United Kingdom VAT & Duties Tribunals (Excise) Decisions

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Cite as: [2008] UKVAT(Excise) E1079, [2008] UKVAT(Excise) E01079

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Terence Horne v Revenue & Customs [2008] UKVAT(Excise) E01079 (08 January 2008)

E01079

EXCISE – 30kg of hand-rolling tobacco, 200 cigarettes, 262.5 litre beer and a van seized at Coquelles – Whether for own use – Appellant lied extensively at interview – No evidence of `not for profit' sale – Appellant and former wife non-smokers – Van used for work but no evidence of exceptional hardship – Appeal dismissed

LONDON TRIBUNAL CENTRE

TERENCE HORNE Appellant

and –

THE COMMISSIONERS FOR HER MAJESTY'S REVENUE & CUSTOMS Respondents

Tribunal: MISS J C GORT (Chairman)

MISS A WEST FCA

Sitting in public in Plymouth on 27 & 28 November 2007

The Appellant appeared in person

Mr S Singh of counsel, instructed by the solicitor's office, for the Respondents

© CROWN COPYRIGHT 2007

DECISION

The appeal is against a decision dated 10 October 2006 on review to uphold a decision dated 26 July 2006 not to restore a Citroen Berlingo van which had been seized from Mr Horne on 1 June 2005.

Background

On 1 June 2005 Customs officers had stopped the Appellant, Mr Horne, and his then wife Eileen Horne at the United Kingdom controlled zone at Coquelles. The officers seized 30kg of hand rolling tobacco, 262.5 litres of beer, 200 cigarettes and a Citroen Berlingo van.

On 2 June 2005 a letter was sent to Her Majesty's Revenue & Customs ("HMRC") requesting restoration of the seized goods and appealing against the seizure of the goods and the vehicle. This letter was purportedly signed by both Mr and Mrs Horne. Subsequent correspondence was sent by HMRC to an address in Bournemouth at 9 Muscliffe Lane, this was the address where Mrs Horne was living, Mr Horne was living elsewhere, having separated from her some time previously.

On 2 July 2005 a letter from a Mrs N Bowers, purportedly acting on behalf of both Mr and Mrs Horne, was sent to HMRC requesting a review of the decision refusing restoration of the goods and the vehicle. In fact Mr Horne had at no time had any contact with Mrs Bowers. Subsequent correspondence ensued between HMRC and Mrs Bowers, and the appeal against seizure was withdrawn. The whole history of this matter is set out in a decision of the tribunal No. E00960 which was released on 5 June 2006 which is appended to this decision. By that decision the tribunal held that Mr Horne himself had at no time requested a review of the decision dated 29 June 2005 refusing restoration of his vehicle, and therefore by virtue of section 16(2) of the Finance Act 1994 the tribunal had no jurisdiction to entertain the appeal. However the tribunal expressed the view that Mr Horne was entitled to start proceedings afresh by requesting HMRC to restore his vehicle, which was the course he took and by a letter dated 27 June 2006 Mr Horne wrote to HMRC requesting the return of his van. By a letter dated 26 July 2006 Mr Horne was informed of HMRC's refusal of restoration and by a letter dated 25 August 2006 he requested a review of that decision. The decision was upheld by a letter dated 10 October 2006 and Mr Horne appealed against that decision on 22 October 2006.

The evidence

The Tribunal heard evidence from Mr Horne, and included in the bundle of documents were notebooks from the officers concerned. We also heard oral evidence from Mr Rayden, the officer who had conducted the review.

It was Mr Horne's evidence that he had decided to travel to France to purchase beer to celebrate his birthday in July. He intended inviting some eight colleagues on that occasion. He was living apart from his wife, Eileen Horne, but was not divorced at the time. By the time of the hearing he was divorced from her, and had re-married. Before travelling to France he let Eileen Horne know of his intention to travel and he told her that she could come along "for the ride" if she wished. Eileen Horne agreed to accompany him. The journey was undertaken in the van he used for his work as a window cleaner. It was a two-seater van which carried some sort of logo on it. Mr Horne also owned a car, but had taken his van with him in order to have enough space to carry thirty or thirty-two cases of beer.

Mr Horne told the Tribunal that it was only after he had purchased the beer in France that Eileen Horne asked him if he knew where the place was where she could purchase cheap tobacco. Mr Horne had been there previously with a friend, and so he drove her to Adinkerke. Eileen Horne purchased the Golden Virginia hand rolling tobacco and a quantity of cigarettes, spending some £1,600 in cash. She was a £140 light, and therefore he contributed that amount to the purchase. Although he and Eileen Horne was separated at the time, and subsequently divorced, Mr Horne told the Tribunal that he gave Eileen Horne no maintenance, despite the fact that she did not work. He told us that she received money from her two daughters who helped her out. Eileen Horne was living in their former home, and he was living in a separate flat. When being interviewed by the Customs officer following the van being stopped Mr Horne was asked if his wife used her own money for the purchase of the tobacco and Mr Horne replied: "Its not her money. Its our money."

