United Kingdom VAT & Duties Tribunals (Excise) Decisions

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URL: http://www.bailii.org/uk/cases/UKVAT/Excise/2005/E00927.html
Cite as: [2005] UKVAT(Excise) E00927, [2005] UKVAT(Excise) E927

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Mackle v Revenue and Customs [2005] UKVAT(Excise) E00927 (24 November 2005)

EO00927

EXCISE DUTIES -- interception of vehicle - owned and driven by Appellant - close to land border with the Republic of Ireland - tanker - contains 18,000 litres of diesel fuel purchased in the Republic - investigations reveal substantial undisclosed purchases of fuel oils in the Republic - whether imported into United Kingdom or not - questions of fact - adequacy of storage facilities held by Appellant in Republic of Ireland - assessment - whether or not assessment made to best judgment - appeal dismissed

BELFAST TRIBUNAL CENTRE

PAEDAR JEROME MACKLE Appellant

and –

THE COMMISSIONERS FOR HER MAJESTY'S REVENUE & CUSTOMS Respondents

Tribunal: ALISTAIR DEVLIN (Chairman)

JOHN ADRAIN FCA

Sitting in public in Belfast on 20 May 2005

Mark Orr QC, instructed by Tiernans, Solicitors, for the Appellant

James Puzey of counsel, instructed by the Solicitor for the Commissioners of Revenue and Customs, for the Respondents

© CROWN COPYRIGHT 2005


 


DECISION

The appeal

1. This is an appeal by Paedar Jerome Mackle [ "the Appellant"] of 353 Monaghan Road, Middletown, County Armagh against an assessment to excise duty chargeable upon hydrocarbon oil dated 27 November 1998. The Appellant carries on in business as a beef farmer and haulier.

