United Kingdom VAT & Duties Tribunals (Excise) Decisions

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Cite as: [2006] UKVAT(Excise) E987, [2006] UKVAT(Excise) E00987

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David George Lewis Weller v Revenue & Customs [2006] UKVAT(Excise) E00987 (12 September 2006)

E00987

EXCISE DUTY – Restoration of goods – Cigarettes – Whether decision not to restore was reasonable – No – Appeal allowed

LONDON TRIBUNAL CENTRE

DAVID GEORGE LEWIS WELLER Appellant

and –

THE COMMISSIONERS FOR HER MAJESTY'S REVENUE & CUSTOMS Respondents

Tribunal: STEPHEN OLIVER QC (Chairman)

CAROL DEBELL

Sitting in public in London on 21 August 2006

Dougald Robinson, friend, for the Appellant

Kieron Beal, counsel, instructed by the Acting General Counsel and Solicitor for HMRC, for the Respondents

© CROWN COPYRIGHT 2006

DECISION

Mr David Weller appeals against a review decision dated 26 October 2004 refusing to restore 1400 cigarettes, 1.5kg of hand-rolling tobacco and 3 litres of spirits seized on 11 July 2004.

The Function of the Tribunal

The decision appealed against falls within Sections 16(8) of the Finance Act 1994. It is an "ancillary matter". Our power are therefore conferred by Section 16(4) which provides that –

"… the powers of an appeal Tribunal on an appeal under this section shall be conferred to a power, where the Tribunal is satisfied that the Commissioners or other person making the decision could not reasonably have arrived at it, to do one or more of the following, that is to say –

(a) to direct that the decision, so far as it remains in force, is to seize to have effect from such time as the Tribunal may direct;

(b) to require the Commissioners to conduct, in accordance with the directions of the Tribunal, a further review of the original decision;

Pursuant to Section 16(6) the burden is on the Appellant to satisfy the Tribunal in the appeal.

The question for us is whether, on reaching the decision appealed against, the Commissioners have acted in a way in which no reasonable panel of Commissioners could have acted, whether they have taken into account some irrelevant matter or disregarded something to which they should have given weight.

The Decision appealed against

The review letter starts with the summary of the background facts. As primary facts these are not challenged. It explains the Commissioners "restoration" policy as follows:

"Excise goods

It is the Department's general policy that seized or condemned excise goods should not normally be restored. However, each case is examined on its merits to determine whether or not restoration may exceptionally be offered."

So far as is relevant the "Consideration" part of the letter reads as follows:

"It is for me to determine whether or not the contested decision is one that should be upheld, varied or withdrawn. In order to do so, I considered the decision afresh, including the events of the 11 July 2004 and related evidence, to identify if any mitigated or exceptional circumstances exist it should be taken into account. I also examined and considered all the material and representations that were before the Commissioners at the time the decision was made and any that have subsequently been received.

The goods were seized due to the conclusion that they were for commercial use."

The letter states what the review has involved:

"In my review, I have examined your correspondence, and the situation surrounding the seizure, to identify if I consider any exceptional circumstances do exist …. My review … only deals with matters relevant to the decision regarding non restoration of the goods."

The review letter rejects Mr Weller's contention that the stopping of him at the Docks and therefore the subsequent seizure was illegal. This has not been pursued before the Tribunal. The letter then sets out what we see as the reason for the decision. This reads:

"… the misleading information provided at interview concerning your previous travel, coupled with the fact that with a consumption rate of 2 or 2½ pouches of tobacco per week, you would not need to travel as frequently as every six weeks to obtain supplies for your own consumption, I find your statements unreliable. Although you travelled as a foot passenger on 11 July and 4 April, I note you normally travel by car, and therefore would have had opportunity to purchase larger amounts at a time, from the cheaper suppliers in Belgium or France, whom you mention.

The revenue involved in the offence is duty of £389.36 and VAT of £107,25, i.e. a total of £396.61."

The conclusion in the review letter is:

"Due to all my findings above, I consider that a refusal to restore the excise goods is both reasonable and proportionate, when taking into account all the above considerations of your case."

