United Kingdom VAT & Duties Tribunals (Excise) Decisions

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URL: http://www.bailii.org/uk/cases/UKVAT/Excise/2005/E00935.html
Cite as: [2005] UKVAT(Excise) E00935, [2005] UKVAT(Excise) E935

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Wendy Ann Edmunds v Revenue and Customs [2005] UKVAT(Excise) E00935 (21 December 2005)

EO00935

EXCISE DUTY – Appellant's motor car seised while carrying dutiable excise goods – Appellant not present at seizure - Respondents offered to restore motor car to Appellant on condition of the payment of a sum equivalent to the duty on the excise goods – whether condition for restoration reasonable – yes – appeal dismissed – CEMA 1979 S152(b); FA 1994 S16(4)

LONDON TRIBUNAL CENTRE

WENDY ANN EDMUNDS

Appellant

- and -

THE COMMISSIONERS FOR HER MAJESTY'S

REVENUE AND CUSTOMS

Respondents

Tribunal: DR A N BRICE (Chairman)

MRS E M MACLEOD CIPM

Sitting in public in London on 18 November 2005

The Appellant in person

Matthew Barnes of Counsel, instructed by the Acting Solicitor for HM Revenue and Customs, for the Respondents

© CROWN COPYRIGHT 2005


 


DECISION

The appeal

1. Mrs Wendy Ann Edmunds (the Appellant) appeals against a review decision of the Respondents dated 23 May 2005. The review decision upheld a previous decision that a condition for the restoration of a Citroen Berlingo motor car with registration number S367 TYC (the Citroen) to the Appellant was the payment of the sum of £1,915.31. At the date of the hearing the sum had been paid to the Respondents and the Citroen had been restored to the Appellant.

The legislation

2. The relevant parts of section 152 of the Customs and Excise Management Act 1979 (the 1979 Act) provide:

"152 The Commissioners may, as they see fit- …

(b) restore, subject to such conditions (if any) as they think proper, any thing forfeited or seized under [the customs and excise] Acts. … .".

3. Section 16(4) of the Finance Act 1994 provides that, in restoration appeals, the powers of the Tribunal are confined. Where the Tribunal are satisfied that the Respondents, or other person making the decision, could not reasonably have arrived at it, the Tribunal may do one or more of three things, namely, (1) direct that the disputed decision ceases to have effect; (2) require the Respondents to conduct another review in accordance with the directions of the Tribunal; and (3) declare the decision to have been unreasonable.

The issues

4. Thus the issues for determination in this appeal are:

(1) whether the decision (that a condition for the restoration of the Citroen to the Appellant was the payment of the sum of £1,915.31) was a decision which the Respondents could not reasonably have arrived at; and, if so,

(2) what action the Tribunal should take under section 16(4).

The evidence

5. A small clip of documents was sent by the Appellant under cover of a letter dated 7 September 2005. A larger bundle was produced by the Respondents. The Appellant gave oral evidence on her own behalf. Oral evidence was given on behalf of the Respondents by Mrs Deborah Carole Gillespie, the Officer of HM Revenue and Customs who made the review decision.

The facts

6. From the evidence before us we find the following facts.

The Appellant and the Citroen

7. The Appellant lives alone in Hastings and does not smoke. She used to work as a school chef for the East Sussex County Council. Her mother, who lives on the other side of Hastings, is ninety-one years of age and disabled through blindness. The Appellant has six adult children (five sons and one daughter) who all live with their partners within about half a mile of her house. Each of the families has a car but three of the sons do not drive.
8. In 1996 the Appellant became ill and in 1997 she retired from her employment on the grounds of ill-health. The Appellant is now entitled to disability living allowance for help with personal care and for help in getting around. She also has a disabled person's parking badge (a Blue Badge).
9. The Appellant acquired the Citroen in about 2000. Until about mid-2004 she went abroad about once a month to buy tobacco products and beer and also ingredients for cooking and baking. Normally she would go with her sister or sister-in-law and the Appellant would drive the Citroen. On some occasions she went to France but did not go to Belgium. The Appellant does not smoke but used to buy tobacco products for her daughter, her sister and her nieces. She said in evidence that she did not exceed the limits and would bring back about 3 kg of tobacco and 3,200 cigarettes each time, for her five sons, her daughter and their partners.
10. In 2004 the Appellant had an operation on her back. On 21 August 2004 she completed a form applying for exemption from paying for a vehicle excise licence in respect of the Citroen. On the form she ticked a box which stated: "I am the person who gets disability living allowance. The vehicle will only be used for me." On 26 August 2004 she was granted exemption from paying for a vehicle licence in respect of the Citroen. After her operation the Appellant did not always drive the Citroen on the visits abroad. Instead it would sometimes be driven by Mr Richard Edmunds, one of her sons, or her daughter, or a Mr Tiffen. Mr Tiffen used to be a long distance lorry driver and is a neighbour of the Appellant. The Appellant arranged that he should be covered by her insurance for visits abroad in the Citroen.

