United Kingdom VAT & Duties Tribunals (Excise) Decisions

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Cite as: [2007] UKVAT(Excise) E1057, [2007] UKVAT(Excise) E01057

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Ms Julie Howells v Revenue & Customs [2007] UKVAT(Excise) E01057 (31 July 2007)

E01057

EXCISE – Restoration of vehicle – Owner not present at time of seizure – No direct knowledge of driver's action in attempting to avoid duty on seized goods – Owner and driver in long-term relationship – Whether genuine third-party situation – Whether importation commercial – Appeal dismissed

LONDON TRIBUNAL CENTRE

MS JULIE HOWELLS Appellant

and –

THE COMMISSIONERS FOR HER MAJESTY'S REVENUE & CUSTOMS Respondents

Tribunal: MISS J C GORT (Chairman)

MR P D DAVDA FCA

Sitting in public in London on 13 June 2007

Mr Gordon Menzies of counsel, instructed by Bradleys for the Appellant

Mr S Darroch of counsel, instructed by the Solicitor's Office, for the Respondents

© CROWN COPYRIGHT 2007

DECISION

This is an appeal against a decision of the Commissioners of Her Majesty's Revenue and Customs ("HMRC") on review that a vehicle seized on 2 May 2006 should not be restored to the Appellant. The decision was contained in a letter dated 17 August 2006.

The grounds of appeal were: "Decision made on incorrect interpretation and totally disproportionate."

The background to this case is that Ms Howells, who is a retired headmistress and who lives with her partner of many years, Mr Mallory Davies, was the owner of a Ford Galaxy Zetec. She had bought this car for the sum of £20,155 in September 2004.

Ms Howells and Mr Davies live in a house owned by Ms Howells, in respect of which Ms Howells paid all the outgoings in order that, should she predecease Mr Davies, he would have no claim on the property. She paid for all the running expenses of the car, including the insurance which also covered Mr Davies to drive. Mr Davies himself was unable to work having a serious heart condition and being in receipt of sickness benefit. Despite this, he was a very heavy smoker, the evidence as to the amount he actually smoked varying between none at all to 40-60 per day. Ms Howells and Mr Davies were in the habit of making regular trips across to France and/or Belgium, according to Ms Howells this was sometimes as often as once a month. As they live in Wales it is quite a long journey for them to undertake, particularly given Mr Davies' state of health. According to Ms Howells, on not every occasion were cigarettes and alcohol purchased, although they were on some occasions. Ms Howells estimated the cost in petrol from Wales for the journey to be some £40, and the cost on the ferry to be £38 although sometimes the crossing would be cheaper, being on offer. They regarded these trips partly as a holiday, as Mr Davies was unable to fly, and partly as an opportunity to take Mr Davies' sister out for the day.

On 2 May 2006 Mr Davies alone was stopped by Customs at the UK control zone at Coquelles in France. In the car were 8 kilogrammes of hand rolling tobacco, 1,200 cigarettes, 70 cigars, 144 litres of beer, 54 litres of wine, 13.2 litres of whisky, 4.2 litres of vodka and 4.2 litres of brandy. The total excise duty involved was £1,510.59. When Mr Davies was stopped he initially told the interviewing officer that he had only purchased one box of tobacco and 800 cigarettes. He claimed that he had last travelled some six weeks previously when he had bought alcohol but no cigarettes or tobacco. He claimed that the cigarettes he had purchased on this occasion were gifts, and half of the tobacco was for his son-in-law, the tobacco he had purchased for himself would last him some six weeks.

On searching the car the officer had found the items listed above under a blanket. Mr Davies had initially only handed over receipts in respect of the cigarettes and tobacco that he had declared, upon the officer finding the items he handed over all the receipts. The officer's note shows that Mr Davies had denied purchasing any cigarettes or tobacco at all when he was first stopped by Customs. He was asked by the interviewing officer why that was, and he said simply: "Didn't think about it."

The goods were said to have cost Mr Davies some £800, and he told the officer that he had financed the purchases that day with money from his benefits. The drinks were said to be for a party he intended to give Ms Howells when about 15 to 16 people were expected. Customs' records show that Mr Davies had travelled on 11 April 2006, not six weeks previously, as Mr Davies had told the officer. He subsequently told the officer, that he had made about six or seven trips in the previous six months.

