United Kingdom VAT & Duties Tribunals (Excise) Decisions

Purves v Revenue and Customs [2005] UKVAT(Excise) E00924 (27 October 2005)

E00924

EXCISE DUTY APPEALS — practice and procedure — further review directed by tribunal of decision not to restore cigarettes seized by Customs at airport on return of Appellant to UK from Spain — further review not conducted in accordance with directions of tribunal — procedure where Customs wish to take account in the further review of documents or information not hitherto before tribunal in evidence — appeal to High Court or reference back to tribunal that made decision required — further review directed accordingly — appeal allowed

MANCHESTER TRIBUNAL CENTRE

ANTHONY EDWARD PURVES Appellant

- and -

THE COMMISSIONERS FOR

HER MAJESTY'S REVENUE AND CUSTOMS Respondents

Tribunal: Michael Johnson (Chairman)

Gillian Pratt

Peter Whitehead

Sitting in public in Manchester on 19 July and 10 October 2005

The Appellant appeared in person

John Gray, counsel, instructed by the Acting Solicitor for HM Revenue and Customs for the Respondents

© CROWN COPYRIGHT 2005


 


DECISION

1. This appeal concerns 10,000 Lambert & Butler cigarettes belonging to the Appellant Mr Purves. Those cigarettes were seized from him by Her Majesty's Customs and Excise ("Customs") on 6 December 2001 at Liverpool John Lennon Airport. Mr Purves was re-entering the UK at the time, having flown in from Barcelona. He had been to Spain for the day, principally with a view to purchasing the cigarettes at a lower price than in the UK.
2. Mr Purves was interviewed by Officer Little at Customs' control in the airport. The result of the interview was that Mr Purves's cigarettes were seized for the following five reasons –

? They exceeded in quantity the guideline figure given in the Schedule to the Excise Duties (Personal Reliefs) Order 1992 SI 1992/3155 (now replaced);

? Mr Purves was said to have misled the officer as to his travelling alone – he had flown to Barcelona with a Mr Cairns;

? Their two tickets had been booked over the internet by a Mr Duffy;

? Mr Purves was said to have misled the officer as to a further trip to Spain planned for 12 December 2001; and

? Mr Cairns, when separately interviewed on 6 December 2001, had given answers to questions that were inconsistent with those given by Mr Purves.

