United Kingdom VAT & Duties Tribunals (Excise) Decisions

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URL: http://www.bailii.org/uk/cases/UKVAT/Excise/2007/E01021.html
Cite as: [2007] UKVAT(Excise) E1021, [2007] UKVAT(Excise) E01021

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James McKenna v Revenue & Customs [2007] UKVAT(Excise) E01021 (22 February 2007)

E01021

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

BELFAST TRIBUNAL CENTRE

JAMES McKENNA Appellant

and –

THE COMMISSIONERS FOR HER MAJESTY'S REVENUE & CUSTOMS Respondents

Tribunal: MS H GIBSON QC (Chairman)

MR A HENNESSY

Sitting in public in Belfast on 18 August 2006

Mr O'Keefe, Sheridan Leonard, solicitors, for the Appellant

Mr Nigel Bird, instructed by the Solicitor for HM Revenue & Customs, for the Respondents

DECISION

This is an appeal under section 16(1) of the Finance Act 1994 against a decision on review by the Respondent dated 20^th July 2004 not to restore the Appellant's Scania cab unit registration 93 MN 1865.

We heard evidence from the Appellant, Mr James McKenna and from Mr Raymond Brenton, a higher officer of Her Majesty's Revenue and Customs. The witness statement of Ms Helen Perkins, the Reviewing Officer, was served by the Respondent and was not objected to.

THE FACTS

The Appellant is a haulage contractor and was the owner of a Scania cab unit registration 93 MN 1865 ("the vehicle"). The vehicle was seized from the Appellant on 4^th May 2004 at Fields End Farm, Moortown, Lincolnshire when the Appellant and two other individuals were arrested by undercover customs officers. The Appellant was identified as the owner and driver of the vehicle. The vehicle was searched and after the padlock on the rear of the trailer was removed using bolt cutters, a significant quantity of cigarettes was found within. The three men were escorted to Lincoln police station and tape recorded interviews were conducted. The Appellant chose not to comment throughout his interview. The goods were seized and thereafter the trailer and vehicle were also seized pursuant to Section 141 of the Customs and Excise Management Act 1979. Proceedings for condemnation were not instigated as none were requested. The goods and vehicle were therefore condemned as forfeit to the Crown by passage of time under paragraph 5 of schedule 3 to the Customs and Excise Management Act 1979. The vehicle, a blue Peugeot, registration R802 JTY driven by the other two men was searched and a number of pieces of paper were found in it, one of which had the words "£1,000 driver". The Appellant's jacket was searched at the time of arrest and £1,000 cash made up of 20 £50 notes was found. The total quantity of cigarettes found and seized were 5,374,800. The duty in respect of same would have been £920,022.16.

On 12^th May 2004 the Appellant wrote to the Respondent requesting restoration. The Respondents replied on 25^th May 2004 advising that the request for restoration had been refused. On 16^th June 2004 the Appellant wrote to the Respondents asking for the refusal to restore the vehicle to be reconsidered. This letter was treated as a request for a formal review. The review officer wrote to the Appellant on 20^th July 2004 confirming the decision not to restore the vehicle. The Appellant served a late notice of appeal against the review decision on 12^th January 2005 in respect of which he was granted leave to appeal out of time on 10^th January 2006.

The Appellant asserted, and it was not disputed by the Respondent, that the value of the vehicle was £5,000.

EVIDENCE

The Appellant was called to give evidence and stated that he was contacted on Sunday 3^rd May 2004 by a representative of an unnamed company who stated that their lorry had broken down and asked him to take a load to England. He asked for clarification regarding the nature of the load and was told it was furniture for a house removal. He went to the main Monaghan/Armagh Road where the lorry had broken down and lorry and trailer were at the side of the road. He stated that he did not wish to give the name of the company because he did not want to get anyone in trouble but had not done any work for them since. He stated that he was asked to take the trailer from the road side to Bligh Service Station off junction 5 of the M180 where he was to be met by a person who would tell him where to go next. He stated that he had no key for the load. He went to Bligh Service Station where he met the man who gave him the directions for the final part of his destination. The Appellant stated that he followed the individual and another person out to what he thought was a warehouse. He was not told the address which transpired to be Fields End Farm, Moortown, Lincolnshire.