At the time of the seizure Ms Howells herself was abroad in America where she had gone as the companion of an elderly woman, Mrs Thomas. Ms Howells described herself as the main carer for Mrs Thomas. Ms Howells had left Mr Davies at home looking after her dog and cat and generally taking care of the house. It emerged from Mr Davies' evidence that Ms Howells had given him £500 when she had gone away. There was no mention from Ms Howells herself in her evidence about giving him this comparatively large sum of money, but she did say that Mr Davies had no general or household expenses as she paid for everything and also that she had provided him with a Tesco card that he could use on her Tesco account. Mr Davies' evidence to us differed in several respects from that which he had given to the officer when stopped, including the fact that he told us that he had purchased the goods in Belgium using the £500 Ms Howells had given him, rather than his benefit money.

Sadly for Ms Howells, not only did she return from America to the loss of her car, she also returned to the loss of her dog who had died towards the end of April. Mr Davies told us that he had not wished to inform her of this fact whilst she was away, knowing that she would be very upset by it. He had therefore left the house to go to stay with his sister so that he would not have to take a telephone call from Ms Howells and pass on the sad news. Having left the house and gone to his sister's have in Essex, he then decided to go abroad in order, he claimed, to buy something for Ms Howells' birthday. He had paid for the journey with the Tesco card, the one that Ms Howells pays for. He gave the reason for lying about the amount of excise goods he had purchased as "panic". He claimed not to have been feeling well and wanting to get home. He claimed to be unaware of the guidelines on what could be brought into the country, and also that he had thought that if you were giving goods away, you could buy as much as you liked. We find it quite unbelievable that somebody who had travelled abroad once a month, as he had, could be unaware of the guidelines and the general restrictions on importation of excise goods. He told the Tribunal that he was going to pay back his friends who had done work on the house whilst Ms Howell was away both with the hand rolling tobacco and with "booze". Those people had refused payment and he considered £500 in exchange for work which he valued at £3,000 was a good deal. This again was different from what he had told the officer. He claimed not to know that he had purchased above the guideline limit.

Mr Davies' consumption of cigarettes was a matter about which the evidence varied considerably. He had told the officer that he smoked 50 to 60 cigarettes a day, using the hand rolling tobacco and a machine. Ms Howells' initial evidence in cross-examination was that Mr Davies had given up smoking 1½ years ago, although he lapsed occasionally. She described him as previously having smoked 60 cigarettes a day but as having slowed down since his heart attack in February 2005. Later in her evidence she said that he had now halved his consumption and smoked some 20 to 30 cigarettes a day. Mr Davies' evidence to us was that, whilst he had tried to give up smoking, he had failed, he smoked some 40 to 60 cigarettes a day, and he was now smoking cigars because it was easier to hide from Ms Howells the fact that he had been smoking them. He described all smokers as liars, and accepted that he had misled Ms Howells. We do not believe it possible that Ms Howells, a former schoolteacher who must be used to people trying to deceive her, could have been unaware that Mr Davies had never given up smoking and was indeed smoking at least 40 cigarettes a day. Neither she nor he are, or were, at the time working, and she must have been aware that he was making tobacco purchases on their monthly trips abroad.

Ms Howells claimed to us that Mr Davies only used the car some 5% of the time. Since his evidence was that he would take it three times a week to go to the hospital or to go shopping and he would do the lion's share of the driving when they made their monthly trips abroad, we do not see how he can be said only to have used the car 5% of the time. Ms Howells, to say the least, was economical with the truth when in her evidence in chief she attempted to persuade us that she had had great difficulty getting about after losing the car, and that she had had to use taxis and borrow her daughter's car. It emerged that she had made no attempt to look into the possibility of the hospital collecting Mrs Thomas, whom she said she had to take to hospital regularly some three times a month, and it only subsequently emerged that Ms Howells had purchased another car which she was currently using, and which she had also insured for Mr Davies to drive.

