United Kingdom VAT & Duties Tribunals (Excise) Decisions

Kyle v Revenue & Customs [2008] UKVAT(Excise) E01081 (16 January 2008)

E01081

EXCISE DUTY – Restoration of private vehicle –– Review Officer refused restoration because the vehicle carried excise goods intended for onward distribution at profit – Appellant's case for restoration based on a misconceived argument – Review Officer took account of relevant matters disregarded irrelevant matters – Review Officer's decision reasonable – Appeal dismissed

LONDON TRIBUNAL CENTRE

DAVID KYLE Appellant

- and -

HER MAJESTY'S REVENUE and CUSTOMS Respondents

Tribunal: MICHAEL TILDESLEY OBE (Chairman)

KEITH DUGDALE (Member)

Sitting in public in Norwich on 13 November 2007

The Appellant appeared in person

Suzanne Lambert, counsel instructed by the Acting Solicitor for HM Revenue & Customs, for the Respondents

© CROWN COPYRIGHT 2008


 


DECISION

The Appeal

1. The Appellant was appealing against the Respondents' decision on review dated 23 February 2007 refusing restoration of a Ford Tourneo 280 SWB Minibus registration number AV54 ZNK (hereinafter referred as the vehicle).
2. We heard evidence from the Appellant, and Mrs Deborah Hodge (formerly known as Mrs Gillespie), the review officer. We allowed a Patrick Carolan to assist the Appellant with his case. We received in evidence the Respondents' bundle of documents.

Issue in Dispute

3. The issue in dispute was whether the Respondents' decision on review refusing restoration of the vehicle was a decision which no reasonable body of Commissioners could have arrived at. In order for the decision to have been reasonable Mrs Hodge, the review officer, must have considered all relevant matters and must not have taken into consideration irrelevant matters.

The Background

4. On 25 October 2006 the Appellant was stopped by Customs Officers in the UK Control Zone in Coquelles in France. The Appellant was driving the vehicle which held four passengers, Jean Elliott, John O'Leary, David Pottle and Leslie Edwards. The Officers found 26 kilograms of hand rolling tobacco, 5,400 cigarettes, 7,350 cigars and cigarillos, and 93 litres of wine in the car. After questioning the Appellant and his passengers the Officers were satisfied that the excise goods were held for a commercial purpose. The Officers, therefore, seized the excise goods and the vehicle.
5. On 10 November 2006 the Appellant's representatives requested restoration of the vehicle which was refused by the Respondents on 13 December 2006. On 22 January 2007 the representatives requested a review of the refusal which was considered by Mrs Hodge on 23 February 2007 when she upheld the decision not to restore the vehicle.

The Review Decision of 23 February 2007

6. Mrs Hodge concluded that the Appellant purchased the excise goods for onward sale at a profit. She placed weight on the following facts in reaching her conclusion:

(1) Mrs Elliot lied to the Customs Officer about their destination. She told the Officer that they had only been to Calais, whereas they had travelled to Belgium.

(2) The quantity of excise goods purchased, which in the case of the hand rolling tobacco was more than eight times the indicative level of three kilograms as specified in the REDS regulations.

(3) No satisfactory explanation was given by the Appellant and his passengers for the 7,350 cigars and cigarillos. The Appellant initially declared to the Officers that 1,000 cigars were his, which was later increased to 2,000. None of his passengers admitted ownership of the remaining quantity of cigars.

(4) The explanations given by the Appellant and his passengers for purchasing the tobacco and cigarettes were not credible. The Appellant intended to give away 5,200 cigarettes at an estimated value of £700 to his 83 year old mother and carer. Mrs Elliott said that she would gift her sons five kilograms of hand rolling tobacco with an estimated value of £285. Mr O' Leary who did not smoke bought five kilograms of hand rolling tobacco at a cost of £285 for his sons despite living on a small pension. Mr Pottle claimed that he purchased five kilograms of Drum hand rolling tobacco, yet only three kilograms was found in the vehicle. Mr Edwards did not know what goods he bought. Further he did not wish to say too much to the Officers for fear of dropping his mate (the Appellant) in it.

(5) The Appellant paid in cash for all the excise goods. None of the passengers reimbursed him for the goods they apparently purchased.

(6) The Appellant failed to mention to the Officer he was the owner and manager of a social club.

(7) The Appellant was a revenue trader who had a ready market for the excise goods purchased.

(8) The Appellant informed the Officer that he had not been to Belgium for 15 years. However, he was found to be in possession of two receipts for tobacco goods dated 14 July 2005 and 2 August 2006 from shops in Adinkerke, Belgium. Further his vehicle was recorded as having travelled to the continent on `19 May 2005, 14 July 2005, 15 September 2005 and 15 March 2006. On 19 March 2001 he was intercepted in a vehicle with Mrs Elliott and another man with 15 kilograms of tobacco, 2,400 cigarettes and a large quantity of beer.

