United Kingdom VAT & Duties Tribunals (Excise) Decisions

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URL: http://www.bailii.org/uk/cases/UKVAT/Excise/2004/E00826.html
Cite as: [2004] UKVAT(Excise) E826, [2004] UKVAT(Excise) E00826

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McKinley & Anor v Customs and Excise [2004] UKVAT(Excise) E00826 (11 November 2004)

E00826

EXCISE DUTY — restoration appeal — each appellant importing 10,000 cigarettes and 1.4 kilos of tobacco — both had other seizures of goods in 12 months preceding events in case — whether Commissioners' decision one which no reasonable body of them could have reached — appeal dismissed.

MANCHESTER TRIBUNAL CENTRE

SANDRA McKINLEY and

MARJORIE WILSON Appellants

- and -

THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents

Tribunal: Mr J D Demack (Chairman)

Miss S Stott (Member)

Sitting in public in Manchester on 29 October 2004

The Appellants in person

Mr J Shields of counsel instructed by the Solicitor for the Customs and Excise for the Respondents

© CROWN COPYRIGHT 2004


 


DECISION
1. On 10 November 2001, the appellants, Mrs Sandra Pauline McKinley and Mrs Marjorie Wilson, returned to the United Kingdom from a four day break in Spain. Each brought with her 10,000 cigarettes and 1.4 kilos of hand rolling tobacco. Mrs Wilson also brought a small number of cigars and some spirits, received as bonuses for her tobacco purchases. On landing at Manchester Airport, the two were stopped by a Customs officer, Mr G R Rigby. He proceeded to interview them. He put a number of preliminary questions to both, then questioned Mrs Wilson alone before questioning Mrs McKinley. He later put further questions to Mrs Wilson.
2. In reply to the questions put to Mrs McKinley, she said that 30 of her 50 cartons of cigarettes were for herself and her husband, and the remaining 20 for her two children and a friend. The tobacco was for her husband. Mrs McKinley explained that she had booked the holiday on teletext and had paid for her purchases and holiday with cash withdrawn from Barclaycard. She declared the joint income of herself and her husband to be £300 per week. The goods had cost about £600. Mrs McKinley admitted having made two previous trips to Spain in the previous 12 months. On returning from the first of them, she said she had brought with her 50 cartons of cigarettes, and, on the second, 15 cartons.
3. Mrs Wilson also said that she had spent some £600 on her purchases, explaining her trip as being "to get cigarettes and drinks and a rest". Twenty cartons of her cigarettes were said to be for herself and her husband, with the remainder for her sons, their wives, and their granddaughters as Christmas presents.
4. Mrs Wilson claimed to smoke between 20 and 25 cigarettes a day, and said she expected the cigarettes to last "over Christmas". She admitted having returned from Majorca in June 2000 with 10,000 cigarettes, which she claimed she and her family had smoked. She further admitted that on returning from Barcelona in February or March 2001, she had had 10,000 cigarettes seized by Customs. Mrs Wilson said that she was a housewife and received £80 per week from her husband, who was a roofer. When asked where she got the money to pay for the cigarettes, she explained that it came from a profit of £28,000 from the sale of a house.
5. Mr Rigby seized the cigarettes and tobacco of both travellers, but did not seize Mrs Wilson's cigars and spirits saying that he did not believe she intended to sell them (Mr Rigby gave evidence to us. To say the least, he was evasive. We are in no doubt that Mrs McKinley's claim that he allowed her to keep the spirits and cigars she imported is true). He noted the following reasons for seizure of Mrs Wilson's goods:

(i) The goods were in excess of the guidelines

(ii) She had travelled to Spain three times in the last 12 months

(iii) She had had 10,000 cigarettes seized previously

(iv) "Co-traveller also carrying goods in excess of the guidelines, which were seized."