Various decisions establish that this is not an occasion to challenge the legality of the forfeiture. We refer to Smith v Revenue of Customs Commissioners (17 October 2005, unreported) and Weller v Revenue of Customs Commissioners [2006] EWHC 237, both High Court decisions, and Cummins (2005) UK VAT E943. Instead, we are constrained by Section 16(4) to determine whether Mr Weller has satisfied us that the Customs could not reasonably have arrived at the relevant decision. We disagree with the two key points relied upon by the review officer. Properly understood we do not think that Mr Weller's statements made at the time when he was stopped were unreliable and we are satisfied that he did not normally travel by car and so had not had the opportunity to purchase larger amounts of cigarettes at a time from cheaper suppliers. In relying on these factors the review officer was taking account of matters which, on examination before the Tribunal, we feel he should not. At a more general level we think that the evidence before us showed exceptional circumstances that, if taken into account, should have persuaded the Commissioners to depart from their policy not to restore goods.

Mr Weller

We start with Mr Weller. He is well into his 60s. He was full-time employed at the time, working 60 hours a week as a transport supervisor with a disposable income (after rent, rates and other living expenses) of £100-£150 a week. His partner of many years works full-time and they share household expenses. He comes from Ashtead, a self- respecting village in Surrey, said by Mr Weller to have a strong sense of good neighbourliness. (We mention this because it was suggested to Mr Weller that his contribution to neighbourliness was as the village cross-border shopper.) Ashtead is some 80 miles from Dover.

Mr Weller talks indistinctly and once he starts he rambles on. He does not meet the questions he is asked with direct and precise answers. He does not offer answers to questions that ought to have been asked and he does not volunteer information that might be helpful. We found note-taking when Mr Weller was questioned at the hearing to be difficult. We frequently had to ask for repeats to his answers which had rambled off into the incomprehensible only to be given an answer with a different sense. We mention that feature because the notebook of the officer who, on his own, questioned Mr Weller at Dover and took notes at the same time shows a lucid, precise and intelligible set of answers. This is particularly the case where, as here, the notes made of the pre-interview answers given by Mr Weller, being answers noted down some minutes after the interception, are relied upon as showing Mr Weller's attempt to cover up a commercial importation of tobacco and cigarettes. Whether the notes record the real sense of the pre-interview answers must, we think, be a matter of doubt.

The events of 11 July

Mr Weller set off to Dover very early in the morning of Sunday 11 July 2004 he was alone and drove his "Astra". He had an oldish Puma sports bag with him. Sunday was his day off. The reason he was alone was because his old friend and companion on trips to Dover (whom we refer to as Mr W) had contracted lung cancer. In earlier years he and Mr W had done the Dover trip every six to eight weeks. He had hoped to travel with a Mr Penson (see para 12 below), but Mr Penson had withdrawn at the last moment. Mr Weller left his Astra in the short-term car park at Dover and took the 7am ferry on a non-landing ticket (He had obtained his ticket and a ticket for his passenger for £1 each from an advertisement in a newspaper.)

Not long after the ferry had left Dover Mr Weller went to the ferry shop and bought cartons of cigarettes, i.e. 800 Benson and Hedges, 200 Berkeley lites, 200 Berkeley Menthol and 200 Special Kings; he also bought 1½kg of Golden Lee Virginia hand-rolling tobacco, 3 bottles of liquor and a carton of café cream small cigars. (We mention that the purchase took place shortly after leaving Dover because of an argument advanced by Mr Robinson to the effect that the excise point was in the United Kingdom and so there could not have been any question of evasion of duty.)

When the ferry got back to Dover, shortly after 11am the same day, Mr Weller took the passenger bus to "the controls" where he was stopped at 11.24. The Puma bag was opened and the goods were revealed. The officer was not taking notes at the time; but when they were entered into his notebook shortly afterwards. The record shows Mr Weller saying that he had been on the boat, a non-lander. That record shows the question "Who are the goods for?" and the answer – "Presents", and the question - "When did you last travel? - answered by these words – "Last November around Christmas time." Mr Weller is recorded as having confirmed that he was aware that it was illegal to import certain items such as drugs, firearms and indecent material. The officer then opened the Puma bag and took out some receipts for P&O for 4 April 2004 and 2 November 2003. The officer then read the so-called "Commerciality Statement" which contains these words:

"I intend to ask you some questions to establish whether these goods are held for a commercial purpose. If no satisfactory explanation is forthcoming or if you do not stay for questioning it may lead me to conclude that the goods are held for a commercial purpose and your goods (and vehicle) may be seized as liable for forfeiture. You are not under arrest and are free to leave at any time. Do you understand?"

By then, Mr Weller told us and we accept, he was in quite a state.

The notebook entry records Mr Weller as saying "yes" at 11.38 and from there on the notebook contains a sequence of questions and answers. It contains the following information:

• The goods had cost some £300.