Ms Howells had gone to a firm of solicitors called Gomer Williams & Donoghue who had referred her on to Bradleys, her present solicitors. In the letter of referral to Bradleys, Gomer Williams had said that the car which had been impounded was a "family car". Bradleys had subsequently written to HMRC stating that the vehicle was registered in Mr Davies' partner's name but was "jointly owned by them". Both Ms Howells and Mr Davies gave evidence to the Tribunal that this was not the case, and that Ms Howells was the sole owner and that had always been the case. We accept that, as a matter of law, that is the case.

The review officer, Mr David Cawthraw, gave evidence to the Tribunal. He acknowledged that there was an error in his decision letter in that, under the heading consideration, he had listed the quantity of whisky as being 31.2 litres when in fact it should be 13.2 litres. The consequence of this was that in the following paragraph he had referred to the large quantity of alcohol which was intended to be consumed by a group of say, 18 people (being the number expected at the party), which equated to amongst other things, 2.2 litres of spirit per person. He acknowledged that this should be 1.1 litre of spirits. However, he gave clear evidence that he had at all other times been properly aware that the correct quantity of whisky was 13.2 litres, as stated at the outset of the decision letter, and remained of the opinion that the reduced quantity of 1.1 litre of spirits per person at the party was still so excessive as not to change his conclusion on that matter.

Mr Cawthraw had not considered the issue of the seizure itself, and indeed that matter was not challenged before us. He did take account of Mr Davies' failure to declare all the excise goods, and the fact that 8 kilogrammes of tobacco was in excess of twice the guide level of 3 kilogrammes, and 21.6 litres of spirits was more than twice the guide level of 10 litres. He also took account of Mr Davies' untruthfulness to the officer and the fact that on two separate occasions he had failed to disclose all the excise goods. He did not accept Mr Davies' explanation for not disclosing all of the tobacco, namely that he did not think about it and just wanted to get home. We note that before us Mr Davies had said that at the time he was not feeling well, but, although he had been asked by the officer who stopped him whether he had any medical conditions that would affect the interview, he had not told the officer that he did not feel well beyond saying that he had a spray to help with his heart problems, nor had Mr Davies taken the opportunity subsequently of telling his solicitor that he had not been feeling well. Mr Cawthraw, in addition to the above, took account of the fact that Mr Davies had lied about the frequency of his trips abroad. Mr Cawthraw also doubted other aspects of Mr Davies' evidence which we do not propose to detail here.

Mr Cawthraw quite clearly concluded that the importation was a commercial one, not least because Mr Davies had said he paid in cash for the goods which he considered to be a common feature of buying excise goods for commercial sale. He looked at the Commissioners' policy which was to consider restoring vehicles where only a small quantity of goods were involved and were not to be sold for a profit. However he considered that 8 kilogrammes of tobacco and 21.6 litres of spirits did not qualify as a small quantity and he therefore did not apply that provision of the policy. With regard to the matter of third-party ownership, he cited the HMRC policy as follows:

"If the vehicle was owned by a third-party who was not present at the time of the seizure, and can show that they were both innocent of and blameless for (sic) the smuggling attempt, then consideration may be given to restoring the vehicle for a fee. If in addition to being both innocent and blameless the third-party demonstrates that they had taken reasonable steps to prevent smuggling in the vehicle then consideration may be given to restoring it free of charge. However a vehicle will not normally be restored to a third-party in a situation where that would be tantamount to restoring it to the person responsible for the smuggling attempt."

Ms Howells had, prior to the decision being made, informed HMRC that she was the sole owner of the vehicle, and had produced the registration document as proof. Mr Cawthraw accepted that the vehicle was registered in her name, but did not consider that the registration document itself proved ownership. He then continued that, as Mr Davies was a frequent driver of the car, he assumed that he must have been insured to drive it, and therefore concluded that Mr Davies was involved in the ownership of the car and that to restore it to Ms Howells would be tantamount to restoring it to him, the person involved in the attempted smuggling. He therefore declined to restore the car to Ms Howells as a genuine third-party owner.

