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United Kingdom VAT & Duties Tribunals (Excise) Decisions
You are here: BAILII >> Databases >> United Kingdom VAT & Duties Tribunals Decisions >> United Kingdom VAT & Duties Tribunals (Excise) Decisions >> Clark (t/a Andrew Clark Plant Hire) v Revenue & Customs [2005] UKVAT(Excise) E00913 (15 July 2005)
URL: http://www.bailii.org/uk/cases/UKVAT/Excise/2005/E00913.html
Cite as: [2005] UKVAT(Excise) E00913, [2005] UKVAT(Excise) E913
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- Andrew Clark T/A Andrew Clark Plant Hire is engaged in the business of Plant Hire and in addition Agricultural Contracting. He hires out plant for use in construction work. He also undertakes Agricultural Contracting for which certain plant and equipment is required.
- For Agricultural work he uses amongst other things a tractor, MGL 10V, and a small digging machine (properly so described, not an excavator) the machine used for digging trenches for drains.
- That digging machine may be transported by a haulage contractor or by the Appellant on a trailer if the work is nearby or access to the farm fields is difficult from the roadway.
- The tractor and trailer will transport other items necessary eg pipes and other equipment to the site. At the site the tractor and trailer will take the digging machine and the requisite pipes and any other material to the place where the work is to be carried out.
- The tractor is registered as an agricultural vehicle. It is used for agricultural purposes. It always is and was on the occasion in question, fuelled by red diesel.
- On 22 October 2003 the tractor with driver trailer, digging machine and equipment were provided to Colin Ballantyne at a neighbouring farm, Netherfield, for use over 2 days.
- The use was admitted to be agricultural in respect of the digging of drains and laying of pipes. Mr Ballantyne did not hire the tractor, or the excavator, these were provided by the Appellant, together with a driver to do the work.
- The driver was not, contrary to the statement of facts an employee of the Appellant, but was a self employed sub-contractor, engaged to drive tractor and digging machine.
- The work at Mr Ballantyne's farm, which was neighbouring, finished in a day and a half and Mr Ballantyne asked the driver to go to a farm at Draffin, 9 miles away, to repair a field drain there which Mr Ballantyne had damaged. That work was not specially requested from the Appellant and at the time he knew nothing of the expedition to Draffin. Mr Ballantyne was ultimately invoiced for the 2 days work, thought by the Appellant at the time it was agreed to be at Mr Ballantyne's Netherfield Farm.
- The tractor with trailer and digging machine went to Draffin and conducted the repairs there. The repairs were also agricultural work. The vehicle made to return to the Appellant's premises.
- On the return journey the vehicle was stopped on B7078 approximately 1 mile south of its junction with A71 by the police.
- It was impounded and, unsurprisingly, the fuel was ascertained as being red diesel.
- The Respondents thought that an offence had been committed. They originally wanted to asses for the Appellant's entire consumption of red diesel but however accepted that the tractor was indeed used for agricultural work on the land.
- They thereafter sought to asses only on the basis of journeys from the Appellant's base to the lands worked upon on the view that what was being done at that stage of the activity was truly haulage and not agricultural work.
- In the Respondents review letter it was, in the first place, accepted that the tractor was registered as an agricultural vehicle. It also stated that information was required to see whether all the work done by the tractor was related to agricultural purposes.
- The officer put it thus in his letter of 19 October 2004 "apart from vague statements that the work done was agricultural your client has provided nothing that confirms his assertion that the haulage of the excavator by the tractor was related to agricultural contracting.
- However that may be, the Appellant provided evidence to the Tribunal that his work was indeed so related.
- The use of the tractor on the occasion in question was solely for purposes related to agriculture.
EO00913
Rebated Fuel – agricultural tractor – used with trailer to transport material and digger to locations for agricultural purposes – whether solely used for purposes related to agriculture – yes.
Penalty – double penalty – agricultural vehicle with rebated fuel normally in tank used on road, whether fuel taken in for that purpose – no evidence of taking in for special purpose of use on road – penalty under HODA 13(1)(b) not applicable.
EDINBURGH TRIBUNAL CENTRE
ANDREW CLARK
T/A ANDREW CLARK PLANT HIRE Appellant
- and -
Tribunal: (Chairman): T Gordon Coutts, QC
for the Appellant Mr Alan Marshall
for the Respondents Mr Andrew Scott, Shepherd & Wedderburn, WS
© CROWN COPYRIGHT 2005.
This appeal was brought in respect of the decision of a reviewing officer of the Respondents to uphold an assessment of £185 of Excise Duty alleged to be due in respect of certain activities of an agricultural tractor. He also upheld penalties, 2 in number, of £250 each in respect of alleged contraventions of the Hydrocarbon Oil Duties Act 1979 section 13(1)(a and b). It will be noted that penalties were imposed in respect of both the use of and the taking in of red diesel.
Certain facts were agreed but, in the view of the Tribunal, inadequately set forth, in a statement of agreed facts produced. The Tribunal however heard evidence from the relevant witnesses and, when their evidence conflicted with or supplemented the statement of agreed facts no objection was taken. Those witnesses were the Appellant, his customer Mr Ballantyne and the tractor/digger driver, Mr Lambie. They were all credible and reliable. Accordingly the Tribunal finds the following facts taking into account all the evidence produced to it:
Contentions of Parties
The Appellant contended that as a matter of fact the use of the vehicle at the time in question was solely for purposes related to agriculture. The Respondents contended that insofar as the tractor took the digging machine to the place of work that part of the use was properly classified as haulage. They did not seek to contend that because part of the activity was haulage by their judgement there could be no question of the operation failing to be "solely" for agricultural purposes.