The events of 9 February 2005

11. About two weeks before 9 February 2005 the Appellant booked the Citroen for a day trip abroad. She intended to drive herself and take passengers. However, on 9 February 2005 she was not well enough to travel so she did not go. Mr Tiffen drove and the passengers were another son of the Appellant, Mr James Edmunds, and Mr Dick who was her gardener. Mr Tiffen drove because neither Mr James Edmunds nor Mr Dick was able to drive.
12. On the return journey Customs Officers stopped the Citroen at Coquelles. The Citroen was carrying excise goods (tobacco, cigarettes, beer and wine). Each of Mr Tiffen, Mr James Edmunds and Mr Dick had purchased excise goods and each was interviewed. Mr James Edmunds said that he was a fisherman and he had paid £1,263 cash for tobacco and cigarettes of which Mr Tiffen had given him £700. He also said that his family would give him what he had paid for the cigarettes. He had last bought cigarettes in December 2004. He had made three or four trips in the previous six months in the Citroen. Mr Tiffen said that he did not know which of the goods were his. He said that he had given Mr Edmunds £600 before leaving England. Mr Tiffen was not employed. He had travelled two or three times in the previous six months. Mr Dick said that he had purchased tobacco and cigarettes some of which were for his wife and some for his son. His son was not expected to pay. He had travelled three or four months previously.
13. Mr Dick was allowed to proceed with his goods. The Customs Officers considered the discrepancies in the accounts of Mr James Edmunds and Mr Tiffen; the difference between their income and their expenditure on the excise goods; and the fact that it had been admitted that some of the goods would be paid for by the family of Mr James Edmunds. They formed the view that the goods belonging to Mr James Edmunds and M Tiffen were not for the personal use of Mr James Edmunds and Mr Tiffen and that they had been imported without payment of duty. The Citroen and the goods belonging to Mr James Edmunds and Mr Tiffen were therefore seized. The seized goods were:

5 kilograms of hand-rolling tobacco

4,400 cigarettes

500 cigars

5 litres of wine

6 litres of beer

9 litres of spirits

14. The total amount of unpaid duty on these excise goods was £1,915.31.

The appeals against seizure

15. On 9 February 2005 each of the Appellant, Mr James Edmunds and Mr Tiffen appealed against the seizure of the Citroen and the excise goods and also requested restoration of the Citroen and excise goods. The grounds of the Appellant's appeal were stated to be that she was disabled and had recently been seriously ill. She could not walk far and needed the Citroen for transport. Since her recent operation she could only drive short distances. She did not think it was wrong to buy cigarettes and tobacco for her family.
16. On 16 February 2005 the Respondents wrote to the Appellant to say that they would institute proceedings in the magistrates court. However, on 18 February 2005 the Appellant wrote to say that she wished to withdraw the appeal against seizure but asked for the restoration of the Citroen on humanitarian grounds. On 20 February 2005 both Mr James Edmunds and Mr Tiffen withdrew their appeals against the seizure of the excise goods. They took no further proceedings in respect of the restoration of the goods.
17. From 9 to 21 February the Appellant used public transport. Between 21 February 2005 and 9 March 2005 she hired a car at a total cost of £346. In oral evidence which we accept the Appellant told us that she thought that Mr James Edmunds might have made some payment for the hired car but she could not remember exactly.

