United Kingdom VAT & Duties Tribunals (Excise) Decisions

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Cite as: [2004] UKVAT(Excise) E00796, [2004] UKVAT(Excise) E796

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Duggan & Anor v Customs and Excise [2004] UKVAT(Excise) E00796 (08 October 2004)

E00796

Excise duty - restoration of vehicle - restoration of goods – dismissed on facts

LONDON TRIBUNAL CENTRE

MICHAEL JOSEPH DUGGAN

SYLVIA MANN Appellants

- and -

THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents

Tribunal: Dr David Williams (Chairman)

Mr Sunil K Das ACIS

Miss S Wong Chong FRICS

Sitting in public in London on 6 July 2004

The Appellant Mr Duggan represented himself and Miss Mann

Mr D Manknell of counsel, instructed by the Solicitor for Customs and Excise

for the Respondents

© CROWN COPYRIGHT 2004

DECISION

This is an appeal by Mr Duggan (the Appellant) against a review decision refusing to restore to him a car and excisable goods seized from him on 5 October 2002. It was established at the beginning of the hearing that Miss Mann, who had also had excisable goods seized from her at the same time as the Appellant, had also separately appealed and that she wished this to be treated as the hearing of her appeal as well, and that Mr Duggan represented her at the hearing (she not being present). This was agreed with the respondents (the Commissioners) and the tribunal, and the hearing proceeded as a hearing on both appeals at the same time.

The evidence given

As Mr Duggan was not represented and had no previous experience of a VAT and Duties tribunal, the chairman discussed procedure with both parties at the start of the hearing. Mr Manknell indicated that as there had been no objection to any witness statement produced by the Commissioners he had brought only the review officer, Mrs Marshall, as a witness. The chairman pointed out to the Appellant that he, the Appellant, had in fact returned the relevant forms filled in to indicate that he objected to his own evidence but not to any evidence put forward by the Respondents. The chairman explained the significance of this and drew the Appellant's attention to the evidence being put forward by the Respondents in written form, and that the Appellant had not objected to it but would be given a chance to comment on it. The Appellant accepted this.

The chairman asked the Appellant if he would be giving evidence. In reply to the Appellant's questions the chairman indicated that formal evidence would be on oath or affirmation, and that having given evidence the Appellant would be subject to cross-examination in the usual way by counsel for the Commissioners. The Appellant stated that he did not wish to give formal evidence. The chairman explained that if he did not wish to do that, then the tribunal would not accept what he had to say as evidence of probative value, though it would note any submissions he wished to make. The chairman then explored with the Appellant the grounds of appeal put forward by the Appellant and Miss Mann in their appeal form and their factual background and again invited the Appellant to give evidence at the appropriate time. He again declined. The Appellant was offered a further chance to give evidence after the Respondents had presented their case. He was warned by the chairman that if he declined to give evidence, then the tribunal could draw conclusions adverse to his case from his failure to do so. He again declined to do so.

Rule 28(2) of the Value Added Tax Rules 1986 provides:

A tribunal may require oral evidence of a witness (including a party to an appeal or application) to be given on oath or affirmation and for that purpose a chairman and any member of the administrative staff of the tribunals on direction of a chairman shall have power to administer oaths or take affirmations.

The Commissioners indicated that they would wish any evidence from the Appellant to be received formally and subject to cross-examination if it was to be given probative value by the tribunal. The chairman having explained the rules to the Appellant and having offered him the opportunity to give formal evidence confirmed that the tribunal would note any submissions of the Appellant, including any relevant submissions on issues of fact, but would not give those submissions the status of proven evidence unless it was given under oath or affirmation and subject to cross-examination. In the event, the only two issues of fact raised by the Appellant at any stage during the hearing are those noted and dealt with below, namely an incident in 2000 and the question of hardship.