In addition to the principal witnesses, Ms Howells, Mr Davies and Mr Cawthraw, the Tribunal also heard from a Mrs Carol Davies, a friend of Ms Howells who had walked her dog whilst Ms Howells was in America. Mrs Davies had been aware that the dog had had to be put down and she had agreed with Mr Davies that she would not inform Ms Howells whilst she was away as she did not want to upset her. Mr Davies had not told her when he left on the trip that is the subject of the appeal that he was going to France. We also heard from a Mrs Rosetta Jaques, who is Mr Davies' sister and with whom Mr Davies had stayed on his way to France on the occasion when the car was seized. He had told her that he was going over to France as it would be a good idea to have a party for Ms Howells on her return to take her mind off the loss of her dog and her birthday to celebrate. She also gave evidence of a very small inheritance that she and Mr Davies had received on the death of their mother. Evidence in the form of an extract from Glass's Guide was produced, giving the value of the car as £9,800.

The legislation

The law provides that where excise goods are brought into the UK from other Member EU member states, by individuals, for their own use, such goods are exempt from UK VAT, which would otherwise had to have been paid.

This law derives from Council Directive 92/12/EEC, (on the general arrangements for products subject to excise duty and on the holding, movement and monitoring of such products), which provides for such exemptions.

Article 8

As regards products acquired by private individuals for their own use and transported by them, the principle governing the internal market lays down that excise duty shall be charged in the Member State in which they are acquired.

Article 9

Without prejudice to Articles 6, 7 and 8, excise duty shall become chargeable where products for consumption in a Member State are held for commercial purpose in another Member State are held for commercial purpose in another Member State. In this case, the duty shall be due in the Member State in whose territory the products are and shall become chargeable to the holder of the products.

The Tobacco Product Regulations give effect to the Directive:

2001, as amended by the Excise Goods, Beer and Tobacco Products (Amendment) Regulations 2002, which set out, at `Regulation 12(1A):

`In the case of tobacco products acquired by a person in another Member State for his own use and transported by him to the United Kingdom, the excise duty point is the time when those goods are held or used for a commercial purpose by any person.

(1B) For the purposes f paragraph 1(A) above –

(a) …

(b) `Own use' includes use as a personal gift

(c) If the tobacco products in question are –

(i) transferred to another person for money or money's worth (including any reimbursement of expenses incurred in connection with obtaining them), or

(ii) the person holding them intends to make such a transfer, those products are to be regarded as being held for a commercial purpose.

(d) If the products are not duty and tax paid in the Member State at the time of acquisition, or the duty and tax that was paid will be or has been reimbursed, refunded or otherwise dispensed with, those products are to be regarded as being held for a commercial purpose.

(e) Without prejudice to sub-paragraphs (c) and (d) above, in determining whether tobacco products are held or used for a commercial purpose by any person, regard shall be taken of:

(i) that person's reasons for having possession or control of those products,

(ii) whether or not that person is a revenue trader (as defined in section 1(1) of the Customs and Excise Management Act 1979,

(iii) that person's conduct, including his intended use of those products or any refusal to disclose his intended use of those products,

(iv) the location of those products

(v) the mode of transport used to convey those products

(vi) any document or other information whatsoever relating to those products,

(vii) the nature of those products including the nature and condition of any package or container,

(viii) the quantity of those products, and in particular, whether the quantity exceeds any of the following quantities –

10 litres of spirits

20 litres of intermediate products

90 litres of wine

110 litres of beer

3,200 cigarettes

400 cigarillos (cigars weighing no more than 3 grammes each)

200 cigars

3 kg of any other tobacco products

(ix) whether that person personally financed the purchase of those products,

(x) any other circumstance that appears to be relevant.

The requirements for the movement of excise goods between Member States are to be found in the Excise Goods (Holding, Movement, Warehousing and REDS Regulations 1992). These provide:

Time and method of payment of duty

(i) Subject to paragraph (2) below and save as the Commissioners may otherwise direct, duty shall be paid on or before an excise duty point.

(ii) In a duty deferment arrangement, and save as the Commissioners may otherwise direct, the time when duty I to be paid shall be the time specified by that arrangement.

(iii) In this regulation `duty deferment arrangement' means any provision made by or under the Customs and Excise Acts that permit the payment of excise duty to be deferred.

Forfeiture of excise goods upon which duty has not been paid.

