United Kingdom VAT & Duties Tribunals (Excise) Decisions

EO00915

EXCISE DUTIES — commercial consignments despatched under duty suspension status to Italy and Belgium — whether goods arrived or diverted — duty point — whether owner of goods liable for duty and VAT — FA 1994 s12(1A), DSMEG Regs 2001 reg 7(2) — VATA s 73(7B) — revocation of registered owner approval — WOWGR reg 5, CEMA s 100G(5) — Respondents' evidence second-hand — Appellant's evidence incredible — whether Appellant has satisfied burden of establishing arrival of goods at warehouse of destination — no — whether liable for payment of duty and VAT — yes — whether registered owner approval reasonably revoked — yes — appeal dismissed

MANCHESTER TRIBUNAL CENTRE

GLOBAL BEERS AND WINES LIMITED Appellant

- and -

HER MAJESTY'S REVENUE AND CUSTOMS Respondents

Tribunal: Colin Bishopp (Chairman)

Brian Strangward

Sitting in public in Birmingham on 10 May, 2 and 3 August 2005

Derek Payne, tax adviser, for the Appellant

James Puzey, counsel, instructed by the Acting Solicitor for HM Revenue and Customs for the Respondents

© CROWN COPYRIGHT 2005


 


DECISION

1. In this appeal, Global Beers and Wines Limited ("Global") challenges the Respondents' decisions, upheld on review or local consideration:

(a) to assess Global for excise duty of £416,537 pursuant to section 12(1A) of the Finance Act 1994 and regulation 7(2) of the Excise Duty Points (Duty Suspended Movement) of Excise Goods Regulations 2001 (SI 2001/3022) ("DSMEG");

(b) to assess Global for VAT of £72,694.12 pursuant to section 73(7B) of the Value Added Tax Act 1994; and

(c) to revoke Global's registered owner approval, granted in accordance with regulation 5 of the Warehousekeepers and Owners of Warehoused Goods Regulations (SI 1999/1278) ("WOWGR"), pursuant to section 100G(5) of the Customs and Excise Management Act 1979.

