United Kingdom VAT & Duties Tribunals (Excise) Decisions

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Cite as: [2006] UKVAT(Excise) E00954, [2006] UKVAT(Excise) E954

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Hutchings v Revenue & Customs [2006] UKVAT(Excise) E00954 (10 May 2006)

 


EO00954

EXCISE DUTY – restoration of goods and vehicle – importation of tobacco goods substantially in excess of guidelines – goods under-declared – goods concealed - fifth review – whether review officer could not reasonably have arrived at the decision not to restore – no – appeal dismissed – FA 1994 s16(4)

LONDON TRIBUNAL CENTRE

GEORGE HUTCHINGS

Appellant

-and-

THE COMMISSIONERS OF HER MAJESTY'SREVENUE AND CUSTOMS

Respondents

Tribunal: DR A N BRICE (Chairman)RAY BATTERSBY

Sitting in public on 2 December 2005 and 12 April 2006

Ms J Hacking of Counsel, instructed by Messrs Lewis Nedas Solicitors, for the AppellantMs F Darroch of Counsel, instructed by the Acting Solicitor of HM Revenue and Customs, for the Respondents

© CROWN COPYRIGHT 2006

DECISION

The appeal

1. Mr George Hutchings (the Appellant) appeals against a review decision of The Commissioners of Her Majesty's Revenue and Customs (the Respondents) dated 20 December 2004. The review decision was given by Mr Gareth Morgan, an Officer of HM Revenue and Customs, and confirmed a refusal to restore to the Appellant a quantity of excise goods and a vehicle being a Mercedes V220 People Carrier with registration V83 MGW (the estate car). It was the Appellant's case that the excise goods were for his personal use and as gifts to close friends and family at no more than cost price. The history of the appeal
2. The estate car and the excise goods were seized on 22 September 2001. A request that the estate car be restored was made on 10 October 2001 and the Respondents decided on 6 December 2001 that the estate car would not be restored. The Appellant's solicitors requested a review of that decision and a first review was carried out on 17 February 2002 by Mr Harries. That first review confirmed the refusal to restore. The Appellant appealed to the Tribunal and the Respondents applied that the Tribunal direct a further review. This was directed on 29 October 2002 with the consent of the Appellant.
3. A second review was carried out by Mr G Crouch on 8 January 2003 and he confirmed the refusal to restore. The Appellant appealed to the Tribunal and there was a hearing on 10 July 2003. The Decision of the Tribunal was released on 20 November 2003 as George Hutchings v The Commissioners of Customs and Excise (2003) Tribunal Decision No. E545. (We call this the 2003 Tribunal Decision.) The Tribunal then found that the second review decision of 8 January 2003 was not a reasonable decision; allowed the appeal; and directed that a further review be carried out.
4. A third review was carried out on 7 January 2004 by Mr R Brenton and that also confirmed the refusal to restore. On 10 June 2004 the Appellant appealed to the Tribunal. The Respondents applied for a direction that the appeal be allowed by consent and that the matter be referred back for a further review. Thus the appeal against the third review did not proceed to a hearing. On 11 June 2004 the Tribunal directed, with the consent of the Appellant, that there should be another review and also directed that the reviewing officer should take full account of the 2003 Tribunal Decision including the findings of fact in that Decision.
5. A fourth review was carried out on 30 June 2004 by Mr B M Wills who confirmed the refusal to restore. The Tribunal then directed a further review.
6. A fifth review was carried out on 30 December 2004 by Mr Gareth Morgan and that is the review decision which is the subject of this appeal. It also confirmed the refusal to restore. The legislation
7. The relevant legislation about excise duty and tobacco products is now contained in The Tobacco Products Regulations 2001 SI 2001 No. 1712 as amended by The Excise Goods, Beer and Tobacco Products (Amendment) Regulations 2002 SI 2002 No. 2692. As the review decision under appeal did not consider the alcoholic products imported we do not refer to the legislation dealing with alcoholic products. At the time of the seizure the Excise Duties (Personal Reliefs) Order 1992 SI 1992 No. 3155 was also in force but, following the judgment of the Divisional Court in The Queen on the application of Hoverspeed Limited and Others v Commissioners of Customs and Excise [2002] EWHC 1630 (Admin) it is no longer regarded as applicable even to importations made before the date of that judgment.
8. In summary, the legislation provides that, where excise goods are acquired by private individuals in another member state for their own use and transported by them to the United Kingdom, duty is charged in the member state in which the goods are acquired. Own use includes a personal gift. However, where excise goods are held in the United Kingdom for commercial purposes then duty is due here from the holder of the goods.
9. In order to establish whether excise goods transported by private individuals are held for commercial purposes regard has to be had to a number of factors one of which is the quantity of the goods. At the time of the importation in 2001 the relevant quantities (called the minimum indicative levels) were 800 cigarettes and 1 kilogram of tobacco. At present the quantities are 3,200 cigarettes and three kilograms of tobacco. Also, if the excise goods are transferred to another person for money or money's worth, or if the person transporting the goods is to receive any re-imbursement of the expenses incurred in obtaining them, then the goods are regarded as held for commercial purposes.
10. Section 49 of the Customs and Excise Management Act 1979 (the 1979 Act) provides that goods which are imported without payment of duty are liable to forfeiture and may be seized and section 141(1)(a) provides that any vehicle used for the carriage of goods liable to forfeiture may be seized. Section 152(b) of the 1979 Act provides that the Respondents may, as they see fit, restore anything forfeited or seized. Section 14 of the Finance Act 1994 (the 1994 Act) provides that the Respondents may be required to review certain decisions and these include decisions as to whether or not anything forfeited or seized is to be restored.
11. There is an appeal to the Tribunal from a review decision but section 16(4) of the 1994 Act restricts the power of the Tribunal on an appeal. The Tribunal, of course, may dismiss an appeal but cannot simply allow it. The Tribunal may only do one or more of the three things mentioned in section 16(4) and then only if they are satisfied that the review officer could not reasonably have arrived at the review decision. The three things are: (a) to direct that the disputed decision ceases to have effect; (b) to require the Respondents to conduct another review in accordance with the directions of the Tribunal; and (c) to declare the decision to have been unreasonable. The issues
12. As this appeal is from a review decision not to restore excise goods and a vehicle what we have to decide is:

(1) whether we are satisfied that the review officer could not reasonably have arrived at his decision; and if so(2) what action we should take under section 16(4).

The evidence

13. The parties agreed that the facts as found in the 2003 Tribunal Decision were undisputed for the purposes of this appeal. However, we also heard further evidence and additional documents were put before us. A bundle of documents was produced by the Appellant and another bundle by the Respondents. Oral evidence was given by the Appellant on his own behalf. Oral evidence was given on behalf of the Respondents by Mr Gareth Morgan, the review officer. The facts
14. From the evidence before us we find the following facts.The importation
15. The Appellant was stopped on 22 September 2001 at Coquelles driving the estate car. He had three passengers, his wife (known as Mrs Carol Brown) and her parents, Mr and Mrs Vance. Mrs Vance was in a wheelchair. Officer Butler asked about the purpose of the trip and was told that it was a day out to go shopping and to take out Mrs Vance. The travellers had been to Boulogne and had purchased cigarettes, beer and wine. When asked if they had any tobacco the Appellant replied that he had some. When asked how much they had in the way of cigarettes and tobacco Mrs Brown replied that they had 800 cigarettes each (which was then the amount of the minimum indicate level). The Appellant added that he had twelve packets of tobacco. When asked how often they travelled Mrs Brown replied once a month. 16 The boot of the car was then opened and Officer Butler found a box containing 5,000 cigarettes and a box of tobacco (six kilograms) with 12 x 10 x 50gram packets. Mrs Brown admitted that there were "a few more than 800 cigarettes each". The travellers were asked if one box of cigarettes and a box of tobacco was all they had, and the Appellant produced a black carrier bag with approximately 2,000 more cigarettes. The Appellant was then asked to take the car into the garage and remove his shopping when another six kilogram box of tobacco was found between the front seats. Also found was a one and a half kilogram box of tobacco and a box of 5,000 cigarettes behind the shopping in the boot. Officer Butler asked the Appellant if that was all the tobacco and cigarettes they had and he answered yes. However, on further inspection of the shopping more bags with cigarettes were found packed into the bottom of the car and covered by a layer of grocery shopping.
16. All told the total amount of excise goods imported amounted to 20,140 cigarettes, 17 kilograms of tobacco; 205.92 litres of beer; 27 litres of still wine and 6 litres of spirits. Details were:

20,140 cigarettes made up as:7,000 Benson and Hedges 4,800 Superkings (Black) 4,000 Superkings Lights 1,200 Silk Cut 800 Embassy No. 1 600 Dunhill 540 Dunhill Inter 400 John Players Special 400 Silk Cut Ultra 400 Superkings Menthol 17 kilograms of tobacco made up as:12 kilograms of Golden Virginia 5 kilograms of Old Holborn Alcoholic products made up as:205.92 litres of beer27 litres of still wine6 litres of whisky

