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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 >> Daly v Revenue and Customs [2005] UKVAT(Excise) E00930 (08 December 2005)
URL: http://www.bailii.org/uk/cases/UKVAT/Excise/2005/E00930.html
Cite as: [2005] UKVAT(Excise) E00930, [2005] UKVAT(Excise) E930
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Robert Daly v Revenue and Customs [2005] UKVAT(Excise) E00930 (08 December 2005)
    EO00930
    EXCISE DUTY – Restoration of seized excise goods and Ford transit van––large quantity of hand rolling tobacco imported – contradictory accounts of the Appellant and his brother about the funding arrangements for the purchase of tobacco – Respondents correct in giving weight to these facts – tribunal's findings of fact support the Respondents conclusion that tobacco imported for commercial purpose - was the non-restoration of transit van proportionate to the Appellant's contravention – yes - did the non-restoration create exceptional hardship – no - was the decision not to restore the excise goods and the Ford transit van reasonable – yes – Appeal dismissed.

    LONDON TRIBUNAL CENTRE

    ROBERT DALY Appellant

    - and -

    THE COMMISSIONERS FOR HER MAJESTY'S REVENUE & CUSTOMS Respondents

    Tribunal: MICHAEL TILDESLEY OBE (Chairman)

    DR MICHAEL JAMES (Member)

    Sitting in public in Plymouth on 25 October 2005

    The Appellant appeared in person

    Gerald Facenna, Counsel instructed by the Acting Solicitor for HM Revenue and Customs, for the Respondents

    © CROWN COPYRIGHT 2005

     
    DECISION
    The Appeal
  1. The Appellant was appealing against the Respondents' decision on review dated 21 May 2004 refusing restoration of excise goods comprising 25 kilograms of Golden Virginia hand rolling tobacco and a Ford transit van, registration number H315 UMB.

  2. The grounds of Appeal as set out in the Notice dated 9 June 2004 were:

    3. "Unfair seizure of goods and vehicle (possibly illegal, although not sure); unhelpful treatment in most correspondence with Officers; relating to evidence proving certain points – tobacco not for resale; not being criminals or smugglers".
    Issue in Dispute
  3. On 14 December 2003 Customs Officers at Poole Ferryport stopped the Appellant and his brother, Derek Daley, driving in separate vehicles and carrying excise goods which included 25 kilograms of Golden Virginia hand rolling tobacco. The Appellant and his brother had spent ten days delivering furniture in France and holidaying in Spain. The Customs Officers were not satisfied that the hand rolling tobacco was for personal use. They seized the two vehicles and excise goods. The Officers restored to the Appellant one of the vehicles (Mercedes van, J690 NVM) on humanitarian grounds for the sum of £90. On 21 May 2004 Mrs Perkins confirmed the non-restoration of the tobacco and the Ford transit van.

  4. The issue was whether Mrs Perkins' refusal of restoration of the tobacco and the Ford transit van was a decision which no reasonable body of Commissioners could have arrived at. In order for the decision to have been reasonable Mrs Perkins must have considered all relevant matters and must not have taken into consideration irrelevant matters.

    5. The Evidence
  5. We heard evidence from:

    6. (1) Robert Daly, the Appellant;
    (2) Helen Perkins, Officer of HM Revenue and Customs, who conducted the review decision on 21 May 2004.

    The Tribunal received a bundle of documents which included the Appellant's correspondence with the Respondents.

    The Respondents' Review Decision of 21 May 2004
  6. Mrs Perkins took account of the following matters in reaching her decision refusing non restoration of the tobacco and the Ford transit van:

    7. (1) The quantity of hand-rolling tobacco which was 25 kilograms. The Appellant and his brother were each importing over four times the indicative level of three kilograms.
    (2) The Appellant's brother failed to provide truthful and accurate information in his interview with the Customs Officers. He gave misleading information about whether he was travelling alone and stated that he slept in the van which was contradicted by the invoices for hotel accommodation found later by the Officers.
    (3) The contradictory accounts of the Appellant and his brother about who financed the purchase of the tobacco which led Mrs Perkins to doubt the Appellant's true intentions for the tobacco and its actual ownership.
    (4) The Appellant's brother had been unemployed for ten years and in receipt of £109 per fortnight in benefits. Mrs Perkins doubted that the brother was in a position to accrue savings of £500 and pay for the tobacco. Mrs Perkins considered that even if he managed to accumulate the funds to pay for the tobacco he would not have spent it all on tobacco without anticipating some form of recompense.
    (5) Mrs Perkins noted that the Appellant's brother had previously purchased a pouch of tobacco in the United Kingdom for £3.50 which he accepted was cheaper than the legitimate United Kingdom price of £8.50 to £9.00. This indicated to Mrs Perkins that the Appellant's brother had access to an outlet that was supplying tobacco without accounting for excise duty. Mrs Perkins considered that this provided her with sufficient reason to question whether the tobacco was genuinely intended for own use.
    (6) The brother's consumption rate of two to three pouches of tobacco did not fit with the amount of tobacco purchased which would have taken him 19 months to smoke. In Mrs Perkins' view it was not credible that he would purchase this amount of tobacco for his personal consumption bearing in mind that the shelf life for tobacco was 12 – 18 months.
    (7) The revenue evaded on the tobacco importation was £2,535.50.
    (8) Mrs Perkins concluded from the above factors that the tobacco purchased by the Appellant and his brother was intended for a commercial purpose. Thus the Ford transit van had been deliberately used to further fraudulent commercial purposes. In such circumstances the decision not to restore the vehicle was reasonable, equitable and proportionate.
    (9) Mrs Perkins noted that the Appellant depended upon the Ford transit van for his business. However, she did not consider that he would suffer exceptional hardship from its non-restoration because he had other vehicles registered to him. Also the Officers had restored one of his vehicles to him on payment of £90. Mrs Perkins felt that the Appellant had been treated extremely leniently.
  7. Mrs Perkins concluded for the reasons set out above that the tobacco and Ford transit van should not be restored to the Appellant. On 14 June 2004 she considered additional information and documentation provided by the Appellant. Mrs Perkins decided that the additional information provided no grounds for her to depart from her original decision of non-restoration.

    8. The Appellant's evidence
  8. The Appellant ran a small eco transport business in Cornwall which he set up about two years prior to being stopped with funding and assistance from local authorities. On 5 December 2003 the Appellant and his brother travelled to France in two vehicles to deliver garden equipment and furniture to friends who lived in the South of France. When they completed their delivery the Appellant and his brother decided to have a short holiday in the Catalan area of Spain. They wanted especially to visit the Salvador Dali museum in Figueres. In Spain they purchased boxes of tobacco, spirits, bottles and boxes of wine and sangria and cases of beer. The Appellant and his brother also bought cooking pans, the designs of which were unique to Catalan.

  9. On the 14 December 2003 they arrived back in the United Kingdom at Poole ferry port in two separate vehicles. Customs Officers stopped them and interviewed the Appellant and his brother separately for about four to five hours in cold interview rooms. They were not offered a cup of tea during the interview and for the first hour were denied a smoke. During the interview the Appellant was aware of Customs Officers carrying out an intensive search of the two vehicles which involved taking panels out of the vans and unscrewing dashboards. The Appellant found some of the questioning intimidating, particularly the questions at the beginning about Andorra. As the interview wore on the Appellant became increasingly uneasy and frightened. The Appellant had never been in trouble before with the police and Customs. He was worried that the Customs Officers suspected him of smuggling drugs or firearms. It was in this context that the Appellant and his brother answered the questions of Customs Officers, which in the Appellant's view explained the discrepancies in his responses and those of his brother.

  10. The Appellant gave evidence of his close relationship with his brother. He viewed the short holiday in Spain as an opportunity to spend quality time with his brother. The Appellant challenged the conclusions drawn by the Customs Officers and Mrs Perkins about the apparent discrepancies in his brother's interview. The Appellant said it was nonsense that his brother had tried to give the impression that he was travelling alone. They both arrived in the ferry port at the same time and it was apparent to the Customs Officers that Appellant and his brother were travelling together, albeit in different vehicles. He considered that the Respondents placed too much significance on the discrepancy between sleeping in the van and stopping in hotels. The Appellant contended that the Officers and Mrs Perkins had made assumptions that his brother was unable to accumulate savings of £500 despite being on benefit. Although the Appellant had been a smoker for ten years, he was unaware that hand rolling tobacco had a limited shelf life. The Appellant considered that the Respondents had arrived at the wrong conclusion from his brother's answer about the price of tobacco in the United Kingdom. The Respondents assumed that the price of £3.50 referred to a 50 gram packet, whereas his brother was probably stating the price of a 25 gram packet of tobacco.

  11. The Appellant explained that his brother purchased his first box of tobacco from his own money. Some days later the Appellant told his brother that he was going to get some more tobacco and asked whether he too wanted additional tobacco for which the Appellant would lend him the money and his brother could pay him back 12 months later. The Appellant paid for the additional tobacco for his brother by credit card. In interview the Appellant informed the Officers that he had paid for his brother's tobacco because he was skint, whereas his brother told them that he paid for his tobacco. The Appellant accepted that they made these statements to the Officers and that he could understand why the Customs Officers viewed the conflict between the statements as suspicious. The Appellant agreed with Respondents' counsel that his brother lied to the Officers but he felt that his brother did so to avoid complicating matters and to protect the Appellant.