2. Those decisions all arise from the Respondents' conclusion that four consignments of excise goods, purportedly despatched by Global from authorised warehouses in the UK to authorised warehouses in Italy and Belgium, did not arrive at their destinations, that in each case an irregular departure from duty suspension occurred, and that Global "caused" that irregular departure within the meaning of regulation 7(2) of DSMEG. They say that, if that conclusion is correct, it necessarily follows that they had reasonable cause to revoke the WOWGR certificate. Global's case is that the four consignments were properly despatched and that they arrived at their intended destinations. If, however, they did not arrive, Global did not know and had no reason to suspect that anything untoward had occurred.
3. Global was represented before us by Derek Payne, a tax adviser, and the Respondents by James Puzey of counsel. We were provided with a substantial amount of documentary evidence, and heard the oral evidence of Permjit Singh Dhillon, Global's sole director, and Matthew Parsons, Jayne Barnbrook and Shelley Morales, all officers of the Respondents.
4. It was common ground that the consignments with which we are concerned, in three cases of vodka and in the fourth of whisky, left the UK authorised warehouse owned by Oakwood Storage Services Limited in Essex, where they had been held to Global's order. The first left on 12 October, the second on 19 October, the third on 22 October and the last on 26 October 2001. An accompanying administrative document ("AAD") was prepared by Oakwood, showing the consignor as itself, the transporter as Anglo Overseas Limited ("AOL") and the consignee (that is, the authorised warehouse of destination) as Serio Import and Export ("Serio") in Seriate, Italy. AOL is in each case described as the guarantor of the consignment, and in each case the AAD shows that the goods are to be held, on arrival, for the account of Global (at that time its name was Estion Limited). That is an oddity, if Global had in fact sold the goods, but we think it is likely to be the result of a mistake rather than of anything else. As these were, or purported to be, exports under duty suspension arrangements, Global did not account for UK excise duty and VAT when the goods were removed from the warehouse. In due course, Global received from AOL an invoice for the transport costs; each invoice sets out, among other details, the intended destination of the goods and bears the words "We certify that the above goods have been shipped as shown". Of the AADs, only three were returned; neither party was able to throw any light on what had happened to the fourth.
5. Mr Dhillon's evidence was that he set up Global in 2001, intending that it should engage in the export of alcoholic beverages especially to other member states of the European Union. We observe in passing that Global's stationery describes it as an importer, rather than exporter, of beers and wines. He relied on recommendations to obtain customers beginning, he said, with some cash and carry outlets in Calais. Global opened accounts with two approved warehouses, Rangefield and Oakwood, both in Essex. The particular recommendation which is relevant in this appeal was made, Mr Dhillon said, by Oakwood's manager. It was of Serio. Mr Dhillon knew that the warehousekeeper in the UK was expected to verify, through one of the Respondents' offices in Glasgow, that the Italian warehousekeeper nominated by Serio (in the event, itself) was authorised to receive goods under duty suspension; the verification is known as a "SEED check". Mr Dhillon told us that he established contact with Serio, which was the surname of its owner. He met Mr Serio, he said, at a hotel in London, and shortly after Serio placed an order for 1664 cases of whisky, which were the subject of the first consignment. He later met another representative of Serio whom he knew only as Tony. In all, Serio ordered four consignments but, as the fourth was in transit, Mr Dhillon received a message from Oakwood that it had been informed by the Respondents that Serio's warehouse authorisation had been withdrawn by the Italian authorities, and the consignment could no longer be delivered to it. Mr Dhillon said that he managed to find another customer for the goods, Veltro International BVBA, a Belgian company, which used the authorised warehouse of Brasserie Caulier, also in Belgium. He was able to arrange for the AAD to be reissued (which is not the appropriate procedure—the existing AAD should have been amended) and for the lorry transporting the goods to be redirected to Brasserie Caulier's address. He told us that re-selling the goods was comparatively easy as he had, coincidentally, had an approach from the owner of Veltro, a Mr Pee.
6. Serio's payments for the three consignments it received were made in cash; Tony brought (most of) the appropriate sums, in sterling, to Mr Dhillon in the UK. He explained that he trusted Mr Serio and was willing to send the consignments to Italy on the strength of a promise of payment in cash. It appears that £15,000 was paid in advance of despatch of the first consignment, and the balance was paid within a week. A further £5000 was paid on the day the second consignment was sent, and the balance three days later: that information is extracted from the stubs of a receipt book Mr Dhillon produced. Payment for the third consignment was rather less prompt, however, and some of the money was paid, Mr Dhillon explained, only after the intervention of a friend and namesake who lived in Germany and who could more easily travel to Italy than Mr Dhillon; the namesake collected part of the balance due and transferred it to Global by bank transfer from Germany. Global's invoice to Veltro was also paid in cash, about six weeks after the consignment was delivered. Mr Dhillon said he went to Belgium to collect the money.