The facts

2. On 6 January 1998, a number of officers of Customs and Excise observed a fuel tanker, Registration No. D801 WCD crossing the land border between the Republic of Ireland and Northern Ireland at Ardgonnell Bridge, and stopping shortly thereafter at premises situate at and known as Monaghan Road, Foyduff, Middletown, County Armagh. The vehicle in question was owned by the Appellant, and on the day in question was being driven by him personally.
3. The Appellant was questioned about the contents of the fuel tanker. The Appellant told the officers who questioned him that the tanker contained approximately 18,000 litres of 'Derv' that is a heavy oil based Diesel Engine Road Vehicle fuel. The Appellant told the officers that he had obtained the fuel from Moore Oils of Castleblaney, County Monaghan. Fuel purchased in the manner described by the Appellant would have had duty paid upon it at source in the Republic of Ireland. The Respondent's officers however detained the vehicle and tanker under section 139[1] of the Customs and Excise Management Act 1979, ["CEMA"] and removed it from Monaghan Road pending the carrying out of further enquiries.
4. The Respondent and its officers then carried out enquiries with their counterparts in the Republic of Ireland under the Convention on Mutual Administrative Assistance between Customs Authorities. These enquiries were designed to ascertain to what extent the Appellant had previously purchased fuel from Moore Oils in the Republic of Ireland. As a result of these enquiries, the Respondent obtained information which appeared to suggest that the Appellant had been a significant customer of Moore Oils since 1990, and that the level of purchases made by him had increased substantially in the period from August 1997 onwards. On 28 April 1998 the Appellant provided invoices for fuel purchases made by him in the period between 1 October 1996 and 18 June 1997. On 8 January and again on 4 August 1998 the Appellant was formally interviewed under caution. During the course of these two interviews, the Appellant stated as follows. He stated that he held two sets of business premises, one at 353 Monaghan Road, Middletown, County Armagh, and the other at Lowart, Glasslough, County Monaghan. He explained that he had fuel storage facilities at Monaghan Road for 1,000 gallons of Derv and for a further 600 gallons of gas oil; he only had fuel storage facilities at Lowart for 2000 gallons of Derv in a tank which was sitting on a trailer, and which he had given to his sister at Christmas 1997. He went on to state that he had arranged with the owner of Moore Oils for the purchase of fuel from him, and that he had arranged collection for 31 December 1997. He stated that he had elected to purchase fuel from Moore Oils because it was cheaper. He explained that he had not declared the importation of the Derv from the Republic of Ireland into Northern Ireland because he had intended to keep the fuel in the Republic. The Appellant accepted having previously purchased fuel from Moore Oils, perhaps, as he put it 20 times over a couple of years. He stated that his normal purchase of Derv from Moore Oils would have been at in or about 1500 to 2000 gallons. The Appellant also accepted that he was aware that United Kingdom excise duty and Value Added Tax were payable upon the importation of Derv from the Republic of Ireland into Northern Ireland; he also accepted that he had intended to take the 18,000 litres of Derv over the border into County Armagh, and that he was aware that his action in that regard had been unlawful. During the course of both interviews, the Appellant was asked what if any storage facilities were available to him for fuel oils both in Northern Ireland and in the Republic. In reply, the Appellant claimed to have capacity for 1000 gallons at 363, Monaghan Road in County Armagh, and capacity for 2000 gallons in the Republic in a tank sitting on a trailer. The Appellant claimed to have sold the tank to his sister in Christmas 1997 at or about the same time as he had acquired the tanker. The tanker, the Appellant claimed, he had purchased on 16 December 1997 for £5,000 plus VAT.
5. At one stage during the course of the interview which took place on 4 August 1998 the Respondent's officers put to the Appellant copies of the invoices which they had obtained showing purchases of Derv by the Appellant from Moore Oils during 1997. In response to this the Appellant had nothing to say.
6. Subsequently on 27 April 1999 at Armagh Magistrates' Court, the Appellant was found guilty of the offence of fraudulent evasion of duty upon the importation of Derv into the United Kingdom, contrary to section 170[2][b] of CEMA. The offence charged in respect of related solely to the importation occurring on 6 January 1998 at Ardgonnell Bridge.
7. Relying then upon the information and material held by them, the Respondent's officers then concluded that in the period between 21 August 1997 and 6 January 1998 a number of consignments of Derv had been purchased by the Appellant in the Republic of Ireland, and thereafter had been imported by him from the Republic of Ireland into Northern Ireland without payment of excise duty having been made. The Respondent accordingly raised an assessment in respect of such importations, which it issued to the Appellant pursuant to section 12[1] of the Finance Act 1994. The assessment was dated 27 November 1998, and was calculated in the sum of £31,208.
8. By letter dated 7 January 1999 the Appellant requested the Respondent to review the assessment. By letter in reply dated 19 February 1999 the Respondent stated that a review had indeed been undertaken, but that the results of the same were that the assessment had been upheld. By Notice of Appeal to this Tribunal dated 12 April 1999 the Appellant contended:

" The Appellant denies importing the consignments of hydrocarbon oil upon which the assessment is made. There is no evidence to support the case that hydrocarbon oil was imported".

