United Kingdom VAT & Duties Tribunals (Excise) Decisions

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Cite as: [2007] UKVAT(Excise) E1020, [2007] UKVAT(Excise) E01020

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Colin Sinclair v Revenue & Customs [2007] UKVAT(Excise) E01020 (22 February 2007)

E01020

Seizure of motor vehicle – Review of decision not to restore – Non-restoration confirmed – Appeal dismissed

BELFAST TRIBUNAL CENTRE

COLIN SINCLAIR Appellant

and –

THE COMMISSIONERS FOR HER MAJESTY'S REVENUE & CUSTOMS Respondents

Tribunal: Ms H GIBSON QC (Chairman)

MR A F HENNESSY OBE

Sitting in public in Belfast on 29 November 2006

The Appellant appeared in person

Mr Chris Watson, instructed by the Solicitor for HM Revenue and Customs, for the Respondents

DECISION

The Appellant appeals against a review decision of the Respondent dated 1^st December 2005 not to restore excise goods and to restore a BMW 530 registration number YCZ 4851 seized on 17^th September 2005 from the Appellant (hereinafter "the vehicle"), for a fee of £4,694.58.

We heard oral evidence from Mr Colin Sinclair, the Appellant and from Mr Raymond Brenton, a senior officer of HM Revenue and Customs. The Respondent had served witness statements of the review officer, Ms Helen Perkins and of Mr Brenton, which were not objected to.

THE FACTS

On 17^th September 2005 at the UK Control Zone at Coquelles, France, the Appellant was stopped by Customs whilst driving the vehicle. Mr Tyrone Williams and Mr David Lee Smith were passengers in the Appellant's vehicle.

The Appellant declared a box of tobacco (6kg), 20 cartons of cigarettes (4,000), a bottle of wine and a bottle of perfume. He was asked to produce the receipts but despite looking in his pocket was unable to find any. Mr Williams declared 3 boxes (18 kg) of tobacco, 400 cigarettes and a case of Zinsandel wine. He produced a receipt from his wallet for the case of wine and the credit card receipts. He was unable to produce any receipts for the tobacco or cigarettes. Mr Smith declared 3 cases of Desperados, 2,000 cigarettes, cigars and spirits. He was also unable to produce any receipts for the goods. The Appellant confirmed that he owned the vehicle.

The Appellant confirmed that the brand of tobacco he had bought was Golden Virginia and the brand of cigarettes was Lambert and Butler. Mr Williams confirmed his brand of goods were also Golden Virginia and Lambert and Butler cigarettes. Mr Smith identified his brand of cigarettes as being Lambert and Butler. He also stated that he had found receipts for Café Crème and also the credit card receipt in a Euroshop carrier bag. All three individuals signed the officer's notebook agreeing the statement of events. All three individuals agreed to be interviewed.

At the interview the Appellant stated he was a serving member of HM Forces and his regiment was the 39 Brigade, Royal Logistics Corps. The people he had travelled with to France were all on a logistics course with him. He stated they all had had the idea to travel across to France today but he could not recall who had suggested it because it was decided two weeks ago. Mr Williams had agreed to book the trip on the internet and the fare was to be split. He stated that the following goods in the vehicle belonged to him: 20 x 200 (4,000) Lambert and Butler cigarettes, 1 box (6 kg) of tobacco, and 3 loose packets (1.5 kg) of Golden Virginia tobacco, 1 bottle of Blossom Hill Rose wine and 1 bottle of Chanel perfume. The Appellant stated that the cigarettes were for his wife and himself. His step son would smoke the tobacco although his wife would give some to her brother. The Appellant said that his brother in law would not give him what he had paid for the tobacco. He had paid for the goods in cash and had thrown the receipts in a bin.

The Appellant was advised that 6 x 6kg (36 kg) of tobacco were located in the boot and reminded that he had claimed 1 box (6 kg) and Mr Williams had claimed 3 boxes (18 kg). The Appellant was asked to whom the remaining 2 boxes (12 kg) of tobacco belonged to and he replied "Mr Smith". He said he was sure about this but had not seen him purchase it because he was filling the vehicle up with diesel. The Appellant accepted that it was his car and his responsibility to ensure that there was nothing illegal in it.