7. The Respondents' evidence was largely second-hand, consisting mainly of documents and statements provided to them by the Italian and Belgian authorities. It was produced by Mrs Morales, who had no personal knowledge of the matter at all; she had merely collected and assembled the information. Mr Parsons was able to give us a good deal of background information about the Commissioners' approach to excise diversion frauds—they say that these consignments were diverted in the course of a fraud—and about the history of their enquiries in this case but his evidence, too, was drawn largely from documents obtained by him from others. Mrs Barnbrook was the officer who recommended that Global's WOWGR authorisation should be revoked and, when her recommendation was accepted by her superior officer, who wrote to Global communicating the decision. It was based on the Respondents' belief that Global had caused, or had been involved in causing, irregular departures from duty suspension arrangements. She told us that it was the Respondents' policy that the mere fact of such involvement must lead to revocation. Again, Mrs Barnbrook relied on information provided to her—by both Mr Dhillon, during the course of a visit she made to Global as well as by her colleagues—and she did not make any further enquiries of her own.
8. Although, therefore, most of the factual basis of the Respondents' case was not directly proved, it was before us and it is appropriate we record it since it is what they took into account in reaching their decisions. Much of the information we saw was not specific to these consignments, but related to rather wider enquiries the Respondents were making; and most, if not all, of it was before Lewison J in Customs and Excise Commissioners v Anglo Overseas Limited [2004] EWHC 2198 (Ch), and is described by him in some detail in his judgment.
9. Information provided to the Respondents by their Italian counterparts showed that, while Serio had indeed been an authorised warehousekeeper, its authorisation was withdrawn on 29 June 2001. That information did not immediately reach the Respondents and it was accepted that enquiries of the Respondents by Oakwood into Serio's authorisation would not have revealed that the authorisation had been withdrawn until after the fourth of the consignments with which we are concerned had already been dispatched. That is consistent with Mr Dhillon's evidence. It was apparent from what the Italian authorities had provided that Serio (or a man purporting to be a representative of Serio) borrowed the key to the premises for which it sought approval from the owner, on the pretext that Serio was considering taking a lease, then showed it to Italian officials in order to obtain the approval, but did not proceed to take the lease. The authorisation was revoked as soon as the Italian authorities discovered what had happened but, as Mr Parsons told us, the exchange of such information between customs authorities in the various member states could be slow and it was not until some time later that the information reached the Respondents. The Italian authorities had also examined the AADs purportedly returned by Serio and had concluded not only that they had been completed after the revocation of the authorisation but that the stamps and signatures ostensibly applied by the Italian authorities were false.
10. The information obtained from the Belgian authorities was that Veltro was engaged in the insurance business with no connection at all to the liquor trade and that, although Brasserie Caulier was an authorised warehousekeeper, it used its facilities only for the storage of products it had manufactured itself. The owner of the Brasserie denied any knowledge of the consignment, and said that the seals and signatures on various AADs produced to him and purportedly completed by the Brasserie (though not including the one used for Global's fourth consignment which, as we have said, was not returned) were false. Veltro's owner, too, denied having bought a consignment of spirits from Global. Part of the Respondents' case is that Global's was only one of several consignments supposedly bought by Veltro and redirected to Brasserie Caulier from Serio immediately after the revocation of Serio's authorisation became known to the UK authorities.
11. Faced with such information, it is not surprising the Respondents took the view that the four consignments had not reached their intended destinations and that, even if the first three had, they could not have been received by an authorised warehousekeeper since the warehouse of destination was no longer authorised. We are, however, conscious that what was available to them, and produced to us, is not direct evidence, and has not been tested by cross-examination. Although the tribunal may admit almost any evidence it thinks fit (see rule 28(1) of the Value Added Tax Tribunals Rules 1986 (SI 1986/590)), we nevertheless have to consider what, if any, weight we should attach to it. It is, we think, appropriate to consider the Respondents' evidence together with what Mr Dhillon told us, and the documentary material he produced. It is necessary also to bear in mind that the burden of establishing that the goods arrived at an authorised warehouse rests in each case on Global (see section 16(6) of the Finance Act 1994 and Tynewydd Labour Working Men's Club and Institute Limited v Customs and Excise Commissioners [1979] STC 570) and that, although we may allow or dismiss the appeals against the assessments as we think appropriate in the light of our findings of fact (see section 16(5) of the Finance Act 1994 and section 84(5) of the VAT Act 1994) we may allow the appeal against the revocation of the WOWGR approval only if we are satisfied that the decision to revoke it was one at which the Respondents could not reasonably have arrived (see section 16(4) of the Finance Act 1994) since the decision is one as to an ancillary matter falling within paragraph 2(2) of Schedule 5 to that Act.