Evidence presented to the Tribunal

9. The Tribunal heard evidence from the Appellant himself, and also from Mr Val Brennan of Moore Oils. Mr Michael McCann, one of the Appellant's lorry drivers, also gave evidence on behalf of the Appellant, together with Mr McKenna, a retired farmer. Mr Kieran Cole and Mr Frank McMullan, the two officers who had conducted the interviews with the Appellant on 8 January and 4 August 1998 attended the hearing on behalf of the Respondent. Mr Brennan told the Tribunal that he had known the Appellant well for a period of some 10 years or thereabouts. He stated that not since 2000 however had he done business with the Appellant. Between 1995 and 2000 he had done extensive business with the Appellant. Mr Brennan told the Tribunal that he used to deliver quantities of diesel into a yard at Glasslough, County Monaghan. He identified these premises as being those belonging to the Appellant at Lowart. He had never delivered fuel for the Appellant to any other address other than to Lowart. Mr Brennan stated that at Lowart the Appellant had a big round tank of approximately 5,000 gallons or 20,000 litres in capacity. He described the tank as being a large round underground type storage tank, which in this instance was sitting on a trailer. Mr Brennan remembered having seen tractor and trailer units at the Lowart premises, but never any other tankers other that is than his own. In cross examination, Mr Brennan was referred to a Schedule of invoices prepared by the Respondent's officers, and to copies of the invoices apparently issued by his firm Moore Oils to the Appellant in the period between 21 August 1997 and 6 January 1998. He accepted that the invoices in question had been issued by his firm, and accepted that they made reference to a total of 8 individual consignments. He however denied that the Appellant had ever collected fuel oil himself from the premises of Moore Oils. He denied ever having seen any tanker belonging to the Appellant.
10. Mr Michael McCann told the Tribunal that he had been employed by the Appellant for 8 years between 1990 and 1998. He worked for the Appellant as a driver, in both jurisdictions but mainly in the Republic of Ireland. The bulk of his work he told the Tribunal would have involved him in the haulage of full loads of bagged peat from the Republic into the premises of a peat processor at Dungannon. He claimed that he would always have got his fuel for the deliveries from the Appellant's premises at Lowart, County Monaghan, and never from the premises at Middletown, County Armagh. He claimed that he had not even been aware of the existence of the premises at Middletown. Unless he had to purchase fuel whilst on the road, he insisted that all fuel for the vehicles driven by him would have been picked up at Lowart. Moreover, he had never seen any oil tanker belonging to the Appellant parked at the Lowart premises.
11. Mr McKenna, a retired farmer from Lowart, County Monaghan, told the Tribunal that the Appellant's premises at Lowart were situated just across the hedge from him. He explained that it was only about three quarters of a mile between where he lived at Lowart, and the border between Northern Ireland and the Republic. He had lived there for some 35 years. In his evidence, he stated that he had never observed any oil tankers at the Appellant's Lowart premises, other than a delivery tanker which bore a Stat Oil logo. Whilst he accepted that he paid no great or particular attention to the events going on in the Appellant's yard, he was nevertheless clear that he had never observed any tanker vehicle at the premises other that is than the Stat Oil delivery tanker. Mr McKenna also accepted that he knew nothing as to whether the Appellant owned his own tanker vehicle, and if so when such a vehicle had been acquired by him.
12. The Appellant himself told the Tribunal that he had previously been involved in the road haulage industry between the late 1980's and the late 1990's. He was now involved in the fuel oils business, and had been so involved since July 1998. The Appellant in his evidence made specific reference to the facts and circumstances of his interception close to the border in January 1998. He accepted his liability to pay excise duty in respect of that consignment of fuel. He told the Tribunal that the nature of his haulage business was such as to largely involve him in the road transportation of bulk peat from the Republic of Ireland into Northern Ireland. The Appellant accepted that the level and frequency of his purchases of fuel oil from Moore Oils increased significantly in 1997. He put this down to an increase in the amount of peat which he was transporting across the border, and specifically to the premises of a particular processor at Dungannon, County Tyrone. As regards storage facilities for fuel, the Appellant told the Tribunal that he had two 600 gallon tanks at Middletown, County Armagh. At Lowart in the Republic of Ireland, the Appellant claimed to have had only one tank, which the Appellant described as an old but substantial underground type tank which he said he had sitting on the back of a trailer. He claimed to have bought it second hand from a scrap yard. The Appellant went on to tell the Tribunal that in 1997 and 1998 he would have had 6 lorries on the road full time. These lorries he told the Tribunal would usually have been carrying full loads. Under cross examination, the Appellant was referred to the contents of his recorded interview as it took place on 8 January 1998. During the course of that interview, the Appellant had told Messrs Coll and McMullan, the Respondent's officers, that he held storage facilities of 1000 gallons at Middletown, County Armagh, and about 2000 gallons at Lowart, in a tank sitting on a trailer. The Appellant accepted having said this, but insisted that he must have been confused, not being as he described it a good judge of the capacity of a tank measured in gallons. The Appellant stated that in 1997 he purchased an oil tanker which he intended to use both to store fuel in and also to use so as to enable him to pump fuel oil from the large tank at Lowart into the tanks of his lorries. He stated that he wanted the tanker because it was more secure. The Appellant also stated that he had sold the large storage tank at Lowart to his sister at Christmas 1997 because she had wanted a tank for use in her own business. The Appellant was asked about his conviction in April 1999. The Appellant had pleaded not guilty, but had been found guilty by the Court. When asked why he had pleaded not guilty the Appellant replied that he could not remember. He was reminded that he had admitted to the Respondent's officers that he was aware that United Kingdom excise duty and Value Added Tax were payable upon the importation of Derv from the Republic of Ireland into Northern Ireland; and had also accepted that he had intended to take the 18,000 litres of Derv over the border into County Armagh, and that he was aware that his action in that regard had been unlawful. The Appellant then claimed that he had only made this admission because he had been told he would get his lorry back if he admitted his guilt. The Appellant claimed to have made this case out before the Magistrates' Court, but that in spite of this he had nevertheless been convicted.