Excise goods, in respect of which duty has not been paid, shall be liable to forfeiture where a breach of regulation 6 above, or of any regulation contained in Part IV, V or VI of these Regulations, or of any condition or restriction imposed by or under such a regulation, relates to those excise goods.

The Customs and Excise Management Act 1979 provides:

S.49. Forfeiture of goods improperly imported:

Where –

(c) any goods, being goods chargeable with any duty … are found, whether before or after the unloading thereof, to have been concealed in any manner on board any ship or aircraft … these goods shall, subject to subsection (2) below, be liable to forfeiture

and in respect of provisions in relation thereto:

S.139 Provisions s to detention, seizure, and condemnation of goods, etc.

Any thing liable to forfeiture under the Customs and Excise Acts may be seized or detained by any officer or constable or any member of Her Majesty's armed forces or coastguard.

S.141(1)(a) and 141(1)(b)

Without prejudice to any other provision of the Customs and Excise Act 1979, where any thing has become liable to forfeiture under the Customs and Excise Acts –

(a) any ship, aircraft, vehicle, animal, container (including any article of passengers' baggage) or other thing whatsoever which has been used for the carriage, handling or deposit or concealment of the thing so liable to forfeiture, either at a time when it was so liable or for the purposes of the commission of the offence for which it later became so liable; and

(b) any other thing mixed, packed or found with the thing so liable,

shall also be liable to forfeiture.

And in respect of the Commissioners' powers thereafter:

S152(b) Powers of the Commissioner to mitigate penalties etc:

The Commissioners may as they see fit –

Stay, sist or compound any proceedings for an offence or for the condemnation of any thing as being forfeited under the Customs and Excise Acts; or restore, subject to such conditions (if any) as they think proper, anything forfeited or seized under those Acts.

The Commissioners are obliged, by s.14 of the Finance Act 1994 to carry out a review of any decision requiring forfeiture. Procedures for such a review are found at s.15 of that Act.

The Respondents' case

Ms Darroch submitted that the main question for the Tribunal was whether if the car were returned, it would effectively be returned to the smuggler. She pointed to the inconsistencies in the evidence, and also the absence of clarity as to the extent of Mr Davies' smoking habit and his financial circumstances. She also questioned why somebody returning from a spending spree would panic when stopped at the Customs. She submitted that there was no evidence of excessive hardship in this case, and, with regard to proportionality, she submitted that there was a clear presumption that where people smuggled goods they would lose the car involved, and, whilst this may be unfortunate where the smuggler was not technically speaking the owner of the car, this was not the sort of case, following the decision in the case of Lindsay v Customs & Excise Commissioners (2002) 1WLR 1766 where the commissioners needed to consider the issue of proportionality. In the Commissioners' view this had been a commercial enterprise. This fact was not altered at all by Ms Howells' ownership because it was effectively a joint enterprise, and Ms Howells had made no attempt to exclude Mr Davies from using the car for smuggling. If the car were returned in the present case it would create a precedent of some difficulty for HMRC and would be inimical to HMRC's policy of protecting the revenue.

The Appellant's case

The Tribunal was referred to two earlier tribunal decisions Robert Brookes (E00847) and Smyth & Smyth (E00940). The tribunal was invited to take the approach taken in those cases in which, in Brookes, it was said that the tribunal was entitled to make its own findings on the primary facts, including blameworthiness, as well as proportionality, and in Smyth & Smyth the tribunal said:

"… it would be irrational for the Commissioners to refuse to restore the vehicle if the owner is entirely blameless because in such a case it does not further the correct enforcement of the law to penalise the innocent; as only the guilty will be deterred from their actions by the forfeiture of their goods. Those entirely innocent of wrong-doing can do no more to comply with the law than their innocence already shows them to have done. If the goods of the entirely innocent are taken on purely technical grounds the application of the law becomes arbitrary and that would also amount to an unconscionable unfairness that it would be unreasonable to enforce."

It was submitted that the officer had concentrated on the documentary evidence only in respect of ownership, but from the evidence before the Tribunal it was now clear that Ms Howells herself was the owner. The decision-maker was said to have made three errors:

That the vehicle was jointly owned,

That the only evidence was registration documents, and

That Mr Davies was a frequent driver.