12. The difficulty for Global lies in our conclusion that much of Mr Dhillon's evidence was implausible, and some quite incredible. He told us that Global was able to take on only one transaction at a time; that part of his evidence is quite believable, since we have the clear impression that Global did not have significant financial resources. Despite Mr Dhillon's suggestion that there may have been other dealings, it transpired that the first sale to Serio was in fact only the second transaction into which Global had entered. The first was a sale to (Mr Dhillon said) a French customer, although the delivery had been made to a Portuguese warehouse (the Respondents say that this consignment too was diverted but there was no evidence of any kind on the subject before us and we disregard the possibility as a factor). Mr Dhillon also told us that after the four consignments with which we are concerned, Global sold other goods, but we had no separate evidence to support that claim. It was clear that there had been no other sales between the first and last of these consignments.
13. The most striking feature of Mr Dhillon's evidence was the manner in which he claimed to have done business with his customers, both in the negotiation of sales and in his willingness to allow credit to them. By his own account, Mr Dhillon relied on the recommendation of a manager at Oakwood, a company to which he had only recently been introduced, and with which Global had only a very brief trading relationship. On the strength of that recommendation he struck up a short acquaintance with a man who was, or purported to be, Mr Serio. The first order placed by Serio was for goods to a value (excluding duty and VAT) of over £22,000. Mr Dhillon, as we have recorded, said that some was paid in advance, with the balance to be paid after delivery. Even taking that evidence at face value, it is in our view incredible that Mr Dhillon should take on trust Mr Serio's assurance that the balance would be paid, and just as incredible that Mr Serio should hand over £15,000 in cash, to a man he barely knew, in advance of delivery. Even on Mr Dhillon's evidence, his trust was misplaced since he had to ask his namesake to travel to Italy from Germany in order to secure payment. We find it implausible, at best, that a businessman honestly engaged in such a trade would expect to pay in cash, or receive cash in payment.
14. The manner in which Mr Dhillon claimed to have established contact with Mr Pee is also implausible and internally confused and, moreover, inconsistent with such documentary evidence as he produced himself. He told us that Oakwood's manager had put him in touch with Mr Pee; yet he produced a letter from Mr Pee, dated 25 October 2001, stating that Global's details had been provided to him by a French business partner. Mr Dhillon maintained that he had travelled to Brussels where he met Mr Pee, and he produced a receipt for an air ticket for travel on 7 November 2001, issued on 30 October but he also produced a letter from Mr Pee referring to a meeting on 31 October. Mr Dhillon tried to explain the inconsistencies by saying that his intended travelling companion, who spoke French, was taken ill and the trip was delayed, but one inconsistency was merely replaced by another and we do not believe Mr Dhillon's explanation; Mr Puzey put it to him that he was making the explanation up as he went along, and we are satisfied that was an accurate observation. And even if, as Mr Dhillon said, Mr Pee had approached him shortly before he found it necessary to re-sell the fourth of Global's consignments to Serio, it seems to us a remarkable stroke of luck, if it is true, that Mr Pee happened to be able and willing to buy exactly the same goods as Serio had ordered. But we are quite satisfied that what Mr Dhillon told us is not true. It is in our view significant that Global's fourth consignment to Serio was only one of several diverted—or allegedly diverted—from Serio to Brasserie Caulier when the former's authorisation was withdrawn.
15. The documentary evidence demonstrated that although Global had contracted with AOL for the transport of the goods (and it is quite clear that it had indeed done so, and that AOL had sent invoices to Global) the transport had in fact been undertaken by another company, Calderdale Transport. Mr Dhillon told us that he was unaware that AOL had subcontracted the work. The Respondents' documentary evidence showed that Calderdale had approached AOL asking if it might, in exchange for a share of the transport charges, use AOL's guarantee for duty suspended transport of excise goods and that AOL—or, at least, one of its managers—had agreed to allow it to do so. Among the documentation were instruction faxes sent by AOL to Oakwood confirming that goods released by Global for transport to Serio would be collected by Calderdale. The Respondents say that the use by Calderdale of AOL's guarantee is irregular (we agree that it is, at the least, a factor which might give rise to concern) and that Mr Dhillon knew that Calderdale rather than AOL was undertaking the transport. There is some evidence to support the latter contention, since one of Global's release instructions to Oakwood indicates that the consignment will be collected by "Anglo Overseas Ltd (Calderdale Distribution)". Mr Dhillon told us he did not know that AOL and Calderdale had made an arrangement such as we have mentioned; he knew the name Calderdale but thought it was a trading name of AOL.
