene and road diesel. Further the Respondents treated the road diesel for purposes of the assessment as duty paid fuel. Counsel submitted that the Respondents have properly taken into account the proportion of duty paid fuel in the mixture when arriving at their assessment. The assessment for excise duty was based upon information provided by the Appellant about the quantities of fuel delivered. The Respondents calculated the excise due on the quantities of fuel delivered less 25% which represented the amount of duty paid fuel in the mixture. The 75/25% kerosene/duty paid fuel in the mixture was derived from the level of contamination of rebated oil in the bulk storage tank on the Appellant's premises and from the contamination level found in his vehicles, four of which had contamination levels in excess of 75%. Counsel observed there was no challenge from the Appellant about whether the Respondents exercised best judgement. Further, the Appellant has provided no evidence to dispute the amount of excise duty claimed.

    17. The Respondent should seek reparation from those convicted for supplying rebated heavy oil.
  17. Respondents' Counsel contended that this ground was ultimately irrelevant to the Appellant's liability. Section 13 of Hydrocarbon Oils Duties Act 1979 (HODA) did not allow the Respondents to assess the suppliers for the excise duty on the fuel purchased by the Appellant. The only avenues that could be pursued against the suppliers were either for a limited civil penalty under section 9 of the Finance Act 1994 or to bring criminal proceedings. The Respondents took criminal proceedings against the suppliers.

  18. In addition, Counsel has considered whether the action by the Respondents to assess the Appellant for excise duty was a proportionate response to the Appellant's contravention having regard to his acquittal and his difficult financial situation.

  19. Counsel was of the opinion that the assessment was entirely proportionate because:

    20. •    The excise duty on the fuel purchased by the Appellant was still due in accordance with applicable law. The Appellant was liable for such duty because he used the illegitimate fuel and took it into his vehicles.

    •    The law did not allow the Respondents to assess duty against suppliers under Section 13 of HODA 1979 and that any assessment against them under the mixing provisions would prove unsustainable.

    •    The issue in the criminal proceedings was the Appellant's dishonest intention, which was not relevant to his dispute with the imposition of a civil assessment.

    •    Some of the purchasers who were not charged with criminal offences were issued with assessments and civil penalties. No civil penalties have been raised against the Appellant.

    •    The circumstances surrounding the Appellant's purchase should have alerted him to the dubious nature of the supplies which lends additional support to the proportionality of the assessment.

  20. The Appellant has not availed himself of the opportunity to respond to the Respondents' submissions which were sent to him on the 5 May 2004.

    21. Reasons for my Decision
    Jurisdiction
  21. Rule 19(4) of the Value Added Tax Tribunals Rules 1986 permits the Tribunal to allow or dismiss an Appeal on failure of a party to comply with any of its directions. Rule 19(4) enabled the Tribunal to strike out the Appellant's Appeal for his failure to supply further and better particulars in accordance with the direction of 14 August 2003. Rule 26(3) allows the Tribunal to set aside any decision or direction given in the absence of a party on such terms as it thinks just provided the absent party makes application within 14 days after the date when the direction of the Tribunal was released. The Appellant was relying on rule 26(3) to give the Tribunal jurisdiction to hear his application to re-instate his Notice of Appeal.

  22. Gotelee and Goldsmith, the Appellant's solicitors, requested reinstatement of the Appeal on the 6 October 2003. Although, this application was made within 14 days of the Tribunal advising David Hanman Associates, the Appellant's previous solicitors, that the Appeal had been struck out, it was not made within 14 days from release of the "unless direction" on 15 August 2003. The applicable time point for the Appellant's application under rule 26(3) to re-instate his Notice of Appeal was the date of release of the "unless direction" not the date when the Tribunal informed him that his Appeal had been struck out. Thus his application to re-instate his Notice of Appeal was out of time because he lodged it with the Tribunal more than 14 days from the date of the release of the "unless direction" on 15 August 2003. The Appellant could have made an application under rule 19(1) to extend the 14 day time limit under rule 26(3), it would appear, however, from the chronology that no such application was made. Therefore, the Appellant's application fails because the Tribunal does not have the jurisdiction to entertain it.

  23. Respondents' counsel did not raise the point about time limits under rule 26(3) at the hearing. The Appellant was not represented and is experiencing serious financial problems. In those circumstances I have decided to consider the Appellant's application on its merits as if I had jurisdiction under rule 26(3).

    24. Decision on its Merits
  24. I have approached the exercise of my discretion under Regulation 26.3 in two stages. First, has the Appellant given a satisfactory explanation for his failure to comply with the directions of the Tribunal? Second, should I grant or refuse the Application having regard to all the circumstances including the balance of prejudice and the right to a fair hearing?

  25. The chronology revealed that the Respondents made application on the 1 August 2002 for the Appellant to serve a list of documents within 30 days and provide further and better particulars. Subsequently the Tribunal made directions on the 3 April 2003, requiring the Appellant to supply further and better particulars within two months after the date of the release of the direction (7 April 2003). On the 14 of August 2003, the Tribunal directed that unless the Appellant supplied further and better particulars within 28 days of the date of release of the direction (15 August 2003), the Appeal would be struck out without further hearing. Nothing was heard from the Appellant with the result that the Appeal was struck out on the 25 September 2003.

