United Kingdom VAT & Duties Tribunals (Excise) Decisions

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URL: http://www.bailii.org/uk/cases/UKVAT/Excise/2007/E01024.html
Cite as: [2007] UKVAT(Excise) E01024, [2007] UKVAT(Excise) E1024

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James Andrew Hilland v Revenue & Customs [2007] UKVAT(Excise) E01024 (06 March 2007)

E01024

Use of rebated fuel in a vehicle - Appeal against assessment under s73 VATA 1994 – Appeal dismissed

BELFAST TRIBUNAL CENTRE

JAMES ANDREW HILLAND Appellant

and –

THE COMMISSIONERS FOR HER MAJESTY'S REVENUE & CUSTOMS Respondents

Tribunal: IAN W HUDDLESTON (Chairman)

A F HENNESSEY

Sitting in public in Belfast on 25 October 2006

The Appellant in person

Mr Tariq Sadiq, BL, for the Respondents

DECISION

Grounds of Appeal

This is an appeal against a decision of the Commissioners (on review) to uphold an assessment issued pursuant to Section 73 VATA 1994 for £2,918 (with interest) being an assessment made to best judgment for the avoidance of excise duty on rebated oil for the period from 4^th March 2002 to 3^rd December 2004.

Facts

The Appellant, at the operative time, carried on the business of a taxi driver from his home at 3 Isle of Shimmey Walk, Ballynahinch, BT24 8DF.

On the 4^th December 2004, Officers from HMRC detected rebated oil ("red diesel") in a vehicle, KXI 7039 – being the vehicle owned and operated by the Appellant for the purposes of his business.

The Appellant was interviewed under caution and admitted fuelling the car with red diesel.

The chronology of events thereafter is as follows:

15^th December 2004 – the Respondents wrote to the Appellant asking for his business records and receipts;

13^th January 2005 – the Appellant responded indicating that he had no records and no receipts, but he did provide a summary of fuel purchased based on mileage performed, estimated mileage per week (calculated at 400 miles per week) and estimated cost of fuel per year;

25^th January 2005 – the Respondents wrote to inform the Appellant of their intention to issue an assessment to cover the rebate of excise duty that was estimated as being misused by the Appellant and invited the Appellant for his comments before an assessment was issued;

28^th January 2005 – the Appellant rang the Respondents with reference to their letter of the 25^th January 2005. He informed the Respondents that he would obtain a letter from Huntfield Service Station to support his case;

28^th January 2005 – the Respondents received a letter that purported to be signed by the manager of Huntfield Service Station. That letter stated that the Appellant had purchased approximately £35 per week of legal diesel over the past three years to fuel his vehicle, registration number KXI 7039;

11^th February 2005 – the Respondents wrote to Huntfield Service Station to verify the letter supplied. Mrs. Mary Fitzpatrick, who was the manager of the Huntfield Service Station, rang the Respondents on the 25^th February 2005. Mrs. Fitzpatrick stated that she did not know anything about the letter that had been sent by Huntfield Service Station. The person who had signed it, J. Hasley, was actually a sales assistant in the garage, and was not the manager. Mrs. Fitzpatrick stated that she did not authorise the letter and stated that she had spoken with Mr. J. Hasley concerning it. Mr. Hasley had initially stated that he did not know the Appellant, but later indicated that he did know the Appellant and that all he had done was to sign the letter that the Appellant had himself constructed;

subsequently on18^th April 2005 – the Respondents received a letter from Mrs. Fitzpatrick confirming that she did not write the 28^th January 2005 letter, or give authorisation for it to be written;

2^nd March 2005 – the Respondents rang the Appellant to inform him that the letter from Huntfield Service Station was not acceptable;

2^nd March 2005 – the Appellant rang the Respondents to state that he had been to the garage and that the manager, Mr. J. Hasley, had told him that everything, as regards the letter, was in order. The Appellant also stated that he would be speaking to the owners of the garage to see what was happening. The Respondents indicated that the letter was not acceptable, and that an assessment would be issued the next day;

3^rd March 2005 – an assessment to best judgement was raised by the Respondents in the sum of £2,918 for the period 4^th March 2002 to 3^rd December 2004, and the Respondents then wrote on the same day to the Appellant to explain the reason for the assessment, and enclosed the assessment and the calculation of duty;

8^th April 2005 – the Appellant wrote to the Respondents to appeal the assessment.

The Respondents reviewed the decision to issue an assessment and upheld the decision in full, the Appellant was informed of the decision by a letter dated 12^th May 2005.