16. The point is of some importance because of Global's contention that it was, and is, entitled to rely on AOL's certificate that "the above goods have been shipped as shown", which we have previously mentioned. It can only be assumed, from the clear (and unchallenged) evidence that the transport was in fact entrusted to Calderdale, that the certificate was based upon information provided to AOL by Calderdale. It may be, as the Respondents suggest, that Calderdale is unreliable since it was itself involved in the diversion of the goods. We did not, however, have any evidence available to us about Calderdale's involvement, if any, in a diversion and Mr Payne correspondingly had no opportunity of dealing with what amounted to nothing more than innuendo. For reasons which we shall explain, we think it entirely possible that Mr Dhillon did not know that Calderdale was a separate organisation which had entered into an unorthodox arrangement with AOL. We are not willing, on the evidence available to us, to find that there was any element of direct collusion between Global and Calderdale.
17. Nevertheless, Global has not satisfied us that the four consignments arrived at authorised warehouses in Italy or Belgium. Second-hand though the Respondents' evidence may be, it raises significant doubts about the authenticity of the three AADs which were, or purportedly were, returned. All Global can point to as evidence that the goods did arrive is AOL's certificate which, as we have indicated, may be unreliable, and Mr Dhillon's evidence that payment was made. We find that evidence quite incredible and do not accept that Serio and Veltro made payments of thousands of pounds, in cash, in the manner Mr Dhillon described. No honest businessman would deal with customers whom he scarcely knew in that fashion. There was no independent evidence that any such payment had been made. It is true that there was some evidence of a bank transfer from Mr Dhillon's namesake in Germany, but the only evidence to link that payment with a purchase by Serio came from Mr Dhillon, whose evidence on that issue too, we find incredible. It is for those reasons that the Appellant has not satisfied us that the goods arrived. Indeed, we are by no means persuaded that Mr Dhillon has ever met a Mr Serio or a Mr Pee (or men purporting to be Mr Serio and Mr Pee) since the manner in which he described his doing so was internally confused, and, in the case of Mr Pee, inconsistent with the available documentation, and, ultimately, incredible. We have no doubt that Mr Dhillon was an untruthful witness and that no reliance can be placed on what he told us unless it is supported by independent and unimpeachable evidence.
18. In summary, we are not satisfied that the goods arrived at their purported destinations; on the contrary, we are quite sure they did not, but were diverted. Where that diversion took place is impossible to say; there was no evidence before us on which we might make any finding.
19. While we do not need to make any findings on the point, we think it appropriate we should also record that we do not think Mr Dhillon was the prime mover behind the diversion. We have the distinct impression that he did not have either the resources or the knowledge to make all the necessary arrangements. Much more likely, we think, is that he allowed Global to be used for the purposes of others. Thus he may not have known anything of some of the participants, such as Calderdale. We are sure, however, not least from the evasive and in many respects clearly untruthful manner in which he gave his evidence, that he knew perfectly well that he was allowing Global to be used for a fraudulent activity. We are in particular quite sure Mr Dhillon knew that the goods had not arrived at an authorised warehouse in Italy or Belgium, and that it was never intended that they should.
20. Mr Payne based his case upon the facts as he contended they were—that the goods had arrived but, if they had not, Global and Mr Dhillon did not, and could not reasonably have known that they did not arrive—and he did not address us at all on the relevant law. Nevertheless, as we have decided against the Appellant on the facts it is appropriate that we should describe the law which, the Respondents say, leads to the conclusion that Global is liable to pay the duty and VAT on the goods.
21. They rely, first, upon article 6(1) of Council Directive 92/12/EEC which provides that excise duty "shall become chargeable at the time of release for consumption", defined by sub-paragraph (a) as "any departure, including irregular departure, from a suspension arrangement". They contend that if goods are sent from one authorised warehouse to another, under a movement suspension arrangement, but fail to arrive, there is an irregular departure from that suspension arrangement. That proposition was accepted without argument by the House of Lords in Greenalls Management Limited v Customs and Excise Commissioners [2005] 1 WLR 1757, and Mr Payne did not seek to challenge it. Article 6(2) provides that