3. By reason of these matters Customs concluded that the cigarettes were not for Mr Purves's own consumption, as he has throughout maintained, but held for commercial purposes and hence subject to UK excise duty that Mr Purves sought to evade.
4. Mr Purves did not contest the seizure of his cigarettes by asking for condemnation proceedings to be commenced before the local magistrates. Customs wrote Mr Purves a letter dated 6 February 2002 explaining that he could require the magistrates to determine the legality of the seizure of the cigarettes, or seek restoration of them, or adopt both routes. Mr Purves might have required condemnation proceedings but he chose only the restoration route.
5. Restoration was refused, so Mr Purves sought a review by Customs of their decision not to restore. The reviewing officer of Customs was Ms Julie Logan. Her review, dated 11 June 2002, resulted adversely to Mr Purves. That review was not conducted within the 45-day period specified by section 15(2) of the Finance Act 1994. Mr Purves initiated the first of three appeals to these tribunals under section 16 of that Act.
6. We do not think that Mr Purves appreciated that, in order to challenge the legality of the seizure, he needed to proceed by way of condemnation proceedings before the magistrates as distinct from seeking restoration. It has been held in the Court of Appeal that, if no abuse of process is involved in so doing, these tribunals can, in exercising their jurisdiction under section 16 of the Finance Act 1994, consider an appellant's case that importations of excise goods were for the traveller's own use and not for commercial purposes – see Gascoyne v the Commissioners of Customs and Excise [2004] EWCA Civ 1162 at [54] – [56], per Buxton LJ ("the Gascoyne case"). We have been unable to identify considerations of, or similar to, abuse of process in this instance.
7. Mr Purves's original appeal was heard on 18 September 2003. The tribunal was sympathetic. Counsel appearing for Customs at that tribunal submitted that the tribunal had no jurisdiction to entertain a case that the cigarettes were for Mr Purves's own use, but the tribunal rejected that submission. The subsequent decision in the case of Gascoyne indicates, in our view, that the tribunal was correct to do so.
8. In relation to the allegation of Customs that Mr Purves had attempted to mislead Mr Little, the tribunal listened to Mr Purves's cross-examination of Mr Little and found that it was doubtful that Mr Purves had sought to mislead him. The tribunal lacked evidence of any relationship between Mr Purves and Mr Cairns for the purpose of this trip to Barcelona, so it found that Mr Purves and Mr Cairns should be treated as individual travellers and that Mr Cairns' part in events should be ignored. Whilst Mr Purves admitted having travelled out to Spain with Mr Cairns, he said that they then had a row, so they parted and returned separately (although on the same aircraft).
9. With regard to the intended trip on 12 December 2001, Mr Little admitted that he might have been told by Mr Purves that it was Mr Purves's son who was due to travel on that date, and the tribunal found that Mr Little's interview notes were "selective" and not entirely to be relied upon. The tribunal accepted as fact that Mr Purves (Senior) did not intend to travel on 12 December. The tribunal ignored the alleged inconsistency between Mr Purves's answers to questions and those of Mr Cairns, for lack of evidence as to what Mr Cairns had said.
10. When interviewed by Customs on 6 December 2001, Mr Purves had claimed to enjoy an income of £1,200 per week. Before the tribunal on 18 September 2003, Mr Purves admitted that that was an exaggeration. However his evidence established to the satisfaction of the tribunal that his true income was sufficient to support his purchase of the 10,000 cigarettes in issue. In relation to his income, the tribunal refused to admit pages from Mr Purves's income tax return for the year to April 2002 that Customs sought to introduce into evidence.
11. The tribunal also found that Customs did not take account of all the matters specified in article 9(2) of Council Directive 92/12/EEC ("the Council Directive"), as should have happened, but only the quantity of cigarettes involved.
12. The tribunal directed a further review of Mr Purves's case, pursuant to section 16(4)(b) of the Finance Act 1994 (the decision says (c), but it is clear that 16(4)(b) was meant), taking into account the points made in its decision.
13. The further review directed by that tribunal also resulted adversely to Mr Purves. Conducted by Ms Maureen Crook, another reviewing officer of Customs, the review was dated 26 November 2003. That review contained a section entitled, "Matters not relevant to my review". Those matters, upon which Ms Crook commented but which she found to be irrelevant to the request for restoration, included the relationship between Mr Purves and Mr Cairns, such as it might have been; whether Mr Purves was travelling with Mr Cairns; the purchase of their two tickets via Mr Duffy; and the fact that Mr Purves had had excise goods seized from him on one previous occasion on his return to the UK from abroad.
14. Mr Purves issued a second appeal against Ms Crook's review decision. The tribunal hearing that appeal, on 21 May 2004, was also sympathetic towards Mr Purves. Mr Little did not attend that hearing, but three other witnesses provided evidence for Customs. One was a senior policy adviser of Customs, Mr Leslie Smith; another was Ms Elizabeth Anne Griffiths, an officer of Customs; the third witness was Ms Theresa Carol Driscoll, a security investigator with EasyJet, the airline with which Mr Purves flew on 6 December 2001. Mr Smith and Ms Griffiths gave oral evidence; Ms Driscoll was excused from attendance and the tribunal had regard to the contents of her witness statement dated 27 January 2004.
15. Customs again argued by counsel that the tribunal was without jurisdiction to entertain the appeal based upon the contention that the cigarettes were for Mr Purves's own use, and again that argument was rejected. The tribunal then drew attention to the matters that Ms Crook had identified as being irrelevant to her decision. The tribunal decided that regard must be had to the findings of fact made by the first tribunal. Ms Crook had moreover not directed her attention to the other matters mentioned in article 9(2) of the Council Directive identified by the first tribunal as requiring to be considered. The tribunal stated that Customs appeared to have been looking to Mr Purves to provide further evidence so satisfy them on the points at issue, but that the burden of proof as to the cigarettes being held for commercial purposes remained on Customs notwithstanding the appeal.
16. The decision as to the burden of proof is in our view clearly right. Confirmation of the correctness of this approach appears from the well-known case of R (on the application of Hoverspeed Ltd and others) v the Commissioners of Customs and Excise [2002] EWHC 1630 (Admin) at [130] ("the Hoverspeed case"). The burden of proof as to commerciality is upon Customs both in condemnation proceedings and before these tribunals. The burden of proof would be irrelevant if these tribunals could not make findings of fact on the issue of commerciality. Clearly we can, and should.
17. The second tribunal, that of 21 May 2004, directed a still further review. The tribunal directed that, in conducting that review, regard should be paid to the following matters –

? Mr Purves's claim that the goods were for his own use;

? The findings of the first tribunal as to the law and as to the matters relevant for consideration; and

? The burden of proof, in that (as the decision of the second tribunal stated) it is not for Mr Purves to prove that the goods were for personal use, but for Customs, on the balance of probabilities, to establish that the goods were being imported for commercial purposes.