The Appellant finally admitted that Mr Williams had asked him to declare a box of tobacco on his behalf. He does have a teenage son at home but he does not smoke. The cigarettes were for himself and his wife and the tobacco (1.5kg) was a gift. He admitted that he had only paid £585 for his excise goods, not the £915 he had earlier claimed and apologised for saying this. He said he did not have a clue as to why Mr Williams had bought so much tobacco. When the officer put to the Appellant that Mr Smith did not have any tobacco either, he replied "I don't know apart from the one box of tobacco I was filling up so I don't know whether he did". He read and agreed the accuracy of the interview notes and signed his name.

When initially interviewed, Mr Williams maintained that he had purchased 3 boxes (18 kg) of tobacco, 4 boxes of St Bruno ready rubbed tobacco and 400 Lambert and Butler cigarettes together with a case of wine and other shop purchases. The tobacco brand was Golden Virginia and was for his wife and his self. He had paid £1,200 and had personally paid for the tobacco with cash from his bank account. He said that he expected the tobacco to last him about 2 years which was why he had bought it. Mr Williams did not have any receipts and did not remember what he had done with them. He loaded all the tobacco into the vehicle whilst the Appellant was filling his car up with diesel just outside a shop.

Later in the interview Mr Williams admitted that all the tobacco namely 720 pouches (36 kg) of Golden Virginia tobacco belonged to him. He had not told the officer this to start with because he was quite worried. He had asked the Appellant to declare the goods on his behalf because he was quite concerned about his limit. The reason he was so concerned about the quantity of tobacco he had purchased in his possession was because he wanted to get it out of the way for the next couple of years. Mr Williams stated that he intended to store the 720 pouches (36kg) of tobacco at his new home when he moved and

expected it to last 4 years. He would be giving some of the tobacco away to his mother in law as and when she needed it. He read and signed the interview notes agreeing them to be an accurate account.

When interviewed, Mr Smith stated that he had purchased 800 Lambert and Butler Cigarettes, 200 Silk Cut cigarettes, 3 lager, 3 spirits and 3 packs of cigars. He did not have any tobacco. Both the Appellant and Mr Williams had purchased tobacco but he did not know how much they had each purchased because after he got his goods he went and sat down. He was not importing any goods into the UK for anyone else.

The officer was satisfied that Mr Smith's goods were for his own use and he was allowed to proceed with them. The officer was satisfied that the tobacco belonging to the Appellant and Mr Williams were held for a commercial purpose, being not for own use, and therefore received them under section 139(1) of the Customs and Excise Management Act 1979 ("the Act") as being liable to forfeiture under the regulations and section 49(1)(a)(i) of the Act. The other excise goods were seized under section 139(1) as being liable to forfeiture under section 141(1)(a) of the Act because they were mixed/packed/found with goods liable to forfeiture. The vehicle was seized under section 139(1) as being liable to forfeiture under section 141(1)(b) because it was used for the carriage of goods liable to forfeiture.

The Appellant told the officer that he was sorry for lying and wanted his vehicle back. The officer explained again that the vehicle and goods were seized and that the car would not be restored. The Appellant was advised of the appeals procedure.

As the legality o the seizure was not challenged by the Appellant in condemnation proceedings, the vehicle and excised goods were confirmed as seized lawfully and condemned as forfeit to the Crown by the passage of time under paragraph 5 of schedule 3 of the Act.

On 18^th September 2005 the Appellant wrote asking for the excise goods and vehicle to be restored to him (pages 87 – 88 of the bundle). The Appellant stated that he understood as owner of the vehicle it was his responsibility that any items purchased while in the EU and stored in his vehicle should be governed by him. When he had commented on the amount of tobacco that had been purchased and was within his vehicle, Mr Williams said that it was his. The Appellant stated that on the short drive back to the tunnel Mr Williams asked if he or Mr Smith could say that some of the tobacco was theirs if questioned. He stated that when he was interviewed, he stuck to Mr Williams' request out of a sense of loyalty and proceeded to tell the officer that 15 packets of the tobacco were his. It was only after a call home that the Appellant realised it would be better to be honest and when subsequently asked to whom the tobacco belonged, he said they were not his, but belonged to Mr Williams. He said that he was very sorry and that this was completely out of character. He said he had caused great distress to his wife and family. He as currently on a course in Aldershot and had a vast amount of military kit to transport to Northern Ireland. Whilst it was his vehicle he believed he was doing nothing but assisting a fellow member of the forces. The Appellant stated that he deeply regretted the incident and there was no malicious intent in his actions. He wanted restoration of the vehicle.