When he arrived at the warehouse, one of the men got out and said that the Appellant was to reverse and to drop the trailer. Whilst the two men were trying to start a forklift, under cover customs officers arrived. The Appellant stated that furniture was sitting in groups in the warehouse. The Appellant stated that as far as he was concerned, the trailer contained furniture. He told one of the customs officers that he did not have keys of the trailer. The customs officers used bolt cutters to open the trailer. He stated that he did not know what was in the boxes at the time and only discovered that the contents were cigarettes when he was at the police station. The Appellant stated that he was advised by the duty solicitor to make no comment. He has not been subsequently charged with any criminal offence in relation to this incident.

The Appellant stated in evidence that when the vehicle was seized, he hired another lorry for a couple of months at a cost of some £1,500 - £2,000. However, due to the expense, he decided to buy a new truck at a cost of €89,000. He paid a deposit of €1,700 - €1,800 and thereafter €1,700 - €1,800 per month. He had had the subject vehicle for a long time and owned same at the time of seizure. He would not have purchased a new truck if the vehicle had not been seized.

Under cross examination, the Appellant stated that he had not previously done work for the company which had contacted him to take the load to England. He again said that he did not want to give its name. When asked had he discussed a fee he said that a price of £500 had been agreed. He said that he had submitted an invoice for £500 to the company in question. When asked why he had not brought the invoice, he said he did not want to get anyone in trouble. He did however say that the £500 fee had been paid. He did not have the bank statements to evidence same. When it was suggested to him that the £1,000 in cash found on him at the time of arrest was in fact the fee, the Appellant asserted this was "running money" which haulage drivers would carry as a matter of course.

The Appellant accepted that the vehicle was much bigger than a normal furniture removal van and also admitted that he did not ask and therefore did not know what the load weighed. It was put to him that in order to have been able to drive the load safely, he would have needed to have known its weight and also that the load had been equally distributed. If he had not checked, he would not have been able to satisfy himself of these factors. The Appellant said it was not unusual not to have been told his final destination. He assumed that the paper work for the load was in the last pallet of the trailer. He had taken it at face value and had not looked for nor checked the paperwork. The Appellant asserted that it was normal practice to take a load without a key, even if he had not seen the contents nor the paperwork supporting same.

The Appellant stated that he had not brought any documentation relating to the hiring agreement or the purchase of the new trucks. He stated that he had not engaged in correspondence with the company involved regarding the loss he had sustained. He proffered an explanation that he did not want to get involved because of the cease fires.

Mr Brenton, a higher officer employer by Her Majesty's Customs and Revenue, gave evidence on behalf of the Respondents. He stated that he had gone through the file and concurred with Ms Perkins' findings. He stated in those circumstances he was content to adopt Ms Perkins' review as communicated in the letter of the 20^th July 2004. Under cross-examination Mr Brunton stated that Ms Perkins had looked at restoration of the vehicle under clause 1 of the Commissioner's Policy which provided:

"Where the Commissioners cannot be satisfied that the driver or haulier are not knowingly involved in smuggling excise goods and the revenue is significant, on the first detection the vehicle may be seized and not restored."

He stated that Ms Perkins had been satisfied by clause 1 and did not consider same under clause 3 which provided that where the Commissioners were not satisfied that the driver or haulier had carried out what was considered to be basic reasonable checks which would have identified the illicit load.

SUBMISSIONS

Mr O'Keefe stated that the lawfulness of the seizure was not being challenged. He asked the Tribunal to accept that the Appellant was a witness of truth and had genuinely believed that he was taking a load of furniture from Monaghan to England. He had no access to the trailer which was not his property. He stated that no criminal charges were proffered against the Appellant and this was persuasive of the truthfulness of the Appellant's evidence. Mr O'Keefe said that the Appellant had suffered financial hardship in terms of hiring an additional lorry and then accelerating the purchase of a new truck. He had suffered a loss of business. He said that the £5,000 being the loss of his vehicle was disproportionate. Furthermore, if the Appellant had not been involved in the criminal activity other than as an unwitting driver, it was disproportionate not to restore the vehicle to him.

Mr Bird submitted that section 16(5) of the Finance Act 1994 prescribed the powers of the Tribunal on the appeal where the Tribunal was "satisfied that the Commissioners or other persons making that decision could not reasonably have arrived at it". He contended that the Tribunal did not have a de novo fact finding rule. He asserted that the Tribunal would not have been entitled to embark on a fact finding rule to establish that the seizure was unlawful. However, if for instance, the Tribunal found as a fact that the Appellant believed that the trailer contained furniture, then the matter could be remitted for review on the basis of the revised factual matrix found by the Tribunal.