The chairman also explained to the Appellant the limited nature of the tribunal's jurisdiction in a case dealing with a decision to seize excisable goods and vehicles. The tribunal notes that the Commissioners placed reliance in presenting their case on the cases of R (Hoverspeed) Ltd v Customs and Excise Commissioners [2003] QB 1041, Lindsay v Customs and Excise Commissioners [2002] 1 WLR 1766, Gora v Customs and Excise Commissioners [2003] EWCA Civ 525, Customs and Excise Commissioners v Alzitrans SL [2003] EWHC 75 (Ch) and the tribunal decision in Kinley and Jenks v Commissioners of Customs and Excise, Manchester Tribunal, 19 May 2003. No point of law was taken by the Appellant, and the tribunal was satisfied that the Commissioners' case was presented consistently with those decisions.

The Commissioners presented their case in full, save as noted above that only one of the witnesses who gave witness statements also gave oral evidence.

Witness statements were received from two officers of Customs and Excise, Esme Eve Butcher and Job Paul Barnard. These were the officers that separately interviewed the Appellant and Miss Mann on 5 October 2002. Their statements included copies of the usual notebook records of interview.

A witness statement was received from Leslie Smith, an Officer of Customs and Excise about the policy of the Commissioners in seizure cases. This was in terms well known to the tribunal and the Appellant raised no point on it.

Witness statements detailing previous cross-Channel journeys by the Appellant in the preceding year were made by Brian Rowland of P&O Ferries Ltd and Susan Breeeze, Customs and Excise Liaison Officer for Eurotunnel. Both contained full details of each of the journeys, in each case indicating that the Appellant as the, or a, person travelling.

The facts

This summary of facts is based on the witness statements submitted by the Commissioners in the absence of any evidence to the contrary from the Appellant and Miss Mann save as indicated. Statements were made by uniformed Customs Officers E. E. Butcher and J. P. Barnard, both on duty at the time of the stopping and seizure. Officer Butcher interviewed the Appellant at the time and Officer Barnard interviewed Miss Mann. The records of the interviews were signed at the time respectively by the Appellant and Miss Mann. The Appellant accepted that he had signed the statement at the hearing. Given the approach taken by the Appellant to the evidence presented in this case, and his refusal to give further evidence formally, the tribunal took the view that it should itself review the facts fully.

Officer Butcher stopped the Appellant's car, a red Audi 100 registration number J247 NLN, at 17.25 on 5 October 2003 in the UK Control Zone of the Channel Tunnel in Coquelles, France. The car was being driven by the Appellant. Miss Mann was also in the car. The Appellant informed the officer that they had been shopping in Adinkerke and Calais for beer, tobacco and cigarettes. They had bought 70 pouches of tobacco and 16 x 200 cigarettes. In reply to a question he stated that each of them had bought that amount. They had last crossed to France two months previously. They were stopped on that occasion but were let through as they had "their quota". They had gone for Miss Mann's birthday.

Officer Butcher later interviewed the Appellant on his own. The Appellant was born on 19 February 1939, and was therefore aged 64 at the date of interview and not then of state pensionable age. In reply to questions he told the officer that he had bought tobacco and cigarettes and the St Bruno for a good friend. He volunteered that he was not selling for profit. In reply to questions about his means he stated that he was receiving a state pension of £123 a week. He had started receiving his pension in April or May. He also had housing benefit to pay for his rent. When asked why he was getting housing benefit he stated that he had signed on for 6 or 7 years and they were still paying it. He had living costs of about £40 a week and petrol of about £20. He had received a lump sum of £4,500 from the construction industry holiday stamps, with another £2,500 to come in January and then a further £2,500 the following June. He told the officer that he smoked Old Holborn, Golden Virginia and a touch of Drum. He also smoked cigarettes perhaps 60-75 a day including 50 roll-ups, amounting to 2 or 21/2 pouches a week. But he was trying to give up. He also drank 8-10 cans of superstrength beer a day.

The officer then asked about previous trips. The appellant was told he had made 18 trips since March 2003, the last one on 31 August, with a previous one on 5 August. When asked what these trips were for, he stated that the trip on 31 August was for Miss Mann's 50^th birthday. When it was pointed out that he had said the same thing on his trip on 8 August, he said he was "just topping up". He was also asked what he had done with the tobacco he had brought in on those occasions, and he said that he had smoked it.