13. The Appellant was reminded of the fact that he had previously been asked by Mr Coll to produce to the Respondent's officers copies of all invoices relating to fuel purchases made by him in the period of three years prior to April 1998. The Appellant initially accepted that he had been asked to produce all such invoices. In response however, the Appellant had only produced 26 out of a true total of 34 invoices, the remaining 8 of which the Respondent had only been able to obtain direct from its counterparts in the Republic of Ireland. No invoices at all from Moore Oils had been voluntarily produced by the Appellant. Indeed no invoices relating to any purchases made in the Republic of Ireland. The Appellant was asked for an explanation as to why no such invoices had been presented by him to the Respondent's officers. The Appellant offered to the Tribunal no such explanation. The Appellant then stated that he had never been requested to produce invoices emanating from the Republic of Ireland. The Appellant was referred to the contents of a letter dated 27 April 1998 from the Respondent, in which the Appellant was clearly asked to produce all invoices relating to fuel purchases made by him from whatever source in the period of three years prior to April 1998. He confirmed having received this letter. The Appellant had however not replied to this correspondence, but had subsequently hand delivered 26 out of the 34 invoices shown on the Respondent's Schedule of invoices to the Respondent and its officers. The only invoices voluntarily delivered up by the Appellant related to purchases of fuel made by the Respondent in Northern Ireland.
14. The pattern of purchases which the Schedule of invoices produced by the Respondents demonstrated was one of significantly increasing sales from August 1997 onwards. From August 1997 until January 1998 the Appellant had been purchasing two and on occasions three times the amount of fuel which he had previously been purchasing, and all of this fuel was now being purchased from Moore Oils in the Republic of Ireland. The Appellant's only explanation was that he must have been busier during that period. When pressed upon the fact that he had told the Respondent's officers that the capacity of his tank at Lowart was only 2000 gallons, whereas he was now claiming that it had been in reality much larger than this, the Appellant claimed not to be particularly familiar with the gallon as a unit of measurement. He then claimed only to have guessed the capacity of the tank to have been 2000 gallons. He then claimed, as he put it, never to talk gallons at all.
15. The Appellant was then asked about other Customs related offences committed by him. He accepted having a previous case history, and specifically admitted having on two previous occasions been detected with red diesel in the running tank of a road going vehicle, and on one previous occasion having been detected for an offence of cattle smuggling. It was specifically put to him that between August 1997 and January 1998 he had been involved in the deliberate and systematic purchase of substantial quantities of fuel oil from Moore Oils in the Republic of Ireland, which he then had illegally imported into Northern Ireland without payment of excise duty, and with the deliberate intention of evading the imposition and payment of such duty. This the Appellant denied.
16. For the Respondent, Mr Coll confirmed that he had been responsible for the preparation and issue of the disputed assessment. He had also, together with Mr McMullan, conducted the two recorded interview sessions with the Appellant on 8 January and 4 August 1998. He formally proved the notes taken during the course of those interviews. Mr Coll confirmed to the Tribunal that after the interview of 8 January had been completed, he had made contact with the Revenue Commissioners in the Republic of Ireland and had requested that they visit the premises of Moore Oils in an effort to there ascertain details of the transactions conducted by the Appellant with that firm. As a result, Mr Coll had received the additional 8 invoices issued by Moore Oils to the Appellant in the period between August 1997 and January 1998, none of which the Appellant had himself disclosed to the Respondent. Mr Coll went on to explain to the Tribunal how the assessment had been based directly upon the contents of these 8 invoices from Moore Oils. Mr Coll explained to the Tribunal how he had excluded from the assessment calculation two of the 8 consignments referred to in the invoices. Due to the fact that these two consignments were of significantly smaller amounts than the remaining 6, he could not rule out the possibility that these consignments might have been stored within the limited 2000 gallon storage capacity available to the Appellant at Lowart. They had accordingly been excluded from his calculations. Basing his calculation solely upon the 6 Moore Oils consignments which remained in respect of the period between August 1997 and January 1998, Mr Coll explained how his assessment in the sum of £31,208 had been arrived at. That assessment was issued in respect of a total of 77,484 litres of fuel which the Respondents were contending the Appellant had purchased from Moore Oils in the Republic of Ireland between August 1997 and January 1998, and had subsequently imported into Northern Ireland without payment of excise duty. Applying a duty rate of £0.4028 per litre, the amount specified in the assessment was arrived at.

