United Kingdom VAT & Duties Tribunals (Excise) Decisions

E00878

Excise Duty – Assessment – s.12 Finance Act 1994 – Fuel imported from European Community – Travellers' Release (Fuel and Lubricants) Order 1995 – Whether earlier assessment possible – Appeal allowed.

LONDON TRIBUNAL CENTRE

KEYES TRANSPORT LIMITED Appellant

and –

THE COMMISSIONERS OF HM REVENUE & CUSTOMS Respondents

Tribunal: DR KAMEEL KHAN (Chairman)

MRS L M SALISBURY

Sitting in public in London on 18 and 19 November 2004

Mr Jolyon Maugham for the Appellant

Ms Caroline Neenan for the Respondents

© CROWN COPYRIGHT 2005


 


DECISION

This is an Appeal by Keyes Transport Limited ("the Appellant") against the H M Customs & Excise ("HMCE") confirmation of their decision under Section 12(1) Finance Act, 1994 ("FA 1994") that the Appellant is liable to excise duty of £107,431.00 in relation to fuel imported into the United Kingdom by Mr Peter Keyes (sole director of the Appellant and one of its drivers) and others, in one of their fleet of lorries. The importation of fuel took place on various dates between May 2002 and August 2003. An Officer's Assessment/Civil Penalty Excise Form, No. EX601 ("EX 601 Form") dated the 3 October was issued by Ms S L Saunders, who at that time, was an officer of the HMCE, Tilbury, Excise Oil Team.

Facts and Background

1. Peter Keyes is the sole director of the Appellant and holds 50% of its shares. The Company, Keyes Transport Limited, is a small family run transport business, which is based in Great Totham, Essex.
2. The Company was incorporated in 1989. It has a turnover of approximately £700,000 per annum with modest profits.
3. The Company has a fleet of eight (8) tractor units with various trailers. It employs ten (10) staff of which seven (7), including Mr Keyes, are drivers. One vehicle in the fleet is a Seddon Atkinson tractor unit which has had its standard manufacture installed fuel tank altered to an enlarged tank with a capacity of approximately 2,000 litres. The tank was fitted by fabricators employed by the Appellant. The Appellant undertook the alteration of the tank in order to transport diesel fuel from Belgium to the United Kingdom to take advantage of a significant cost saving in the price of fuel purchased in Belgium. The vehicle travelled to the Continent approximately twice weekly to purchase fuel to bring to the UK. If, as the Respondents contend, the purchased fuel did not qualify for appropriate excise duty relief, the duty due to the Commissioners on each litre of imported fuel is levied at the rate of 0.4582p per litre with an appropriate mileage allowance (103 miles in this case) for fuel used on the UK part of the journey from Dover to Great Totham, which was given because of Mr Keyes's full co-operation and good compliance record. The calculation of the duty was done on the following basis (see Witness Statement of S L Saunders, Office HMCE, dated 9 November 2004):

"I calculated the amount of duty payable on these two amounts, by multiplying the total of the Schedules (i.e. 9 May 2002-31 December 2002 totalling 98,809.54 litres purchased and 1 January 2003-31 August 2003 totalling 143,519 litres purchased) by 4582, the appropriate duty rate at the time, which totalled £111,034.99. I calculated an allowance for the journey made from Dover to Great Totham, which Mr Keyes said was 103 miles at 7.5 miles to the gallon. The total gallons used per trip, was 13.73, which amounts to 62.42 litres. I multiplied this by the number of trips made (126). The total being 7,664.92 litres used. I multiplied this by the UK duty rate, which totalled £3,603.71. I then deducted the allowance from the total amount." (words in brackets added).