6. Mr Rigby also gave reasons (i), (ii) and (iv) for seizing Mrs McKinley's goods. In her case, he gave as his third reason, "McKinley had knowledge of the Customs guidelines".
7. On 16 December 2001, each appellant requested restoration of the goods seized. In Mrs McKinley's case restoration was refused on 30 December 2001; in Mrs Wilson's case, it was refused on 16 January 2002. Each appellant required a review of the decision not to restore. Suffice it to say that each appeal was allowed, and the Commissioners were directed by the tribunal to carry out a re-review. Mrs McKinley's re-review was carried out by Miss Logan (now Mrs Wiggs), and Mrs Wilson's by Mr R Brenton. Each review was adverse to the traveller. It is against the decisions on further review that the appellants now appeal.
8. In her review of 8 May 2003, Miss Logan, considered whether, in Mrs McKinley's case, the decision not to restore should be upheld, varied or withdrawn. Miss Logan first dealt with Mrs McKinley's ability to pay for her goods, saying that her income appeared inconsistent with the expenditure "plus your previous trips, cigarettes purchased and giving away 20 cartons, approximately £260 worth of gifts".
9. In interview, Mrs McKinley disclosed her income as invalidity benefit of £92 per week and £56 "for care". She was asked whether her husband worked and replied that he was retired. No questions were put to her about her husband's income or about any capital the couple might have. In the absence of any questions as to capital, we are unable to accept that Miss Logan could have concluded that Mrs McKinley's finances, as opposed to income, appeared inconsistent with expenditure.
10. Next, Miss Logan noted that Mrs McKinley had had excise goods seized from her some four years earlier. We were given few details about that seizure, but it appeared that the goods were imported from Tenerife, an island that forms part of Spain but is outside the European Union. Not surprisingly, many travellers from Tenerife return to the United Kingdom with goods in excess of the import limits. In those circumstances, and since we are dealing with events which occurred four years earlier, we do not consider it was reasonable of Miss Logan to take account of that seizure.
11. On the basis of the matters mentioned in the last three preceding paragraphs, and nothing more, Miss Logan expressed herself satisfied that Mrs McKinley's goods were not for own use, and that they were held for commercial purposes. And since Mrs McKinley did not require the Commissioners to bring condemnation proceedings, Miss Logan observed that her goods had been condemned as forfeit by passage of time.
12. Miss Logan then proceeded to consider whether Mrs McKinley's goods should be restored. First she noted that with 10,000 cigarettes, she was three times over Customs amended guideline for cigarettes (formerly 800, then 3,200). Quite correctly, Miss Logan observed that it was not unreasonable for Customs officers to take account of the guidelines.
13. Mrs McKinley submitted a number of documents for Miss Logan to consider in reaching her decision. Among them were a Barclaycard VISA receipt dated 2 November 2001 showing a cash advance of £850, and another statement for an account in the name of I P McKinley, showing a credit balance as at 16 November 2001 of £2,000. Miss Logan said of both documents that they did not prove the goods were for own use. That was true. But what the documents did show was that Mrs McKinley had the means to pay for the goods which she had bought.
14. Miss Logan next noted that Mrs McKinley claimed that she and her husband had a joint income of £300 per week, and outgoings, excluding food, of about £300 per month, with no debts. On the basis of a declared cigarette consumption of 40 – 50 cigarettes per day for Mrs McKinley, and somewhat less for her husband, Miss Logan noted that it would be costing the two "£400 per month at UK prices" and would thus increase their outgoings.
15. That is completely to miss the point. United Kingdom residents travel to other countries in the European Union to buy cigarettes and other excise goods at continental prices. They do so to avoid having to pay more expensive UK prices. They are at liberty to import as much as they like provided it is for their own use and is personally transported. It was suggested in the review letter that the two travellers should have enquired of Customs the amount of goods they could import for personal use before seeking to import the quantities with which they were found. We enquired of Mrs Wiggs what the response to such a question would be. She confirmed that they could import as much as they liked for own use, provided they personally transported it. In those circumstances, we fail to see in what benefit enquiries of Customs could have resulted.