7. Mrs Hodge considered that non-restoration of the vehicle was fair, reasonable and proportionate in view of the Appellant's importation of excise goods for commercial purposes.
8. Mrs Hodge decided that the Appellant's circumstances did not amount to exceptional hardship. The Appellant was responsible for the care of his elderly mother. He required the vehicle to transport her to the hospital and shops. In reaching her decision Mrs Hodge noted that the Appellant was a registered keeper of a Peugeot 405 from 26 November 2006. Also the two people residing with the Appellant had their own vehicles.

The Appellant's Case

9. The Appellant considered that he had done nothing wrong. He paid the duty on the excise goods in the Member State where they were purchased. The Respondents' case was based on assumptions. He was treated as a guilty person from the outset. They produced no evidence that he sold on the excise goods at a profit.
10. The Respondents did not give him the relevant documents when his vehicle was seized. The Appellant phoned the Folkestone Office to obtain the necessary forms with which to make the Appeal. He stated that the Respondents' seizure of his vehicle was illegal.
11. The Appellant in cross examination accepted that he received and signed the seizure notices in respect of the excise goods and vehicle. Further, he was represented by a solicitor in his dealings with the Respondents about the seizure of the vehicle. The Appellant did not appeal to the magistrates' court against the forfeiture of his vehicle.
12. The Appellant acknowledged that his vehicle was recorded as having travelled on four previous occasions in the 18 months preceding the seizure on 25 October 2006. However, he was not forthcoming about whether he drove the vehicle on the previous occasions and about the purchases made. In his view the Respondents had no evidence that he purchased excise goods on the previous trips. He considered that the stopping of his vehicle in March 2001 was irrelevant. He had done nothing wrong.
13. The Appellant was equally dismissive of the receipts found in his vehicle. The majority of the receipts related to the 25 October 2006. The Respondents could not prove that he purchased the goods recorded on the receipts dated 14 July 2005 and 2 August 2006. The lists of alcohol on the Bitburger memo-pads were shopping lists for Sainsburys. The Appellant pointed out that the lists mainly comprised of spirits, and that it was cheaper to buy alcohol from the supermarket than from the continent. No spirits were found in the vehicle when it was stopped in October 2006.
14. The Appellant had no day-to- day involvement with his social club, which was a licensed proprietary members' club open seven days a week. No tobacco products were sold at the club. The Appellant stated that he received £150 per week rent from Mrs Elliot who managed the club.
15. The Appellant stated that it was normal for him to conduct transactions in cash. He had been a market trader when all his dealings were in cash. He accepted that he paid for the excise goods but he expected the passengers to reimburse him for their share of the goods.
16. The Appellant challenged the relevance of Mrs Hodge's statement that 26 kilograms of tobacco was more than eight times the guideline of three kilograms. As far as the Appellant was concerned he was entitled to buy as much tobacco as he required from another Member State. Further the guideline of three kilograms was simply that, it had no legal force. The Appellant offered no explanation for the discrepancy between the amounts of cigars declared and purchased. In his view the discrepancy was not indicative of a commercial purpose. He preferred smoking cigars and would give some away as Christmas presents.
17. The Appellant did not call any of his passengers as witnesses. Mrs Elliott managed the Appellant's social club. Messrs O'Leary, Pottle and Edwards were regulars at the social club and friends of the Appellant. The Appellant could not remember what Mrs Elliott purchased on 25 October 2006. Further he could not identify which receipts in the Respondents' bundle belonged to Mrs Elliott. The Appellant could not explain how Mr O'Leary could afford £285 on tobacco from his small pension, particularly as Mr O'Leary did not smoke. The Appellant considered that Mr O' Leary's circumstances were personal to him. The Appellant was unable to tell the Tribunal why Mr Edwards was not prepared to divulge information to the Customs Officers in case he dropped the Appellant in it. The Appellant thought that Mr Edwards must have been bullied by the Officers.
18. The Appellant was the full-time carer of his elderly mother who was 84 years old. Her mobility was severely hampered by having one arm. Also she experienced a serious fall which worsened her condition. The Peugeot 405 was an old car and unsuitable for transporting his mother. The Appellant, however, told the Tribunal that he recently purchased a new Nissan Van. He did not consider it relevant that the other occupants at his address owned vehicles.
19. The vehicle was subject to a hire purchase agreement with Black Horse Limited. The Appellant had kept up his payments on the vehicle whilst in the Respondents' custody.

Reasons for the Decision

20. The Respondents' power regarding restoration of vehicles which have been forfeited or seized is set out under section 152(b) of the Customs and Excise Management Act 1979. Once the power is exercised whether in the form of a positive decision to restore on terms or a refusal to restore, the person affected has a right of appeal to the Tribunal. The powers of the Tribunal are limited in the terms set out in section 16(4) of Finance Act 1994 which provides that:

"confined to a power, where the Tribunal are satisfied that the Commissioners or other person making the 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;

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 that decision to have been unreasonable and to give directions to the Commissioners as to the steps to be taken for securing that repetitions of unreasonableness do not occur when comparable circumstances arise in future".