The request for restoration

18. On 10 March 2005 the Respondents asked the Appellant to supply some information to enable them to consider her request for the restoration of the Citroen. The Appellant completed a form which disclosed that she knew both Mr Tiffen and Mr Dick and that she knew that they would be travelling together with her son James. She had previously lent the Citroen to her other son (Richard) and to her daughter for fishing trips and holidays. She had no other vehicles. The Citroen was insured for driving abroad. She knew that the trip was to purchase excise goods and some of the goods which had been purchased (wine, cigarettes, beer and spirits) were for her. She had given money to her son James in advance of the trip. She would normally have been driving the Citroen herself but had recently had an operation on her back.
19. On 15 March 2005 the Respondents notified the Appellant that they had decided to restore the Citroen on condition of the payment of a fee of £1,915.31. On 17 March the Citroen was restored to another of the Appellant's sons who paid the fee. In evidence which we accept the Appellant told us that she had borrowed the money from her mother and that she and Mr James Edmunds were paying back the loan by instalments of £50 each per month. She said that Mr Tiffen did not contribute because he was merely the driver and drove that day because she was too unwell to go on the trip. If she were successful in her appeal she would repay her mother and after that her son might continue to pay her.
20. The Appellant does not now have the Citroen. Since 4 April 2005 she has had a Motability car. On 7 April 2005 the Appellant requested a formal review of the decision of 15 March. She said that she had booked the car for the trip but could not travel on the day. The amounts purchased were not excessive as they had been purchased for the family on a "not for profit" basis. If she had travelled, as she had intended, then the amounts would have been below the guidelines.

The review decision

21. On 23 May 2005 the Respondents gave their review decision. This upheld the previous decision to restore the Citroen on condition that the fee was paid. The letter summarised the Respondents' policy for the restoration of private vehicles which was that, if they had be used for the improper importation of excise goods, they would not normally be restored. In some circumstances, however, they might be restored subject to conditions (for example, for a fee). Such circumstances might include the case where excise goods were imported on a "not for profit" basis; or where the quantity was small; or where the vehicle was owned by a person who was not present at the time of the importation and was either blameless or had taken reasonable steps to prevent smuggling in the vehicle. The letter considered all the facts of the case and went on to state:

"I have also paid particular attention to the degree of hardship caused by the loss of the vehicle. Hardship is a natural consequence of having a vehicle seised and it is exceptional hardship that I must look at in order to find a reason to deviate from the policy. One must expect a considerable inconvenience as a result of having a vehicle seised by Customs, and perhaps considerable expense in paying for the restoration of the vehicle. I do not regard either the inconvenience or the expense in your case as exceptional hardship over and above what one should expect.

I see from official records that you are shown as the keeper of a Vauxhall Astra car, registration number G81 JEP. The records also show another car registered at your address. In the circumstance I do not consider that you have suffered exceptional hardship by the loss of the car and having to pay a fee for its restoration nor do you have grounds for it to be restored free of charge for humanitarian reasons, which normally only take place at the time of seizure."

The arguments

22. The Appellant argued that the condition for the restoration of the Citroen was unreasonable. She had had no intention to deceive. Only the tobacco products had been over the limits but she had had to pay the excise duty on all the seized goods. She had suffered extreme hardship because of the seizure. After the seizure all she had wanted was her car back. She needed to visit her mother and she did not have the money to buy another car.
23. For the Respondents Mr Barnes argued that the Appellant had agreed that the tobacco goods had been imported for members of her family who would pay for the goods on a cost basis. The goods had, therefore, not been imported for the personal use of the travellers in the car and so were dutiable and duty should have been paid. As the alcoholic goods were "mixed, packed and found with" the tobacco products they also had been seised. The Appellant had supplied her car to the travellers and was aware of their purpose to import excise goods for the family at cost. Journeys had been made at approximately one-month intervals and if each passenger had always imported goods "within the limits" that was a lot of excise goods. Bearing in mind the number of journeys made by the Citroen the amount of the fee was not excessive and the Appellant had not experienced exceptional hardship. She had only been without a car for two to three weeks. She had first used public transport and then hired a car and shortly afterwards her own car had been restored. A reduction in the fee would not mitigate any hardship there might have been because the fee had already been paid and Mr James Edmunds was paying it off monthly. Mr Barnes also argued that the Appellant's statement on the form dated 21 August 2004 indicated that her state of mind was to "turn a blind eye" to some things. He argued that the Appellant had been involved in the importation of excise goods without the payment of duty on a regular basis and the review decision was reasonable.