17. The duty on those goods amounted to £4,605.03. The four separate interviews
18. Mrs Brown was interviewed by Officer Butler and said that half of the Old Holborn belonged to Mr Vance and all the Bensons belonged to Mrs Vance. A box of 5,000 Superkings and a box of Golden Virginia (2 x 12 x 10 x 50 grams) belonged to her (Mrs Brown). Mrs Vance would take about half a box of Bensons (2,500) and the rest would go to Mrs Brown's children. When asked who paid for the goods Mrs Brown replied that she and the Appellant and Mrs Vance had paid and they would "sort it all out when we go back". They had paid cash and she had a few hundred and the Appellant had a few hundred (pounds). When asked why she had said earlier that she had been to Boulogne, and had not added that the travellers had been to Belgium, Mrs Brown replied that she did not really know that it was Belgium – it was just past Dunkirk. Mrs Brown said that they had last travelled about a fortnight earlier when Mrs Vance did not have her wheelchair. At that time she (Mrs Brown) had brought back two boxes of 800 cigarettes each.
19. Mrs Brown also said that she had re-packed the goods into her own bags because they were stronger. She had not mentioned all the goods earlier because she was scared. Mrs Brown said that she smoked any brand of cigarettes but mostly Superkings and smoked forty to sixty a day and the cigarettes would last until November after her daughter's baby was born. As her daughter was about to have a baby they might not be returning for some time. Although her children used to say that they would pay for their goods they never did. Mrs Brown added that she did not work and was in receipt of incapacity benefit of £140 per fortnight and the Appellant gave her house keeping money. She at first said that she had paid for the goods with her savings but later said that she had no savings although her husband had.
20. Mrs Vance was also interviewed by Officer Butler and said that the Superkings were hers. She did not know how many she had and she did not know how many had been imported. She smoked two or three packets a day (of tobacco). She had not purchased the goods herself but had given the money to the Appellant and Mrs Brown. She had last travelled about three weeks previously.
21. Mr Vance was also interviewed by Office Butler and said that all the box of Old Holborn belonged to him. He had not paid for it at that time. He smoked about seven or eight packets each week. He had no cigarettes. He had also travelled about one month previously and had not purchased any tobacco on that occasion.
22. The Appellant was questioned by Officer Bugler. When asked which goods were his he replied that "its near enough all in one like". He was asked how many cigarettes he had and replied that he had six kilograms of tobacco and 5,000 Superkings cigarettes. He had not bothered with a receipt. The cigarettes were £19 a packet of 200 and the tobacco was about £20 a packet for half a kilogram. He had paid for all the goods and Mr and Mrs Vance had given him some money. No-one had provided him with the finance for the purchases and he did not expect to receive money in return for the goods. He smoked about sixty cigarettes each day and about five pouches of tobacco each week. He expected the importations to last until March. He also said that his wife smoked about 200 cigarettes each week but no tobacco. He was an agency school bus driver and was paid £186 a week and his pension was £452 a month. He had savings of about £3,000 and he had financed the visit that day from his savings; he had withdrawn about £1,200. He had last travelled about three weeks previously and on that occasion he had brought back 600 cigarettes and his wife had brought back 1600; they had all been smoked since. He had travelled about every fortnight in the last year and brought hack tobacco goods on each occasion - about 2,000 cigarettes and 2.5 kilograms of tobacco. The seizure
23. After the interviews a decision was made to seize the excise goods and the estate car. Officer Butler recorded the reasons as: excess mils (meaning, we understand, that the quantity of the goods exceeded the minimum indicative levels); inconsistent stories, goods under declared; goods hidden; consumption rates unbelievable; and regular travellers.The request for restoration of the estate car
24. On 10 October 2001 Messrs Lewis Nedas & Co, Solicitors, wrote on behalf of the Appellant conceding that the cigarettes and tobacco were properly seized but asking for the restoration of the car. The letter admitted that some of the excise goods exceeded the guidelines but said that all had been purchased for personal use. On 31 October the Appellant was asked to supply proof of ownership of the vehicle and provided a copy of a bill of sale showing that the Appellant had purchased it on 29 December 1999 for £24,995. On 28 November 2001 Messrs Lewis Nedas & Co wrote further to say that Mrs Vance was 82 years old and was disabled and confined to a wheelchair. The estate car, which was a people carrier, had been purchased specifically for her needs. As she was in a wheelchair she could not leave home without the appropriate form of transportation. On 6 December 2001 the Respondents replied to say that the estate car would not be restored.
25. There followed the first three reviews which we have mentioned above, the third of which was appealed to the Tribunal. The 2003 Tribunal Decision
26. As the review decision which is under appeal was carried out under the directions of the Tribunal given in the 2003 Tribunal Decision we now summarise the relevant parts of that Decision. Here we record that Mrs Brown died on 5 May 2003 and so was unable to give evidence at the 2003 Tribunal hearing. In paragraph 1 of its Decision the Tribunal recorded that the Appellant's case was that the excise goods were for personal use and gifts to friends and family at no more than cost price.
27. In paragraphs 30 to 36 of its Decision the 2003 Tribunal summarised the evidence of the Appellant without any statement that it was accepted. At paragraph 32 the Tribunal referred to a list of intended recipients in the following way:

"

The Appellant produced a list made by Mrs Brown some five or six months before the hearing listing the people to whom it was intended that the cigarettes and tobacco should be given. They were going to be given as Christmas presents. The list gives the names or descriptions of sixteen people besides the four travellers themselves, with amounts of cigarettes or tobacco against each. All the people listed are relatives of the travellers or partners of relatives. The list accounts for all the goods except 1,500 cigarettes and 3 kilograms of tobacco."

