United Kingdom VAT & Duties Tribunals (Excise) Decisions

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Cite as: [2006] UKVAT(Excise) E961, [2006] UKVAT(Excise) E00961

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Collin Wood v Revenue & Customs [2006] UKVAT(Excise) E00961 (01 June 2006)

EO961

EXCISE DUTY — gritters —whether vehicles used by Appellant as gritters qualify for that description within para 8 Sch 1 Hydrocarbon Oil Duties Act 1979 — appeal allowed

MANCHESTER TRIBUNAL CENTRE

COLLIN WOOD Appellant

- and -

THE COMMISSIONERS FOR

HER MAJESTY'S REVENUE AND CUSTOMS Respondents

Tribunal: David Demack (Chairman)

Alban Holden

Sitting in public in Manchester on 24 April 2006

Craig Sephton QC instructed by Messrs Davies Ridgeway solicitors, Warrington, for the Appellant

Nigel Poole, counsel, instructed by the Acting Solicitor for HM Revenue and Customs for the Respondents

DECISION

The Appellant, Mr Collin Wood, provides services of gritting roads and similar surfaces to local authorities, supermarkets, and other organisations. He has two depots, one in the north of England and one in the south, near Basingstoke. All the vehicles which operate from his depot in the north are vehicles which Her Majesty's Commissioners for Revenue and Customs (HMRC) have no hesitation in accepting as having been constructed or adapted for gritting so that they are excepted vehicles for the purpose of the Hydrocarbon Oil Duties Act 1979, and qualify to use rebated fuel. But HMRC are unwilling to accept that the vehicles which operated out of the Basingstoke depot in March 2005 were adapted for gritting, and hence qualified to use rebated fuel. (It is common ground that those vehicles were not constructed for gritting).

Three types of vehicle are involved in the appeal:

(a) A Ford Transit flatbed on which was a frame in which sat a gritting hopper in the shape of an inverted 'toblerone' for dispensing salt and other materials used to deal with frost, ice and snow. The hopper was attached to the frame by means of a nylon rope;

(b) Five Land Rover Defenders, some at least of which had attached to their front a large bracket capable of supporting a snow plough, and all of which had bolted to their rear a tow bar ball joint to enable them to tow a trailer hopper specifically designed as a gritter, again in the shape of an inverted 'toblerone';

(c) A Citroen Xantia motor car with a tow bar ball joint bolt attached to its rear to enable it to tow a trailer of the type mentioned at (b) above. (It was claimed by Mr Wood, and we accept, that the car was purchased solely for use in an emergency should one of the vehicles at (a) or (b) above fail).

No evidence was adduced to indicate that Mr Wood had taken in rebated fuel or used any of the vehicles on a public road for any purpose other than as a gritter; nor was it even suggested by HMRC that he had or might have done so.

The appeal is against a decision on review by HMRC of 23 August 2005 to confirm an assessment to £8,317.20 excise duty issued on 22 April 2005, and made to recover the rebate of duty on diesel fuel oil which HMRC estimated Mr Wood had "misused". (Mr Wood was also assessed to a civil penalty of £5,260, but did not submit a separate appeal in relation thereto). In his Notice of Appeal, given on 7 September 2005, Mr Wood gave his reason for appealing as:

"The vehicles seized by HMCE on the 8^th March should be treated as excepted vehicles as they are adapted, and used, solely for the conveyance of machinery for spreading material on roads to deal with frost, ice or snow. Demountable gritters, i.e. those that are not permanently attached to the vehicle chassis by means of welding or locking are used by local authorities throughout the country and are used fuelled with rebated oil".

Mr Wood was represented by Mr Craig Sephton QC and HMRC by Mr Nigel Poole of counsel. We were presented with a joint bundle of copy documents, to which each party added documents at the hearing. We also took oral evidence from Mr Wood himself, Mr Gordon Leicester, the manager of his Basingstoke depot, and Mrs Karen Wilson, an officer of HMRC, and had before us the witness statements of two other officers of HMRC, Miss Frances Manley and Mrs H J Harvard. From that evidence, we find the facts contained in paragraphs 1 to 4 above and those which follow to have been established.

