United Kingdom VAT & Duties Tribunals (Excise) Decisions

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Cite as: [2007] UKVAT(Excise) E01047, [2007] UKVAT(Excise) E1047

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Brian Joseph Peet v Revenue & Customs [2007] UKVAT(Excise) E01047 (19 June 2007)

E01047

EXCISE DUTY RESTORATION OF GOODS — new review on facts — "guideline" amounts not exceeded — some of the goods intended to be provided on a non-profit basis to others — facts found not indicative of out-and-out smuggling — review decision unreasonable — appeal allowed and further review directed

MANCHESTER TRIBUNAL CENTRE

BRIAN JOSEPH PEET Appellant

- and -

THE COMMISSIONERS FOR

HER MAJESTY'S REVENUE AND CUSTOMS Respondents

Tribunal: Michael Johnson (Chairman)

Alban Holden

Sitting in public in Manchester on 10 April 2007

The Appellant appeared in person

Jennifer Blewitt, counsel, instructed by the Acting Solicitor for HM Revenue and Customs for the Respondents

© CROWN COPYRIGHT 2007

DECISION

The Appellant has represented himself in this appeal. He was the only live witness before us. However we have had the benefit of reading and considering the contents of a witness statement dated 15 September 2006 from Mr Graham Charles Crouch, who is a reviewing officer of H M Revenue and Customs ("Customs"), together with the various exhibits to that statement. We have been provided by Customs with a bundle containing copies of those documents and of other documents relevant to the appeal.

It appears that on 26 April 2006, the Appellant was a coach passenger on a trip to the continent, when the vehicle was stopped and the passengers questioned at the UK Customs control zone at Coquelles, France, preparatory to their returning to England. The Appellant had in his possession the "guideline" amounts of 3,200 cigarettes and 3 Kg of hand-rolling tobacco ("the goods"), purchased by him in Luxembourg. The goods were seized by Customs on the basis that they were not for the traveller's own use and were therefore liable to UK excise duty. His case has throughout been that the goods were purchased for his own use.

Wishing to get the goods back, the Appellant filled in and sent to Customs a printed Appeal Letter, to which he attached a separate manuscript letter, setting out in layman's terms the grounds on which he claimed that he should be entitled to import the goods free from UK excise duty. The Appellant did not, however, sign either Part A or Part B of the printed Appeal Letter. At the end of his manuscript letter, he wrote: "I do not know which signature to sign … ".

Part A of the printed letter provided for the commencement by Customs of condemnation proceedings in the Magistrates Court. Part B provided for the institution of restoration proceedings before the VAT & Duties tribunals, if on review of a decision by Customs not to restore the goods, the reviewing officer were to uphold that decision.

Having heard the Appellant in tribunal, it is clear to us that he did not understand the difference between condemnation proceedings on the one hand and proceedings before these tribunals on the other hand. That is why he signed neither part of the printed Appeal Letter. However, from a fair reading of his manuscript letter, it is clear to us that he was saying that he had bought the goods abroad in order to save money. He went on as follows:

" … When interviewed it was implied that I might be reselling [the goods]. Which I am not. They are for my own use. If you decide to return [the goods] I have no problem if you have some-one to come and check on [the goods] over the coming months, as they are for my own use. … "

He pointed out that he had brought back only the "legal" amounts.

It therefore seems to us that condemnation proceedings would have been the appropriate proceedings for the Appellant to present his case.

When we asked Jennifer Blewitt, counsel appearing for Customs, whether such proceedings were ever instituted, she replied that such proceedings were not instituted because the matter was overtaken by events. She referred us to a letter to Customs from the Appellant dated 15 May 2006, and a reply to that letter from Customs dated 24 May 2006. In the Appellant's letter, he said that he would like to contest the seizure of the goods, only he could not afford to do so. The only course left to him, he continued, was to request restoration. In Customs' reply to the letter, they confirmed that condemnation proceedings had been withdrawn at his request (the letter seems to imply that proceedings were already on foot, but according to counsel that is not correct).

In the result, the goods have been deemed forfeit to the Crown pursuant to paragraph 5 of Schedule 3 of the Customs and Excise Management Act 1979 ("the 1979 Act").

The Appellant lives in Pemberton, Wigan. It has thus been a straightforward matter for him to attend a tribunal hearing in Manchester. Attending a Magistrates Court hearing in Dover – which is the relevant court for a seizure at Coquelles – would have meant a day's travel each way for him, plus an overnight stay. We can therefore well understand the cost considerations in his electing for a tribunal hearing.