Reasons for Decision

24. The first issue in the appeal is whether the decision (that a condition for the restoration of the Citroen to the Appellant was the payment of the sum of £1,915.31) was a reasonable decision.
25. We begin our consideration of the arguments of the parties by first summarising the legislative background. We then make findings on the disputed facts. And finally we decide if the condition for restoration was reasonable.

The legislative background

26. Article 99 of the Treaty of Rome (now Article 93 EC) provides that the Council of Ministers of the European Community should adopt provisions for the harmonisation of legislation concerning excise duties. The main excise duty directive was adopted on 25 February 1992 and is Council Directive (EEC) No. 92/12. Article 8 provides that, as regards products acquired by private individuals for their own use and transported by them, excise duty is charged in the member state in which they are acquired. Article 7 provides that where excise goods are released for consumption in one member state, but held for commercial purposes in another, then excise duty is chargeable in the member state in which the goods are held.
27. Thus the scheme of the directive is that where excise goods are acquired by private individuals, for their own use and transported by them, excise duty is charged in the member state in which they are acquired but otherwise duty is charged in the member state where the goods are held. Article 9.2 of the directive provides that, in order to establish whether goods transported by private individuals are intended for commercial purposes, member states must take account of certain criteria including the quantity of the products. As far as quantity is concerned, member states may lay down guide levels solely as a form of evidence. The guide levels may not be lower than 800 cigarettes, 400 cigarillos, 200 cigars and 1 kilogram of smoking tobacco.
28. The provisions of the directive have been implemented in the United Kingdom by, among other things, The Excise Goods, Beer and Tobacco Products (Amendment) Regulations SI 2002 No. 2692 (the Amendment Regulations). Regulation 4 provides that, in the case of tobacco products acquired by a person in another member state for his own use and transported by him to the United Kingdom, the excise duty point is the time when those products are held or used for a commercial purpose by any person. "Own use" is defined as including a personal gift. However, regulation 4 goes on to provide that, if the tobacco products in question are transferred to another person for money or money's worth (including any reimbursement of expenses incurred in connection with obtaining them) the products are to be regarded as being held for a commercial purpose. Finally, Regulation 4 provides that, in determining whether tobacco products are held or used for a commercial purpose, regard shall be taken of a number of factors including the quantity of the products and, in particular, whether the quantity exceeds 3,200 cigarettes; 400 cigarillos; 200 cigars; and three kilograms of any other tobacco products.
29. Thus both the directive and the Amendment Regulations provide that, where excise goods are held for commercial purposes, then excise duty is due in the member state in which the goods are held. At first sight, therefore, it would appear that a conclusion that goods are held for commercial purposes would result in a demand for the tax due.
30. However, the provisions relating to administration, collection and enforcement of excise duty are left to member states and in the United Kingdom they are contained in the 1979 Act. Section 49 provides that goods which are imported without payment of duty are liable to forfeiture. Section 141(1)(a) provides that, where a thing has become liable to forfeiture, then any vehicle used for the carriage of that thing, and any other thing mixed, packed or found with the thing liable to forfeiture, is also liable to forfeiture. Section 139(1) provides that anything liable to forfeiture may be seized by a Customs Officer. These are the legislative provisions which applied to the seizure of the Appellant's car and the excise goods.
31. Paragraph 1 of Schedule 3 of the 1979 Act provides that Customs and Excise shall give notice of seizure to any person who, to their knowledge, was at the time of the seizure the owner or one of the owners. Notice of seizure was given to the Appellant as owner of the car. Paragraph 3 provides that, if a person claims that anything seized as liable to forfeiture is not so liable, he must give notice of his claim in writing to Customs and Excise within one month of the date of the notice of seizure or of the seizure. Paragraph 6 provides that, if a notice has been given within that month, then Customs and Excise must take proceedings for the condemnation of the thing by the magistrates court. Thus all matters concerned with forfeiture and seizure are not matters for the Tribunal but for the magistrates court. Although the Appellant, as owner of the car, initially asked for proceedings to be taken in the magistrates court, she later withdrew that request. Also, although Mr James Edmunds and Mr Tiffen, as owners of the excise goods, initially applied for proceedings to be taken in the magistrates court, they later withdrew their requests, We therefore proceed on the basis that the car and the excise goods were properly seized as being liable to forfeiture. Section 152(b) of the 1979 Act provides that Customs and Excise may, as they see fit, restore, subject to such conditions (if any) as they think proper, anything forfeited or seized.
32. Sections 14 to 16 of the Finance Act 1994 provide for appeals to the Tribunal with respect to certain decisions of Customs and Excise. Section 14 provides that Customs and Excise may be required to review certain decisions and section 14(1)(d) provides that such decisions include those specified in Schedule 5. Paragraph 2(1)(r) of Schedule 5 specifies any decision under section 152(b) as to whether or not anything forfeited or seized is to be restored to any person or as to the conditions subject to which any such thing is so restored. Section 15 describes the review procedure and section 16 provides that an appeal lies to the Tribunal with respect to a decision on review.
33. Thus, although there is no appeal to the Tribunal against either forfeiture or seizure, there is an appeal to the Tribunal against a refusal to restore a vehicle or excise goods or the conditions for restoration. This appeal relates to a condition for restoration.