Having made the purchases the couple set off to return home. They were stopped at Coquelles and after they had been asked to pull over in the van and the van was being searched, Eileen Horne asked Mr Horne to say that half of the tobacco was his. Mr Horne was a little uncertain as to precisely when this conversation had actually taken place, and subsequently in his evidence he said that Mrs Horne had said to him: "If we get stopped, say half is yours". This is exactly what he did. However, we have doubts given Mr Horne's answers at interview as to whether or not such a conversation ever took place. At the subsequent interview when he was asked who the goods belonged to, he replied: "It's a joint thing I suppose." He then gave detailed and elaborate answers to questions about the amount that he smoked and how long the tobacco would last for. He also gave what purported to be details of how much tobacco he had left over from a previous visit, and how long the tobacco would last him. He was vague both to the officer and the Tribunal about previous visits that he had made to Adinkerke and previous purchases of tobacco.

Surprisingly, Mr Horne told us that neither he nor Eileen Horne nor his daughter smoked.

Whilst we have not heard from Eileen Horne, Mr Rayden, in reviewing the officer's decision not to restore the vehicle, took account of all the preceding correspondence and events. He also took account of the tribunal decision E00960 referred to above. Mr Horne had given evidence before the tribunal on that occasion and had admitted to that tribunal, as he did to this one, that he had lied to cover up for his then wife. Mr Rayden recorded inter alia: "Your wife also told a lie when she told an officer that you smoked `four to five pouches a week'. That alone is good reason to doubt your and your wife's credibility." He took account of the fact that neither Mr Horne nor Eileen Horne had claimed that the excise goods were to be passed on to others on a `not for profit' basis. In one of the letters from Mrs Bowers, the friend who was acting on behalf of Eileen Horne, it is stated that the tobacco was for both Mr and Mrs Eileen Horne and members of their family and the cigarettes were a gift for their daughter.

In a very comprehensive review letter Mr Rayden not only considered all the correspondence and the earlier decision, and the evidence that Mr Horne had given in the course of that hearing, he also reviewed HMRC's restoration policy for excise goods, and for the restoration of private vehicles; he considered whether the case was one to be approached on a `not for profit' basis, and whether it was an aggravated case. He also referred to not being fettered by the Commissioners' policy although he was guided by it. In considering restoration he looked at all the circumstances surrounding the seizure, but did not consider the legality of the correctness of the seizure itself since there had been no appeal against those matters. In particular, with regard to the vehicle he considered the quantity of the excise goods which were being carried in it, and also the degree of hardship which would be caused to Mr Horne by the loss of the van. However, he makes no reference to any value which might be ascribed to the van, but in evidence he told us that he had not done so because this was not the type of case where it was appropriate to consider restoration on payment of an equivalent sum to the duty which it had been attempted to evade. This was because he concluded that the goods were being brought in with the intention of selling them on, there being no credible evidence of there being sold on a `not for profit' basis.

With regard to the value of the van, Mr Horne told the Tribunal that he had paid £5,000 for the van less than a year prior to its being seized, but he accepted that it might have decreased in value by approximately £1,000 in that time. The total excise duty on the tobacco, the beer and the cigarettes was £3,416.68.

Mr Horne had worked for very many years as a window cleaner, he had three employees and used two vans. The two vans were both two-seaters and it was unlawful to carry passengers in the back of the vans as they were presently constructed without bolted in seats. Having had the one van seized, he had had to turn away work because of lack of transport for two of the employees. He had at all times, however, had a private vehicle as well. He had at no time considered looking to Eileen Horne for reimbursement of the cost of the van. He had no contact with her for some time and wished for no further contact.

The Appellant's case

Mr Horne's case was put by him on the basis that there had been no attempt to smuggle goods, in that everything they had purchased was on show and nothing was hidden. In addition he considered that it was not made clear to travellers what the amount of goods that they could bring in was. He had been told that he could bring in as much as he liked for personal use, yet he had been shown a leaflet by the officers which stated that there was an allowance of 60 pouches of tobacco per person. He felt he was being penalised unfairly as he had only been attempting to assist his former wife, she was the one who had wanted the tobacco, but he was the one who had lost the most. He considered that the officers should have taken account of the fact that it was unlikely that he would have used his own van, which had his name written on the side, if he had intended breaking the law, and he would not have risked losing his livelihood.

Mr Horne felt that he and the former Mrs Horne had been treated very badly by the officers, and he felt that they were threatened by a woman officer who had said to him that if he did not tell them what was going on they would have to stay all night. He had asked her what he had done wrong and she had not told him. It was Mr Horne's opinion that the officers should have taken only the hand rolling tobacco which was in excess of the quantities which were allowed and then let them carry on their way. He did not believe that he or his former wife had acted criminally and he was not personally guilty.