4. The Company's main business is in the UK. Its principal customers are Norfolkline, UBC and Seawheel and others for whom they provide a general haulage to and from the ports of Felixstowe, Harwich and Tilbury and other destinations in the UK.
5. The Appellant had become aware in early 2002 of the opportunity to save money by purchasing diesel fuel in Belgium and bringing this fuel to the UK. This was well known to hauliers generally and several hauliers were involved in such importation of fuel. It was reported in the motor industry press ("Motor Transport" November 2003 - November 2004) which gave details of the excise duty saving as well as special offer fuel cruises to Belgium and France. These cruises, discounted fares on channel crossing, were offered by ferry operators such as Eurotunnel and P & O Stena Lines. In the advertisement for the cruises, it was stated that at current prices "up to £250 on a single purchase of 1,000 litres" of fuel could be obtained if the fuel was purchased on the Continent. A copy of the advertisement was tended in evidence.
6. The Appellant, as well as some other hauliers, modified the size of their manufacturer installed fuel tank to have a larger than standard tank installed on their vehicles. The tanks which were installed would carry significantly more fuel, between 1,500 and 2,000 litres but in some cases tanks carried as much as 2,500 litres. From the photograph presented in evidence by the Appellant, the new fuel tanks on their vehicle were clearly visible and if compared with other similar vehicles, it was apparent that the standard manufacture fitted tanks had been removed.
7. Mr Keyes decided that the Appellant would benefit from purchasing cheaper fuel on the Continent and bringing it to the UK. In May 2002, Mr Keyes using the enlarged tank on his Seddon Atkinson tractor unit (R58DNF) ("Seddon Atkinson") made the first of many diesel runs to Belgium. There were approximately ten (10) diesel runs between May to July 2002, between 22 July and end of September 2002 there were eight (8) and between October 2002 and September 2003, there were approximately eighty (80). This on average works out to just under 2 diesel runs per week.
8. Mr Keyes and the other drivers would sometimes be stopped on their return journey by HMCE officers and their vehicle inspected and documents checked, as is often the case at border controls. The larger non-standard tank on the Seddon Atkinson was observed and commented on from time to time by HMCE officers. The Freight Rummage Details View of HMCE showed, inter alia, the date of a journey, when the vehicle was stopped by HMCE. There were twenty-two (22) such stops between 22 July 2002 and 4 October 2003. The fuel purchase invoices obtained from the Appellant by HMCE on 16 September 2003 shows a total of 126 fuel trips over an 18 month period starting in May 2002.
9. Mr Keyes was stopped on 9 May 2002 (evidenced by his Witness Statement, diary entry and Tachograph) while on a diesel run and he was asked to and did confirm the purpose of his trip was to purchase fuel. He was asked about the larger non-standard tank on the Seddon Atkinson and he explained, inter alia, that the tank had five "fillers". Fillers are inlets for filling the tank and are noticeable on the outside of the tank. There were three separate tanks, two large and one small. The large tanks had two fillers each. The smaller tank contained the fuel used on the journey. The receipt for the fuel purchased in Belgium was requested by the HMCE officer and shown to him. The inspection by HMCE was thorough and the officers were aware of the compartmentalised tank.
10. Mr Keyes stated in his Witness Statement that one of his drivers, David Branch, was stopped on 21 April 2003 in the Seddon Atkinson and asked whether the diesel in the tank was used in other vehicles and he said that it was so used. No other written confirmation of this statement was presented. In oral evidence given during the hearing, Judi Bastow, who had also given a Witness Statement, confirmed that on one occasion when travelling with Peter Keyes, on a fuel trip in June or July 2002, she told the HMCE officers that the diesel being transported was being decanted for use in other vehicles in the Appellant's fleet.
11. HMCE visited the Appellant's premises on 1 and 16 September 2004 and spoke to Mr Keyes, who confirmed that the Seddon Atkinson had travelled to Belgium approximately twice per week over the last year to purchase fuel for use by the vehicles in his fleet. He thought that the decanting of fuel in this way was not against the law. It was explained to him that the use of the fuel in other vehicles meant his Company was liable to excise duty on purchased fuel since it was not used or intended for use by the Seddon Atkinson.
12. At all times Mr Keyes was cooperative and helpful to HMCE and on the visit by the officers of HMCE to the Appellant on 16 September, copies of the fuel purchase invoices for the fuel purchased in Belgium was provided and at that point HMCE felt they had sufficient information to issue an assessment. The average purchase was 2,000 litres.