"The chargeability conditions and rate of excise duty to be adopted shall be those in force on the date on which duty becomes chargeable in the Member State where release for consumption takes place … Excise duty shall be levied and collected according to the procedure laid down by each Member State …"

22. Article 20 determines the Member State in which duty becomes chargeable, and also contains some provisions about the identity of the person liable to pay the duty. So far as material, it reads:

"1. Where an irregularity or offence has been committed in the course of a movement involving the chargeability of excise duty, the excise duty shall be due in the Member State where the offence or irregularity was committed from the natural or legal person who guaranteed the payment of the excise duties in accordance with Article 15(3), without prejudice to the bringing of criminal proceedings.

Where the excise duty is collected in a Member State other than that of departure, the member state collecting the duty shall inform the competent authorities of the country of departure.

2. When, in the course of movement, an offence or irregularity has been detected without it being possible to determine where it was committed, it shall be deemed to have been committed in the Member State where it was detected.

3. Without prejudice to the provision of Article 6(2), when products subject to excise duty do not arrive at their destination and it is not possible to determine where the offence of irregularity was committed, that offence or irregularity shall be deemed to have been committed in the Member State of departure, which shall collect the excise duties at the rate in force on the date when the products were dispatched unless within a period of four months from the date of dispatch of the products evidence is produced to the satisfaction of the competent authorities of the correctness of the transaction or of the place where the offence or irregularity was actually committed."

23. In the United Kingdom, the relevant provisions implementing the article are set out in DSMEG. Regulations 3 and 4 are relevant here; they read:

"3 Irregularity occurring or detected in the United Kingdom

(1) This regulation applies where:

(a) excise goods are—

(i) subject to a duty suspended movement that started in the United Kingdom; or

(ii) imported into the United Kingdom during a duty suspended movement; and

(b) in relation to those goods and that movement, there is an irregularity which occurs or is detected in the United Kingdom.

(2) Where the Commissioners are satisfied that the irregularity occurred in the United Kingdom, the excise duty point shall be the time of the occurrence of the irregularity or, where it is not possible to establish when the irregularity occurred, the time when the irregularity first comes to the attention of the Commissioners.

(3) Where it is not possible to establish in which member State the irregularity occurred, the excise duty point shall be the time of the detection of the irregularity or, where it is not possible to establish when the irregularity was detected, the time when the irregularity first comes to the attention of the Commissioners.

(4) For the purposes of this regulation, detection has the same meaning as in Article 20(2) of the Directive.

4 Failure of excise goods to arrive at their destination

(1) This regulation applies where:

(a) there is a duty suspended movement that started in the United Kingdom; and

(b) within four months of the date of removal , the duty suspended movement is not discharged by the arrival of the excise goods at their destination; and

(c) there is no excise duty point as prescribed by regulation 3 above; and

(d) there has been an irregularity.

(2) Where this regulation applies and subject to paragraph (3) below, the excise duty point shall be the time when the goods were removed from the tax warehouse in the United Kingdom.

(3) The excise duty point as prescribed by paragraph (2) above shall not apply where, within four months of the date of removal, the authorized warehousekeeper accounts for the excise goods to the satisfaction of the Commissioners."

24. As we have said, we are satisfied that the goods did not arrive at their intended, or purported, destination, but we cannot say where they were diverted. However, it seems clear to us that, as the Respondents maintain, it was they (rather than the authorities in another Member State) who detected the diversion; the overseas authorities did no more, in the context of this case, than provide information after the detection had occurred. We agree with Mr Puzey that this case probably comes under article 20(2) and regulation 3(3) since it is not possible to establish where the irregularity occurred. If, however, regulation 3 does not apply, article 20(3) and regulation 4(2) provide for an alternative duty point. Whichever of the two possibilities is appropriate, duty is due in the UK.
25. Article 20(1) provides that the guarantor shall be liable for payment of the duty. In the UK, the relevant corresponding provisions are to be found at regulation 7 of DSMEG:

"(1) Subject to paragraph (2) below, where there is an excise duty point as prescribed by regulation 3 or 4 above, the person liable to pay the excise duty on the occurrence of that excise duty point shall be the person shown as the consignor on the accompanying administrative document or, if someone other than the consignor is shown in Box 10 of that document as having arranged for the guarantee, that other person.