In an accompanying letter dated 18^th September 2005, Mr Williams stated that he felt completely responsible for the events. He had purchased the goods and loaded them into the vehicle while the Appellant was fuelling it. When the Appellant remarked to him about the quantity of tobacco he purchased, he became worried and asked him to say that he had purchased one box and Mr Smith to say that he had purchased 2 boxes. He foolishly maintained this version when interviewed. Later on he admitted he had bought all the tobacco and had asked the Appellant and Mr Smith to cover for him. He said that he was genuinely sorry for the deceit and was very sorry for the distress he had caused the Appellant and his family.

On 17^th October 2005 an officer of the Respondents wrote refusing to restore the excise goods and vehicle. In a letter dated 27^th October the Appellant wrote asking for a review of that decision (page 107 of the bundle). The appellant stated inter alia that the officers on duty at the time of seizure prejudged him by allowing Mr Smith to keep possession of his items contained in the vehicle. He drew attention to the fact that the tobacco belonged to Mr Williams. He still fully believed that the items purchased by Mr Williams and Mr Smith were for personal use and not for financial gain. He thought the trip was a great way to save money but had now been labelled a smuggler. He was a senior non-commissioned officer in the British Army with an exemplary military record which had been tarnished by this incident.

On 1^st November 2005 an officer wrote to the Appellant explaining the review process and asking him to provide any further information in support of his request for a review. Nothing further was received.

The officer conducting the review, Ms H. B. Perkins, set out the impugned decision in the letter dated 1^st December 2005 (pages 24 to 37 of the bundle). She concluded that the seized excise goods should not be returned to the Appellant. However exceptionally she was prepared to vary the decision of non-restoration of the vehicle for a fee, equivalent to the total duty involved, namely £4,694.58. The decision letter also advised the Appellant of his rights of appeal. A note clearly informed him that restoration and/or payment of a fee did not affect his right to appeal subsequently against her decision.

EVIDENCE

The Appellant gave evidence that Mr Williams and Mr Smith decided to go the trip. They purchased their goods while he was filling up with diesel. He did not pay much attention. It was raining. He then went to the shop to buy his goods. Some time later when some goods were being put in the boot, the Appellant noticed the tobacco. Mr Williams said it was his. He and Mr Smith were asked to pretend that some of the tobacco was theirs. The Appellant stated that when stopped by the customs officers he fabricated the story out of loyalty to Mr Williams and also to ensure that he was not segregated. He went on to say that he then realized that his loyalty should have been to his family. Mr Smith was the only one to get his goods back. He has given the bank statements to show £600 withdrawn from his bank account. The vehicle was purchased on a 61 month hire purchase contract with repayments of £330 per month. There are a further 35 months to go. He has had to continue to make the repayments. He needed a car and replaced the vehicle with a Ford Focus costing £7,000. He paid a deposit of £1,200 and financed the balance of the purchase by hire purchase at a cost of £123 per month. There are 40 months remaining. His wife does not work. Son of 17 is at Bangor Tech. And lives at home. His other outgoings are £500 per month. His income has gone down from £2,200 to £1,980. Their house has been sold and they live in rented married quarters. He cannot afford to pay the £4,694.58. The decision was too harsh considering his role.

Under cross-examination, the Appellant stated that he had not considered or explored re-financing of the vehicle. He accepted that he could have re-financed and paid the required fee and still appealed the decision. He said that he had paid no attention to what they were buying and the first time he was alarmed was at Eurocitie. Mr Watson put to him that if he had touched the tobacco, he must have known the quantity there. The Appellant said he paid no attention. He said they did not discuss what they would be purchasing. In response to questioning he said it was not necessary to know what everyone was buying was the car was spacious. Before they got to the control zone, the appellant said he was alarmed when he saw the amount of tobacco. He knew there was a personal limit but did not know how much that was. Williams asked then to claim part of the tobacco as theirs. At the time The Appellant stated that he had subsequently taken the view that Smith and Williams were doing it for re-sale. He said it was unfair that he was burdened while Smith had been allowed to keep his goods. Mr Watson suggested he could take it up with them. When it was put to him that paying the fee would have been a cheaper option, the Appellant said he thought it would have been an admission of guilt. He said it was not about the money but the principle.