The Law

The assessment to excise duty and penalties is covered by Section 12 FA 1994 which

provides, so far as is relevant:

"(1) Subject to subsection (4) below, where it appears to the Commissioners –

(a) that any person is a person from whom any amount has become due in respect of any duty of excise; and

(b) that there has been a default falling within subsection (2) below,

the Commissioners may assess the amount of duty due from that person to the best of their judgement and notify that amount to that person or his representative.

[(1A) Subject to subsection (4) below, where it appears to the Commissioners –

(a) that any person is a person from whom any amount has become due in respect of any duty of excise; and

(b) at the amount due can be ascertained by the Commissioners,

the Commissioners may assess the amount of duty due from that person and notify that amount to that person or his representative.]

(4) An assessment of the amount of any duty of excise due from any person shall not be made under this section at any time after whichever is the earlier of the following times, that is to say –

(a) subject to subsection (5) below, the end of the period of [three years] beginning with the time when his liability to the duty arose; and

(b) the end of the period of one year beginning with the day on which evidence of facts, sufficient in the opinion of the Commissioners to justify the making of the assessment, comes to their knowledge;

but this subsection shall be without prejudice, where further evidence comes to the knowledge of the Commissioners at any time after the making of an assessment under this section, to the making of a further assessment within the period applicable by virtue of this subsection in relation to that further assessment.

(6) The reference in subsection (4) above to the time when a person's

Liability to a duty of excise arose are references -

(a) in the case of a duty of excise on goods, to the excise duty point; and

(b) in any other case, to the time when the duty was charged.

13. Section 4(1) Excise Goods (Holding, Movement, Warehousing and REDS) Regulations 1992 provides:

"The excise duty point in relation to any Community Excise Goods shall be the time when the goods are charged with duty at importation"

The expression "Community Excise Goods" is defined by Regulation 2(1) as:

"Excise goods imported into the United Kingdom from another Member State and which have been produced or are in free circulation in the European Community at that importation…"

14. The Travellers' Release (Fuel and Lubricants) Order 1995 (SI 1995/1777) ("the Traveller's Order") provides, so far as relevant:

"2 Interpretation

In this Order –

"commercial vehicle" means any road vehicle that –

(a) by its type of construction and equipment, is designed for and capable of transporting goods or more than 9 persons, including the driver; or

(b) is being used or is intended for use to carry passengers for reward; or

(c) is being used or is intended for use for a purpose other than transport;

"standard tanks" has the meaning given in Article 8a of Council Directive 92/81/EEC.

3 Relief for fuel and lubricants contained in a commercial vehicle

(1) Subject to the provisions of this Order, a person who has travelled from another member State shall on entering the United Kingdom be relieved from payment of excise duty on the fuel and lubricants contained in a commercial vehicle that he has with him.

(2) The reliefs afforded by this Order apply only to fuel that –

(a) is contained in the vehicle's standard tanks; and

(b) Is being used or is intended for use by that vehicle.

(3) The reliefs afforded by this Order apply only to fuel on which –

(a) excise duty has been paid in the member State in which the fuel was acquired at a rate that is appropriate to the use to which that fuel is being or is intended to be put; and

(b) the excise duty paid on that fuel has not been remitted, repaid or drawn back."

15. Article 8(a) of the Council Directive 92/81/EEC as amended by Council Directive 94/74/EEC provides:

4.1 "1. Mineral oil released for consumption in a Member State contained in the standard tanks of commercial motor vehicles and intended to be used as fuel by those same vehicles as well as in special containers and intended to be used for the operation during the course of transport, of the systems equipping those containers shall not be subject to excise duty in any other Member State. "

and

4.2 2. For the purposes of this Article –

"Standard tanks" shall mean –

The tanks permanently fixed by the manufacturer to all motor vehicles of the same type as the vehicle in question and whose permanent fitting enables fuel to be used directly, both for the purposes of the propulsion and, where appropriate, for the operation during transport, of the refrigeration systems and other systems…".

