United Kingdom VAT & Duties Tribunals (Excise) Decisions

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URL: http://www.bailii.org/uk/cases/UKVAT/Excise/2004/E00760.html
Cite as: [2004] UKVAT(Excise) E00760, [2004] UKVAT(Excise) E760

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Rangefeld Imports Exports Ltd v Customs and Excise [2004] UKVAT(Excise) E00760 (09 July 2004)

E00760

Excise Warehousing (Etc) Regulations 1988 – Imposition of additional requirement to notify vehicle registration numbers before movement of excise goods out of a warehouse could take place – Whether decision reasonably arrived at – yes – Appeal dismissed

LONDON TRIBUNAL CENTRE

RANGEFIELD IMPORT EXPORT LIMITED Appellant

and –

THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents

Tribunal: Malcolm Gammie Q.C. (Chairman)

Lynneth Salisbury

Sitting in public in London on 16th April 2004

Mr David Dixson, Director, for the Appellant

Dr Ian Hutton of counsel, instructed by the Solicitor of Customs and Excise, for the Respondents

© CROWN COPYRIGHT 2004


 


DECISION

Introduction

1. Rangefield Import Export Limited ("the Appellant") appeals against a decision of the Commissioners to amend the Appellant's warehouse approval. Following amendment the Appellant is required to notify to the Commissioners the registration numbers of all vehicles intended to be used to move full loads of alcohol in duty suspension. This means that no such movements may proceed until the Commissioners have completed their checks and given the Appellant formal notification that the movement can proceed.
2. The decision in question is contained in a letter of 1^st May 2003 from Mr Anthony Lawler, an officer of the Excise Warehousing Division of the East London VAT office. The decision was confirmed on review by Ms Daphne Park of the London Appeals and Reconsiderations Team by letter of 7^th July 2003.
3. In addition to the documentary evidence put before us we heard evidence from Mr David Dixson, one of the Appellant's directors, Mr Anthony Lawler, the excise senior assurance officer against whose decision the appeal is made, Mr Paul Stevens, the assistant assurance officer who identified a number of the irregularities leading to Mr Lawler's decision, and Ms Daphne Park, the senior assurance officer who conducted the review of Mr Lawler's decision
4. Based on the documents we received and the evidence we heard, we find the following facts in this case.

The Facts

5. The Appellant operates as an import, export and storage warehouse from premises in Barking. On 28^th April 2003 Mr Stevens received a telephone call from the National Discreditation Team (NDT) in Dover regarding the vehicle registration details that had been entered in the Accompanying Administrative Document (AAD) covering excise goods that had left the Appellant's warehouse. The NDT informed Mr Stevens that no vehicle of that registration number existed. Mr Stevens contacted the Appellant to confirm the registration number and then checked himself through the Commissioners' National Co-ordination Unit (NCU) that the information from NDT was correct, which it was.
6. Mr Stevens then compiled a list of all British registered vehicles that had been shown on the AAD movements leaving the Appellant's warehouse between 9^th and 28^th April 2003 and asked the NCU to check the registration numbers. This revealed that a number of vehicle registration numbers were those of privately registered cars which would not have been capable of carrying the goods said to have been loaded on the vehicle in question.
7. Mr Stevens reported this information to Mr Lawler who discussed the matter with his manager. They decided that these discrepancies represented an unacceptable level of risk to the revenue given the amount of excise duty involved in the movements. Mr Lawler accordingly wrote to Mr Dixson amending the Appellant's warehouse approval in the manner described in paragraph 1 above.
8. Mr Dixson immediately sought a review of Mr Lawler's decision and wrote on 1^st May 2003 to the London Appeals and Reconsiderations Team stating that the new conditions were too onerous. Mr Dixson noted that the Appellant complied with the voluntary early warning system (EWS) under which it faxed details of the movement via the AAD to the Commissioners. He also suggested that under the terms of the Excise Goods and Movement Notice 197, a despatching warehouse was not required to give the Commissioners advance notice of a movement unless the consignment consisted of ethyl alcohol spirits or cigarettes in excess of prescribed quantities.
9. In his letter of 1^st May 2003 Mr Dixson said that the Commissioners' verification process would slow down the loading and despatch of the vehicles to an unacceptable extent. He said that previous experience of similar procedures imposed by the Commissioners showed that these verifications could take an average of one to two hours (per vehicle) and on one occasion had taken over twenty-four hours. In subsequent correspondence with Ms Park,, the officer responsible for conducting the review of Mr Lawler's decision, he maintained that on average the checks were taking twenty to sixty minutes and on one occasion vehicles had been held up overnight. He said that this involved additional costs in the form of overtime payments for staff and waiting time charges for vehicles.
10. Before conducting her review, Ms Park sought further information from Mr Lawler and Mr Dixson. There was a delay resulting from a meeting between Mr Dixson and two other officers of the Commissioners designed to resolve the issue. As there was no resolution, Ms Park proceeded to review Mr Lawler's decision in the light of the information she had received from Mr Lawler and Mr Stevens and the representations made by Mr Dixson. While Mr Dixson claimed that the verifications had delayed the despatch of vehicles and had resulted in additional costs Ms Park did not feel that he had provided any evidence to support his claims. She accordingly replied on 7^th July upholding Mr Lawler's decision. She said that the Commissioners attempted to complete their checks as quickly as possible and that the average of 20 to 60 minutes advanced by Mr Dixson did not appear to her to be excessive. At the time of her decision Ms Park did not have all the AADs that had caused concern before her but she had no reason to doubt the information provided to her by Mr Lawler and Mr Stevens and the AADs in question were subsequently produced.
11. Mr Dixson gave evidence, and was cross-examined by Dr Hutton, on the background to the irregularities identified by Mr Stevens and on the impact on the Appellant's business of Mr Lawler's decision. In the course of his evidence Mr Dixson took us through a specimen delivery in April 2004. The thrust of his evidence was that the additional requirement to notify to the Commissioners the registration numbers of all vehicles and then to await confirmation of the Commissioners' checks before any movement could proceed unnecessarily hampered the Appellant's commercial operations, created additional costs and provided the Commissioners with no additional information beyond what they had already received through the early warning system and the AAD.