Officer Barnard interviewed Miss Mann at the same time as Officer Butcher was interviewing the Appellant. In reply to questions, Miss Mann said she had bought half the beer, and would drink most of it herself as she was a "bit of an alcy". She had also bought 10 sleeves of Superkings Blue cigarettes and 6 of Benson and Hedges, with 50 pouches of Golden Virginia, 10 Old Holborn and 10 Pipe Tobacco. It was all for her. She stated that she had last been over about two months before, and that she had, she thought, bought 60 pouches of tobacco on that trip (with the Appellant buying a similar amount), and perhaps 25 cases of beer between them. She had perhaps bought a few cigarettes. She was asked if she had been over in September, but she said she thought not though "my memory isn't quite so good." When asked about her means she said she did a bit of cleaning but was on incapacity benefit for which she got a little under £78 a week. She did not earn enough to affect her benefit. She stated that she had probably spent £700 on that trip, but she had borrowed it from the Appellant. It would take a little while to pay it back. She had never had goods seized by Customs before, though she had had paperwork given to her. She could not remember the details.

The officer searched Miss Mann's bag with her agreement. In it were found a copy of the standard Customs and Excise Public Notice 1 and some separate packets of cigarettes with Belgian duty stamps. Miss Mann said she had just bought these but had thrown the receipt away. When she was asked whether these were her cigarettes and the rest did not belong to her, she denied it.

The evidence of trips in the last years was from both P&O Ferries, all for trips between Dover and Calais, and from Eurotunnel, all for trips on the Shuttle. All the P&O trips were logged as made by both the Appellant and Miss Mann. The Eurotunnel details showed the Appellant as being the lead passenger on each occasion but gave no details about other passengers. The following trips were logged in the 12 months prior to 5 October 2003:

27 November 2002 P&O

15 January 2003 P&O

24 March 2003 P&O

26 March 2003 P&O

3 April 2003 P&O

17 April 2003 Eurotunnel

19 April 2003 P&O

23 April 2003* Eurotunnel

29 April 2003 Eurotunnel

5 May 2003 Eurotunnel

15 May 2003 P&O

21 May 2003 P&O

29 May 2003 P&O

5 June 2003 P&O

27 June 2003 Eurotunnel

10 July 2003 P&O

25 July 2003 Eurotunnel

28 July 2003 Eurotunnel

2 August 2003 Eurotunnel

5 August 2003 P&O

8 August 2003 P&O

31 August 2003 Eurotunnel

6 September 2003 Eurotunnel

The Appellant indicated – though gave no formal evidence or details – that some earlier trips were by others using his car without his consent. It was not clear on what dates this was said to have happened. The tribunal did note that each of the trips using P&O were said to be by the Appellant and Miss Mann by name. Taking that into account, the tribunal find that the Appellant did make each of these trips himself. With the exception of the trip marked with an asterisk, each trip was started in the early afternoon and the Appellant returned that evening by the same route. The fare paid varied from a free trip to £49 for a trip. We find these details to be accurate - save as noted the Appellant did not attempt to challenge them. They show that, with the trip on 5 October 2003, the Appellant made a minimum of 24 trips to France in the twelve months, accompanied by Miss Mann on most if not all of them. The seized car was used on seven of the trips (all since it was acquired by the Appellant on 16 May 2003) with other cars being used on other trips.

If the Appellant's statement to the officer on interview on 5 October 2003 was correct – and we have heard no evidence to contradict it – the Appellant and Miss Mann bought their "full quota" of beer and tobacco into the United Kingdom on all but two or three of those trips. The Respondents also gave some evidence that the Appellant had been stopped on 5 June 2003 with 10kg of tobacco at the time and on 8 August 2003 with 9 kg of tobacco and 3200 cigarettes.

The goods seized from the Appellant and Miss Mann on 5 October 2003 were:

150 pouches (7.5kg) of tobacco, including five different kinds

6,400 cigarettes including 3 different kinds

28 cases (336 litres) of lager, including 4 different kinds

6 litres brandy

The sterling equivalent of the amount paid for the tobacco was £1234 and for the lager £327. As noted above these were paid in cash. Miss Mann stated that the Appellant lent her much of her share of that cost.

The respondent's case

The officers who interviewed the Appellant and Miss Mann took the view at the time that they were importing goods commercially and not for personal use, and the goods and car were seized on that basis.