28. In paragraph 51 the Tribunal considered the burden of proof and concluded that it lay on the Respondents to show that the goods were not imported for the Appellant's own use and that of his companions. However, the Tribunal went on to say that "the amounts imported were very substantially in excess of the indicative levels and the Tribunal agreed that this was a matter to be considered when determining whether the burden of proof had been discharged".
29. At paragraph 52 the Tribunal found as facts that the Appellant and Mrs Brown had deliberately understated the amount of both cigarettes and tobacco which they had imported, knowing that they were so doing. The Tribunal also found that some of the cigarettes were in bags under ordinary household shopping and, taken together with the understatement of the amounts imported, that was a matter which the Respondents were entitled to take into consideration. The Tribunal did not accept that the Appellant did not now how much had been paid and also did not accept that he did not know what quantity of cigarettes and tobacco had been purchased. The fact that the Appellant was a regular and frequent traveller across the Channel was relevant but not probative because people travelled regularly for many different reasons which did not involve importation of excise goods.
30. In paragraphs 53 to 55 of its Decision the Tribunal mentioned some matters in the review decision then under appeal with which it did not agree. The Tribunal did not accept that the Appellant and Mrs Brown had said that they intended to receive money for the excise goods from members of their family. The Tribunal did not agree that the Appellant had said that he had purchased goods from the back of a lorry, that is goods upon which no duty had been paid in the country of origin. And the Tribunal did not agree with a reference in the review letter to the loss to legitimate trade. But, perhaps most importantly, the Tribunal did not agree with the assumption in the review letter that, on each of the previous twenty-eight trips, the Appellant had imported the same quantities of excise goods as were imported on 22 September 2001. In paragraph 55 the Tribunal considered how the review decision had dealt with hardship caused to the Appellant's family by the seizure of the vehicle and did not agree with the consideration given to the availability of another vehicle nor whether it was capable of taking a wheel chair. At paragraph 58 the Tribunal concluded that the assumption as to the level of imports on the previous trips, when there was no evidence to support that assumption, and the failure properly to consider the issue of hardship, meant that the review decision was not reasonable.
31. After the 2003 Tribunal Decision the fourth and fifth reviews followed. The fifth review was dated 30 December 2004 and was carried out by Mr Gareth Morgan. It is that review which is the subject of this appeal. The 2004 review decision
32. We now therefore summarise the review decision of 20 December 2004 given by Mr Morgan. It first set out the Respondents' policies for the restoration of excise goods and private vehicles. These were that seized excise goods were not normally restored but that each case was considered on its own facts and exceptionally restoration might be offered. As far as restoration of private vehicles used for the improper importation of excise goods was concerned, these might be restored for a fee if the excise goods were to be transferred but not for profit; if the excise goods were to be supplied for profit but if their quantity was small and this was a first occurrence; or if the vehicle was owned by a blameless third party; in all cases all relevant circumstances would be taken into account.
33. Mr Morgan then went on to consider the facts about the interviews with the Customs Officers. He recorded that Mrs Brown when stopped at Coquelles had said that the trip had been to Boulogne and did not mention Belgium; later she said that she did not know that it was Belgium. In view of the frequency of travel, Mr Morgan found that hard to believe. Mr Morgan then recorded that initially the quantities of the excise goods had been under-declared and that more had been found when the estate-car was searched. He noted that some of the cigarettes had been transferred to other bags and were found under other shopping and he concluded that there was an intention to deceive. Mr Morgan then noted that the claims by each of the travellers for particular goods were inconsistent and did not match the amounts actually transported and concluded that the goods were not owned by the four individuals but had been split to give the Officers the impression that they were.
34. Mr Morgan then turned to the issue of receipts and remarked that, when asked for receipts at Coquelles, the Appellant had said he never bothered with them However, the Appellant had told the Tribunal in 2003 that he had produced five receipts for tobacco but Mr Morgan had not seen these and did not believe that they had been produced, although he accepted that receipts for groceries had been produced.
35. Mr Morgan went on to summarise a number of discrepancies in the accounts of the travellers as to who had paid for the goods and how much. He concluded that these discrepancies led him to believe that the goods were not all for personal consumption. Mr Morgan then dealt with the Appellant's rate of consumption of tobacco and cigarettes and concluded that this would reach 117 cigarettes a day. Taken with the frequency of travel, and the amounts which the Appellant had admitted he brought back each time, that would bring his consumption to 139 cigarettes a day which was incredible.
36. Mr Morgan then referred to the claims that some of the cigarettes were to be given away and he noted that, when stopped, the Appellant had not said that he intended to give any away. He referred to the list of sixteen friends and relatives produced to the Tribunal in 2003 and could not understand why it had not been mentioned at Coquelles. He also noted that the number of recipients had been nine in a letter dated 2 January 2002 from the Appellant's solicitor.
37. Bearing in mind the unsatisfactory nature of the claim that some of the goods were to be given away, the under-declaration of the goods, the concealment of some of the goods, the confusion about payment, the confusion about ownership, and the incredible consumption rates Mr Morgan concluded that it was probable that the goods were destined for a sale at a profit and so he concluded that the goods should not be restored.
38. Mr Morgan then went on to consider the restoration of the vehicle. As these were not small quantities of excise goods the policy about restoration in return for a fee did not apply. He considered hardship and concluded that the estate car had not been purchased specifically for the needs of Mrs Vance because it had been purchased in 1999 and Mrs Vance only received her wheelchair two weeks before 21 September 2001. Also, apart from having sliding doors, the estate car was not different from any other saloon or hatchback and had not been specially adapted. Further, from 11 June 2002 to 2003 the Appellant had had the use of a Kia Shuma car which could have been used to transport Mrs Vance. Mr Morgan relied upon Customs and Excise v Lindsay [2002] STC 588 for the principle that, if a person engaged in smuggling for profit, then it was acceptable and proportionate that, subject to exceptional individual considerations, the vehicle should be seized. He concluded that there were no grounds to conclude that there was exceptional hardship from the loss of the estate car and decided to uphold the decision to refuse to restore it. The new evidence from the Appellant