4.3 In the case of Whitehead Machinery v Customs and Excise Commissioners (2003) Decision No. E473, HMCE have given an opinion on the definition of a standard tank which stated (quoting a letter dated 25 July 2003 from Tracey Miller, Oils Tax Practice, Commissioners' Environmental Taxes Regimes Division):

"Under this definition, a standard tank can be considered to be restricted to one fitted solely by the manufacturer. However, in the case of a secondhand vehicle the purchaser shall not necessarily know if the tank was fitted at the time of manufacture… The Commissioners agreed that tanks fitted by the manufacturer, at the time of manufacture, are considered standard tanks. This extends to systems fitted as "operational extras" not necessarily by the manufacturer, but only where it can be demonstrated that the manufacturer would supply the type of tank in question. Replacement or upgraded tanks may also be considered as standard but only when replaced by reasons such as damage or routine maintenance and the replacement tanks are the same specification as the original."

The Parties' Contentions

Appellant's Arguments

The Appellant contends that the assessment made on 7 October 2003 is a single global assessment which is void for having been out of time and therefore not within the terms of Section 12(1) FA 1994. They also contend that from July 2002 the Commissioners had sufficient information to justify the making of an assessment. Further, they say that the Commissioners misdirected themselves in law in their approach to s.12 FA 1994 and the Traveller's Order.

The Respondents' Arguments

The Respondents argument is that until the fuel invoices were provided on 16 September 2003 by the Appellant, there was insufficient information to raise the various assessments in question. The assessments raised on 7 October 2003 were therefore within the one year period for raising an assessment under Section 12 FA 1994. They explained that the assessments can be divided into two periods; the first period from October 2002 to October 2003 is definitely within the time as contemplated by s.12 FA 1994; the second from May 2002 to September 2002 where the assessments could not have been made without invoices provided on 16 September 2003, although HMCE were aware of trips made by the Appellant on 22 July, 17 August and 31 August 2002.

They further contend that while one global form, EX 601 Form, was completed and used to notify the Appellant, there were approximately 126 different assessments contained in that notification. They say that this is confirmed by the letter from HMCE to the Appellant dated 7 October 2003 which provides Schedules identifying the total number of litres of diesel purchased and the calculation of the total duty due on that diesel. The assessments were made for practical purposes on the EX 601 Form rather than raising 126 different assessments on different forms. They say that the Form was not however one global assessment.

Decision

The main issue in this appeal is whether the assessment issued on 7 October 2003 is one global assessment or a series of individual assessments and in either case whether the assessment is or assessments are out of time. It is the decision of this Tribunal that the EX 601 Form contained one global assessment to excise duty and this assessment is time barred since sufficient evidence had come into possession of the Commissioners to justify the making of an assessment on or before 22 July 2002 as required to be made under s.12 Finance Act 1994.

We outline below the reasons for this decision.

16. From the evidence presented to the Tribunal there was some dispute as to whether HMCE knew that the Appellant's "diesel run" commenced on 9 May 2002. The Tribunal heard oral evidence from Mr Keyes and was provided with a copy of his Witness Statement, diary entry and tachograph of the Seddon Atkinson for the journey. Mr Keyes, a reliable witness, said that on the day he was "stopped and questioned by a customs officer for about an hour and twenty minutes". He was asked some questions about his newly converted 2,000 litre fuel tank on his vehicle, the Seddon Atkinson, including why the tanks were fitted. In answer to this question from HMCE officer he said, "I told them that it was to go to Belgium to buy cheap diesel". He went on to say in his Witness Statement, "I explained that everyone else was (doing diesel runs) and that I needed to be able to compete with them which meant that I needed to be able to buy diesel as cheaply as I could". The officer then asked to see my receipts for the diesel purchased, which I showed him. The officer told me that "the tank was too big…". One can conclude from this evidence that HMCE had knowledge of the size of the tank on the Seddon Atkinson, the fuel invoice for the fuel purchased in Belgium and the purpose of the trip to Belgium by the Appellant. This was known on the 9 May 2002.
17. Let us look at what else was known by HMCE and the other information which was available to them at the time. HMCE had information from their own records, as evidenced in the Freight Rummage Details View, that a diesel run was made by the Seddon Atkinson on 22 July 2002. They also appeared to have confirmed in a letter on 30 January 2004 to Fisher Michael Limited, the Appellant's accountants, that they "knew of Mr Keyes's activities since May 2002". We can presume that the activities spoken of are the diesel runs. In the course of her oral evidence to the Tribunal, Judi Bastow, formerly an Inspector of Taxes and partner of Mr Peter Keyes, who provided a Witness Statement, confirmed that she had accompanied Mr Keyes on "four or five" of his diesel runs before October 2002 and on one of those trips she was asked a question on the use of the fuel by HMCE officer who had stopped the Seddon Atkinson and she said:

"I was asked whether we were selling the diesel. I replied why would he (Peter Keyes) sell it when he had eight lorries to put it in?". When asked about the date of this statement, she replied

"In early summer 2002 around June or July".

While this may be a remark made in an informal chat, it did fasten HMCE with knowledge of the decanting of fuel by the Appellant. The HMCE officer could and should have followed up on this information. It is very likely that this conversation took place at or before 22 July 2002.

18. From the evidence, it would not be unreasonable to conclude that HMCE had information about the Appellant's diesel run in May and July 2002. The also had a copy of invoices for fuel purchased in Belgium, the notice of an altered non-standard tank in the Seddon Atkinson and the fact that diesel was being decanted into other vehicles. HMCE were also aware of the activities of hauliers in altering tanks and purchasing cheaper diesel on the Continent for use in the UK. In order to obtain relief from excise duty under the Traveller's Order, the fuel should be transported in a standard tank and not be decanted into other vehicles. If one of these conditions is not satisfied, the relief would not be available and there is evidence that one or both of the conditions was not being satisfied.

HMCE knew there was a significant cost saving if diesel was purchased in Belgium and brought to the UK. They knew there were fuel cruises, cheap channel crossings to Calais and Zebrugge, offered by fuel operators such as P & O Stena Line Service and Eurotunnel which, while not against the law, provided hauliers with an opportunity to purchase fuel in Belgium and France for importation into the UK. These "fuel cruises" were advertised in the trade press, the Motor Transport, which was available publicly. It was also reported in the press that various hauliers had fitted larger fuel tanks to carry larger quantities of petrol. The standard tank capacity was increased from approximately 800-1,300 litres to between 1,500 to 2,000 litres or more. It was known that the vehicles making the diesel run did not carry a load nor a trailer compartment at the back of the vehicle. From the photograph presented to the Tribunal, it was clear to the naked eye that the tanks on the Seddon Atkinson was significantly larger than the standard manufactured fitted tanks and the vehicle was carrying no load when stopped.

19. Let us now look at what has to be available to HMCE in order to make an assessment under Section 12 FA 1994. Section 12(4)(b) FA 1994 states that an assessment must be made by:

"The end of the period of one year beginning with the day on which evidence of facts, sufficient in the opinion of the Commissioners to justify the making of the assessment, comes to their knowledge."

This means that HMCE must exercise a subjective judgment, an opinion as to what evidence justifies making of an assessment. The opinion must be arrived at from the facts, the evidence and the date when the "last piece of the puzzle fell into place" (Aldous L. J. Pegasus Birds v HMCE (2000) STC 91 at 97b-c)).

20. The role of the Tribunal is to look at what facts the assessing officer considered in making the assessment and to decide when the last of those facts came to the knowledge of the officer. The period of one year runs from that date. The officer must have actual rather than constructive knowledge of the relevant facts (Spillane v C & E Commissioners 1990 STC 212 at 215-6) and the burden of proving that the assessment was out of time rests with the taxpayer (Section 12(6) FA 1996).
21. The second legal issue concerns the application of the Traveller's Order. Under this Order a person who has travelled from another Member State in the EU is relieved from paying excise duty on fuel contained in a commercial vehicle if such fuel is contained in a standard tank and the fuel is used or intended for use by that vehicle. The fuel in the vehicle must be of a type and quality necessary for the normal operation of the vehicle during its journey. If the fuel being imported to the UK does not qualify for relief under the Traveller's Order, a question arises as to whether an assessment should be made for exercise duty arising at that time, i.e. at the date of import.
22. The Appellant argues that there are three reasons why the Traveller's Order does not apply to the Appellant and the presence of anyone of these three reasons will justify the making of an assessment. The three reasons submitted in the Appellant's Skeleton Argument are:

