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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 >> Hall v Revenue and Customs [2005] UKVAT(Excise) E00921 (06 October 2005)
URL: http://www.bailii.org/uk/cases/UKVAT/Excise/2005/E00921.html
Cite as: [2005] UKVAT(Excise) E921, [2005] UKVAT(Excise) E00921
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- and –
- On the 7 July 2004, the Appellant alighted from a coach at a supermarket in Clacton, Essex. Customs Officers approached the Appellant and asked a series of questions. It became apparent to the officers after questioning that the Appellant intended to sell most of the goods which had been brought from the continent. The goods were accordingly seized together with the vehicle into which they had been placed.
- The Officers decided to offer restoration of the vehicle on payment of a fee of £1,985. On the 21 July 2004, that amount was paid by the Appellant in order to secure the release of the vehicle.
- On the 29 July 2004, HM Customs received a letter from the Appellant requesting a review of the decision to impose a restoration feee for the vehicle. It is this decision which is now appealed.
- There appears to be no dispute that the goods were imported for a commercial purpose and the vehicle was legitimately seized (see Appellant's letter to Respondents dated 27 July 2004).
- European Council Directive, 92/12/EEC, sets out the arrangement for the treatment of products subject to excise duty and the holding and movement of such products between Member States. The legislation states that where excise goods are held for a commercial purpose they are subject to excise duty chargeable to the holder of the products. It sets out factors to be considered when deciding whether excise goods are held for a commercial purpose.
- In the United Kingdom, the above Directive is currently enacted by two sets of Regulations, which came into force on 1 December 2002. These are the Excise Goods, Beer and Tobacco Products (Amendment) Regulations 2002; and the Channel Tunnel (Alcoholic Liquor and Tobacco Products) (Amendment) Order 2002.
E 0921
Excise Duty – Restoration fee – Whether reasonable and proportionate – Appeal dismissed
LONDON TRIBUNAL CENTRE
PHILLIP HALL Appellant
THE COMMISSIONERS FOR REVENUE AND CUSTOMS Respondents
Tribunal: DR KAMEEL KHAN (Chairman)
Sitting in public in London on 21 June 2005
The Appellant appeared in person
Sarabjit Singh for Revenue and Customs, for the Respondents
INTRODUCTION
This Appeal concerns a disputed decision of the Commissioners of Customs and Excise ("the Respondents"), as contained in their letter dated 12 September 2004, in which they notified the Appellant that they had upheld, on review, the decision to impose a fee of £1985 for the restoration of a seized vehicle. The vehicle, which was owned by the Appellant was seized together with goods consisting of 6,920 cigarettes, 8.5 kilos of hand rolled tobacco, 105 cigars and 54 litres of beer. The goods were seized because they were intended for commercial sale and not personal use.
BACKGROUND
RELEVANT LEGISLATION
There are a number of pieces of legislation which are applicable in this case and these are set out below:
These Regulations amend a number of other pieces of UK law to ensure UK excise duty is not payable on excise goods which are acquired by a person in another Member State for his own use and transported by him to the United Kingdom. "Own Use" includes goods intended as gifts.
The Regulations set out the factors, which Customs should take into account in deciding whether goods are for own use. These include amounts of each type of product, which are considered reasonable for own use. The current amounts for tobacco are 3 kilograms of tobacco, 3,200 cigarettes, 400 cigarillos and 200 cigars; for alcohol, the amounts are 110 litres of beer (approximately 193 pints), 90 litres of wine, 10 litres of sprits and 20 litres of other products such as port and liqueurs.
Where excise goods are:
(i) transferred to another person for money or monies worth (including any reimbursement of expenses incurred in connection with obtaining them), or;
(ii) the person holding them intends to make such a transfer, the goods are to be regarded as being held for a commercial purpose.
Other factors which the Commissioners will consider include a person's reasons for having the goods, the location of the goods when found, whether the person is a revenue trader and any other circumstances that appear to be relevant.
(iii) where excise goods are held for a commercial purpose and not for own use, there are legal requirements governing the movement of such goods and accounting for the excise duty. The principles and procedures are set out in the Excise Duty (Holding, Movement, Warehouse and REDS) Regulations 1992, commonly called the REDS Regulation. These define the time in which excise duty becomes payable (the excise duty point) and require that excise duty must be paid or guaranteed before the goods reach that point. Part VI of the Regulations requires those who are not registered dealers and shippers to account for the duty before moving the goods and to obtain a certificate from Customs, which must then accompany the goods when they arrive. Excise duty points are similarly established in the Beer Regulations 1993 and the Tobacco Products Regulations 2001. For example, for tobacco products, the duty point is the time when the goods are held or used for a commercial purpose.
Regulation 16 of the REDS Regulations provides that where there has been a breach of these procedures, the goods become liable to forfeiture and Customs may then seize them.
Certain provisions of the Customs and Excise Management Act 1999 are also relevant (CEMA). Section 49 of the Act concerns goods, which have not been properly imported and provides that Customs must seize excise goods on which duty was due but not paid.
Under Section 141 (1), Customs may seize any other goods, which are found and may also seize any means of transport such as cars, lorries and boats which are used improperly to deposit the goods.