39. We were asked at the hearing in December 2005 to hear new oral evidence from the Appellant about hardship. We decided to hear the oral evidence of the Appellant without prejudice to any subsequent decision we might make as to its relevance.
40. The Appellant told us that the estate car which had been seized had been made in 1999 and was eight or nine months old when he had purchased it on 12 January 2000 for £24,995. This sum had been made up as: cash of £9,000; part exchange of £5,000 and credit of £10,995. In addition there were charges for credit which meant that the total amount to be paid for the estate car under his hire purchase agreement came to £29,843.20. The monthly repayments were £261.97 and he had had to keep them up since the seizure. They would cease in July 2006.
41. The Appellant told us that he was upset when the estate car had been seized because he had always wanted a Mercedes. At the date of the seizure he was a Transport Officer with the London Borough of Tower Hamlets earning about £180 a week and he had had to continue paying the monthly payments under the hire purchase agreement. It was awkward for him to get to and from work and to take Mrs Brown to and from hospital. (Mrs Brown had angina and died of a massive coronary on 5 May 2003.)
42. Also, the Appellant said that he had purchased the estate car to take Mrs Vance about because it had a wide door and she had arthritis. He accepted that she was not in a wheelchair when the Mercedes was purchased in January 2000, although she did then have a stick. Mrs Vance lived at Gravesend which was about twenty or thirty miles away from the Appellant's house. At first the Appellant said that Mr Vance usually transported Mrs Vance but later said that Mr Vance did not drive, The Appellant used to take Mrs Vance out shopping on a Saturday. Later Mrs Vance had two sticks and just before the seizure she had a wheel chair. When the estate car had been seized it was not possible for him to take Mrs Vance out on a Saturday. The Appellant told us that he had lost touch with Mrs Vance after the funeral of Mrs Brown in 2003.
43. The Appellant then told us that after the seizure he needed a car and at first he borrowed one. Then his grandson wanted a car so in June 2002 the Appellant purchased a car (the Kia) which his grandson liked and his grandson paid the deposit. The Kia cost about £4,500. The Appellant taught his grandson to drive but his grandson did not pass his driving test so the Appellant part-exchanged the Kia for a Peugeot because he needed a car to get to work. He had to be at work at 7.00 am.
44. At the date of the December 2005 hearing the Appellant owned a Galaxy seven-seater people carrier which had cost £23,000 new. He had purchased it with a low deposit and a loan which was repayable in four years. He was then working as a private minicab driver and had been doing that for about seven months. He lived on his own and earned about £350 to £400 a week and paid £275 each month off the loan for the Galaxy. He accepted that the Galaxy was very similar to the Mercedes. He also accepted that since the seizure he "had never been off the road". He had worked all the time and had "never claimed off the state". The new documentary evidence
45. In the Appellant's bundle of documents for the hearing we saw a copy of the hire purchase agreement for the estate car and a list of recipients for the tobacco goods; most of the recipients were friends and family of the travellers. We also saw some receipts which were: a transport ticket for 21 September 2001; three copies of a grocery receipt from Auchan Calais dated 22 September 2001; three copies of a grocery receipt from Auchan Boulogne dated 22 September 2001; copies of five receipts for tobacco and cigarettes from Adinkerke all dated 22 September 2001; and a receipt for beer dated either 21 or 22 September 2001. The new evidence from Mr Morgan
46. In oral evidence which we accept Mr Morgan told us that the new oral and documentary evidence of the Appellant would not have led him to a different decision. As far as the list of recipients was concerned Mr Morgan noted that it was not dated and that the list of recipients produced to the 2003 Tribunal had been prepared in early 2003. The fact was that, at the time of importation, none of the travellers had mentioned that they were purchasing goods for their friends and family at cost. He accepted that no-one had been asked at the time of importation whether they had purchased goods for other persons but Mr Morgan was of the view that it would have been normal for the travellers to have volunteered that information if it were true. He added that, at the time of the importation, none of the travellers, apart from the Appellant, knew the quantities or the price of the goods. That was inconsistent with the suggestion that the goods were purchased for friends and family at cost. Also, the suggestion that the goods were purchased for friends and family was inconsistent with the concealment of the goods.
47. Also in evidence which we accept Mr Morgan told us that the new evidence about hardship was inconsistent with previous claims. Very shortly after the seizure the Appellant's solicitors had stated that the estate car had been purchased specifically for Mrs Vance's needs whereas the Appellant now accepted that Mrs Vance had not had a wheel chair when the estate car had been purchased. The arguments
48. For the Appellant Ms Hacking argued that Mr Morgan's decision was unreasonable because he had taken into account some irrelevant factors and had failed to consider some relevant factors; he had not distinguished between the transfer of goods on a profit basis on the one hand and a not-for-profit basis on the other; he had not considered proportionality; and he had not properly considered the hardship resulting from the seizure. For the Respondents Ms Darroch cited the judgment of Lord Phillips in Lindsay at [40] for the principle that the test was whether the disputed decision was "so unreasonable that no reasonable authority could ever have come to it". She went on to argue that Mr Morgan's decision not to restore the estate car was reasonable and proportionate. It was reasonable for Mr Morgan to conclude that the goods had been imported for supply at a profit and from that it followed that it was not necessary to go on to consider the issues of proportionality or hardship. However, Mr Morgan had considered both issues and had reached a reasonable decision. Reasons for decision
49. Before considering the arguments of the parties we record that we adopt the views of the 2003 Tribunal at paragraph [39] that the burden of proof is on the Respondents to prove, on the balance of probabilities, that the goods were imported by the Appellant for a commercial purpose.
50. From the arguments of the parties we have identified the following questions:

(1) How should we deal with the fresh evidence? (2) What is the test we should apply?(3) Did Mr Morgan take into account some irrelevant matters or fail to take into account all relevant matters?(4) Did Mr Morgan unreasonably fail to consider the difference between supplies on a for-profit and supplies on a not-for-profit basis? (5) Was Mr Morgan's decision proportionate?(6) Does Mr Morgan's decision take proper account of hardship?

(1) How should we deal with the fresh evidence?

51. Dealing with the right of the Tribunal to hear further evidence Ms Hacking cited Anne Meiklejohn Connolly v The Commissioners of Customs and Excise (2003) Tribunal Decision E443 at page 19 lines 2-15 and Andrew Williams v The Commissioners of Customs and Excise (2003) Tribunal Decision E491 at [3].
52. For the Respondents Ms Darroch resisted the introduction of fresh evidence at this very late stage. She argued that the appeal was against the decision of the review officer and that it was inappropriate to introduce fresh evidence that the review officer could not have taken into account in conducting his review. The fact that Mr Morgan had not been able to consider the fresh evidence in his review letter did not render the review decision unreasonable. The hearing of this appeal commenced in 2005 when four years had elapsed since the seizure and there had already been five reviews. Enough was enough. If the Appellant had had fresh evidence then he should have served it before the hearing and the Respondents should have had advance notice of it.
53. Although we had much sympathy with the arguments of Ms Darroch, especially her arguments that the fresh evidence should have been served on the Tribunal and the Respondents before the hearing, we decided to admit the fresh evidence. This is consistent with the decisions of the Tribunal in Connolly and in Andrew Williams and is also consistent with the Tribunal's role which is to hear evidence and find facts. However, having decided to admit the fresh evidence, we record that we did not accept all of it. (2) What is the test we should apply?
54. The second question which arises from the arguments of the parties concerns the test we should apply. We start with the legislation and note that section 16(4) of the 1994 Act provides that we may only do one of the three things mentioned in section 16(4) "if we are satisfied that the review officer could not reasonably have arrived at the decision". We follow the guidance of Lord Phillips MR in Lindsay at [40] where he said that if the Respondents are to arrive reasonably at a decision then their decision must comply with the Convention in Schedule 1 to the Human Rights Act 1988. He went on:

"Quite apart from this, the Commissioners will not arrive reasonably at a decision if they take into account irrelevant matters or fail to take into account all relevant matters – see Customs and Excise Commissioners v J H Corbitt (Numismatists) Limited [1981] AC 22 at 60 per Lord Lane."

55. We have also referred to the judgment of the Court of Appeal in John Dee Limited v Customs and Excise Commissioners [1995] STC 941 and to the principle that, if it were shown that a decision of the Respondents was erroneous because of their failure to take relevant material into account, a tribunal could nevertheless dismiss an appeal if the decision would inevitably have been the same had account been taken of the additional material. (3) Did Mr Morgan take into account some irrelevant matters or fail to take account of some relevant matters?
56. The third question arising out of the arguments of the parties is whether Mr Morgan took into account any irrelevant matters or failed to take account of all relevant matters.
57. For the Appellant Ms Hacking argued that Mr Morgan had taken into account some irrelevant considerations, including Mrs Brown's failure to mention Belgium; his own views; and judging the travellers by his own standards. She also argued at length that Mr Morgan had failed to consider some relevant matters. Paragraphs 13 to 38 of her skeleton argument identified a large number of such factors which included: what was going to happen to the excise goods and the fact that Mr Morgan had made no effort to get hold of the list of

intended recipients; the fact of Mrs Brown's expressed intention to give some of the excise goods to her children; the interpretation to be given to some of the statements made about ownership; the details of the consumption rates; the fact that the supplies purchased were expected to last; the reasons for the frequent visits; the Appellant's employment and financial circumstances; and the fact that the Appellant had not been asked whether he intended to give any of the goods away. Ms Hacking also noted that Mr Morgan had not given any figures for the loss to legitimate trade and he had not defined the meaning of "small quantity" within the context of the policy to restore vehicles.