  12. The Appellant paid 408 Euros (£250) for a box of six kilograms of hand rolling tobacco. In all the Appellant and his brother spent about £1,040 on hand rolling tobacco during the trip to Spain. The Appellant intended to give about one half of the tobacco to his mother, girlfriend, girlfriend's father and two relatives, known as Mary and Don. The Appellant was not expecting them to reimburse him for the gifts of tobacco. His brother, however, would repay him for the money borrowed to pay for his share of the tobacco. The Appellant was not aware of the indicative levels for tobacco importations. He was under the impression that he could bring in as much tobacco as he was wanted provided it was for personal use which included gifts to other people. The Appellant was adamant that he did not buy the tobacco for resale or to make a profit.

  13. The Appellant travelled to Spain about one month before 14 December 2003. On that occasion the Appellant imported two kilograms of tobacco and ten bottles of wine and his vehicle was searched thoroughly by either Customs Officers or Police Officers who found nothing incriminating. The Officers supplied the Appellant with a form confirming the outcomes of their search. The Appellant made various attempts to obtain a copy of that form without success. Mrs Perkins, however, did not draw adverse inferences from the Appellant's previous trip to Spain. In her review decision she did not suggest that the Appellant was a regular traveller to the continent for the purpose of buying excise goods.

  14. The Appellant earned about £1,600 a month from his removal business. He also received income from selling records and letting a property. The Appellant had no savings. He had about £1,500 prior to his trip to Spain in December 2003 of which about £400 was left. At the time of his return to the United Kingdom he had exceeded the credit level on his credit card.

  15. The Appellant owned four vehicles, which he used for his business. The Appellant agreed that he could carry on his business without the Ford transit van. However, he considered that the transit van would be difficult to replace. The "Glass book" value of the transit van was irrelevant and did not reflect its true worth as represented by the van's reliability and low mileage. Also the Appellant used the transit van for specific jobs which could not be done by his other vehicles. The loss of the Ford transit van would adversely affect his business.

  16. The Appellant felt humiliated by the Customs Officers' humanitarian gesture to restore one of his vehicles. He considered that the Officers derided his representations about the worth of his two vehicles. The Appellant and his brother were required to empty their pockets so that the Officers could see how much cash they had to pay the restoration fee for the Mercedes van. The Officers took all their cash for the fee.

    17. The Jurisdiction of the Tribunal
  17. The Respondents' power regarding restoration of goods and vehicles which have been forfeited or seized is set out under section 152(b) of the Customs and Excise Management Act 1979. Once the power is exercised whether in the form of a positive decision to restore on terms or a refusal to restore, the person affected has a right of appeal to the Tribunal. The powers of the Tribunal are limited in the terms set out in section 16(4) of Finance Act 1994 which provides that:

    18. "confined to a power, where the Tribunal are satisfied that the Commissioners or other person 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 that the decision, so far as it remains in force, is to cease to have effect from such time as the Tribunal may direct;
    b) to require the Commissioners to conduct, in accordance with the directions of the Tribunal, a further review of the original decision;
    c) in the case of a decision which has already been acted on or taken effect and cannot be remedied by a further review, to declare that decision to have been unreasonable and to give directions to the Commissioners as to the steps to be taken for securing that repetitions of unreasonableness do not occur when comparable circumstances arise in future".
  18. The precondition to the Tribunal's exercise of one or more of its three powers, namely, that the person making a decision could not reasonably have arrived at it, falls within the guidance given by Lord Lane in the decision in Customs and Excise v JH Corbitt (Numismatists) Ltd [1980] STC 231 at page 239:

    19. "…..if it were shown the Commissioners had acted in a way in which no reasonable panel of commissioners could have acted; if they had taken into account some irrelevant matter or had disregarded something to which they should have given weight".
    Was the Decision of Mrs Perkins Reasonable?
  19. The Appellant sought to persuade the Tribunal that he and his brother purchased the tobacco for their own use and to give away as presents. The Appellant blamed the intimidating atmosphere of the interviews for the contradictory responses given by him and his brother.

  20. We consider that the amount of tobacco purchased by the Appellant and his brother was too large a quantity for their own personal use, particularly when compared with the consumption rate of the Appellant's brother of one packet every three days. The Appellant asserted that he intended to give away one half of the tobacco as presents to family and friends. The Appellant produced no evidence from family and friends at the Tribunal to corroborate his assertion. Further we consider that the Appellant's contradictory evidence about the financing of the tobacco purchases undermined the Appellant's contention that he intended to gift the tobacco.

