United Kingdom VAT & Duties Tribunals (Excise) Decisions

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Cite as: [2005] UKVAT(Excise) E889, [2005] UKVAT(Excise) E00889

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McNeill v Customs & Excise [2005] UKVAT(Excise) E00889 (06 June 2005)

E0889

RESTORATION — Appellant coach trip to Belgium — stopped on return at Dover — 12 kg hand rolling tobacco — purchased for her and family — condemnation proceedings — failure to notify Appellant of those proceedings, Appellant did not attend — right to allege own use — yes — refusal to restore cigarettes and spirits unreasonable — appeal allowed

MANCHESTER TRIBUNAL CENTRE

IRENE McNEILL Appellant

- and -

HER MAJESTY'S REVENUE AND CUSTOMS Respondents

Tribunal: David Porter (Chairman)

Peter Whitehead

Sitting in public in Manchester on 19 April 2005

The Appellant in person

Samantha Holland, counsel, of the Acting Solicitor for HM Revenue and Customs for the Respondents

DECISION

Irene McNeill appeals against the Respondents' decision contained in a letter of 7 October 2004 refusing to restore 12 kg of hand rolling tobacco 200 cigarettes and 50 cigars.

We heard evidence from the Appellant and Samantha Holland of counsel appeared for the Respondents and produced a bundle of documents for the Tribunal.

We find the following facts. The Appellant, who lives in Chorlton in Manchester, decided to go to Belgium to buy some hand rolling tobacco. She travelled in a Bellevue Company Coach along with other passengers, who also intended to buy cigarettes. She was unclear as to where she had been, other than that it was Belgium. She bought some hand rolling tobacco for which she obtained a receipt. As she was leaving the shop, she decided she could carry more goods and returned to buy a further amount of hand rolling tobacco and the 200 cigarettes and obtained a further receipt. We are satisfied that as a result she had two receipts. She was also given 50 cigars by the shopkeeper.

When the coach arrived at Dover, it was pulled in by the Respondents and the passengers and the Appellant disembarked. The Appellant was the last person to leave the coach and was asked by the Respondents to step aside, to which she did not object, as she felt that she had done nothing wrong.

When the Appellant was interviewed, she confirmed that she was not working due to sickness having been assaulted by her son in 1995. She receives approximately £77 per week, which is £20 more than the usual state benefit. She saved some money and her children gave her money from time to time for birthdays and Christmas. She smoked some 40 cigarettes per day but was unable to say how many she rolled from a pouch of tobacco. What was apparent from the evidence was that she had never counted the number of cigarettes that she could roll from a pouch of tobacco. Prior to the hearing, she had counted the number when she used the machine and had been able to roll approximately 70 cigarettes from a pouch. She expected the tobacco to last approximately twelve months. She would be giving some to her partner and some to her children as gifts. At the end of the interview she said that she had a couple of hundred pounds in the bank. She had not had time to tell them that she had money in her savings accounts as she was told the coach was about to leave and she could not get home other than the coach. Customs were not satisfied that the goods were for her personal use and advised that they were seizing them.

At a later date she instructed Nigel Gibbons & Co Solicitors who asked in a letter of 30 August 2003 that the Respondents should initiate condemnations proceedings. Customs wrote back on 24 September 2003 advising that "if he wished to contest the seizure as unlawful, then he need take no further action … And he would be sent a summons telling him where and when the first hearing would take place". No such summons was received. When he wrote again on 22 July 2004 to enquire about the progress of the case, the Respondents replied on 26 July 2004 advising him that condemnation proceedings had been taken place at the Channel Magistrates Court on 9 February 2004. Restoration had been refused as outlined in their letter of 15 March 2004. Mr Gibbons wrote to the Respondents again on 24 August 2004 indicating that he had not received their letter of 15 March 2004 and in the circumstances it was only right that the Appellant's case should be reviewed.

