United Kingdom VAT & Duties Tribunals (Excise) Decisions

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Cite as: [2006] UKVAT(Excise) E992, [2006] UKVAT(Excise) E00992

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Robert Brookes v Revenue & Customs [2006] UKVAT(Excise) E00992 (27 September 2006)

E00992

Excise Duty – Father & son importing excise goods – restoration of motor vehicle and goods – previous Tribunal decision making findings of fact and ordering re-review – reasonableness of Commissioners' decision – Appellant's claim for compensation for economic loss – whether Tribunal has jurisdiction – no – appeal dismissed

MANCHESTER TRIBUNAL CENTRE

ROBERT BROOKES Appellant

- and -

THE COMMISSIONERS FOR

HER MAJESTY'S REVENUE AND CUSTOMS Respondents

Tribunal: Lady Mitting (Chairman)

Mrs Marjorie P Kostick BA FCA CTA (Member)

Sitting in public in Birmingham on Wednesday 6 September 2006

Appellant appeared in person

James Puzey of Counsel, instructed by the Acting Solicitor for HM Revenue and Customs for the Respondents

DECISION

The appeal of Mr Robert Brookes, the Appellant, is stated to be a claim by him for compensation under the following heads:

(i) Interest on loan for a replacement car - £1,705

(ii) Counsel's advice - £705

(iii) The Duty deducted by the Reviewing Officer from the value of the vehicle - £1230

(iv) The value of the entire consignment of excise goods purchased on the day of seizure – no value given

(v) Solicitors costs - £500

(vi) Money lost due to days off work - £500

(vii) The cost of travelling home after the vehicle was seized - £30

(viii) Time taken over the last four years - £500

Mr Robert Brookes gave oral evidence under oath but although his son, Mr Richard Brookes, was in Court, the Appellant did not call him. The reviewing officer, Mrs Helen Perkins, was on maternity leave and no oral evidence was therefore called by the Respondents. Senior Officer, Mr Raymond Brenton, was also present.

Chronology

On 20^th May 2001, the Appellant and his son, Mr Richard Brookes, were intercepted at the UK Control Zone Coquelles. They were travelling in a vehicle owned and driven by the Appellant and were found to be carrying excise goods consisting of 12 kilogrammes hand-rolling tobacco; 800 cigarettes; 250 cigars and 234 litres of beer. Customs Officers seized the goods and vehicle.

Correspondence ensued in which the Appellant requested restoration of the vehicle, a request which was refused. A request was made for a review of that decision. The review did not take place within the statutory time limit and the original decision was, therefore, deemed upheld. After some delay, an appeal was made to the Tribunal. For technical reasons no hearing took place and, by consent, the Tribunal directed a review of the decision refusing restoration.

The review was carried out by Mr Gareth Morgan and he concluded that both father and son were importing for commercial purposes and refused restoration of both goods and vehicle. The Appellant lodged an appeal against the review decision of Mr Morgan, the appeal being heard on 6 January 2005 by a Tribunal chaired by Mr Michael Tildesley. That Tribunal found the following pertinent facts:

(a) the cigarettes had been purchased by the Appellant for the personal use of himself and his wife

(b) the cigars had been purchased by the Appellant and were for his brother who would reimburse him at cost

(c) the beer had been purchased by the son and was to be split between father and son

(d) the son had purchased the entirety of the tobacco which in the finding of the Tribunal had been imported for the purpose of the sale on at a profit

(e) the Appellant had, between 11 June 2000 and 20 May 2001 made 18 trips to the Continent, of which 15 were day trips and 3 were on holidays. An average of £238 had been spent per trip.

The conclusion of the Tribunal was that as it had reached findings of fact fundamentally different from the assumptions upon which Mr Morgan had based his review decision, Mr Morgan's decision was unreasonable and that is was, therefore, necessary to re-examine the proportionality of the non-restoration of the vehicle, such examination to take into account an analysis of the precise extent of the Appellant's culpability, if any.

The review, ordered by the Tribunal, was carried out by Mrs Helen Perkins,

and was dated 21 March 2005. She was, of course, not concerned with the tobacco which had been purchased by Mr Richard Brookes who had lodged no appeal. Mrs Perkins concluded that the Appellant should not have his excise goods returned to him because certainly the cigars were intended for a commercial transaction (sale at cost) and the remainder of the goods were mixed, packed or found with the cigars.