7.1 It is common ground that it was the Appellant's intention to use the diesel otherwise than in the vehicle and the Commissioners had evidence of such from May 2002 or July 2002.

7.2 It is also common ground that the tank attached to the vehicle, Seddon Atkinson, was not a standard tank i.e. a tank fitted by the manufacturer.

7.3 That the fuel imported must be of a quantity to enable the vehicle to travel from its point of departure to its destination.

7.4 The Tribunal does not agree with point 3 but would consider point 1 and 2 in its reasoning. As regards point 3, there is nothing in the legislation to indicate that the quantity of fuel purchase is restricted in this way.

23. The HMCE agreed that for the Traveller's Order not to apply the vehicle must be fitted with a non-standard tank or the fuel must be decanted to other vehicles. HMCE said that they had a record (Freight Rummage Details View) of a trip by the Appellant on 22 July 2002, but only knew the fuel was being decanted in September 2004, when informed by Mr Keyes at the time of their visit. In the letter of P Brent, Reviewing Officer, dated 30 January 2004 advising on the mandatory departmental review decision, it is stated:

"Although the Commissioners knew of Mr Keyes's activities since May 2002, there was nothing to confirm that he was committing an offence. It was only when he confirmed his actions to Customs officers during their visits in September 2004, that an offence could be established."

In the same letter, the Reviewing Officer states:

"A tank that contains in excess of 1,500 litres is unlikely to be considered as standard."

The officer stated that "there was nothing to confirm that he was committing an offence." However, the Freight Rummage Details View of 22 July 2003 confirmed that the Seddon Atkinson had a tank capacity of 2,015 litres or more, which is clearly a non-standard tank. They also contend that it was not "perverse or wholly unreasonable" not to take further action (i.e. issue an assessment) earlier than the date it was done. (Pegasus Birds v HMCE 2000 SCT 91 at 98d-e).