The Appellant appealed, disclosing in his Notice of Appeal the grounds of his appeal as follows:

"I dispute the penalty assessment of £2,918, because at no time during the period in question 04/03/02 to 03/12/04 did I use rebated fuels. As I have no receipts for fuel during this period, the only thing I could do to prove this was get a letter from Huntfield Garage to say I was a regular customer, and that I had purchased £35 a week from them. Unfortunately Customs would not accept this."

Case before Tribunal

The Appellant represented himself and gave evidence under oath. His evidence was that at no time except the night that he was stopped by Customs did he ever use rebated fuel to fuel his taxi. On cross-examination Mr. Hilland gave evidence that he had no business records, notwithstanding that he was a self-employed, part time taxi driver. Previously Mr. Hilland had employed an accountant, Savage & Co., but in the period throughout which he had been operating as a taxi driver, he had completed his own self-assessment tax returns. In the absence of being able to produce business records and/or receipts to Customs (when they requested them) Mr. Hilland had approached the person whom he believed to be the manager of the Huntfield Service Station, Mr. J. Hasley. When Customs had queried the authenticity of Mr. Hasley's letter, Mr. Hilland had returned to the petrol filling station and had been assured that everything was "ok". He had not been able to get to speak to Mrs. M. Fitzpatrick. Mr. Hilland, when asked, confirmed that he had not thought it necessary to ask either Mr. Hasley or Mrs. Fitzpatrick to attend the Tribunal hearing to confirm his version of events.

HMRC were represented by Mr. Tariq Sadiq of Counsel. The Respondents' case centred on the fact that the fuelling and running of the vehicle by the Appellant, using rebated oil, was in contravention of Section 12(2) of the Hydrocarbon Oil Duties Act 1979 ("HODA") which states:

"No heavy oil on whose delivery for home use rebate has been allowed shall be:

(a) used as a fuel for road vehicles; or

(b) taken into a road vehicle as fuel."

Due to the contravention of that provision (as accepted by the Appellant in relation to the one occasion that he was stopped and his vehicle tested), the Respondents assessed the Appellant in accordance with Section 13(1A) of HODA which states:

"Where oil is used or is taken into a road vehicle, in contravention of Section 12(2) above, the Commissioners may:

(a) assess an amount equal to the rebate on like oil at the rate in force at the time of the contravention as being excise duty due from any person who used the oil or was liable for the oil being taken into the road vehicle; and

(b) notify him or his representative accordingly……"

The time limits within which the Appellant must be assessed are set out in Section 12A(4) of the Finance Act 1994 which states that:

"No assessment ……… shall be made at any time after whichever is the earlier of the following times, that is to stay:

(a) subject to sub-section 6 below, the end of the period of three years beginning with the relevant time;

(b) the end of the period of one year beginning with the day on which evidence of facts, sufficient in the opinion of the Commissioners to justify the making of the assessment, comes to their knowledge."

The assessment which Customs had issued for £2,918 was based on the mileage travelled from information supplied on odometer reading at the date of purchase (1^st November 2000) to the odometer reading at date of stop (4^th December 2004), adjusted to cover actual periods of assessment. It was the Respondents' case, therefore, that an assessment had been made to best judgment (based on the information provided by Mr. Hilland) and that he had failed to adduce any cogent evidence which disproved the assessment which Customs had raised – they, therefore, operating on the assumption that re-bated oil had been used by the Appellant throughout the assessment period.

Customs called Miss. Claire Louise Corin, an assistant assessment officer with Customs, to give evidence about the conversations she had had with Mrs. Fitzparick. Miss. Corin gave evidence that Mrs. Fitzpatrick had denied all knowledge of the letter, and had indicated that Mr. Hasley did not have any authority to issue it on behalf of the owners of Huntfield Service Station.

Decision

It appeared to the Tribunal that clearly an offence had been committed by the Appellant (as he acknowledged) under Section 12(2) of HODA. The burden of proof, therefore, passed to him to satisfy the Commissioners, or this Tribunal, that he had throughout the period through which the assessment to "best judgment" had been raised bought legitimate diesel to fuel his taxi.

The Appellant had not discharged that burden of proof and the Tribunal, therefore, agreed with the assessment which had been raised by Customs & Excise. Mr. Hilland had failed to produce any evidence to the contrary or to substantiate his claims and, for that reason, his Appeal would be dismissed.

No order as to costs.

IAN HUDDLESTON

CHAIRMAN

RELEASED: 6 March 2007

LON/2005/8068