58. For the Respondents Ms Darroch argued that the relevant circumstances were that the Appellant had purchased a very substantial quantity of excise goods; that he had repeatedly and deliberately under-stated the amounts and had only admitted to having quantities which were then within the minimum indicative levels; that much of the cigarettes and tobacco were packed under other shopping; that the interviews with the occupants of the estate car had revealed confusion about consumption rates, the ownership of the goods and who had paid for them; and the fact that the late production of the lists of family and friends for whom, it was claimed, the goods were intended, was not consistent with the fact that no mention of such recipients had been made at Coquelles.
59. Ms Darroch referred to Lindsay at [22] which stated that Mr Lindsay and his father had imported 18,500 cigarettes and ten kilograms of tobacco which the Tribunal had accepted was for their own use and for the use of their family who paid them. However, at [28] Lord Phillips MR had stated that, bearing in mind the quantities imported "had the issue been raised, the Tribunal could properly have concluded that Mr Lindsay was using his vehicle for commercial smuggling". Ms Darroch argued that the quantities imported by the Appellant exceeded those imported by Mr Lindsay. She then argued that Mr Morgan's decision, that the goods were imported for sale at a profit, was a reasonable decision.
60. We approach the arguments of the parties by first considering the individual matters the subject of argument before us and we then go on to consider whether Mr Morgan's conclusion, that the Appellant imported goods for supply at a profit, was reasonable.
61. We begin with the quantities of goods. These were very large indeed and exceed the quantities regarded by Lord Phillips in Lindsay as indicative of smuggling at a profit. We then go on to consider the way in which the goods were declared at Coquelles. We are of the view that the conscious under-declarations and the partial concealment of the goods are factors which are consistent with the actions of travellers who are importing goods for sale at a profit. We then go on to consider the accounts given in the four interviews. These are mutually inconsistent in a number of respects. There was no consistency about the persons who owned the goods. There was no consistency about who had paid for them. And there was no consistency about how much they had cost.
62. Within this context we consider the evidence of the receipts. At his interview at Coquelles the Appellant said that he did not bother with receipts but at the hearing before us receipts were produced but not referred to. We find that the Appellant did not have the receipts at the time of the importations on 22 September 2001 and we also find this surprising. The Appellant had purchased a considerable amount of excise goods for cash and his case was that they were to be distributed to sixteen members of his friends and family at no more than cost price. In those circumstances we would expect that receipts would be asked for and retained so that the Appellant, and those who were going to pay him, would know what each item had cost.
63. We next consider the frequency of travel which, according to the Appellant, was about every fortnight in the year before the seizure. We agree with the 2003 Tribunal that a review officer should not make assumptions without evidence as to the level of imports on previous trips. Nevertheless, in our view it is permissible to remark that, if travellers are making such frequent journeys, then it would not normally be expected that they would buy on any one occasion more than is required until the next occasion, particularly as cash has to be paid each time. We accept that Mrs Brown said that, as her daughter was about to have a baby, they would not be returning until in or after November but the Appellant also said that the importations would last until March (which was then six months away). There was no other explanation given as to why what had been regular trips were suddenly to cease and we find it probable that, if the seizure had not taken place, the regular trips would most probably have resumed after the birth of Mrs Brown's grandchild. That would not be consistent with the need to bring back such large quantities on one occasion.
64. We next turn to consider the list of recipients. Here we remark that neither the list nor the recipients were mentioned during the four interviews. A list of nine recipients was mentioned in an early letter by the Appellant's solicitors to the Respondents. In paragraph 32 of its Decision the 2003 Tribunal referred to a list which had been made by Mrs Brown some five or six months before the 2003 hearing. However, paragraph 32 was included within the description of the evidence of the Appellant and the 2003 Tribunal did not say that it accepted that evidence. Accordingly, the 2003 Tribunal made no findings about that list. Also, we agree with Mr Morgan that the list produced to us had no date and it was not obvious that it was the same list as had been produced to the 2003 Tribunal. Having admitted the evidence of the list before us we have decided to give it very little weight. We also note that the 2003 Tribunal was told that the people on the list were going to receive the goods as Christmas presents and that is inconsistent with the Appellant's case before us that the recipients were going to pay the cost.
65. We have also considered the very many other factors which Ms Hacking argued were relevant matters which Mr Morgan had failed to consider. We do not mention them all individually but do not regard any of them as rendering his decision unreasonable.
66. Turning to those matters which Ms Hacking argued were irrelevant we agree that we would not have regarded Mrs Brown's failure to mention Belgium in the initial questioning as relevant in deciding whether excise goods had been imported for own use. However, we do not think that it was unreasonable of Mr Morgan to mention it within the whole context of the actions of the travellers on that day. Again we do not regard it as unreasonable for Mr Morgan to mention his own views and we do not think that he judged the travellers solely by his own standards. Like Mr Morgan we would expect travellers to tell the truth to Customs Officers at all times. There is no need for travellers to be scared or nervous if they are acting within the law.
67. We conclude that Mr Morgan's conclusion, that the Appellant was importing excise goods for sale at a profit, was a reasonable decision. In our view it took account of all relevant matters and did not take account of any irrelevant matter.

(4) Did Mr Morgan consider the difference between supplies on a not-for-profit basis and supplies for profit?

68. The fourth question arising out of the arguments of the parties is whether Mr Morgan considered the difference between supplies on a not-for-profit basis and supplies for profit.
69. For the Appellant Ms Hacking cited Lindsay and the judgments of Lord Phillips MR at [18], [63] to [65] and of Judge LJ at [71] to [73] and argued that Mr Morgan's review only distinguished between importation for personal use on the one hand and importation with intention to re-supply for payment on the other without distinguishing between re-supply for profit and re-supply not for profit. It was unreasonable to assume that, if importations were not for personal use, they must have been for supply at a profit.
70. In Lindsay at [18] Lord Phillips MR remarked that "there is a very significant distinction between a man who is bringing cigarettes into England to distribute to members of his family against re-imbursement, and a man who is bringing cigarettes into England in order to sell them at a profit". At [63] he went on to say that the Respondents' then policy about the restoration of cars used for smuggling was appropriate when the goods were smuggled in order to sell them at a profit, although cases of exceptional hardship would always require consideration. At [64] he said that the policy should not automatically apply to a "driver importing goods for social distribution to family or friends in circumstances where there is no attempt to make a profit" but did go on to say that, even in such a case, non-restoration could be appropriate depending upon the circumstances including "the scale of the importation, whether it was a first offence, whether there was any attempt at concealment or dissimulation, the value of the vehicle and the degree of hardship that will be caused by forfeiture". Similar views were expressed by Judge LJ at [71] to [73]
71. We note that in paragraph 1 of its Decision the 2003 Tribunal recorded that the Appellant claimed in his notice of appeal that all the goods purchased were for personal use and "gifts to family and friends and supplied at no more than cost price". In our view this denotes a certain amount of confusion because outright gifts are treated as being for the importer's own use whereas importations which will be paid for, even if there is no profit, are treated as commercial importations. Nevertheless, we agree with Ms Hacking that, with commercial importations, there is a distinction to be drawn between importations which will result in a sale for profit on the one hand and importations for transfer to friends and family at cost on the other.
72. However, we accept the evidence of Mr Morgan that his conclusion that the Appellant was importing excise goods for sale at a profit meant that he had concluded that the Appellant was not importing goods for distribution to family and friends at cost. We regard that as a reasonable decision.

(5) Was Mr Morgan's decision proportionate?