16. Next, Miss Logan dealt with the seizure of 10,000 cigarettes from Mr McKinley at Manchester Airport on 16 December 2000. Customs alleged that Mrs McKinley was travelling with him but went through Customs alone – a technique said by Customs to be one frequently used by smugglers. Those cigarettes were condemned as forfeit by magistrates on 29 August 2001. Finally, Miss Logan noted that on 26 March 2001, Customs officers raided Mr and Mrs McKinley's home and seized 3,110 cigarettes and 50 grams of hand rolling tobacco which Mr McKinley subsequently admitted having purchased from a man in a public house.
17. As she considered that Mrs McKinley had offered no reason for Customs departing from their non-restoration policy, and against the background of four seizures of goods from Mr and Mrs McKinley, Miss Logan confirmed that Mrs McKinley's goods would not be restored.
18. As we mentioned earlier, the re-review in Mrs Wilson's case was carried out by Mr Brenton. In his review of 22 August 2003 he explained that he had taken account of both changes in Customs policy after the date of seizure, and the effect of various cases decided by the higher courts. He particularly referred to the case of Hoverspeed Limited (and Others) v Commissioners of Customs and Excise.
19. Mr Brenton adopted a different approach in dealing with Mrs Wilson's case from that of Miss Logan in Mrs McKinley's, first observing that the two travellers were importing between them 20,000 cigarettes and 2.8 kilos of tobacco. He considered that fact should be taken into account when dealing with Mrs Wilson's case, i.e. he looked at the two importations as a joint exercise. He emphasised that each traveller had been stopped with an identical quantity of tobacco goods, and that each had paid for her goods in cash, cash payment "noted to be a feature of persons who buy duty-free excise goods for commercial sale. This is because cash will have been received from others in advance, and such persons or the purchasers do not wish to use the normal cheque or credit card so there is no evidence of the transaction in their account."
20. Cash payment may well be a feature of importation of excise goods for commercial purposes, but care must be taken in the use of such information; it must be taken in context and considered against the background of other facts.
21. Then Mr Brenton observed that Mrs Wilson claimed that a large proportion of her goods were to be given as presents for Christmas. He responded to the claim, saying; "This is often given as a reason for large importations of tobacco goods by travellers attempting [to] disguise the commercial intent of their venture. I believe … it is … implausible that you could give away £600 - £700 of tobacco goods without expecting recompense for your expenditure at the very least at cost."
22. We would make three points on Mr Brenton's observations. First, we note that Mrs Wilson's trip to Spain took place in mid-November 2001, so that it would not have been in the least surprising had she decided to buy presents, including tobacco goods, as Christmas presents. Second, implausibility must be judged against the financial circumstances of the individual concerned. In the instant case, it is quite plain that Mrs Wilson had adequate funds to purchase the tobacco goods she imported, so that any judgment as to her motive must be made against that background. Third, as Mr Brenton himself admitted in evidence, he had dealt with the review on the basis of French prices for tobacco goods rather than Spanish prices, so that the value of the gifts Mrs Wilson intended to make was substantially less than the £600 - £700 on which he worked.
23. Next, Mr Brenton dealt with the seizure from Mrs Wilson of 10,000 cigarettes imported on 15 March 2001. He accused her of "deliberately lying" to the officer who dealt with her in saying that she was travelling alone, when the passenger list showed her as travelling with her husband. (Customs attempts to find Mr Wilson proved fruitless). He further accused her of "lying" to allow her husband to import "a large quantity" of excise goods destined for the "UK illicit market" so that she was "complicit in that smuggling enterprise".
24. Accepting that Mrs Wilson claimed to be travelling alone, Mr Brenton had no other evidence to support his statement that Mr Wilson had imported a large quantity of excise goods which Mrs Wilson was complicit in smuggling. It was a most serious allegation and certainly not one justified on the information before him. His mention of a seizure of goods from Mr Wilson on 16 December 2000 does not, in our judgment, constitute evidence for this purpose.
25. In conclusion, Mr Brenton expressed his "belief" that Mrs Wilson and Mrs McKinley were "compliant (sic) in the joint importation of 20,000 cigarettes and 2.8 kgs [of tobacco] which were destined for resale in the UK illicit market … [T]o believe that you and Mrs McKinley were importing goods for 'own use', including gifts, stretches the bounds of credibility beyond acceptable limits".
26. Having observed that Mrs Wilson's goods had been condemned as forfeit to the Crown, he confirmed that they would not be restored to her.