24. The Appellant argues that, based on the evidence of Mr Keyes and HMCE's own evidence, there was sufficient evidence to raise a best judgement assessment, one year from 9 May or alternatively, based on the evidence of Judi Bastow, an assessment should have been raised within one year from July 2002. It is the opinion of the Tribunal that HMCE had sufficient evidence to raise an earlier assessment than raised. HMCE evidence of 22 July, as contained in their Freight Rummage Details View, shows that there was information about the Seddon Atkinson making a diesel run and having a non-standard tank capacity exceeding 2000 litres. They were also told, around that time, that the fuel was being decanted into other vehicles.
25. Was HMCE able to make a valid judgement on the material before them? The answer to that would appear to be yes. It was known that a significant cost saving would be obtained if diesel was purchased in France or Belgium and that ferry operators were offering discounted cross channel fares to hauliers. This was written about and advertised in the trade press. It is also known from the press that hauliers were fitting larger non-standard tanks to their vehicles and regular weekly trips were made, without load, to purchase fuel for import into the UK. It was clear to the naked eye that the tanks being used on the vehicles were larger than manufacturer standard tanks. It was evident from the Witness Statement, diary entry and tachograph provided and attached to the Witness Statement that Mr Peter Keyes was stopped by HMCE on 9 May (for approximately 1½ hours). He made clear that he was conducting a diesel run. HMCE appear to have confirmed and knew of Mr Keyes's diesel run in their letter of 30 January 2004. For our purposes, we can say that HMCE knew of Mr Keyes's diesel run from that date. They also commented on the larger non-standard tanks being used on the Seddon Atkinson and the fact that trips were being made regularly, perhaps twice weekly. They had internal guidance on what constituted a non-standard tank. The officer asked to see Mr Keyes's purchase receipt for diesel and this was shown to the HMCE officer.
26. The Witness Statement and evidence given in court of Judi Bastow, a reliable witness, is also instructive. In her evidence she said she was asked in June and July whether the diesel in the Seddon Atkinson was being sold and she confirmed that this was not the case but that the diesel was being decanted into other lorries in the Appellant's fleet. This may well have been the "last piece of evidence", the smoking gun if you like, to justify the making of an assessment. The Freight Rummage Details View of 22 July confirmed that HMCE knew the vehicle was on a fuel run, contained 2,015 litres of fuel and was travelling "unit only" i.e. no load. This would fasten HMCE with actual knowledge on that date and when taken with the supporting evidence of Mr Keyes and Ms Bastow, HMCE had the requisite information to justify the making of an assessment. They could have requested fuel invoices from the Appellant at that time in order to complete the assessment form if they so wished. They did not have to wait until September 2004 to make such a request. For completeness HMCE also had information on 21 April 2003, from the driver of the Seddon Atkinson, Mr David Branch, that the diesel was being used in other vehicles although a copy of his written statement was not produced to the Tribunal.
27. It is fair to say that HMCE also had knowledge of an industry practice of buying cheap diesel on the Continent and bringing it back to the UK in larger fitted tanks. They were given information by Mr Keyes of the diesel run and had access to the motor industry press which advertised fuel cruises. The fuel purchased by the Appellant in the month of June 2002 was over 10,000 litres and it is reasonable to assume that all of this would not have been used in one vehicle. HMCE had records of trips, litres of fuel contained in the tanks of the vehicle and the fact that the vehicle carried no load and was on a diesel run. This is the actual knowledge in the hands of the HMCE. There was sufficient evidence of facts to make an assessment and it would be reasonable to expect it to be made earlier than when it was made.
28. One is reminded of the comments of Aldous L. J. in the case of Pegasus Birds Ltd v C & E Commissioners [2000] SCT 91 at page 97 when he says that the purpose of the section, Section 73 VATA 1994, similarly worded to Section 12 FA 1994:

"is to protect the taxpayer from a tardy assessment, not to penalise the Commissioners for failing to spot some facts which, for example, may have become available to them in a document obtained during a raid".

There was a tardy assessment in this case. We cannot substitute our view for that of the HMCE but can decide that an assessment is perverse. In this case, HMCE had sufficient information to make an assessment earlier than September 2004 and this information ie: the size of the tank and the decanting of fuel, should have been taken into account in making the assessment and we therefore conclude that the assessment is perverse.

The next issue concerns whether there was a global assessment or series of individual assessments. The law in this area is clear. Whether the Commissioners have made a global assessment or a series of individual assessments is a question of fact, which is resolved by looking at the relevant documentation (C&E Commissioners v. Le Rififi [1995] STC 103 at 107). A global assessment is a single assessment for several excise points or, in the case of value added tax, for more than one accounting period. The Commissioners can choose whether to make a global assessment or a series of separate assessments (House (t/a P&J Autos) v. C&E Commissioners [1994] STC 211 at 233). In assessing the facts to decide if a global assessment was made one has to be objective and the state of mind of the person making the assessment is not relevant. It is important to look at what was done by the assessing officer, not what he intended to do (Courts v. Commissioners of Customs & Excise [2005] STC 227, per Jonathan Parker L.J. at para. 99). In our case, we shall need to look at the EX 601 Form, the Schedules attaching to that form and the Guidance Letter provided by HMCE on 25 January 2005 ("Guidance Letter") explaining the completion of the form. The Tribunal's role is to look at the facts and not to assist the Commissioners with any deficiencies in their work.