The review letter was sent on 7 October 2004 and restoration was refused on the basis that:

The quantity of goods exceeded the guidelines

The Appellant could not give a plausible explanation as to why she had two receipts

The Respondents failed to see how she could have saved enough money to buy the goods

She was unclear as to the number of cigarettes she could roll from a pouch and the tobacco would not last as long as she stated

She had not mentioned what quantity of the goods she was going to give her partner and children

The letter also indicated that no further information had been provided. At the Tribunal the Appellant produced two bank statements, which showed that she had £1730.86 in the bank at the time of the seizure. She stated that Mr Gibbon had sent details of the statements to Customs some time before the receipt of the review letter. She was unable to produce any evidence to that effect. We note that correspondence from Customs has not reached Mr Gibbon, and it would appear that his letters had not been responded to. In the circumstances, we are satisfied that Customs had received details of the Appellant's bank statements prior to the completion of the review letter. It is extraordinary that the Respondents did not advise the Appellant nor Mr Gibbon of the condemnation proceedings.

The Law

The Excise Duties (Personal Reliefs) Order 1992 as amended at article 3 states:-

"Subject to the provisions of this Order a community traveller entering the United Kingdom shall be relieved from the payment of any duty of excise on excise goods which he has obtained for his own use in the course of cross-border shopping and which he has transported"

'Own Use' is defined in the order as:-

'Own Use' includes use as a personal gift provided that if the person making the gift receives in consequence any money or money's worth (including any reimbursements of expenses incurred in connection with obtaining the goods in question) his use shall not be regarded as own use for the purpose of this Order.

The Commissioners may require the person to satisfy them that the goods are not being held for commercial purposes."

Paragraph 2 of Article 9 of the Council Directive 92/12/EEC provides the criteria which must be taken into account in establishing whether or not the products are intended for commercial use:

The commercial status of the person holding the products, and his reason for holding them

The place where the products are located or, if appropriate, the mode of transport used

Any documents relating to the products

The nature of the products

The quantity of the products

Ms Holland submitted that the Tribunal could not consider that the goods had been acquired by the Appellant for her own use. The case had come before the magistrates in February 2004 and neither the Appellant nor her solicitor attended. She understood that Mr Gibbon was no longer in practice on his own as he had joined a larger firm. If, as the Appellant alleges, Mr Gibbon thought that the case was clear-cut, it was surprising that he had not appeared for the Appellant. At the interview, the Appellant indicated that she was in receipt of sickness benefit and it was not credible that she would have spent the amount of money that she did. Ms Holland had seen the bank statements for the first time at the Tribunal and was unable to say whether the Respondents had received copies. In the review letter, the Customs Review Officer indicated that Mr Gibbon had not provided any further information even though he had been asked to do so.

Ms Holland referred to Balbir Singh Gora and others v Commissioners of Customs and Excise 2003 EWCA Civ 525 and Barry Gascoyne v (1) HM Customs and Excise and (2) The Chairman of the VAT and Duties Tribunal 2004 EWCA Civ 1162 and whilst accepting that the observations by Buxton LJ in Gascoyne were obiter, as here, it is not now open to the Appellant to raise evidence to the effect that she had acquired the goods for her own use. Further in Anthony Johnstone v The Chairman of the VAT & Duties Tribunal 2005 EWHC 115 (admin) Mr Justice Moses had confirmed that where there had been a magistrates hearing at which the appellant had had an opportunity to argue that the goods had been purchased for his own use, it was not open to a tribunal to hear that evidence again. Given the facts before the Customs Review Officer in February 2004 she considered that he had acted reasonably in all the circumstances and the case should be dismissed.

The Appellant had nothing further to add.