Mr Wood carries on business inter alia of salt gritting from a base in Newton-le-Willows, Merseyside. He operates a number of vehicles in his business. Those which are based at Newton-le-Willows are conventional gritting lorries, having gritting machinery welded or bolted to their chassis, and are accepted by HMRC as gritters. But those based at Basingstoke do not have gritting machinery bolted or welded on. Due to the fact that they operate at premises to which access could not be gained by conventional gritters due to their large size, small vehicles have to be used, and Mr Wood has chosen to use a Fort Transit flatbed and Land Rover Defenders for the purpose. As a "back-up" vehicle, he has purchased a Citroen Xantia.

The gritting machinery attached to the Ford Transit as described in paragraph 3(a) above is not permanently attached to it, and can be removed. And the gritting trailers used with the Land Rover and Citroen vehicles as described at paragraph 3(b) above can also be detached from the towing vehicle.

On 8 March 2005, as a result of what Mr Wood believed to be a complaint to HMRC by a disgruntled former employee of his, officers of HMRC visited Blacklands Farm, Basingstoke, Mr Wood's southern base. There they found the seven vehicles referred to in paragraph (2) above, but there was no employee or representative of Mr Wood present. The officers were able to test the fuel in the tanks of five of those vehicles and subsequently established that all five contained rebated fuel. All seven vehicles were taxed for use on public roads.

Three of the Land Rover vehicles had small grit dispensing trailers, of the type described in paragraph 2(b) above, attached to them by means of a tow bar, and the Ford Transit flatbed described in paragraph 2(a) above had a large grit dispenser sitting on a frame on the vehicle bed. The other Land Rover vehicles had grit and shovels in the back of them.

Mrs Wilson obtained a mobile telephone number for Mr Wood and spoke to him on the afternoon of 8 March 2005. He was told that HMRC had seized all seven vehicles as they were running on rebated fuel. In reply, he said that he thought he was allowed to run them on such fuel as they were gritters.

HMRC then "recovered" all the vehicles to what they described as safe storage. That exercise required their "popping", i.e. breaking, side windows of two of them to enable the handbrakes and steering locks to be released, and having their propeller shafts removed to allow them to be towed away.

Subsequently, Mr Wood deposited £25,000 with HMRC to have the use of his vehicles, and on 4 May 2005, HMRC entered into an agreement with him for the return of the vehicles seized.

Following examination of Mr Wood's records, HMRC calculated that between 2 December 2003 and 2 March 2005 inclusive, Mr Wood had purchased 17,136 litres of red diesel which attracted a rebate of £8,317.20, and it was to that sum that he was assessed.

As we have indicated the issue raised in the appeal is whether the seven vehicles (or any of them) were gritters as defined in paragraph 8 of Schedule 1 to the Hydrocarbon Oil Duties Act 1979 and so qualified to be fuelled with and use rebated oil on public roads. A "road vehicle" is detailed in section 27 of that Act as a vehicle "constructed or adapted for use on roads, but does not include any vehicle which is an excepted vehicle within the meaning given by Schedule 1 to this Act". Paragraph 8 of Schedule 1 reads:

"Gritters

A vehicle is an excepted vehicle if it is constructed or adapted, and used, solely for the conveyance of machinery used for spreading material on roads to deal with frost, ice or snow (with or without articles or material used for the purposes of the machinery)."