The areas of disputed fact

34. With that legislative background in mind we now turn to consider the disputed facts. We identified two areas of disputed fact, namely, whether previous importations had included dutiable excise goods and whether the Appellant had erroneously completed the form of 21 August 2004 applying for exemption from paying for a vehicle excise licence.
35. Beginning with the question whether previous importations had included dutiable excise goods, the Appellant told us in evidence which we accept that visits abroad were made about once a month, that she did not always bring back excise goods when she travelled abroad, and that, if she did, she "did not exceed the limits". The Appellant also told us that she had lent the Citroen to other drivers but had not intended that they should "exceed the limits". We asked the Appellant what she meant by this phrase and she replied that, on her journeys, each person in the car would not import more that 3 kg of tobacco and 3,200 cigarettes. However, she went on to say that this also applied to herself, other drivers and passengers who did not smoke and who brought back the tobacco goods for members of the family who would pay the cost. The Appellant also told us that, before the journey on 9 February 2005, she had collected money from the other members of her family and had given it to her son. She had not intended that her son James and Mr Tiffen should "exceed the limits". In the light of the earlier evidence we conclude that this meant that Mr James Edmunds and Mr Tiffen would import no more that 3 kilograms of tobacco and 3,200 cigarettes each not for their personal use but for the use of family members who paid them.
36. From this evidence we find that before 9 February 2005 the Appellant went abroad about every month; that she did not bring back excise goods on every occasion; but that when she did bring back excise goods they were not all for her personal use. We also find that, in the months when the Appellant did not go abroad in the Citroen, it was likely that she lent the Citroen to another driver who also brought back excise goods which were not all for his personal use.
37. We accept that the Appellant believed that this was in accordance with the law but it was not. The law makes it clear that the exemption from excise duty only applies where the goods are for the personal use of the traveller who transports them.
38. Next we consider whether the Appellant erroneously completed the form of 21 August 2004 applying for exemption from paying for a vehicle excise licence. On the form the Appellant ticked a box which stated: "I am the person who gets disability living allowance. The vehicle will only be used for me." For the Respondents Mr Barnes argued that, as the Appellant intended that other persons might drive the car, this statement indicated that her state of mind was to "turn a blind eye" to some things. The Appellant, on the other hand, argued that the Citroen was only used for her; she had not stated on the form of 24 August 2004 that the car would only be used by her. Here we agree with the Appellant and do not consider that the statement on the form of 21 August 2004 indicated that the Appellant "turned a blind eye" to important matters.

Were the conditions of restoration reasonable?