  26. Having examined the chronology, I am satisfied that the delay from the 1 August 2002 associated with the Appeal proceedings has been the responsibility of the Appellant. His explanation for not complying with the directions was the failure by his solicitors to keep him informed of the proceedings. I find inconsistencies between the Appellant's explanation and the chronology. During the course of the Appeal the Appellant instructed three firms of solicitors and presumably given instructions to release the papers to the new firm of solicitors. Further, on the 12 August 2003, David Hanman Associates enclosed a copy of "draft further and better particulars" which should have been agreed with the Appellant before they were sent. In those circumstances I consider that there was contact between the Appellant and his legal representatives during the course of these proceedings.

  27. The question of whether the Appellant has a real prospect of success in relation to his Appeal is a material factor in weighing up the balance of prejudice to the parties which in turn is a critical factor for determining the outcome of the application to re-instate. The majority of the points in the "draft further and better particulars" dealt with the criminal prosecution rather than the civil assessment. The "draft particulars", however, raised the issue about whether the Respondents could properly establish the loss to the revenue by the Appellants' use of the rebated fuel. Respondents' Counsel explained in detail how the assessment was arrived at. He showed that the Respondents had allowed for the duty paid fuel in the mixture using information supplied by Appellant about the amount of fuel delivered and the levels of contamination in the bulk storage tank and in the vehicles used by the Appellant's business. This enabled the Respondents to calculate with some certainty the amount of excise duty owed by the Appellant in respect of his use of the rebated fuel. The Appellant has not challenged the contents of Counsel's opinion. I conclude that the Appellant has not demonstrated to me that he has a realistic prospect of success with his Appeal if I allow his application to re-instate on the grounds set out in the "draft further and better particulars".

  28. The issue of prejudice, however, is not restricted to the Appellant, but encompasses potential prejudice to the Respondents. Counsel pointed out that it was approaching three years since the assessment and even longer since the officers visited the Appellant in June and September 2000. The granting of the Appellant's application would build in further delay which would severely compromise the Respondents' case.

  29. Article 6 of the European Convention on Human Rights gives the Appellant the right to a fair hearing in the determination of his civil rights and obligations. The chronology showed that the Appellant has been given every opportunity to exercise his right but by his inaction has failed to avail himself of the opportunities so provided.

  30. I directed Respondent's Counsel to address the Appellant's assertion that he had been singled out for prosecution and civil assessment. Counsel explained why the Respondents prosecuted the Appellant and the reasons for not prosecuting other purchasers. He stated that civil assessments and penalties had been raised against the other purchasers except for two where the Respondents gave their reasons for not requiring them to pay excise duty. Counsel analysed the legislation to show that it was not possible to recover the excise duty lost from the suppliers of the rebated fuel. I am satisfied that the Respondents have been even-handed with the Appellant. Counsel has persuaded me that the Respondents' action to assess the Appellant for excise duty was a proportionate response to his contravention.

  31. I, therefore, find that

    32. •    The Appellant's explanation for not complying with the directions of the Tribunal unconvincing and inconsistent with the facts revealed in the chronology.

    •    The Appellant has been responsible for the delay in the hearing of this Appeal since the 20 August 2002.

    •    The Appellant has not demonstrated in the "draft further and better particulars " that he has a realistic prospect of success with his Appeal.

    •    The Respondents will suffer prejudice with their case if there is further delay.

    •    The Appellant has had ample opportunity to exercise his right to a fair hearing but has not availed himself of the opportunities presented.

    •    The Respondents have been even-handed with the Appellant. Their decision to assess him for excise duty was a proportionate response to the Appellant's contravention.

  32. I consider that I had no jurisdiction to hear the Appellant's application to re-instate his Notice of Appeal because it was not made within 14 days from the release of the "unless direction " on 15 August 2003. However, as this point was not raised by the Respondents on 25 March 2004, I have considered the merits of his application. I find that his application is without merit for the reasons set out in paragraph 31 above. I, therefore, dismiss the Appellant's application to re-instate his Appeal which means that the direction made on 14 August 2004 striking out his Appeal and confirmed on 25 September 2003 stands. I make no order for costs.

    33. MICHAEL TILDESLEY
    CHAIRMAN
    RELEASED:21/06/2004

    LON/2001/8186

    Schedule One

    CHRONOLOGY
    (C = Customs and Excise; A = Appellant)

    07.06.2000
    C Visit A's premises and samples of fuel are taken from vehicles and bulk storage tank.

    A interviewed.

    06.09.2000
    A interviewed.

    08.06.2001
    Assessment for the period 21.04.99 to 07.06.2000, in the sum of £98.745, for excise duty on rebated fuel improperly used.