My colleague and I have considered the facts and the submissions and we have decided that the decision not to restore the goods was not one which the Customs Review Officer could reasonably have come to. The are some unsatisfactory features to this case:

Customs were aware that the Appellant was represented but failed to advice either the Appellant or her representative of the condemnation proceedings in February 2004

Letters from Customs to Mr Gibbon appear to have gone astray

We are satisfied that Customs did have the details of the bank statement and were aware that the Appellant could afford the goods

The Appellant had two receipts because she had returned to the shop to purchase some more goods

It would appear that the Appellant was put under severe pressure to terminate the interview, as she would otherwise have been unable to travel home on the coach, which was due to depart. She was not therefore able to expand on her financial position

The evidence given by the Appellant to the tribunal was clear and succinct and we believe her version of the events

We accept that where there have been condemnation proceedings and the facts have been heard or the Appellant has failed to attend such a hearing it is not open to an Appellant to allege that the goods were purchased for the Appellant's own use at these proceedings.

Phill LJ in Gora at paragraph 58 states:-

"While the division of jurisdiction between the courts and the tribunal may arguably be curious, and is probably retained because of the long standing jurisdiction of the courts in proceedings for condemnation, the division is clear and it is not intended that the tribunal should have jurisdiction to reconsider the condemnation of the goods as forfeited."

Buxton LJ stated at paragraph 46:-

"I do not think it can be intended that the ex(im)porter before the tribunal would have a second bite at the cherry of lawfulness, having failed in the condemnation proceedings, or let them go by default … the reason why the importer cannot have the liberty is not because of the terms of the statute, but because the normal English law rules of res judicata or abuse of process."

The cases are concerned that the Appellant should not have "two bites at the cherry" and there should not be an abuse of process. In the case of Anthony Johnson, the appellant had been able to give evidence as to the purchase of his goods for his own use. In this case the Appellant had not been given that opportunity because the Respondents failed to advise either her or her solicitor. It seems to us that for an Appellant to be prevented from alleging that the goods were purchased for the Appellant's own use when there has been a magistrates court hearing, the Appellant must have had the opportunity to give her version of the facts. This Appellant was never given the chance to give her version of the facts as neither she nor her representative were advised of the hearing which would have given them that opportunity. Nor had she failed to appear at the magistrates through her own fault.

If they had been told of the date, as they should have been, they would have undoubtedly attended at court and presumably would have produced the evidence that we have heard today. The decision of the magistrates court, although referring to the letter of 20 August 2004 from Mr Gibbon, makes no reference as to why the Appellant nor Mr Gibbon failed to attend. The decision merely identifies the goods and indicates that they were over the guideline quantities. In the circumstances it is clear that the facts, which would have been raised by the Appellant, were never aired.

The appropriate action would no doubt have been for Mr Gibbon and the Appellant to appeal the decision of the magistrates. On 23 July 2004, some six months later, Mr Gibbon wrote to the Respondents to enquire what progress had been made in the case. It was only then that he was advised that the matter had been heard by the magistrates. By then it was far too late for him to appeal the decision in the magistrates court.

We have therefore decided that we can hear evidence as to the Appellant acquiring the goods for her own use. We are satisfied by her explanation of the events that the goods were bought for her and as gifts for her family. Further, the Reviewing Officer seems to have taken no account of the Respondents' failure to advise the Appellant or her representative of the magistrates' court hearing. Nor has he taken account of the fact that the Appellant appears to have had sufficient money to justify the purchase of the goods. We therefore allow the appeal.

This tribunal hereby directs under section 16(4)(b) of the Finance Act 1994 that:

a) The Respondents do conduct a further review of the decision to refuse restoration of the goods and serve the same on the Appellant and the Tribunal within 40 days of the release of this direction

b) The review be conducted by an officer not previously involved, and shall be on the basis of the finding by the Tribunal that the goods were held for the Appellant's own use. Consideration shall be given to the financial position of the Appellant as identified by her bank statements. The Respondents shall also consider whether restoration should be made in the form of compensation and if so, shall specify the amount of compensation on the basis of the calculation

c) The Appeal is determined on the above basis

d) If dissatisfied with the review, the Appellant will have a further right of appeal to this Tribunal

The Appellant asked for no costs other than her taxi fares and we award £10.

DAVID PORTER

CHAIRMAN
Release Date: 28 June 2005