39. In the light of those findings about the disputed facts we turn to consider whether the condition for restoration was reasonable and here we consider each of the Appellant's arguments in turn.
40. First, the Appellant argued that she had no intention to deceive. However, the Appellant does not smoke and she admitted that before the journey on 9 February 2005 she had collected money from the other members of her family and had given it to her son, James. The reason for handing over the money was to enable James to buy tobaccos goods for the family for which they would pay. This makes it clear that the excise goods which were imported were not acquired by private individuals for their own use and transported by them. Thus excise duty was due in the United Kingdom. The Appellant said that she had not intended that her son James and Mr Tiffen should exceed the limits but the limits are not relevant if in fact the excise goods are not for the personal use of the traveller who transports them.
41. Next, the Appellant argued that the review decision was incorrect because she did not have another car. With her letter to the Tribunal of 7 September 2005 the Appellant produced documentation showing that a Vauxhall Astra with registration G81 JEP, of which she was the registered keeper, had been scrapped as a total loss on 28 March 2003. She also produced copy documentation from the Driver and Vehicle Licensing Agency about a Fiat Uno with registration K277 VPJ. This indicated that the registered keeper was a Miss Katy Edmunds, who had the same address as the Appellant, and that the car had been disposed of in 2003. In oral evidence the Appellant told us that she had been the keeper of the Vauxhall Astra which had belonged to her grand-daughter and had been stolen. The other car also belonged to her grand daughter who drove it. Although both these cars had belonged to her grand-daughter she (the Appellant) had insured them as second cars on her insurance because it would have been very expensive for her grand-daughter to insure them herself. We accept this evidence.
42. However, in oral evidence which we also accept Mrs Gillespie told us that if, at the time of her decision, she had had the documentary and oral evidence which was available at the hearing it would have made no difference to her decision. The fact was that, at the date of the review decision, the car had been restored to the Appellant and the fee paid and so at that time the Appellant was not deprived of a car upon which she relied and so did not suffer exceptional hardship. We agree that at the date of the review decision the Appellant was not suffering any hardship because of the non-restoration of the car because by then the car had been restored.
43. Next, the Appellant argued that she had suffered extreme hardship because of the seizure. After the seizure all she had wanted was her car back. She needed to visit her mother and she did not have the money to buy another car. However, the fact is that the car has been restored and the only issue in this appeal is whether the condition of restoration is reasonable. In our view the condition of restoration (the fee) did not cause the Appellant exceptional hardship as she was able to borrow this from her mother and her son is helping her to repay that loan.
44. Finally, the Appellant argued that only the tobacco products had been over the limits but that she had had to pay the excise duty on all the seized goods. Mr Barnes argued that the other seised goods had been "mixed, packed and found with" the tobacco goods. The words "mixed, packed and found with" appear in section 141(1)(a) of the 1979 Act which provides that goods which are "mixed, packed and found with" other goods which are liable to forfeiture are themselves liable to forfeiture. That section does not contain any provision about the fee payable as a condition of restoration. It is section 152(b) of the 1979 Act which contains provisions about the conditions of restoration and that section provides that the conditions may be such as the Respondents "think proper". What we have to decide in this appeal is whether the amount of the fee payable as a condition of restoration (which happened to be the same amount as the excise duty on all the goods) was a decision that the Respondents could not reasonably have arrived at. In our view that decision was one which the Respondents could reasonably have arrived at.
45. We also note that the review decision was in accord with the Respondents stated policy. In this appeal the excise goods were imported on a "not for profit" basis and the quantity was not very large. A decision to restore the car subject to the payment of a fee was, therefore, in accordance with that policy.
46. Finally, in deciding whether the review decision was reasonable we have applied the principles in Lindsay v Customs and Excise Commissioners [2002] 1 WLR 1766 to the facts of this appeal. The importation in this appeal was "not for profit". The scale of the importation was not large but it was one of a series of similar importations. There was some attempt at dissimulation by Mr James Edmunds and Mr Tiffen at the time of the seizure as they did not state that the money for the goods had been provided by the Appellant. We were not told the value of the Citroen but it was at least four years old. We conclude that the condition for restoration was proportionate having regard to all the material considerations.

Decision

47. We therefore conclude that the review decision (that a condition for the restoration of the Citroen to the Appellant was the payment of the sum of £1,915.31) was a decision which could reasonably have been arrived at by the Respondents.
48. That conclusion means that the appeal must be dismissed and that we do not have to consider what action the tribunal should take under section 16(4).

Costs

49. Mr Barnes made an application for costs. If the Respondents wish to pursue that application then they should lodge a statement explaining why the Respondents consider that their usual policy on costs in appeals before this Tribunal does not apply in this appeal.

DR A N BRICE

CHAIRMAN

RELEASE DATE: 21 December 2005

LON/2005/8071

50. 12.05