It seems to us, however, that the Appellant in essence still wanted – and wants – to contest the seizure. Not being able to afford to do so in court, he elected to put his case in tribunal instead, seeking restoration of the goods. His case is the same as it has always been. We think that in the circumstances it would be contrary to the Appellant's human rights for him not to be able to rely before us on the case that he would have advanced before the court. We are mindful of what was said by Buxton LJ in Gascoyne v The Commissioners of Customs and Excise [2005] Ch 215 at [54] – [56], viz:

"[54] As it seems to me, for an importer to be completely shut out in the only tribunal before which he has in fact appeared from ventilating the matters that are deemed to have been decided against him because of paragraph 5 of Schedule 3 [of the 1979 Act] does not adequately enable him to assert his [Human Rights] Convention rights.

"[55] In my view, therefore, in a case where the deeming provisions under paragraph 5 are applied, the tribunal can reopen those issues: though the tribunal will always have very well in mind considerations of, or similar to, abuse of process in considering whether such issues should in fact be ventilated before it.

"[56] The mere fact that the applicant has not applied to the commissioners, and therefore there have been no condemnation proceedings, would not, in my view, be enough. But, in my judgment, it goes too far to say that the deeming provisions have always, in every case, got to be paramount."

On 12 June 2006, Customs issued a decision refusing to restore the goods to the Appellant. In a consequential letter to Customs dated 18 June 2006, the Appellant reiterated that the goods were for his own use and complied with the "guidelines". He also reminded Customs why he did not challenge in court the legality or correctness of the seizure. He asked for the decision to be reviewed.

The review decision was dated 31 July 2006. It was prepared by Mr Crouch. The decision was adverse to the Appellant, upholding as it did the earlier decision against restoration. The Appellant has appealed against the review decision pursuant to s 16(1) of the Finance Act 1994 ("the 1994 Act"). The grounds of his appeal are that he brought back only the "guideline" amounts, that he did not contest the seizure on grounds of cost, but that he has done nothing illegal and that restoration should not have been refused.

Examining Mr Crouch's decision, it seems to us that the decision does not correctly rehearse the background to the case. The review letter states: "You [ie the Appellant] challenged the legality of the seizure [of the goods] in the Magistrates Court but have since withdrawn your appeal". As we say above, that does not appear to be correct. As we understand it, proceedings were never instituted in court, because the Appellant said that he could not afford them. It was not, of course, for the Appellant to institute the proceedings: rather that was the task of Customs – see paragraph 6 of Schedule 3 of the 1979 Act.

The reasons why the Appellant did not persevere with his court challenge were firstly that it was going to be too expensive and secondly that he trusted that justice would nevertheless be done by this tribunal. The review decision does not seem to us to take proper account of that background.

Mr Crouch goes on in his review decision to say this: "In considering restoration I have looked at all of the circumstances surrounding the seizure but I have not considered the legality or the correctness of the seizure itself. … " [The bold highlighting is in the original.] He cites in support of this approach the Gascoyne case (supra) at [46] – [47]. Additionally he cites Albert Smith v The Commissioners for Revenue and Customs [2005] EWHC 3435 (Ch), a decision of Lewison J.

However, as we interpret them, these authorities are not saying that the failure to apply to the Magistrates Court is necessarily conclusive against a reviewing officer examining the question whether the goods might not have been correctly seized. It all depends upon the circumstances of the non-application. There will be cases where the reviewing officer should consider as part of the surrounding circumstances that the traveller would have gone to court but for a particular reason or reasons, the validity of which then becomes relevant. If there exists such a valid reason or reasons, it is as we see it important to have regard thereto. Otherwise the reviewing officer's decision might be unreasonable, because it could end up perpetrating an injustice.

For Customs, Miss Blewitt submitted that this case was equivalent to Gavin Shaw & Roisin Shaw v The Commissioners for H M Revenue and Customs (2006) Excise Decision No 01023. As in the present case, Mr Shaw did not pursue condemnation proceedings on grounds of cost. However it appears that Mr Shaw elected not to go to court knowing that this would close the door on his argument that the goods should not have been seized. That is different from the present case. In this case, the Appellant proceeded to tribunal in the expectation that the tribunal would take account of his case that the goods should not have been seized. Unlike the Shaw case, the Appellant in this case never indicated that he was voluntarily withdrawing his challenge to the seizure: on the contrary, he has maintained that stance throughout.