21. The precondition to the Tribunal's exercise of one or more of its three powers, namely, that the person making a decision could not reasonably have arrived at it, falls within the guidance given by Lord Lane in the decision in Customs and Excise v JH Corbitt (Numismatists) Ltd [1980] STC 231 at page 239:

"…..if it were shown the Commissioners had acted in a way in which no reasonable panel of commissioners could have acted; if they had taken into account some irrelevant matter or had disregarded something to which they should have given weight".

22. The Respondents accepted that we had jurisdiction to hear the Appeal despite the vehicle being subject to a hire purchase agreement. The onus was upon the Appellant to demonstrate on the balance of probabilities that Mrs Hodge's decision refusing restoration of the vehicle was unreasonable.
23. We were not impressed with the Appellant's evidence. His answers to straightforward questions put by Respondents' counsel were vague and evasive, particularly when they went to the heart of the Appeal. The Appellant's standard response to questions was that he was entitled to buy as much excise goods as he wanted from another Member State, and that it was up to the Respondents to bring evidence that he sold the excise goods on at a profit.
24. We consider that the facts of the Appellant's importation had all the hallmarks of a commercial importation. He purchased a large quantity of excise goods with cash. He was a revenue trader owning a licensed proprietary club. He took along passengers who did not know what they allegedly bought and did not have the funds to pay for them. He was a regular traveller to the continent. His answers to the Customs Officer during interview were evasive and misleading. The facts of the case demanded explanations from the Appellant. He chose not to give them, and instead relied on a misconceived argument derived from his understanding of the law.
25. UK duty is payable on excise goods which are imported for a commercial purpose. Under section 49 of Customs and Excise Management Act 1979 the Respondents are empowered to forfeit goods unlawfully imported on which duty has not been paid. Under section 141 of the 1979 Act any vehicle carrying unlawfully imported goods is also liable to forfeiture. In the Appellant's case the Respondents exercised their powers under the 1979 Act to seize the excise goods and the vehicle. The Appellant had the right to challenge the lawfulness of the seizure before the magistrates. He chose not to exercise his right. In which case we are not entitled to consider the lawfulness of the seizure unless we are satisfied that it would be proportionate to do so, having in mind considerations of abuse of process.
26. The Appellant put forward no substantive grounds for re-opening the issue about the lawfulness of the seizure. The Appellant asserted that the Respondents failed to provide him with the correct information about his rights of Appeal. The Appellant's assertion, however, was contradicted by the notes of interview which recorded that the Officer had issued and explained the paperwork. Further the Appellant signed the formal seizure notices acknowledging that he had received the necessary paperwork. At the outset of the dispute the Appellant was legally represented. In those circumstances we are satisfied that the Appellant made an informed choice with the benefit of legal advice not to appeal to the magistrates' courts. We, therefore, find no grounds to re-open the lawfulness of the Respondents' seizure of the vehicle on 25 October 2006.
27. We are concerned with the reasonableness of Mrs Hodge's decision to refuse restoration of the vehicle. Mrs Hodge concluded that the Appellant purchased the excise goods for onward distribution for sale at a profit. We find that Mrs Hodge's conclusion was supported by the facts of the case which had all the hallmarks of a commercial importation. We are satisfied that Mrs Hodge did not take into account irrelevant matters. The Appellant's testimony was unsatisfactory and failed to undermine the validity of Mrs Hodge's conclusion. In those circumstances we hold that Mrs Hodge correctly applied the principles of proportionality as expounded by Lord Phillips MR in Lindsay v Customs and Excise Commissioners [2002] 1 WLR 1766 where Lord Phillips stated that persons who are smuggling for a commercial purpose for profit generally take themselves beyond the threshold whereby a lesser penalty than deprivation of property can be considered subject to the issue of exceptional hardship.
28. The remaining matter is whether Mrs Hodge properly addressed the issue of exceptional hardship by taking into account relevant matters and disregarding irrelevant matters. Essentially the Appellant asserted that he required the vehicle to transport his elderly mother to various locations and an elderly man, who was blind, to and from the Appellant's social club. Mrs Hodge considered that hardship was a natural consequence of having the vehicle seized, however, the test was whether the hardship was exceptional. She found that the Appellant had access to other vehicles, and that any hardship suffered by the Appellant was not exceptional. The Appellant adduced no new evidence of hardship at the hearing. We find that Mrs Hodge gave proper consideration and weight to the relevant facts on hardship. Her conclusion of no exceptional hardship was reasonably arrived at.

Decision

29. We are satisfied for the reasons set out above that the Respondents' decision on review dated 23 February 2007 refusing restoration of a Ford Tourneo 280 SWB Minibus, registration number AV54 ZNK, was reasonably arrived at within the meaning of section 16(4) of the Finance Act 1994. We, therefore, dismiss the Appeal. We make no order for costs.

MICHAEL TILDESLEY OBE

CHAIRMAN

RELEASE DATE: 16 January 2008

LON 2007/8033