18. Neither the decision of the first tribunal nor that of the second tribunal was the subject of an appeal to the High Court by Customs. Nor have Customs referred back to either of the earlier tribunals for directions as to the conduct of the further reviews required by those tribunals respectively.
19. The review directed by the second tribunal was conducted by another reviewing officer of Customs, Mr Raymond Brenton. His review decision was dated 11 August 2004. That review also resulted adversely to Mr Purves, and it is the subject of this latest appeal by Mr Purves. It is that decision that we have to consider, pursuant to section 16(4) of the Finance Act 1994.
20. Mr Brenton was the only witness who gave evidence before us on behalf of Customs. In that regard, we were referred by Mr Purves to a letter dated 5 July 2005 that he had received from Mr Peter Garvin of the Solicitor's office of Her Majesty's Revenue and Customs. Mr Purves had believed that Customs intended to provide evidence in this third appeal from Mr Cairns, Ms Driscoll, Ms Griffiths and Mr Little, and the letter of 5 July 2005 was written in response to Mr Purves's notice of objection to the receipt of evidence in writing from those persons, without their also being tendered for oral cross-examination by him.
21. The letter dated 5 July 2005 stated that witness statements from those persons were served on Mr Purves in respect of his previous (ie second) appeal and not in respect of the current appeal, and it continued –

"[Customs] do not propose to rely on the evidence contained in these witness statements and hence you are not able to object to these witness statements so that the officers will be called (sic – Mr Cairns and Ms Driscoll are not, of course, officers of Customs)".

22. The letter then confirmed that Customs' only witness before us would be Mr Brenton.
23. Mr Purves gave oral evidence before us and was cross-examined by Mr Gray of counsel, representing Customs. Mr Brenton gave oral evidence and was cross-examined by Mr Purves. The only witness statement before us was that from Mr Brenton dated 11 October 2004, together with its 19 exhibits.
24. Mr Purves's evidence was, so far as we could tell, identical to that apparently given before the first tribunal and the second tribunal respectively. We accept that evidence. We see no reason to make fresh findings of fact about it. We are content to adopt the findings of fact made by the first tribunal, just as the second tribunal did. We think that it would be undesirable for one tribunal to accept the evidence of a witness, and for the next or next but one tribunal to reject identical evidence or make alternative findings, without cogent grounds for doing so. We identify no such grounds here.
25. The contents of Mr Brenton's review decision present us with a difficulty. In that decision, Mr Brenton finds various statements of Mr Purves to Mr Little to be untrue. Mr Brenton says that he is of the opinion that Mr Purves's reason for entering Customs' controls alone was an attempt to circumvent those controls and that his replies to Mr Little were a deliberate attempt to deceive the officer. Mr Brenton says that he believes that Mr Purves's claim to have had a row with Mr Cairns, so that they returned separately, was a hindsight explanation to give credibility to his actions. Mr Brenton says that Mr Cairns was stopped and had 9,400 cigarettes seized from him.
26. Mr Brenton says that, having read the record of Customs' interview with Mr Cairns – which was not apparently before the first tribunal and may or may not have been before the second tribunal – Mr Purves had operated a subterfuge. Mr Brenton says that he is of opinion that Mr Purves's exaggeration of his income was gross and yet another deliberate attempt to deceive. Mr Brenton says that Mr Purves had had 4,800 cigarettes seized from him on his return from the Canary Islands on 7 April 2001, and should have told Customs about this.
27. Mr Brenton draws attention to the fact that Mr Duffy had booked Mr Purves's ticket. He says that records available to him show that Mr Duffy was involved in purchasing numerous tickets over the internet on behalf of others including Mr Purves and Mr Cairns. He states that Mr Duffy is recorded by Customs as being a revenue offender.
28. Mr Brenton states –

"I believe on the balance of probabilities that you and Mr Cairns were part of an organized group of individuals importing excise goods to be sold on the UK illicit market and Mr Terrence Duffy was instrumental in this enterprise".

29. Mr Brenton questions Mr Purves's intention to travel again to Spain on 12 December 2001. The first tribunal, Mr Brenton says, did not have the evidence of Mr Cairns' interview available, nor the witness statement from Ms Driscoll provided to the second tribunal (these are exhibited to Mr Brenton's witness statement before us). Mr Brenton analyses Mr Cairns' comments to Customs, and Ms Driscoll's statement, and is sceptical of the first tribunal having accepted Mr Purves's claim that he did not intend to travel on 12 December.
30. Referring to the burden of proof in these appeals, Mr Brenton then mentions the Hoverspeed case at [173], per Brooke LJ, referring to the decision of Lord Woolf CJ in the case of Goldsmith v the Commissioners of Customs and Excise [2001] EWHC Admin 285. Mr Brenton states –

"Lord Woolf seems to imply that it is not unreasonable for the person in possession of the goods to provide such evidence as required by Customs to satisfy them that the goods are not for a commercial purpose even though the burden of proof still lies firmly with Customs".