The Notice of Assessment EX 601 Form is called an "Officer's Assessment/Civil Penalty Excise" Form". Under the sub-heading "Payment of Any Outstanding Amount is Due Immediately" there are various columns for information. There are eight lines crossing the vertical columns. In the first column, there is the heading "Period/Default Dates" which gives the "start" and "end" date for the assessment as 01/05/02 and 29/08/03 respectively. The second column is headed "Assessment/Penalty" and this has a sub-heading called "Duty/Penalty Due" which gives the figure of £107,431. The other columns give code references such as "asset code", "penalty code" and "account code". In the "Net Amount due to/from" Customs and Excise, given at the end of the form, the figure of £107,431 is restated.

There is one reference number on the form, called "Unique Reference Number", which is 466121068. The form is accompanied by a letter dated 7 October 2003 to which Schedules are attached. The Schedules identified the total litres of diesel purchased between 9 May 2002 and 31 December 2002 and 1 January 2003 and 31 August 2003 and another Schedule sets out the calculation of the total duty due on the total number of litres of diesel purchased. There are no columns for the individual duty liability on each excise point and there are 126 exercise points. The reader does not know in looking at the form and schedules what the individual duty is at each excise point.

The Guidance Letter provided by HMCE explains how the form is completed. It states that the horizontal lines, numbered 1-8 are for "easier identification of liabilities". The heading "Period Default Dates" is where "you must record here the dates on which the assessments or liabilities to a penalty started or finished. This may result in single line assessments or penalties covering periods ranging from one day to, possibly, several years …… the lines of liability should be recorded in chronological order, with the oldest liability starting on line 1".

It is clear that the form can be used for several assessments, if the appropriate horizontal lines are completed, with the start/end date, the duty/penalty due and the appropriate codes. These are called the "Lines of Liability".

The Explanatory Notes to the EX 601 Form, which are at the back of the form, does use the singular and refers to "the assessment" and HMCE "hereby assess". The Guidance Letter does contemplate the form being used for more than one assessment and gives individual lines for completion if such assessment are to be made. The reference to "the assessment is therefore confusing to the reader.

Counsel for the Respondents argued, at a second short hearing to hear arguments on the Guidance Letter, that whilst the EX 601 Form in the "Period/Default Dates" column had the dates from 1 May 2002 to 29 August 2003, it was not a global assessment since the form "in isolation is not the assessment but forms part of the notification assessment package. In this case the assessment comprises the EX 601 Form, the letter of notification and the accompanying Schedules". I cannot accept this argument as presented. The Guidance Letter states that "the accompanying documents give all the information the trader needs to be made aware of the details of the debt". The form itself must make the assessment and each line must state an individual assessment, even if this involves using several forms to make the required one hundred and twenty six assessments.

We can infer from the layout of the form that if one line is completed there is one assessment and if several lines are completed there are several assessments. Even if we accept the argument of the Respondent, there is only one global figure for tax due and if there were a series of assessment one would expect to see the individual tax levied at each excise duty point. In the Schedules attached to the form the date fuel is purchased is given in one column and in the next column is given the invoice amount for the fuel purchased e.g. 19/05/02, £1,960.00 but there is no figure given for the duty assessed at that excise duty point. An individual assessment would have to show the excise duty assessed and not aggregate on the individual assessments into one global figure, as was done in this case.

The Schedules attaching to the form are meant to give information to the taxpayer and should be read with the assessment form which should be completed to show the assessment or assessments made. (See International Language Centres Limited v. Customs & Excise [1993] STC. 394 at 396-398).

In conclusion, we believe that the assessment is global since the completion of the form and the way the information was presented would support the making of a global assessment.

The Schedules attached to the form were not meant to be individual assessments but rather information schedules which explained the assessment. There was one reference number for the assessment and one global figure for tax due and the Guidance Letter suggests that the formation of the EX 601 Form allows for individual assessments if the individual lines and amount of tax due is completed. Based on the facts objectively assessed, one can only conclude that the assessment was a global assessment.

It is our conclusion that the assessment, which is to say the entire assessment, is out of time and the appeal should be allowed.

Accordingly the decision of the Tribunal is that the Appeal should be allowed.

DR KAMEEL KHAN CHAIRMAN RELEASED: 5 May 2005

LON/04/8011