In relation to the vehicle, Mrs Perkins outlined the current policy as to the

restoration of vehicles. She stated that vehicles would not normally be restored but in the following circumstances the Commissioners could, in their discretion, restore on terms:-

if the excise goods were destined for supply on a not for profit basis

if the excise goods were destined for supply for profit, the quantity was small and it was a first occurrence

Mrs Perkins went on to repeat the direction of the Tribunal, that she had to

consider the culpability of the Appellant. She calculated that the duty evaded on the tobacco was £1,161.72 and on the cigars £68.02 and further that the commercial importation of the goods would not have been possible without the use of the Appellant's vehicle. She concluded, stressing the importance which she placed on the involvement of the Appellant's vehicle, that the vehicle should be returned on payment of the duty evaded on the tobacco and cigars. The Respondents placed a valuation on the vehicle of £8,875 which was not disputed by the Appellant from which they deducted the evaded duty of £1,229.74.

It is ostensibly against this decision which the Appellant appeals and which

has come before us.

The Appellant's Evidence and Submissions

The Appellant put his case partly by way of oral evidence and partly by

submission. In his oral evidence, he initially asserted that the original Tribunal figure of 18 journeys was incorrect and should have been 11. He withdrew this assertion when it was pointed out that the figure of 18 had been agreed by him in oral evidence to the original Tribunal and had also been based on a schedule prepared by his own solicitors. We should say at this stage that we totally accept that Mr Brookes' assertion to us was based on error and was not any attempt to deceive. In cross-examination he said that he did not know when his son had started smoking tobacco but that it was not long before the seizure. When asked if he had asked his son why he had purchased so much, the Appellant told us that his son had told him that he would probably be selling it on.

Mr Brookes' submission was to the effect that the Respondents had, in

agreeing a compensation package for the vehicle, conceded that they had acted unlawfully. Mr Brookes had accepted the valuation put upon his vehicle by the Respondents and any deduction from that was perpetuating the unlawful act. Because the Respondents had admitted they had seized the car unlawfully, it followed that they were not entitled to seize any of the contents of the vehicle and that he must, therefore, be entitled to compensation for everything within it which, of course, consisted of the excise goods purchased. In relation to the claim he was making for Barristers' and Solicitors' fees, when asked why he had not made an application for costs to Mr Tildesley, he advised us that he thought, when asked by Mr Tildesley if he wished to make an application for costs, that Mr Tildesley had only been referring to the costs of that day which it was not his intention to reclaim. What had happened five years ago, submitted Mr Brookes, was illegal and he had been forced to make payments out and to lose money which he should not have done. He stressed that his claim had been conservative and that his Solicitor had, in fact, advised him he could claim for very much more including hardship but he had not wished to appear unreasonable.

The Tribunal's Jurisdiction

The jurisdiction of the Tribunal is drawn from Section 16(4) Finance Act 1994

which states :

"In relation to any decision as to an ancillary matter, or a decision on the review of such a decision, the powers of an appeal tribunal on an appeal under this section shall be confined to a power, where the tribunal is satisfied that the Commissioners or other person making that decision could not reasonably have arrived at it, to do one or more of the following, that is to

say -

i. "to direct that the decision, so far as it remains in force, is to cease to have effect from such time as the tribunal may direct;

ii. to require the Commissioners to conduct, in accordance with the Directions of the tribu nal, a further review of the original decision; and

iii. in the case of, a decision which has already been acted upon or taken effect and cannot be remedied by a further review, to declare the decision to have been unreasonable and to give directions to the Commissioners as to the steps to be taken for securing that repetitions of the unreasonableness do not occur when comparable circumstances arises in future."

Conclusions

We have not dealt separately with Mr Puzey's submissions as these are drawn upon within our conclusions.

Section 16(4) is quite specific and strictly defines and limits the extent of our powers. Where the jurisdiction of the Tribunal is clearly defined, it is not open to the Tribunal to create for itself any additional powers. Specifically the Tribunal is given no power either by the Customs & Excise Management Act 1979 ("CEMA") or the Finance Act 1994 to award compensation for general economic loss. It is, therefore, simply not open to the Tribunal to entertain or adjudicate upon Mr Brookes' claim for the interest on his car loan; the money he lost due to days off work; the costs of travelling home after the seizure; or the blanket figure of £500 to compensate for lost time.

It should also be pointed out that given that our jurisdiction is limited to considering the contents of the review decision, it must follow that we cannot give consideration to any matters which do not form part of that decision. None of these four items of claim formed any part of Mrs Perkins' decision.

We have some sympathy with Mr Brookes over his claim for Counsel's fees and his Solicitors' costs. Unfortunately however, again, we cannot assume a jurisdiction over these which we do not have. Mr Brookes has produced the fee notes in relation to each and they clearly pre-date by some distance the original Tribunal Hearing. It may well be therefore that these costs ought to have been claimed by Mr Brookes when he was asked by Mr Tildesley whether he had a claim for costs. We are sorry if Mr Brookes misunderstood the direction of Mr Tildesley's question but that cannot alter the position for us. We as a tribunal cannot interfere with a costs order made by another tribunal on another day in another case.