Mr Brenton gave evidence on behalf of the Respondents. He was covering for Ms Perkins who was on maternity leave and referred to her statement which had not been objected to. He said that Ms Perkins had taken account of all relevant facts in reaching her decision and had been reasonable in her application of the Respondents' policy on restoration. The Appellant was aware of the large amount of tobacco goods prior to importation and as a result became complicit. The Appellant had not demonstrated exceptional hardship. He was making the re-payments but still had a reasonable income. Also had heard today that he had purchased another vehicle. Restoration had been offered for a fee. There was no evidence that the Appellant was involved in commercial distribution and hence had been given benefit of doubt. For payment of fee. At the hearing there was some difference over the value of the vehicle. The Appellant felt it was worth £13,000.00 Whereas the respondents considered its then second-hand value was £11,425.00.

The Appellant asked why had Mr Smith been allowed to keep his goods. Mr Brenton said that officer on day had to make a decision and Mr Smith had not claimed any tobacco. His quantity of goods was considered reasonable and for personal use. This was in contrast to the tobacco declared by the Appellant and Mr Williams which was considered to be for commercial purposes. It was not credible to think that amount of tobacco was for domestic purposes.

CONCLUSION

The powers exercisable by the Tribunal in relation to this appeal are set out in section 16(4) of the Finance Act 1994 viz. as follows:

In relation to any decision as to an ancillary matter, or any 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 are 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—

(a) 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;

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

(c) in the case of a decision which has already been acted on 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 arise in future.

The review decision is set out at pages 24 to 37 of the bundle. The Respondents' general policy is that seized excise goods should not normally be restored. Each case is examined on its merits to decide if restoration may be offered exceptionally. The Respondents' general policy is that private vehicles used for the improper purpose or transportation of excise goods should not normally be restored.

The Tribunal has carefully considered the review decision and has concluded that the officer concerned considered all relevant facts including the Appellant's personal circumstances. She did not find there were exceptional circumstances justifying departure from the Respondent's policy of non-restoration of seized goods. Furthermore she considered a number of other factors formed positive additional reasons for concluding that the goods should not be restored. Mr Williams imported tobacco 12 times the Guide Level of 3 kg. The Appellant lied to the Customs Officer about the goods and then compounded this by saying it was for his stepson. The Appellant originally said that he believed the tobacco purchased was not for commercial gain. However 36 kg was on any view a commercial quantity. Indeed the Appellant accepted this in the course of his evidence at the hearing. There were no receipts and cash was used. It would have taken Mr Williams 5 years to consume the tobacco. Whereas the shelf life was 12-18 months.

The review officer concluded that the vehicle should not be restored under the policy provisions for restoration as it had not been demonstrated that the goods were to be sold at purchase price nor was the quantity involved small. She did not consider that the Appellant had suffered exceptional hardship by loss of the car. However she gave serious consideration to the fact that the value of the vehicle was considerably more than that at the date of the decision not to restore. She was exceptionally prepared to vary the review decision of non- restoration to restoration of the vehicle for 100% of the total revenue involved i.e. £4,694.58.

The Tribunal considers that it was entirely reasonable and proper for Ms Perkins to conclude that the additional matters (summarised at paragraph 26 above) positively supported non-restoration of the goods. The Appellant was untruthful at his interview. He was responsible for the vehicle. He was aware there was a large quantity of tobacco prior to importation and became complicit in a false declaration The Appellant feels that it was unfair that Mr Smith was able to keep his goods. However as the review officer identified Mr Smith did not make a false declaration. His goods were deemed to be a reasonable amount for personal consumption. The customs officer had to make a decision on the day. Ms Perkins did not consider that the Appellant had demonstrated exceptional circumstances by reason of loss of the vehicle. However because of the disproportionate value of the car to the lost revenue, she decided to vary the original non-restoration to restoration on payment of a fee. The Tribunal heard that the Appellant bought another car on payment of a deposit of £1,200.00. The balance was also arranged on finance. He did not consider re-financing the original hire purchase agreement for the subject vehicle. The Appellant said that payment of the fee would have been like an admission of guilt. The Tribunal is mindful of the clear note advising the Appellant that payment of the fee did not preclude continuing with an appeal.

Having considered all the documents available and heard the evidence, the Tribunal is not satisfied that the Respondent could not reasonably have arrived at that decision. Accordingly the appeal fails.

The Respondents made no application for costs and we make no order.

HEATHER GIBSON

CHAIRMAN

RELEASED: 22 February 2007

LON/06/8015