  21. In their interviews the Appellant and his brother gave contradictory accounts about who paid for the brother's share of tobacco. The Appellant stated that he paid for his brother's share because he was skint. His brother, on the other hand, told the Officers that he paid for his share from his savings. The Appellant suggested that his brother was trying not to complicate matters with his response and in some way protecting the Appellant. However, the Appellant when giving evidence accepted that his brother lied. The Appellant compounded matters by giving another version of the funding arrangements at the hearing by telling us that his brother paid for the first box of the tobacco and then borrowed money from the Appellant to buy the second box. We were not impressed with the Appellant's explanations for the contradictory accounts and with his inconsistent versions of the funding arrangements for the tobacco. We consider that the contradictions and inconsistencies were indicative of the Appellant and his brother attempting to conceal their true intentions with respect to the tobacco, namely they intended to make a profit from their tobacco purchases.

  22. The Appellant in his evidence played down the fact that his brother had limited resources. He asserted that Mrs Perkins made unwarranted assumptions about the ability of his brother to accumulate £500 savings on benefit of £109 per fortnight. We, however, share with Mrs Perkins the same doubts about his brother's ability to save this amount on such limited income. Moreover even if the brother had accumulated the £500 we find it improbable that he would spend the full £500 on tobacco unless he was expecting a return on his tobacco expenditure. Likewise the Appellant's finances were precarious. On his return to the United Kingdom he told the Customs Officers that he had £400 left from the £1,500 he took out with him. The Appellant had no savings and exceeded his credit limit on his credit card. We find that the Appellant's financial position renders problematical his contention that the tobacco was not for resale.

  23. The Appellant told the Customs Officers that he was not expecting his friends and family to reimburse him for the tobacco that he intended to give to them. However, he was expecting his brother to repay him the money borrowed to buy the second box of tobacco. We find the Appellant's responses contradictory, particularly in light of his brother's limited income. In our view he was treating his brother differently because the Appellant and his brother were engaged in a joint enterprise to profit from their tobacco purchases.

  24. Mrs Perkins carried out a thorough review of the circumstances of the tobacco importation of the Appellant and his brother. She reviewed her decision in the light of the additional information placed before her by the Appellant. She placed weight on the large quantity of hand rolling tobacco imported, the contradictions in the accounts of the Appellant and his brother about the funding arrangements, the financial position of the Appellant's brother and the inconsistencies in his interview including the sale price of tobacco in the United Kingdom. We consider that Mrs Perkins was correct in placing weight on these facts. We found no evidence that she relied upon irrelevant considerations. Our own findings of fact support her conclusions that there were no exceptional circumstances to justify restoration of the excise goods and that the tobacco was purchased by the Appellant and his brother for commercial purposes.

  25. Her finding that the tobacco was purchased for commercial purposes was relevant to the issue of the proportionality of the non-restoration of the Ford transit van. Mrs Perkins correctly applied her mind to the ruling of Lord Phillips MR in Lindsay v Customs and Excise Commissioners [2002] 1 WLR 1766 where Lord Phillips stated that persons who are smuggling for a commercial purpose for profit generally take themselves beyond the threshold whereby a lesser penalty than deprivation of property can be considered.

  26. We are satisfied that Mrs Perkins addressed the issue of proportionality in her review decision and applied the law correctly. Our findings of fact support her conclusion that the non-restoration of the Ford transit van was proportionate.

  27. Mrs Perkins went on to examine whether the Appellant suffered exceptional hardship arising from the non-restoration of the Ford transit van. Mrs Perkins noted that the Appellant depended upon the transit van for his business. However, she decided that the Appellant suffered no exceptional hardship because he had other vehicles registered in his name including the Mercedes van which was restored to him on humanitarian grounds. We find as fact that the Appellant owned three other vehicles which enabled him to continue his removal business. Therefore, we are satisfied that the evidence justified Mrs Perkins finding of no exceptional circumstances.

    28. Our Decision
  28. We are satisfied for the reasons set out above that the Respondents' decision on review dated 21 May 2004 refusing restoration of excise goods comprising 25 kilograms of Golden Virginia hand rolling tobacco and a Ford transit van, registration number H315 UMB was reasonably arrived at within the meaning of section 16(4) of the Finance Act 1994.

  29. We, therefore, dismiss the Appeal. We make no order for costs.

    30. MICHAEL TILDESLEY OBE
    CHAIRMAN
    RELEASE DATE: 8 December 2005

    LON/04/8049

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