Those decisions were reviewed by Mrs H. M. Marshall, a review officer for the Respondents. In her review letter dated 20 January 2004 she notified the Appellant that she confirmed those decisions, which were contested by the Appellant and Miss Mann. Her reasons were set out in the usual way in that review letter. Mrs Marshall gave evidence on affirmation before the tribunal confirming the views she took in the letter and about the evidence put before her. The Appellant was invited to cross-examine Mrs Marshall. He indicated objections to certain aspects of Mrs Marshall's evidence. The chairman asked her to treat those objections as questions, and she answered them. These chiefly related to evidence she gave about the Appellant being stopped by a Customs officer on 11 January 2000. Mrs Marshall gave evidence that the records showed this as a previous offence, although no action was taken following it. The Appellant made it clear that he denied this. In reply to the chairman's questions, Mrs Marshall gave evidence that the records showed that both a man and a woman were stopped on that date, that they gave the names of the Appellant and Miss Mann, and that they had produced their passports as identification.

In addition to the evidence in the review letter, Mrs Marshall also stated that she had considered the value of the car and the duty foregone, but that she did not consider either determinative of her decision. The tobacco duty that would have been paid was £2047, not including VAT. The car was over 12 years old and in her view its value was unlikely to have exceeded the revenue involved on 5 October 2003, without any regard being paid to the duty involved on previous trips.

Having presented the evidence, Mr Manknell invited the tribunal to reject the Appellant's appeal and find that Mrs Marshall had acted reasonably in taking the review decision that was taken. Her conclusion was that the Appellant and Miss Mann had brought the goods into the United Kingdom for commercial purposes. Further, in so far as the imports of the Appellant and of Miss Mann were separate imports, they were nonetheless brought in intermixed together and the two had a common purpose. It was therefore sufficient for it to be found that one of them was bringing in the goods for a commercial purpose for the goods to be liable to be seized from either.

Drawing on the Commissioners' evidence, Mr Manknell stressed the following features of the cases. He submitted that as the Appellant had chosen not to give formal evidence and face cross-examination, it might be appropriate for the tribunal to draw conclusions about the view he had expressed but not supported. Mr Manknell also drew attention to various statements made by the Appellant, including that he thought Customs had stopped seizing cars, that he accepted that he had been on an excessive number of trips, and that he had followed what he had understood to be the guidelines for the amounts that could be brought in from the national press. Mr Manknell noted that both the Appellant and Miss Mann had tried to mislead the Customs officers about their previous trips. The number and frequency of the previous trips were relevant to the review decision, and cast doubt on the reasons given to the officers for the trips, in particular the reference to a party for Miss Mann's 50^th birthday. Separately from that, the frequency of trips and amounts purchased were out of line with the personal consumption rates stated by the Appellant and Miss Mann.

Mr Manknell also submitted that it was also not clear how the appellant and Miss Mann could meet the costs of the trips and purchases from their own resources. The expenditure on this trip was grossly disproportionate to their income, particularly when viewed in the context of the other trips and purchases. The comments about capital sums would not explain how this trip was financed in the context of the other trips. This suggested a commercial purpose. That purpose was, Mr Manknell submitted, additionally confirmed by the fact that the Appellant and Miss Mann had several different brands of tobacco and cigarettes. People buying for personal consumption tended to use the same brands, and therefore buy consistently. Not only that, but the Appellant had said he was trying to stop smoking. Further, Miss Mann was found to have some cigarettes in her personal bag separate from those said to have been bought by her and not covered by the receipts produced. This might suggest that her personal supply was in her bag while the other cigarettes were bought for commercial purposes.

The tribunal's decision

The tribunal has little hesitation in rejecting the appeals of both the Appellant and Miss Mann. It considers that Mrs Marshall had clear evidence on which to conclude as she did that both the Appellant and Miss Mann were bringing in the goods, or at least most of them, for commercial purposes and that they had a common purpose in doing this.