73. The fifth question which arises out of the arguments of the parties is whether Mr Morgan's decision was proportionate.
74. For the Appellant Ms Hacking cited Lindsay and the judgments of Lord Phillips MR and of Judge LJ and argued that, because he had reached the view that the goods were destined for sale at a profit, Mr Morgan had failed to consider the question of proportionality. For the Respondents Ms Darroch relied upon the judgment of Lord Phillips MR in Lindsay at [63] and that of Judge LJ for the principle that the loss of a vehicle was proportionate in the case of smuggling for profit.
75. The principle of proportionality was considered in Lindsay at [18] where Lord Phillips MR distinguished between importation for family and friends at cost on the one hand and importation for sale at a profit. At [63] he went on to say that the Respondents then policy about the restoration of cars used for smuggling was proportionate when the goods were smuggled in order to sell them at a profit (although cases of exceptional hardship would always require consideration). At [64] he said that non-restoration should not automatically apply to a "driver importing goods for social distribution to family or friends in circumstances where there is no attempt to make a profit" but did go on to say that, even in such a case, non-restoration could be appropriate depending upon the circumstances including "the scale of the importation, whether it was a first offence, whether there was any attempt at concealment or dissimulation, the value of the vehicle and the degree of hardship that will be caused by forfeiture". Similar views were expressed by Judge LJ at [71] to [73]
76. In our view Mr Morgan's conclusion that the Appellant was importing excise goods for sale at a profit meant that the non-restoration of the estate car was proportionate. We rely upon the words of Lord Phillips MR in Lindsay at [63] where he said:

"Those who deliberately use their cars to further fraudulent commercial ventures in the knowledge that if they are caught their cars will be rendered liable to forfeiture cannot be reasonably heard to complain if they lose those vehicles. Nor does it seem to me that, in such circumstances the value of the car used need be taken into consideration. Those circumstances will normally take the case beyond the threshold where that factor can carry significant weight in the balance. Cases of exceptional hardship must always, of course, be given due consideration."

77. We conclude that Mr Morgan's decision was proportionate and was reasonable.

(6) Does Mr Morgan's decision take account of hardship?

78. The last question arising out of the arguments of the parties is whether Mr Morgan's decision took account of hardship.
79. For the Appellant Ms Hacking first cited Bill Kristofferson v The Commissioners of Customs and Excise (2003) Tribunal Decision No. E406 at page 6 lines 29 to 42 for the principle that, even if goods are imported for a commercial purpose, a refusal to restore could amount to exceptional hardship. First she argued that inadequate consideration had been given to the hardship caused to Mrs Vance as the Kia Shuma had not been acquired until June 2002, six months after the seizure. There was now a considerable element of hardship arising out of the inability to transport Mrs Vance because of a lack of wheelchair space. Secondly, Mr Morgan had not taken into account the expense suffered by the Appellant who did not have high earnings and who had lost an expensive estate car; Mr Morgan had not made any reference to the value of the Appellant's estate car and the payments for the estate car were still creating hardship. Thirdly, Mr Morgan had not asked the Appellant for his representations and Ms Hacking cited Andrew Williams at [30] and [31] for the principle that whilst there was no statutory requirement for a review officer to make enquiries of an appellant he should do so as a matter of fairness if he decided to make other enquiries and ascertain facts other than those found by a previous tribunal. Fourthly, Ms Hacking relied upon the additional evidence as to hardship heard by us and argued that the change in circumstance demonstrated by the new evidence, which was not known to Mr Morgan when he conducted his review, was sufficient to justify the opinion that the question of exceptional hardship should be reconsidered afresh and she cited Neil Frost and Stephen Arthur Mason v The Commissioners of Customs and Excise (2003) Tribunal Decision E872 at [30] and [31].
80. Ms Darrroch argued that the new evidence showed that there were no persons now depending upon the estate car for medical or humanitarian help.
81. As this is a case where excise goods were imported for sale at a profit we follow the guidance of Lord Phillips in Lindsay and consider whether the non-restoration will lead to exceptional hardship. No hardship will, at present be caused to Mrs Vance by the non-restoration of the estate car because the Appellant lost touch with Mrs Vance in 2003 after the death of Mrs Brown. So, even if the estate car were to be restored, it would not be used to take out Mrs Vance. Conversely, the Galaxy could be used to take out Mrs Vance. Even at the time of the seizure we do not accept that there was exceptional hardship to Mrs Vance because we accept the evidence of the Appellant that "he had never been off the road".
82. Turning to financial hardship, Lord Phillips made it clear that the value of the car seized need not be taken into consideration. Although we agree that, whilst there is no statutory requirement for a review officer to make enquiries of an appellant he should normally do so as a matter of fairness if he decided to make other enquiries, we are of the view that in this appeal Mr Morgan's failure to make enquiries was not unreasonable and, as we ourselves admitted the fresh evidence, the fact that Mr Morgan did not make any additional enquiries did not cause any injustice.
83. We accept that the payment of the hire purchase instalments on the estate car, together with the loan repayments in respect of the Galaxy, would cause some financial hardship to the Appellant However, as he is earning we do not regard that as exceptional hardship. Taking into account the scale of importation and the attempt at concealment and dissimulation we do not regard the financial hardship as exceptional.
84. We conclude that, in respect of hardship, Mr Morgan's decision was reasonable

Decision

85. Our decision on the issue for determination in the appeal is that we are satisfied that Mr Morgan, the review officer, could reasonably have arrived at his decision.
86. The appeal is, therefore, dismissed.

DR A N BRICE

CHAIRMAN

RELEASE DATE: 10 May 2006

LON/2005/8038

87. 05.06