31. Mr Brenton reiterates the position of Customs that these tribunals have no jurisdiction to consider the legality or the correctness of the seizure itself, and so should not entertain Mr Purves's case that he brought back his cigarettes for his own use.
32. Mr Brenton ends his consideration of Mr Purves's case with the following words –

"I have considered the decisions of the Tribunals of 18 September 2003 and 21 May 2004 and am satisfied that with the evidence before me this was one incident in an organized operation funded by a third person and that on the balance of probabilities these goods were destined for distribution in the illicit UK market".

33. From the contents of his review decision, it is clear that Mr Brenton had access to and considered in his decision-making process records which were not before one or both earlier tribunals. These records appear to fall within the following five categories –

? Those relating to the seizure of 9,400 cigarettes from Mr Cairns on 6 December 2001;

? Those relating to Mr Purves's income, including the tax return which was not admitted by the first tribunal;

? Those relating to the alleged revenue offending of Mr Duffy and his purchase of tickets;

? Those relating to EasyJet; and

? Those (if any) evidencing the alleged organized operation for the importation of illicit excise goods for distribution on the UK market.

34. In evidence, Mr Brenton told the tribunal that Customs believed these documents, or some of them, to be "sensitive". That was the reason, he said, why he had not exhibited them to his witness statement. Nor are they referred to in Customs' List of Documents served in respect of this appeal.
35. Mr Gray informed the tribunal that Customs would be prepared to show the documents to the members of the tribunal so long as Mr Purves did not have sight of them. This is not a procedure contemplated by the tribunal rules, but it is within the knowledge of the chairman that, following principles of public interest immunity, that course was contemplated in the tribunal case of CT, C & P Ellinas (trading as Hunts Cross Supper Bar) VAT Decision 15346 ("the Ellinas case"). Indeed, Mr Gray drew our attention to the case of Alfred Crompton Amusement Machines Ltd v the Commissioners for Customs and Excise (No 2) [1974] AC 405, which was considered in the Ellinas case. Mr Gray submitted that we should dismiss the appeal without requiring disclosure of the additional records relied upon by Mr Brenton. Mr Purves replied that the additional records were essential to his appeal and that he should be allowed to see them and deal with them.
36. We agree with Mr Purves and we reject Mr Gray's submission. In the present case there is nothing to show that the rule should not apply whereby documents the tribunal thinks necessary for the fair disposal of the proceedings should be disclosed to the other party if he so requests. The records mentioned are in our view obviously covered by that rule. We asked Mr Gray whether he wished to apply orally for an adjournment in order to produce the missing documents, or to lodge objections to their disclosure, or to call other evidence. Having sought instructions, Mr Gray did apply for an adjournment, but he later withdrew his application before we had ruled upon it. This withdrawal was on the basis that Customs were content for the hearing to proceed on the limited evidence before the tribunal.
37. We take the view that, if Customs wish to take account of documents which are relevant to a further review directed by a tribunal, and those documents have not been before the tribunal for consideration as part of the evidence, the correct way forward is for Customs either to appeal the decision to the High Court, having regard to the additional evidence, or to apply to the tribunal for further directions as to the conduct of the review. This is because the further review directed by the tribunal is under the control of the tribunal. The further review is to be "in accordance with the directions of the tribunal" – see section 16(4)(b) of the Finance Act 1994.
38. The additional information relied upon by Mr Brenton is in his opinion clearly of significance. He is of the view that it is so significant that we ought not to accept Mr Purves's case but that we should doubt Mr Purves's bona fides and uphold the latest review decision.
39. We cannot do this on the evidence adduced before us. It seems to us to be clear that Mr Brenton was directed by the second tribunal to conduct his further review upon the basis of Mr Purves's bona fides that that tribunal directed (see paragraph 17 above). Mr Brenton has not done this. Rather he has departed from the decisions of the previous tribunals hearing Mr Purves's case and has embarked upon a fact-finding process of his own. That being so, we are satisfied that he could not reasonably have arrived at his decision, within the meaning of section 16(4).
40. We therefore direct Customs to conduct, in accordance with the directions given by the second tribunal, ie the tribunal that heard the second appeal on 21 May 2004, a further review of Mr Brenton's decision not to restore Mr Purves's cigarettes. The further review is to be conducted by a reviewing officer other than those who have hitherto conducted reviews of Mr Purves's case. The further review is to be carried out by 31 December 2005 and a copy of it sent to the Manchester Tribunal Centre, quoting the reference for the instant appeal.
41. This appeal is accordingly allowed. We will entertain an application by Mr Purves for costs if he wishes to make one.

MICHAEL JOHNSON

CHAIRMAN
Release Date: 27 October 2005

MAN/04/8094