In these circumstances it was not reasonable to uphold the decision, and in any event the registration document was only one factor, and it was only in a rare case that the registered keeper was not the owner, therefore Mr Cawthraw should have made further enquiries; it was unreasonable of him to reject Ms Howells' assertion at the time. Having found that the vehicle was owned by a third-party, it was incumbent on Mr Cawthraw to consider whether or not she was blameless and in the present circumstances he would have been bound to consider she was blameless because at the time she was on the other side of the world.

Mr Menzies submitted that it was reasonable of Ms Howells to have given Mr Davies pocket money when she went to America. She had led a blameless life and was completely unaware of what was going on. He attempted to explain Ms Howells' inconsistent evidence with regard to the amount Mr Davies smoked by saying that when she had first started giving her evidence she had focussed solely on the issue of her car and her own lack of blameworthiness, and she was therefore bound to get details wrong. In the present case there had been no suggestion that it was a pre-ordained enterprise, and, short of it being a joint enterprise, she was blameless. In the circumstances taking the car was both disproportionate and unreasonable.

The HMRC policy acknowledged the tension between the need to protect the revenue and to protect the innocent. There was nothing Ms Howells could have done to stop the importation. If she had known about it, she would not have allowed it because of her concern for Mr Davies' health. The issue of proportionality did not just relate to the value of the car, which it was accepted was £9,800, as compared with the loss to the revenue of £1,510.50, it was also relevant to the issue of blameworthiness. Whilst Mr Menzies primary submission was that the car should be restored free, he submitted as a secondary proposition that if the Tribunal were to find Ms Howells to be not entirely blameless, then the car should be restored for a fee.

Decision

We found Mr Davies to be a thoroughly unreliable witness who was prepared to lie and prevaricate. He admitted as much when saying that smokers could not be trusted. We do not accept his evidence that he had not purchased cigarettes on every occasion when he had crossed the channel, it seems quite incredible to us that a man who smoked as heavily and as deceitfully as Mr Davies would resist the opportunity. He appears to be a totally self-indulgent man with no concern for Ms Howells' feelings in the matter. This relates not only to the amount of his smoking and indeed the fact that he smoked at all, but also to his being prepared to drive the car a long distance on his own despite having a bad heart condition when he must have known that Ms Howells would not in any circumstances have wanted him to undertake such a long drive on his own.

Ms Howells herself was not a straightforward or reliable witness. We take particular note of her contradictory evidence with regard to Mr Davies' smoking habits. She was not telling the truth when she said he had given up 1½ years ago and only lapsed occasionally. We find it inconceivable that someone who had continually smoked at least 40 cigarettes a day, who was unemployed at the same time as Ms Howells herself was retired, meaning that they were continually in each other's company, could, unbeknownst to her, smoke even 20-30 cigarettes a day. She must also have been fully aware that he was purchasing quantities of tobacco and/or cigarettes when they made their monthly trips abroad. She did not admit the fact that she had purchased a car after she lost the car in question, she told us only that she had taken taxis and then borrowed her daughter's car. She may well have done this, however she refrained from telling us of the subsequent purchase until cross-examination. She made no mention to us of the £500 that she had given Mr Davies when she went off to America, despite the fact that she must have been aware from the number of questions regarding the issue of their finances that the Tribunal was very interested in the matter of her and Mr Davies' finances. We also find the frequency of the trips she made to France with Mr Davies not to have been properly explained. On her estimate the cost was some £78 in travelling alone, Mr Davies was unwell and it is a significant journey from Llanelli to Dover, she herself did not like driving on motorways, and, even given the concern both parties had for Mrs Jaques whose husband was ill and who liked to travel across with them on occasion, we do not accept that the explanation she gave for the frequency of the journeys was the whole story. We find that it was also part of their purpose to purchase cigarettes and/or tobacco.