The tribunal consider two aspects of the facts are of particular importance in this case. First, there is a clearly established pattern of regular "shopping trips" to France. Although the trips used two different routes and several different cars, the tribunal finds that they were all similar in that 23 of the 24 documented trips in the 12 months leading to this final trip (for the purposes of this case) were short trips leaving the UK in the afternoon and returning in the evening. The tribunal notes also that the Appellant accepted that the total number was excessive. It also notes and accepts the Respondents' evidence that the Appellant was stopped and questioned on 5 June 2003 and 8 August 2003, and that he and Miss Mann had also been stopped and questioned in 2000. It notes three points arising from those previous stops. First, the Appellant and Miss Mann were both clearly aware of the attitude of the Respondents to "shopping trips" of this sort, and were aware of what they thought were the individual limits for single trips, but showed no awareness of the rules about goods brought in for commercial purposes. Second, those stops occurred on trips using P&O ferries. The Appellant conducted his immediate following trips by Eurotunnel. Third, when stopped on 5 October on a Eurotunnel trip, both the Appellant and Miss Mann suggested that their last trip was "about two months ago". This would appear to refer to the trip on which they were stopped on 8 August on a trip using P&O. Both forgot or chose to ignore the two subsequent trips by Eurotunnel. Did the Appellant consider that his trips by P&O were being monitored, but not those by Eurotunnel? That was one of many specific questions that could not be answered as the Appellant gave no evidence and did not submit himself to questioning.

The other aspect of the case of particular importance is the level of funds necessary to meet the costs of purchasing and bringing in the levels of goods that the Appellant and Miss Mann appear to have brought in during the 12 months to October 2003, including also the costs of the fares and petrol for the trips and buying and maintaining the car or cars used. The car seized on 5 October 2003 was purchased by the Appellant six months before, as noted above. The travel schedules show that the Appellant used a Ford Sierra car on most of the trips, including both before and after that purchase. Was that also his car? On 31 August 2003 he also used a Rover car, though the tribunal had no details about how this came to be used.

The evidence of the seized receipts on this occasion showed four consecutive receipts totalling 1234.20 for tobacco, although no clear evidence was given by either party as to whether these were Euros or Pounds Sterling. There was a fifth receipt for £327 on the same day for beer, suggesting that the other receipts were also for Pounds. Even if they were not, this is still a considerable amount of cash, to which must be added the fare paid and the petrol and other trip costs. How could that be justified for personal consumption (or presents for which the Appellant and Miss Mann received nothing in exchange)?

The Appellant told the Customs officers on 5 October that he was on a state pension. That cannot be correct as he was not then old enough to draw a state pension. But he was receiving housing benefit (an income-related benefit). That would suggest that he was not working and had limited other income and was receiving another state benefit. He told the tribunal he retired in January this year. He stated, as noted above, that he had received capital sums in connection with previous work in the construction industry. He also told the tribunal that he was suffering financial hardship during the second half of 2003. The evidence from Miss Mann was that he had helped her purchase the goods she had bought. She was receiving incapacity benefit and was therefore not working beyond the minimal amount of cleaning that she said she did. If her evidence is correct, then she was earning not more than £20 a week, as that was then the earnings limit for work done with a doctor's prior approval while generally incapable of work.

The tribunal finds that the Commissioners were entitled to conclude on this evidence that the information given to them by the Appellant and Miss Mann when stopped on this occasion lacked credibility and that they – and in particular the Appellant – had not explained how they could use the quantity of goods they had brought in on that occasion, or finance the purchases, without recovering at least some of the cost by commercial means. Nor has any explanation been offered to the tribunal. On the contrary, the Appellant has admitted that he had limited funds at that time. We find that the Commissioners were fully entitled to conclude on the evidence available that the Appellant and Miss Mann were not using all the tobacco they were bringing in for their own purposes and that they could not afford to purchase such quantities of goods without recovering some of the costs of their purchases and trips commercially. The Commissioners were fully aware when the Appellant and Miss Mann were stopped on this occasion of the previous history of cross-Channel trips and took the decisions in that context.

We therefore conclude that the Commissioners were entitled to treat the goods brought in as a commercial consignment and to seize them and the vehicle accordingly. We also conclude that this must have been a common purpose of both the Appellant and Miss Mann, not least in that they themselves stated that he had helped pay for her share of the goods. Accordingly, we reject both appeals.

DAVID WILLIAMS

CHAIRMAN

RELEASED: 8 October 2004

LON/04/8020