The Appellant did not dispute the quantification of the assessment, taking the view that the expense involved in ascertaining the minutiae of the insignificant sum of £183 relating to the use of the tractor for short distances from time to time over several matters for the alleged haulage purpose was not economic.
It might be noted that the assessment was arrived at by way of an exercise using post codes to establish distances possibly travelled. While it is not a matter which arises in the present case there are obvious difficulties and potential inaccuracies in such an exercise. For example examination of the relevant ordinance survey map would make it apparent that contrary to the schedule produced by the Respondents the distance travelled to Crookedstonemuir Farm is not twice that travelled to Browntod Farm and doubtless similar inaccuracies could be demonstrated. However that matter does not, by concession, arise.
Mr Clark was interviewed by officers of the Respondents and a record of interview was produced. It is apparent from all analysis of that interview that statements were made by Mr Clark which were not precisely considered. So, for example, in response to the leading question "has tractor been used in public road prior to yesterday doing non-agricultural work" the response was "yes". However at the end of the interview when asked why he ran his vehicle on the road the response was "its an agricultural vehicle and I thought it was an agricultural job I was doing". Further the business of the Appellant was described in a short form as Agricultural Plant Hire. It would have been more accurately described as Agricultural, Plant Hire.
Some discussion took place in relation to work which had been done by the Appellant on a pond at Netherfield Farm for a Mr Lightbody in 2002. This was said to be work which was not agricultural and therefore disqualified the vehicle from being an agricultural tractor. That contention was neither precisely formulated nor detailed. If, as might be the case, it was a sole instance, then that could not support the assessment as a whole.
The Law
The tractor in question was registered as an agricultural tractor. Accordingly in terms of the section 12(2) of the first schedule to the Hydrocarbon Oil Duties Act 1979 it is an excepted vehicle if used on public roads solely for purposes related to agriculture, horticulture, forestry or other activities.
Should such a vehicle be considered a "road vehicle" by section 12(2) no heavy oil …. Shall (a) be used as fuel for a road vehicle or (b) be taken into a road vehicle as fuel unless an amount equal to the amount for the time being allowable in respect of rebate has been paid to the Commissioners in accordance with Regulations.
By section 13 of the said Act sub-section 1 it is provided:
(1) [Where any person] –
(a) uses heavy oil in contravention of section 12(2) above; or
(b) is liable for heavy oil being taken into a road vehicle in contravention of that subsection,
[his use of the oil [or his becoming so liable(or, where his conduct includes both, each of them)] shall attract a penalty under section 9 of the Finance Act 1994 (civil penalties)] …
It can be seen from the above that there are circumstances in which the presence of red diesel in the fuel tank of a vehicle may not be an offence.
Decision
The Tribunal was satisfied that on the occasion under examination the tractor was being used solely for purposes related to agriculture. The transport of the digging machine from A-B was for that purpose and not for the purpose of a contract of hire as such. In the particular circumstances of the case before the Tribunal the sole use of the tractor was related to agriculture. There was no ancillary contract and no other purpose or use was suggested other than the assertion that what was taking place was, for the part of the time the tractor was used, should be considered haulage. In that regard the case is distinguishable from the English High Court Decision of R v Commissioners Ex parte England Environmental Limited Q.B.D 21.3.96 (CO/2802/95) where the case related to a contract involving 2 separate purposes. One was agricultural but there was another which was the transport of waste material from the premises of A to be distributed in various places on various farms. Accordingly the arrangement was one which involved not only the use of the vehicle and its agricultural purpose but also the use of the vehicle for the purpose of removing waste from a third parties premises for the benefit of that third party.
A Tribunal decision subsequent thereto, Bryan & Thomas v Commissioners, (E00875) 3 March 2005, was similar in its factual background. It is noted that in each of these cases the sums involved were tens of thousands of pounds of duty not the de minimis £185 with which this case was concerned. In both cases discussions took place about the reason for the rebating of fuel. It was to assist farmers it was said. Such matters were alluded to in this case. They have no significance because it is the farmer who gets, even if indirectly the benefit of a lower price. That consideration was so insignificant in the context of the use and sums involved in the present case that the Tribunal was surprised it was mentioned.
Accordingly on the facts before the Tribunal in the instant case the use of the vehicle was solely for purposes relating to agriculture and the assessment requires to be discharged. It is not saved by the possibility of a single instance over a year earlier involving an improper use. Nor is the Tribunal prepared to divide up the assessment to rescue a small part of it.
That reasoning also applies to the imposition of the penalties which were not due because of illegitimate use of red diesel on 22 October 2003.
However if the Tribunal are thought to be wrong in that assessment of the factual situation and of the law applicable they would have discharged the penalty relating to taking in of fuel. There should have been no question of the imposition of a double penalty on a proper consideration of the facts
The agricultural vehicle in question was entitled to have red diesel in its tank so it was not an offence to put it there. It might have been an offence to use the diesel already in the tank on the public road. There was no evidence that red diesel was specifically put into the tractor for the purpose of the journey to or from Draffin as opposed to the vehicle's normal use.
Neither party sought expenses in the event of success.
EDN/04/8009