• Mr Weller had borrowed £15,000 to buy his car.

• Mr Weller had £100-£150 a week after expenses.

• Asked to explain why he had not mentioned the April 2004 trip, Mr Weller had said that he did not keep track of these things.

• Normally Mr Weller travelled by car with his friend Mr W.

• Mr Weller normally got through two packets of Golden Virginia a week.

At 12.22 Mr Weller signed the notes acknowledging them as an accurate account. The notes then record a visit to the car park to inspect Mr Weller's Astra which contained "nothing of Customs interest". The notes record the seizure.

A later letter to the Customs enclosed a note from Mr Weller's partner, who gave evidence before us confirming its contents and her consumption of cigarettes, stating that 800 Benson and Hedges and 200 Menthol cigarettes had been for her; there was also enclosed a letter from Mr Penson containing these words:

"I am a mechanic and often help him with car maintenance. As a thank you he occasional brings me various gifts back from his trip to France (i.e. cigarettes or alcohol). Although I have offered him payments, he has never accepted and has always been adamant that they were gifts."

Mr Penson duly signed the letter but did not attend to give evidence. Mr Penson, Mr Weller explained to us, was another of the good neighbours in Ashtead who sometimes repaired his car for a small payment and sometimes ferried him around. We accept that Mr Weller owed a debt of gratitude to Mr Penson but we do not accept that the cigarettes given by Mr Weller to Mr Penson were in any real sense payment in kind for Mr Penson's services.

Mr Weller never challenged the seizure. The reasons for this are contained in the High Court decision of Weller v Revenue & Customs Commissioners.

Conclusion

Having heard evidence from Mr Weller, we have decided that the conclusions of the review officer are so improbable as to be unsustainable.

We think that the review officer failed to take into account that Mr Weller had adequate spare funds to cover the costs of buying the goods. In this connection we note that Mr Weller's Dover ferry trips appear to have become much less frequent than every six - eight weeks as was the case in earlier years; perhaps this is the result of Mr W's smoking–related illness. We also note that Mr Weller and his partner habitually contribute to the joint household expenditure; we cannot construe that as Mr Weller's partner paying for the 800 Benson and Hedges and 200 Menthol cigarettes apparently destined for her. It was just a domestic arrangement.

The quantity of goods bought on the trip is not great. It is half (or less) of the "guideline" quantity. The expenses of the trip, 160 miles by car plus parking charges plus the boat ticket, are such that, were the goods for sale (which would have to be at a deep discount to the store prices for like goods) in and around Ashtead, any profit would be small if not non-existent.

Mr Weller evidently enjoyed these trips; or at least he used to when Mr W was fit. His job occupied him for six days a week leaving little room for that pastime.

If the intercepting officer's notes are accurate, Mr Weller did mislead the Commissioners by his opening answers (which we point out were made before the actual note taking started). The goods were not, save for the carton destined for Mr Penson, "presents" and November 2003 was not his last visit. Mr Weller says, and we accept this, that at the moment of interception he could only reliably recall the November 2003 visit because on that occasion he had bought a Christmas present for his grandson. Moreover, for reasons given in paragraph 5 above we have difficulty in relying on the pre-interview answers.

The officer's conclusion that Mr Weller normally travelled by car and so had every opportunity on those occasions to purchase larger amounts is unfounded. In particular we accept that Mr Weller did not take his car on the boat.

We were shown the receipt for the purchase made by Mr Weller in the course of the April 2004 trip. The receipt confirmed that on that occasion he had bought 800 Benson and Hedges, which, we infer, were for Mr Weller's partner. They showed Mr Weller buying only 1kg of hand-rolling tobacco and six packs of café creams. Mr Weller's use of hand-rolling tobacco was not challenged. If his account of consuming two pouches a week is to be believed, his April purchase of 1kg is consistent with it being a purchase for his own use.

The points summarised above amount, in our view, either to exceptional circumstances which the review officer ought to have taken into account in reaching his decision or to matters which he should have not taken into account at all. Moreover, we find as a fact that Mr Weller was not importing for a commercial purpose. Any suggestion that he was is, in our view, misconceived and fanciful. For those reasons we quash the review decision and direct that the matter be the subject of a fresh review taking into account the findings made in this decision.

We allow the appeal and award Mr Weller his costs of an amount to be agreed. If the amount cannot be agreed, the matter should be referred back to the Tribunal for a further direction.

STEPHEN OLIVER QC

CHAIRMAN

RELEASED: 12 September 2006

LON/04/8093