Mr Bird invited the Tribunal to reject the Appellant's evidence in its entirety. He reminded the Tribunal that in his notice of appeal the Appellant had stated he had not known that duty had not been paid. This was inconsistent with the evidence given today that he thought the trailer contained furniture. This explanation had not been given on any previous occasion. It was inconceivable that any prudent driver would take a load of that size without checking same or the paperwork in connection with it prior to departure. The Appellant had not produced any documentation to show the £500 allegedly received by cheque. Nor had he produced any documentation regarding the hiring of the lorry for the several months after seizure nor the documentation relating to the new vehicle which he referred to today. There was no evidence of hardship as the Appellant had not provided evidence of the payments allegedly made nor the financial impact on him. The seizure itself did not constitute hardship as this was a natural consequence of seizure. Nor was the £5,000 loss in terms of the value of the vehicle disproportionate in comparison to the magnitude of the duty lost on the cigarettes.

CONCLUSION

As was conceded by Mr O'Keefe, the lawfulness of the seizure was not a matter for this Tribunal. The Appellant's request for restoration was confined to the vehicle. He had made no request in respect of the trailer or its contents. 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 dated 20^th July 2004, which is the subject of this appeal, is to be found at pages 22 – 26 of the bundle together with the relevant exhibits including original notes and interviews.

Contrary to the exhortation of his Counsel, this Tribunal did not find the Appellant to be an honest witness. We found his version of events to be inconsistent and implausible. The Tribunal did not find it credible that the Appellant would have agreed to take a trailer of this size merely on a verbal assurance that the trailer contained furniture. The Appellant's version meant that he made no checks on distribution nor on the necessary paperwork nor did he have a key to the trailer if required to make same available to any harbour or other authorities. This was the first time the Appellant had made the case that he thought the load had contained furniture. This was never mentioned by his previous solicitors in their correspondence with the Respondent. Nor was it mentioned in his notice of appeal by his present solicitors. In fact, the notice of appeal asserted that the Appellant did not know that duty had not been paid. The Tribunal does not accept the submission made on behalf of the Appellant that this was not inconsistent with the claim that he believed the load to be furniture. The Tribunal found the Appellant's explanation that the £1,000 found on his person made up in denominations of 20 £50 was "running money" to be believable. A more obvious explanation was, in the Tribunal, to be found on the note in the Peugeot vehicle "£1,000 driver". In his evidence the Appellant said he thought the warehouse contained furniture and asserted that furniture was stored there when he took the lorry in. The notes of the officers are quite clear as was their diagram. There is no mention of furniture being located there. Again this is the first time this allegation has been made. The Tribunal, once again, found it lacking in any credibility. The decision not to bring criminal charges against the Appellant could have been due to may reasons and the Tribunal did not find the fact that they were not brought persuasive of the truthfulness of his evidence.

On review the Respondents concluded that it could not be satisfied that the Appellant was not knowingly involved in the smuggling of these excise goods in respect of which the revenue was substantial.

In these circumstances under clause 1 of Customs policy the vehicle may be seized and not restored. The reviewing officer considered whether the Appellant had presented a case for dis-applying the policy. suffered exceptional hardship.

On considering the information provided, the reviewing officer concluded that the Appellant had not suffered exceptional hardship by loss of the vehicle. In his evidence the Appellant stated that he had hired another lorry for a period and then purchased another. This purchase had not been referred to the reviewing officer. Nor did the Appellant bring any documentation vouching same to the hearing. The Appellant did not adduce any evidence as to how these payments impacted on his finances.

The reviewing officer also considered whether the value of the vehicle was disproportionate to the £920,022.16 revenue involved. In view of the magnitude of the revenue, she considered that not to restore the vehicle was fair and proportionate. She concluded that the vehicle should not be restored. The Tribunal was advised that the value of the subject vehicle was £5,000.00.

Having considered all the documents available and heard the evidence, the Tribunal is not satisfied that the Respondent. Accordingly the appeal fails.

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

HEATHER GIBSON

CHAIRMAN

RELEASED: 22 February 2007

LON/05/8013