27. We earlier mentioned the oral evidence of Mrs McKinley. Mrs Wilson also gave evidence to us. Both travellers claimed they were importing their tobacco goods for own use, including as genuine gifts. The persistence of the two ladies in pursuing this appeal over a period approaching three years is to their credit, and certainly goes to their credibility as witnesses. Had we been considering the events of 10 November 2001 in isolation, we should certainly have accepted the truth of their claim.
28. Mr Shields, counsel for the Commissioners of Customs and Excise, submitted that we were unable to find that the two ladies had imported the goods for own use, for neither had appealed the legality of seizure of their goods so that they were deemed condemned as having been imported for commercial purposes. We accept that their goods were condemned, but that is all. It does not prevent us, solely for the purpose of seeking to invoke the discretionary remedy of restoration contained in s.152 of the Customs and Excise Management Act 1979, from finding that they were imported for own use. So said Peter Smith J at para 49 of his judgment in Dickinson v Commissioners of Customs and Excise [2003] EWHC 2358 (Ch).
29. For the benefit of Mrs McKinley and Mrs Wilson, we should explain that travellers from one Member State in the European Union to another have a community right to import, free of duty in the country of arrival, excise goods including cigarettes and tobacco in any quantity, provided they are for own use and are personally transported. Own use in this context includes goods intended as gifts.
30. Member States are entitled to provide guidelines as to appropriate quantities for personal use. Initially the United Kingdom guidelines were the minimum laid down in an EC Directive - 800 cigarettes and one kilo of tobacco. Those guidelines were in operation when the two travellers had their goods seized; they were later increased to 3,200 cigarettes and three kilos of tobacco. Excise goods seized by Customs are liable to forfeiture. But if the person importing them contests their seizure, Customs are required to take proceedings to have them forfeited. Seizure may be contested on the basis that the goods were imported for personal use, and not for commercial purposes. If the importer does not require Customs to take proceedings, the goods are condemned as forfeit by passage of time. Condemnation as forfeit means that ownership in the goods passes to the Crown.
31. Notwithstanding that goods may have been condemned as forfeit, Customs have a discretion to restore them to a person importing them. By the Finance Act 1994 travellers whose goods have been seized as forfeited may appeal to these tribunals against a decision on review of the Commissioners not to restore them. That is what Mrs McKinley and Mrs Wilson have done. But a tribunal has very limited jurisdiction; it can only allow an appeal if the review decision is one at which no reasonable body of the Commissioners could have arrived in that they took account of something they should have ignored, or ignored something they should have considered or their entire decision is unreasonable. In the event that a tribunal holds that the Commissioners' decision is unreasonable, it can only direct the Commissioners to carry out a further review of the decision not to restore, such review to take account of the findings of fact of the tribunal.
32. In the instant case, there was a procedural flaw. The Commissioners required the travellers to prove that their goods were being imported for personal use. In Hoverspeed v Commissioners of Customs and Excise [2002] EWHC 1630 (Admin), the Divisional Court held that the burden of proof in that behalf falls on the Commissioners, not the travellers.
33. The question that then arises is: does the procedural flaw identified in the last preceding paragraph and the fact that the two reviewing officers took account of matters which, in our judgment, should have been ignored avail the appellants anything? As we said earlier, had we been considering events of 10 November 2001 alone we should have accepted the appellants' claim that they were importing their tobacco goods for their own use, and not for commercial purposes The test we must apply in reaching our conclusion is whether the decision not to restore the goods is one which no reasonable body of Commissioners could have reached; and, in applying that test, we must consider whether the Commissioners would inevitably reach the same conclusion on re-review as they did in the reviews under appeal (see John Dee Ltd v Commissioners of Customs and Excise [1995] STC 941 at p952). In our judgment, the decision of the Commissioners not to restore was reasonable; even if we had been prepared to allow the appeals the Commissioners would inevitably have reached the same conclusion on review.
34. We therefore dismiss the appeals.

DAVID DEMACK

CHAIRMAN
Release Date: 11 November 2004

MAN/2003/8114 & MAN/2003/8146