The Respondents' case

Mr Singh contended that HMRC's decision not to offer restoration of the vehicle was reasonably arrived at on the basis that Mr Horne was complicit in the attempt to import the seized tobacco for profit. He pointed to the complete fabrication of Mr Horne's answers to the interviewing officer.

It was submitted that there were two possible explanations for Mr Horne's lies to the interviewing officer. The first was that Mr Horne's then wife was attempting to smuggle tobacco into the United Kingdom for profit and was claiming that the tobacco jointly belonged to them so as to increase her prospect of avoiding detection, and Mr Horne was complicit in this. Or Mr Horne was now being truthful in claiming that he had lied when interviewed because Eileen Horne had told him to do so; this explanation lack credibility. It was submitted that the explanation for Mr Horne's lies was that he was trying to help his former wife avoid detection and the lies were designed to help her to get through Customs with the goods.

With regard to the issue of proportionality, the Respondents' principal case was that a large quantity of goods was being brought in to the United Kingdom for profit. It would not be proportionate to consider restoration of the vehicle. Any deterrent effect of seizure would be weakened were vehicles to be restored on payment of a fee in the circumstances such as the present ones, and there was a public interest in protecting the revenue.

The Tribunal was referred to the case of Lindsay v Customs and Excise Commissioners (2002) 1 WLR 1766 in which the Court of Appeal had held that HMRC's policy of non-restoration of vehicles used for commercial smuggling was lawful, stating that:

"63. Those who deliberately use their cars to further fraudulent commercial ventures in the knowledge that if they are caught their cars would be rendered liable to forfeiture cannot reasonably be heard to complain if they lose their vehicle. Nor does it seem to me that, in such circumstances, the value of the car used needs to be taken into consideration. Those circumstances will normally take the case beyond the threshold where that factor can carry significant weight in the balance. Cases of exceptional hardship must always, of course, be given due consideration."

Exceptional hardship had also been considered by the reviewing officer and any hardship suffered by Mr Horne was of the kind to be expected following non-restoration of a vehicle used for illicitly importing excise goods. It should also be considered that Mr Horne had another van which had allowed him to carry on his work following the seizure. Any hardship suffered by Mr Horne was to be expected, and was not exceptional.

It was submitted that the decision struck a fair balance between ensuring compliance with UK revenue law and protecting the revenue on the one hand, and the right to enjoyment of property under Article 1 of Protocol 1 of the European Convention on Human Rights on the other.

Reasons for decision

This is an unusual case in that Mr Horne has come before us admitting to having lied extensively to the officer about the circumstances surrounding the importation, and having also said to us in his evidence not only that the whole thing was a fabrication (his words), but also: "We all tell lies". He did not seem to see that it was entirely wrong to have attempted to deceive the Customs officers about the circumstances surrounding the purchase of the tobacco. He also did not seem to understand that it was difficult, if not impossible, for any tribunal hearing the evidence to be confident that it could rely on the evidence of a man who had admitted previously to having deliberately set out to deceive the Customs officers.

Mr Horne told us not only that he did not smoke, which we do accept, but also that his former wife did not smoke. He did not seem to understand that the fact of her not smoking made it all the more probable that this large quantity of hand rolling tobacco was being brought into the United Kingdom in order to be sold at a profit. The additional fact that his daughter did not smoke either, made this even more likely.

It is, however, not for us to examine the issue of the correctness of the seizure and the issue surrounding it, but to consider whether or not the reviewing officer, Mr Rayden, had properly taken account of all relevant matters when undertaking the review, and had not disregarded anything which he ought to have taken into account. As we have said above, we find this to have been a most thorough review, the only exception being that there is no reference to the value of the van. This would only be relevant were it to be a case of a `not for profit' importation, which it was not. This was very evidently a commercial importation, the quantity alone, quite apart from the surrounding circumstances of there being no evidence that it was to be sold onto family or friends at cost price, make that clear.

Whilst undoubtedly Mr Horne has suffered loss of business through the loss of his vehicle and he has been in a state of uncertainty over a longer period than would normally be expected to be the case because of the initial contact by HMRC being made with Eileen Horne and not with Mr Horne, it is to Eileen Horne that Mr Horne should look, not to HMRC. Whether or not Mr Horne was aware of Eileen Horne's intentions with regard to the tobacco, we do not know. He cannot have thought that the vast quantity of tobacco could have been simply for her two son-in-laws' consumption. It appears to be at best, as far as Mr Horne is concerned, a case of Nelsonian blindness in that he did not put his mind to what his former wife intended to do with the cigarettes. At worst he was, as HMRC contend, complicit in her attempt to bring in this excessive amount. We do not have to make that decision. The decision we do make is that HMRC properly considered all the relevant evidence, they did not take account of any irrelevant evidence and this appeal is therefore dismissed.

There is no order for costs.

MISS J C GORT

CHAIRMAN

RELEASED: 8 January 2008

LON 2006/8093