Mr Poole observed that the Land Rover and Citroen vehicles could be used for gritting as and when a gritter was attached using a common tow bar ball joint. Under the statutory definition, which was to be construed narrowly (see Universal Sealants (UK) Limited v Commissioners of Customs and Excise (2005) Decision No. E193), a gritter was a vehicle which was both "constructed or adapted, and used, solely" for gritting. He submitted that the condition "solely" applied to construction or adaptation and to use: the comma in the distinction was to be found after the word "used", and not after the word "solely". Mr Wood's vehicles were not constructed or adapted solely for the conveyance of machinery for spreading grit in that:

(a) they could be used for all manner of purposes;

(b) the construction of each was that of a normal road vehicle of its class;

(c) Mr Wood was required to prove what adaptations had been carried out to each vehicle (in so far as he relied on adaptations in support of his appeal), but there were no adaptations which could be found solely for the conveyance of machinery for spreading material on roads; and

(d) even if the vehicles had been used exclusively for gritting, they did not qualify as gritters under the statutory definition.

Mr Poole maintained that the purpose of the exception for gritters was that they served a valuable public purpose, but, he added, if a vehicle was not constructed or adapted solely for conveying gritting machinery then (given the usual weather conditions in the United Kingdom) for most of the time they would be road vehicles available for use for other purposes. The fact that, in evidence, Mr Wood contrasted his Basingstoke-based vehicles with "purpose built gritting lorries" supported HMRC's case. He invited us to dismiss the appeal.

Mr Sephton opened his submissions by observing that the Shorter Oxford English Dictionary defined 'adapt' as meaning "to fit, to make suitable (to, for)", or "to alter so as to fit for a new use". He maintained that all the Basingstoke-based vehicles were adapted, within the dictionary meanings, by being made suitable as gritters.

He next dealt with a point taken by Mr Poole to which we did not refer when dealing with the latter's submissions. It will be recalled that on HMRC visiting the Basingstoke base on 8 March 2005, they found all seven of Mr Wood's vehicles to be taxed as ordinary road vehicles. As gritters, they would have qualified for a lower rate of vehicle excise duty. Mr Poole maintained that by being fully taxed, Mr Wood accepted that they were ordinary road vehicles. We do not accept his submission in that behalf, being satisfied on the evidence that Mr Wood was not aware that gritters qualify for a lower rate of vehicle excise duty.

Of Mr Poole's claim that towing or carrying gritting facilities which were not welded or bolted to a vehicle did not constitute their adaptation, Mr Sephton asked, "Why not?". He maintained that to adapt a vehicle as a gritter, one had to attach a tow bar and gritter trailer. The Citroen Xantia car was adapted to enable it to convey gritting vehicles: that was the clearest evidence of its being adapted solely for the conveyance of machinery used for spreading material on roads.

The fact that the adaptations to Mr Wood's vehicles were not permanent was, in Mr Sephton's submission, irrelevant. The question was: at the relevant time was the vehicle an excepted one? The relevant time was when fuel was taken in, and when used as fuel for that road vehicle (see section 12(2) of the 1979 Act). He further maintained that there was no evidence of an infraction in the law in the instant case.

He observed, quite correctly, that, in making his submissions, Mr Poole used "alteration" on a number of occasions as an apparent synonym of "adaptation". Mr Sephton submitted that an alteration was different from an adaptation, and in any event, adaptation did not mean permanent adaptation.

Dealing with the three types of vehicles in Mr Wood's fleet, Mr Sephton first submitted that the Ford Transit was made suitable for gritting by adaptation: it differed only from a standard, i.e. purpose built, gritter by means of the way in which the machinery was attached to the vehicle, and that was irrelevant. Of the Citroen Xantia, Mr Sephton claimed that the evidence pointed to its having been adapted for a single purpose – that of gritting. And of the Land Rovers, he contended that as their tow bars were used in connection with devices for spreading material used in gritting, the affixation of a trailer to one of them was an adaptation.

Having carefully considered the submissions of both parties in detail, we conclude that those of Mr Sephton are in every aspect correct. It seems to us that HMRC are contending, not that Mr Wood's vehicles were not adapted for use as gritters, but that to qualify as gritters vehicles must be incapable of any other use whatsoever. We are unable to accept that argument. We therefore allow the appeal.

We direct HMRC to pay Mr Wood's costs of and in connection with and consequent upon the appeal.

DAVID DEMACK

CHAIRMAN
Release Date1 June 2006

MAN/05/8050