With regard to Mr Davies' evidence that the cigarettes were intended as a gift for people who had done work on the house, that of itself renders the venture a commercial one. He himself said that it was worth paying £500 to get £3,000 worth of work done. Quite apart from the excise duty implications, there are further tax implications in paying in kind, a matter with which we are not directly concerned. It does however go to the attitude of both Ms Howells and Mr Davies. We note that Mr Davies told the officer that he paid for the goods using his benefit money, he did not refer to the £500 that he now says Ms Howells had given him, and we find that she did in fact give him. We also take account of the fact that, when asked by the officer whether his girlfriend was aware that he had taken her car over to France, Mr Davies replied: "I think so …". We regard this answer as significant and cannot accept Mr Davies subsequent evidence to us that Ms Howells did not know. In fact he had qualified it by saying: "She would not have allowed me to go on my own", which indicates that Ms Howells may well have allowed him to go with someone else accompanying him, and the extent to which he did not know was only the fact that he went on his own.

The function of the Tribunal in such a case is to consider whether or not the reviewing officer properly arrived at his reconsideration of the circumstances, and whether he took account of all relevant matters and did not take account of irrelevant matters. Mr Menzies pointed to the issue of the fact of joint ownership of the car, and Mr Cawthraw's failure to accept Ms Howells' evidence that she alone was the owner. We do not consider that the decision was rendered unreasonable by these facts, and in any event Mr Cawthraw had also considered the fact that Mr Davies was insured to drive the car and that to restore it to Ms Howells would be tantamount to restoring it to Mr Davies, the person involved in the attempt of smuggling. He concluded: "I therefore decline to restore the car to Ms Howells as a genuine third-party owner." This shows that, despite not being totally satisfied with the evidence of her being the sole owner, it was clearly on the basis of her close connection with Mr Davies that he was refusing to restore the car. Whilst we accept that she was the genuine and sole owner, the evidence before us made it abundantly clear that Mr Davies was, as Mr Cawthraw had found, a frequent driver of the car. Ms Howells' evidence that he only drove it 5% of the time is not consistent with his evidence of taking it three times a week to the hospital and of his doing the bulk of the driving, namely the motorway driving once a month when they went to France. Mr Davies has not satisfied us that this was not a commercial venture, we find that he was intending paying for work done on Ms Howell's house with the cigarettes, and therefore Mr Cawthraw was correct not to consider the matter of proportionality.

It was submitted by Mr Menzies that it is incumbent on the Commissioners to show that there was a joint enterprise. We do not accept this. Whilst there is certainly no evidence at all that Ms Howells knew of this particular journey and its purpose, nonetheless she evidently turned a blind eye both to the extent of Mr Davies smoking, and to his deception in that regard, and took no steps whatsoever to prevent his purchases, even facilitating them by giving him access to funds.

We do not consider that this is a case of a genuine third-party owner. We regard it as completely unrealistic to view the relationship between Ms Howells and Mr Davies as other than that of a married couple. We do not consider Ms Howells would be able to prevent Mr Davies from repeating the offence. She quite clearly has no control over Mr Davies, she gives him access to money and insures the car for him to drive, and has given no indication that she would not continue to do so were the seized vehicle restored, having now insured the second car she has purchased for him to drive and having taken a trip to France with him in that car. We can see no proper reason to refer the matter back to the Commissioners to re-review it. Whilst technically Mr Cawthraw may have been wrong in his conclusions as to the legal ownership of the vehicle, he was quite correct, in our view, in considering that restoring the vehicle to Ms Howells would be tantamount to restoring it to Mr Davies. We do not consider that Mr Cawthraw's decision that Ms Howells was not a genuine third-party owner was an unreasonable one in the circumstances, and nor do we find the totality of his decision an unreasonable one, it being a requirement of section 16(4) of the Finance Act 1994 that the powers of an appeal tribunal are confined to deciding whether or not the Commissioners could not reasonably have arrived at that decision.

We have considered the issue of proportionality, but, given our agreement with the Commissioners' finding that this was a commercial importation, following the decision in Lindsay (supra) we do not find that it is open to us to refer the matter back to the Commissioners in order for them to consider restoring the vehicle to Ms Howells on payment of a sum of money, despite the large discrepancy between the value of the car and amount of duty evaded.

This appeal is dismissed. No order for costs.

MISS J C GORT

CHAIRMAN

RELEASED: 31 July 2007

LON 2006/8082