(2) Any other person who causes or has caused the occurrence of an excise duty point as prescribed by regulation 3 or 4 above, shall be jointly and severally liable to pay the duty with the person specified in paragraph (1) above."

26. The Respondents accept that Global does not come within paragraph (1): none of the AADs show it as the consignor (that is always Oakwood, the warehouse of despatch) nor as the guarantor (in each case AOL) but they say that paragraph (2) applies since Global "caused the occurrence" of the excise duty point. There is no provision of the directive which imposes joint and several liability in the manner of regulation 7(2), but in re Arena Corporation Limited [2004] EWCA Civ 371 the Court of Appeal decided that the regulation was not inconsistent with the directive and was valid.
27. Quite what is meant by the words "causes" and "caused" in regulation 7(2) is not immediately clear, and there is as far as we know, no judicial authority which is directly in point. Although the paragraph was considered in re Arena Corporation Limited the court did not need to decide what it was necessary to demonstrate if the paragraph is to apply. In F J H Wrothwell Ltd v Yorkshire Water Authority [1984] Crim LR 43 McCullough J said "The word 'cause' is to be given its ordinary commonsense meaning and any attempt to introduce refinements is to be deprecated". Here, on its own evidence, Global arranged for goods which it owned to be taken from Oakwood's warehouse, loaded on a lorry and driven away. To what extent it thereafter exercised any control over the goods is unclear, though we are satisfied it acquiesced in their diversion. In McLeod v Buchanan [1940] 2 All ER 179 the issue was whether the owner of a vehicle had "caused" its user to drive it. At p 187, Lord Wright said "To 'cause' the user involves some express or positive mandate from the person 'causing' to the other person, or some authority from the former to the latter, arising in the circumstances of the case."
28. If one applies that observation to the facts of this case as we have found them it seems to us indisputable that Global, through Mr Dhillon, has "caused" the occurrence of the duty point (that is, the departure from the suspension arrangement) by, at the lowest, making the goods available for others to divert, and acquiescing in that diversion. Its liability to pay the duty is, therefore, established. We were not addressed on the value of the duty and take it that the amount assessed is accepted to be correct.
29. The liability for VAT is imposed by section 73(7B) of the VAT Act which reads:

"Where it appears to the Commissioners that goods have been removed from a warehouse or fiscal warehouse without payment of the VAT payable under section 18(4) or section 18D on that removal, they may assess to the best of their judgment the amount of VAT due from the person removing the goods or other person liable and notify it to him."

30. We do not, we think, need to explore the provisions of sections 18 and 18D. There was no suggestion by Mr Payne that, even if Global was liable for the duty it was not liable for the VAT, and he did not argue that section 73(7B) did not apply, save on the facts. It does not seem to us that there can be any real doubt that Global, as the then owner of the goods, removed them from the warehouse, nor that it did not pay any VAT to the Respondents in consequence of that removal. Absent acceptable evidence of the sale of the goods outside the European Community, or within the Community to another VAT-registered trader, and of their removal in either case from the UK, Global is liable in accordance with ordinary principles to account for the VAT. Again, there was no dispute about the amount of the assessment.
31. The appeals against the duty and VAT assessments are therefore both dismissed.
32. As we have mentioned, Global can succeed in its appeal against the withdrawal of its approval only if we are satisfied that the Commissioners could not reasonably have decided to withdraw it. We do not need to rehearse the facts of the case again; it will be obvious from our findings that the only possible conclusion is that the Commissioners' decision was not only reasonable, but inevitable. Traders cannot expect to retain an authorisation if they abuse it. That limb of the appeal is also dismissed.
33. Mr Puzey sought a direction in the Commissioners' favour in respect of costs, on the grounds that Global had been knowingly complicit in the diversions. We consider the application is justified in this case, and we direct that Global shall pay the Respondents' costs the amount of which, if not agreed, is to be the subject of detailed assessment by a tribunal chairman sitting alone, on the application of either party made within three months after the release of this decision.

COLIN BISHOPP

CHAIRMAN
Release Date: 22 September 2005

MAN/03/8157