The relevant statutory provisions

17. Pursuant to section 6[1] of the Hydrocarbon Oils Duties Act 1979, hydrocarbon oil is charged with a duty of excise whenever it is imported into the United Kingdom, the relevant point of excise duty being the point at which the goods in question are imported. Under Regulation 5[1] of the Excise Goods [Holding, Movement, warehousing and REDS] Regulations 1992, the person liable to pay the duty in the case of an importation from another Member State is the importer.
18. Pursuant to section 12[1] of the Finance Act 1994 where it appears to the Commissioners that any person from whom any amount has become due in respect of any duty of excise the Commissioners may assess the amount of duty from that person to the best of their judgment and notify that amount to that person or his representative.

Arguments on behalf of the Appellant

19. It was argued on behalf of the Appellant that there was wholly insufficient evidence to establish that the Appellant had ever imported any of the 6 consignments of fuel oil purchased from Moore Oils in the Republic of Ireland into Northern Ireland, and that on the basis of the paucity of evidence available in this regard the decision to assess as per the disputed assessment was not one which could ever reasonably have been arrived at.

Arguments on behalf of the Respondent

20. Counsel for the Respondent drew the Tribunal's attention to the fact that on 6 January 1998 at Ardgonnell Bridge the Appellant had already been detected in the act of smuggling illicit fuel into the United Kingdom. Although he had initially admitted the offence, when it was formally raised against him in the form of a criminal charge in respect of the fraudulent evasion of duty, the Appellant had pleaded not guilty but had nevertheless been convicted of the offence. The Appellant had further admitted three previous incidents of smuggling for which he had previously been detected. The Appellant it was submitted was a convicted smuggler with a poor record of previous illicit activity. The Tribunal's attention was drawn to the fact that whenever the Appellant had been afforded an opportunity to be candid with the Respondent's officers about the true level of fuel oil purchases which were made by him in the period of three years immediately prior to April 1998 he had failed to do so, and had specifically failed to produce any of the 8 invoices from Moore Oils in the Republic of Ireland which formed the core of this disputed assessment. The assessment, it was contended, was one manifestly made to best judgment.

Findings

21. We regret to have to say that we found the Appellant an unconvincing witness. We are satisfied on the material before us that at least 6 out of the 8 consignments of fuel oil which were purchased by the Appellant from Moore Oils in the period between August 1997 and January 1998 were indeed purchased by the Appellant with the intention of subsequently transporting those consignments across the border into Northern Ireland without duty being paid. We are also satisfied on the basis of the material before us that whenever the Appellant told Mr Coll and Mr McMullan back on 8 January 1998 that his only storage facilities at Lowart in the Republic of Ireland was a tank of approximately 2000 gallons in capacity, the was on that occasion telling the truth. On that basis, we simply do not accept that the 6 consignments which subsequently formed the basis of the Respondent's assessment were ever stored at Lowart, as alleged, and find that on the balance of probabilities all of these consignments will have been illegally imported into Northern Ireland without payment of duty. On the basis of those findings of fact, the assessment as arrived at by the Respondent's officer is in our view wholly reasonable and is not open to being criticised or set aside. We accordingly find against the Appellant. The assessment was clearly made to best judgment and as such is unassailable. The appeal is accordingly dismissed. We make no order as to costs.

ALISTAIR F. W. DEVLIN

CHAIRMAN

RELEASED: 24 November 2005

LON/99/8015