Turning to the claim for the value of the goods purchased on the day of the seizure. Mr Brookes included the cost of the tobacco but that was purchased by his son and cannot in any event therefore form part of a claim by the Appellant.

Section 49 CEMA provides that goods that are imported without payment of duty which is chargeable upon them are subject to forfeiture. It is further provided that anything which is mixed, packed or found with such goods is also liable to forfeiture. Looking therefore just at the Appellant's purchases, by his own admission and as found by the Tribunal, the cigars were liable to duty as they were being passed on, albeit at cost, and this is deemed to be a commercial purpose. The cigars therefore could never be subject to restoration and as the cigarettes and the Appellant's share of the beer were mixed and packed with the cigars, they also were rightly seized and it was a perfectly reasonable decision not to restore them. Additionally, of course, the whole consignment was packed with Mr Richard Brookes' tobacco which was for a purely commercial purpose of sale at a profit. The decision therefore to refuse restoration of any of the goods was perfectly reasonable and as such the question of compensation for the cost of the goods cannot possibly arise.

There remains the claim for the deducted duty from the value of the vehicle. Although couched as a claim for compensation, the effect of the claim is in fact a contention that the decision of Mrs Perkins to award conditional restoration rather than full and unconditional restoration was not reasonable. Again, given the limits of our jurisdiction, even if we were to find that her decision had been unreasonable and that she should have awarded unconditional restoration, our power would have been limited to directing a further review. We would not ourselves have been able to overturn her decision and award unconditional restoration. However, our role is to consider the reasonableness of the view taken by Mrs Perkins.

We have to say that we were hampered by not having Mrs Perkins available to give evidence, albeit for perfectly acceptable reasons. We found her review decision to be unclear and given this lack of clarity it appeared to be somewhat illogical. It appeared to us that, following the wording of the Commissioners' policy, as set out above, Mrs Perkins could have ordered conditional restoration if the goods had been destined for supply on a not for profit basis or if it was a first occurrence and the amount was small, even though destined for supply for profit. She had to base her review on the findings of the Tribunal that the cigars were destined for a not for profit supply but the tobacco was to be sold at a profit. However, the amount of tobacco at 12 kilogrammes, exceeded the Commissioners' general rule of thumb in their definition of "small". The problem was compounded by Mrs Perkins' omission to state how culpable she thought the Appellant to have been. If she had thought he was not culpable in the least in relation to the tobacco, should she have deducted the duty on the tobacco or merely on the cigars ? If she considered him to have been culpable, then why did she allow restoration on any terms as she would have been justified in refusing restoration at all. Mr Brenton tried to help us in this although he had not spoken to Mrs Perkins and was not aware of her reasoning but was merely reading into her words what he believed she had meant. In the course of his statement to us, he told us that the Respondents accepted that the Appellant was not complicit in the actions of his son but that they took the view that the Appellant had been reckless or negligent in not preventing the importation in his vehicle. He knew of the amount involved but had taken no steps to prevent it. This would explain Mrs Perkins stressing twice the importance which she placed upon the involvement of the Appellant's vehicle in the importation.

There was no evidence before Mrs Perkins to justify this view other than the mere fact that the vehicle was used. For all she knew, the Appellant could have taken the issue up with his son and could have been given totally satisfactory assurances. The mere use of the vehicle does not prove culpability. Had this remained the case, we may have found ourselves in the position of having to allow the appeal and direct a re-review. However, the decision was made abundantly clear by the Appellant himself in his oral evidence when he said he had been told by his son that the tobacco was to be sold on. He admitted in his evidence that he was aware of the guide levels and that he knew that to sell goods on for profit was illegal. Given this, the Respondents would, in our view, have been justified in refusing restoration at all and certainly at the very least if the matter went back for re-review, the decision would have inevitably remained the same that unconditional restoration was out of the question.

The appeal is therefore dismissed in its entirety. Mr Puzey made no application for costs and we make no order.

In concluding we feel we should just correct the view the Appellant appears to be taking of the Respondents' offer of conditional restoration. It is quite correct that the Respondents fixed a value on the vehicle which was acceptable to Mr Brookes. This they had to do as it was the starting point of their offer of conditional restoration. To merely fix and agree the value of the vehicle and then to offer to restore it conditionally cannot possibly be taken as an admission that they had acted at any stage unlawfully.

LADY MITTING

CHAIRMAN

Release Date:27 September 2006
MAN/05/8047