    21.08.20001
    C To Russell Jones & Walker (A's initial representatives): Review Decision.

    11.09.2001
    Notice of Appeal: stating simply that A "does not owe H.M. Customs & Excise any excise duty"

    19.09.2001
    Russell Jones & Walker to Tribunal: enclosing Notice of Appeal

    26.10.2001
    C Application Notice: that appeal be stood over until after conclusion of criminal proceedings.

    12.11.2001
    Tribunal Direction: appeal stood over for 6 months pending the outcome of the criminal proceedings.

    21.05.2002
    Tribunal to C: stating that appeal stood over until 12.05.2002 and that has now expired; asking for appropriate action to be taken.

    30.05.2002
    Tribunal to C: asking for confirmation of current position.

    11.06.2002
    C Application Notice: for time for service of Statement of Case and List of Documents to be extended to 12.07.2002 to clarify result in criminal proceedings. Application allowed on 17.06.2002.

    25.07.2002
    Tribunal to C: stating that appeal stood over until 12.07.2002 and that has now expired; asking for appropriate action to be taken.

    01.08.2002
    Statement of Case and List of Documents

    C Application Notice: apply that date of service of Statement of Case and List of Documents be extended up to the date of service.

    C Application Notice: that A serve List of Documents within 30 days and provide Further and Better Particulars.

    24.09.2002
    Notice of Hearing (C application that A provide further and better particulars of his grounds of appeal) on 07.11.2003.

    04.11.2002
    A to Russell Jones & Walker: authorising release of papers to David Hanman Associates (A's next representatives).

    06.11.2002
    David Hanman Associates to Tribunal: enclosing Notice of Acting; applying for matter to be adjourned for 4 weeks. Tribunal stood over appeal to 20.12.2002.

    David Hanman Associates to C: stating that asked Tribunal for a 4 week adjournment to allow them to obtain all of the papers.

    21.01.2003
    Tribunal to C: stating that appeal stood over until 21.12.2002 and that has now expired; asking for appropriate action to be taken.

    28.01.2003
    David Hanman Associates to Tribunal: with change of address.

    29.01.2003
    Tribunal to C: asking for confirmation as to current position.

    30.01.2003
    C to Tribunal: asking for another hearing to be listed for 'further and better particulars'.

    25.02.2003
    Notice of Hearing (C application that A provide further and better particulars of his grounds of appeal) on 03.04.2003.

    03.04.2003
    Tribunal Direction: directing that A supply Further and Better Particulars of his appeal within 2 months after the date of release of the direction [released on 07.04.2003]

    09.06.2003
    Tribunal to C: asking whether directions order released on 07.04.2003 has been complied with.

    25.06.2003
    Tribunal to C: asking whether directions order released on 07.04.2003 has been complied with.

    26.06.2003
    C Application Notice: for appeal to be struck out for want of prosecution under rule 18(2) given that A has failed to supply further and better particulars by 7 June 2003.

    C to Tribunal: confirming that have not received any further and better particulars of the grounds of appeal and that A has failed to comply with direction released on 07.04.2003; stating that C have made application for appeal to be struck out for want of prosecution.

    11.07.2003
    Notice of Hearing (application that appeal be struck out) on 14.08.2003.

    12.08.2003
    David Hanman Associates to C: asking for 28 days to finalise the Further and Better Particulars of the Grounds of Appeal; enclosing copy of draft Further and Better Particulars.

    David Hanman Associates to Tribunal: asking that hearing on 14.08.2003 be re-scheduled.

    14.08.2003
    C to Tribunal: asking for a direction that A serve its perfected Further and Better Particulars within 28 days.

    Tribunal Direction: "unless the Appellant supplies further and better particulars of his appeal within 28 days of the date of release of this Direction [released on 15.08.2003] the appeal will be struck out without further hearing".

    25.09.2003
    Tribunal to David Hanman Associates: stating that, given direction on 15.08.2003 has not been complied with, the appeal now stands struck out.

    06.10.2003
    Gotelee & Goldsmith (A's most recent representatives) to Tribunal: requesting reinstatement, with further direction that Further and Better Particulars be supplied by 5pm on 07.11.2003, failing which the Appeal be struck out.

    13.10.2003
    Notice of Hearing on 07.11.2003.

    06.11.2003
    Gotelee & Goldsmith to Tribunal: requesting postponement of hearing on 07.11.2003.

    C Notice of Application: consenting to hearing on 07.11.2003 being postponed to allow A's new representative time to receive correspondence from former representatives.

    Tribunal to Gotelee & Goldsmith: application for hearing on 07.11.2003 to be postponed allowed.

    01.12.2003
    Gotelee & Goldsmith to Tribunal: in relation to re-listing preliminary hearing.

    11.12.2003
    Notice of Hearing on 12.02.2004.

    07.01.2004
    Notice of Hearing on 11.02.2004 (hearing on 12.02.2004 postponed)

    09.01.2004
    Gotelee & Goldsmith to Tribunal: requesting that hearing scheduled for 11.02.2004 be vacated.

    19.03.2004
    Gotelee & Goldsmith to Tribunal: stating that no longer acting for Appellant.

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