In arriving at our decision, we have been mindful that in the Smith case, Lewison J said this, at [32]:

"[32] In truth, on the facts found by the tribunal, there was no more than a failure to issue a notice of claim, which, as Buxton LJ said, is not enough to enable the tribunal to re-open the question [of legality of the seizure]. The tribunal never asked itself what were Mr Smith's actual reasons for not issuing a notice of claim, and never therefore considered whether those reasons, if accepted, were good ones. In addition, the tribunal jumped straight to the question whether the goods which Mr Smith had in his car were for his own use. The statutory question which the tribunal was required to answer was whether the Commissioners' decision was one which they could not reasonably have arrived at. The tribunal never referred to any of the matters considered by the reviewing officer and did not answer the only question which the statute poses for them, namely whether that decision was one which the Commissioners could reasonably have arrived at. It is not, as I understand it, the function of the tribunal to substitute their own view on a review under s 16(4) of the [1994 Act] as opposed to an appeal to which s 16(5) applies. The only power which the tribunal have to go into the question whether goods have been lawfully seized is in the very limited circumstances described by Buxton LJ [in the Gascoyne case (supra)]. Those circumstances did not, on the tribunal's finding, arise in the present case, and the decision of the tribunal is therefore, in my judgment, legally flawed and should be set aside."

We think that the reasons for the Appellant in this case not having argued his case before the Magistrates Court are good ones. They are the reasons stated in paragraph 14 of this decision. Those reasons should have been taken into account by the reviewing officer.

As Lewison J pointed out, it would be wrong for us to jump straight to the conclusion that the goods were for the Appellant's own use. Rather we should look at the facts, and discern what conclusion is reasonably to be derived from them. Then we should consider the reasonableness of the officer's decision in the light thereof.

Firstly, the imported goods did not exceed the "guideline" amounts. We find that the Appellant believed that if he limited his importation of cigarettes and tobacco to those amounts, it could not reasonably be assumed against him that the importation was for commercial purposes. That was a circumstance that it does not appear to us that the reviewing officer took into account in reaching his decision.

Secondly, the evidence given to Customs by the Appellant in interview was that he was in receipt of incapacity benefit of £85 per week, from which he had saved approximately £500 to spend on the goods (the purchase receipts that he produced totalled the equivalent of some £456). The Appellant had been on benefits for 3 to 4 years. He had travelled to the continent about a month previously and had then purchased some wine, 800 cigarettes and 40 pouches of tobacco. He had also visited the continent on a previous occasion to that one.

Mr Crouch thought that the Appellant could not afford to buy so many cigarettes and so much tobacco from his modest income. Also, as a smoker of 20 to 30 cigarettes per day, he seemed to the reviewing officer to be acquiring too many cigarettes and too much tobacco purely for his own use. Mr Crouch calculated that the Appellant's consumption rate would be more akin to 100 cigarettes per day than the Appellant's stated level of consumption.

However in tribunal the Appellant told us, and we accept, that some of the cigarettes and tobacco were acquired in the knowledge that they would probably be surplus to his own consumption requirements. We find that this aspect of the matter was touched on but not fully clarified in interview. It appears that he intended to pass on to others some of the cigarettes and tobacco, and the recipients from the Appellant would pay him at cost price for what they received, on the basis that the Appellant could not afford to make gifts. We were told, and we accept, that it was not a case of the recipients having commissioned the Appellant to buy cigarettes or tobacco for them; rather it was a case of the Appellant having available some spare cigarettes and tobacco that he might provide at cost price if not needed by him.

This seems to us to account for the Appellant being in sufficient funds to make further purchases. It also seems to us to distinguish this case from out-and-out smuggling. In his review letter, Mr Crouch does accept that, if the goods were to be passed to others on a not-for-profit reimbursement basis, the goods should normally be restored, at least for a fee. In this case, there was not even, so it appears, a prior agreement for reimbursement.

As Lewison J pointed out in the Smith case (supra), what we are concerned with in this appeal is whether the officer making the review decision could or could not reasonably have arrived at it. Having established the full facts, we consider that the decision was unreasonable. It was unreasonable because it failed to take into account the matters referred to by us in paragraphs 14, 19, 21 and 24 above. In the light of our findings, we believe that the conclusion reached on the further review ought to be significantly different from that arrived at on the review dated 31 July 2006.

We therefore allow this appeal. We direct that a further review of the decision not to restore is to take place, conducted by a different reviewing officer of Customs. The further review is to take into account the matters identified by us in the preceding paragraph of this decision. The review is to take place within the period of two months following the date of release of this decision, and copies of it are to be sent to the Appellant and to the Manchester Tribunal Centre respectively, specifying the reference MAN/2006/8043 and, in the latter case, marked for the attention of the Chairman.

MICHAEL JOHNSON

CHAIRMAN
Release Date: 19 June 2007

MAN/2006/8043