Section 152 (b) of the Act allows Customs to decide what to do with the seized things. Customs may decide whether or not they should be restored and what, if any, conditions should be attached to any restoration decision.
Other provisions affect decisions to restore and are aimed at ensuring that such decisions are made reasonably.
RESTORATION POLICY
Vehicles
The Commissioners' general policy regarding private vehicles used for the improper importation or transportation of excise goods is that they will not be offered for restoration.
This policy is designed to be robust in order to protect legitimate UK trade and revenue and prevent illicit trade in excise goods.
However, at the discretion of the Commissioners, vehicles may be offered for restoration or restoration on terms in the following circumstances;
1) Where the excise goods were destined for supply on a "not for profit" basis, for example, for reimbursement.
2) When excise goods were destined for supply for profit; providing the quantity of excise goods is small and is a first occurrence.
3) Where the vehicles were owned by a third party owner who was not present at the time of seizure of the vehicles and was either blameless over taking reasonable steps to prevent smuggling in their vehicle.
In all cases, any other relevant circumstances, will be taken into account in deciding whether restoration is appropriate.
In this case, it is clear that when initially questioned by the officers, the Appellants gave answers which were not entirely true. These related to the quantity of goods and the fact that he was in fact a smoker. It became apparent that the goods were intended for resale and that similar type goods acquired on previous trips had been resold. The goods would appear to have been properly seized. The total excise duty is normally calculated based on the revenue evaded. In this case, the figure of £1,985 was correctly calculated.
JURISDICTION OF THE TRIBUNAL
1) The question for the Tribunal is whether the fee of £1985 was reasonable and proportionate as a penalty for the restoration of the vehicle.
2) Section 16(4) of the VAT Act 1994 provides that relevant power of the Tribunal:
"shall be confined to have power, where the Tribunal are satisfied that the Commissioners or other persons making the decision could not reasonably have arrived at it, to do one or more of the following, that is to say:
a) to direct a decision, so far as remains in force, is to cease to have effect from such time as the Tribunal may direct;
b) to require the Commissions to conduct, in accordance with the directions of the tribunal a further review of the original decision; and
c) in the case of a decision, which has already been acted upon or taken effect and cannot be remedied by a future review, to declare the decision to have been unreasonable and to give directions to the Commissions as to the steps to be taken for securing that repetitions of the unreasonableness does not occur when comparative circumstances arrives in future".
DECISION
It is considered that the decision to impose a fee of £1985 for the restoration of the vehicle was reasonable and proportionate in the circumstances. In the first instance, the Appellants tried to deceive the officers by stating he was a smoker when in fact he was not a smoker at all. The quantity of goods which had to be declared that the quantity of goods being imported was under declared and the Appellant also knew what he was doing was wrong and admitted to have mislead officers when being questioned (see Appellant's letter of 27 July 2004"I know I have done wrong").
The Appellant told the interviewing officers that he intended to sell the majority of the excise goods that he had imported and that he had sold goods which he had bought on previous trips. It is clear and without doubt that the goods were imported for a commercial purpose. This was confirmed by the Appellant in his letter to the Respondents dated 27 July 2004, when he stated that he saw his enterprise as "a way of making a few pounds".
It would mean beyond doubt that the goods were liable to duty and that the Appellants had failed to pay the duty on the goods in advance, as a commercial importer of excise goods is required to do. The regulations in these areas were designed to protect legitimate traders and secure finances for the Revenue. The Appellant was in breach of the relevant statutory provisions and was therefore liable for the penalty for breach of those provisions. It is clear that the Respondents properly followed the policy in relation to the restoration of vehicles and calculated the duty to be paid for such restoration correctly. The figure of £1,985 was correctly calculated. It should be considered in the circumstances that the charging of this amount of duty for the restoration of the vehicles is intended to be a deterrent for those breaching the statutory provisions and a penalty for that breach. It is a legitimate penalty and one intended to secure the legitimate interest, legitimate traders and the Revenue. It should also be borne in mind that in the case of Lindsay v Commissioners of Customs & Excise [2002] 1WLR 1766, the Court of Appeal held that the policy of non restoration of vehicles used for commercial smuggling was lawful stating that
"those who deliberately use their cars to further fraudulent commercial ventures in the knowledge that if they are caught, their cars would be rendered liable for forfeiture cannot reasonably be heard to complain if they lose their vehicle. Nor does it seem to me that, in the circumstances, the value of the car used needs to be taken into consideration. Those circumstances will normally take the case beyond the threshold where that factor can carry significant weight in the balance. Cases of exceptional hardship must always, of course, be given consideration" (at paragraph 63). It would seem on the basis of this statement that the Respondents would have been justified in refusing to offer the vehicle for restoration given the Appellant had admitted he was a commercial smuggler. Given this position, the offering of the vehicle for restoration demonstrated the Respondents' wish to act in a fair and proportionate manner."
In the circumstances, the Tribunal believes that the duty levied was fair and proportionate and is intended to obtain the appropriate revenue and protection in the market which the legislation intended. The Respondents have shown a degree of fairness in giving the Appellant an opportunity to enjoy his property once the duty has been paid.
The Appeal is accordingly dismissed.
LON/04/8079