The legislation

12. Section 93 of the Customs and Excise Management Act 1979 provides that the Commissioners may make regulations for the purpose of regulating warehouses and warehoused goods. The section provides that such regulations may include approving the occupier of a warehouse for these purposes and regulating the removal of goods from a warehouse.
13. The Excise Warehousing (Etc.) Regulations 1988 are made under section 93. Regulations 15 to 17 impose obligations on warehouse-occupiers in relation to movements. Regulation 17(3) states that –

"Any right granted to the Commissioners or the proper officer by these Regulations to

(a) make a direction or requirement;

(b) give permission or consent;

(c) grant approval;

(d) impose a condition or restriction,

shall include a right to revoke, vary or replace any such direction, requirement, permission, consent, approved condition or restriction."

14. Section 16(4) of the Finance Act 1994 provides that the jurisdiction of an appeal tribunal in relation to an 'ancillary matter' is confined to circumstances where the tribunal is satisfied that the Commissioners "could not reasonably have arrived at the decision". Subsection (8) provides that a decision as to an 'ancillary matter' is such as is listed in Schedule 5 to the Finance Act 1994. Schedule 5 includes (at item 2(2)) decisions made under regulations made under section 93 of the Act in relation to the removal of goods or the conditions of such removal.

The Parties' Contentions

15. The Appellant set out its contentions in a letter from Mr Dixson that accompanied its notice of appeal and Mr Dixson elaborated on these in the course of his evidence and in the submissions he made. In essence, the Appellant contends that the requirement imposed by Mr Lawler when coupled with the Commissioners' working methods for implementing the requirement in practice unnecessarily hampers the Appellant's commercial operations, adds to its costs and provides no additional information beyond what the Commissioners already get under existing procedures.
16. Dr Hutton for the Commissioners explained the nature of the diversion fraud that the Commissioners had to guard against. He noted that in this case the evidence was the registration numbers recorded in the AADs identified by Mr Stevens were incorrectly recorded. While Mr Dixson did not accept that there was any diversion fraud involved, Dr Hutton submitted that the only explanation for the inaccuracy was either that the Appellant had incorrectly reported the vehicle registration numbers or that the vehicles had used false number plates. In either case the Commissioners had been rightly concerned at the possibility of diversion fraud and the only way of preventing it was to ensure that the stated vehicle registration number had been checked before the vehicle left the warehouse.
17. Dr Hutton submitted that no less restrictive measure could achieve what was a reasonable objective for protecting the revenue. He said that the decision had properly been made taking into consideration the relevant material, that the matter had been properly reviewed and that there was no basis, given its limited jurisdiction, on which we could conclude that the relevant decision was one that the Commissioners could not reasonably have made.

Conclusion

18. Dr Hutton criticised Mr Dixson for failing to provide adequate evidence to support his claim of increased costs and time spent. He also suggested that the Appellant could always take steps to mitigate the impact of the additional requirement. We are prepared to accept, however, that the effect of Mr Lawler's decision has been to slow the Appellant's commercial operations and has added to some extent to its costs, as an additional requirement of this nature is almost bound to do. We are also prepared to accept Mr Dixson's evidence that the Appellant correctly recorded the registration numbers of vehicles in the AADs between 9^th and 28^th April 2003 without knowing that those registration numbers did not necessarily belong to the vehicles involved. In our view, however, this is not enough to call into question Mr Lawler's decision.
19. From the evidence before us we understand that the EWS functions to notify the Commissioners that a movement out of a warehouse is to take place. If the Commissioners do not go back to the warehousekeeper within twenty-four hours the movement may be made. Although the Commissioners ask warehousekeepers to send a copy of the completed AAD to provide the necessary details of the vehicle and trailer that will be used to transport the goods, there is nothing under the normal procedure to prevent the vehicle leaving the warehouse in the meantime. The problem is that the Commissioners may be unable to complete their checks on the AAD before the vehicle leaves. No doubt in many cases the necessary checks may have been made under existing procedures but the additional requirement guarantees for the Commissioners that the vehicle will not have left the Appellant's premises (so becoming more difficult to track) before its registration number has been checked.
20. We would expect the Commissioners to have regard to the nature of any additional compliance burdens that they impose on a warehousekeeper and to ensure that any additional requirements are apt to achieve the Commissioners' objectives, both in general terms and in terms of their practical implementation. In practical terms this means that the Commissioners should work with the Appellant to minimise any disruption and additional costs to its business.
21. Nevertheless, neither our acceptance of Mr Dixson's evidence as to disruption and costs nor our expectations of how the Commissioners should deal practically with matters undermine Mr Lawler's decision. In this case, Mr Lawler had identified a particular concern in relation to movements out of the Appellant's warehouse. Having done so his duty was to consider what steps he should take to protect the excise tax that might otherwise be at risk. We think it impossible for us to say that his decision to impose this additional requirement was in the circumstances one that he could not reasonably have arrived at.
22. Accordingly, we dismiss this appeal.

MALCOLM GAMMIE QC

CHAIRMAN

RELEASE DATE: 9 JULY 2004

LON/03/8172