United Kingdom VAT & Duties Tribunals (Excise) Decisions

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Cite as: [2008] UKVAT(Excise) E1088, [2008] UKVAT(Excise) E01088

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Peter Broadman v Revenue & Customs [2008] UKVAT(Excise) E01088 (22 February 2008)

E01088

Excise Duty - Importation of tobacco and alcohol for "a commercial purpose" - Seizure of Audi A4 – Whether the goods acquired that were not for own use or to be given away were only to be transferred to others for reimbursement of cost – Appeal dismissed – Right to request a re-hearing at which the Appellant would be present in person to give evidence and the circumstances where the Tribunal might agree and order that such a re-hearing be allowed

LONDON TRIBUNAL CENTRE

PETER BROADMAN Appellant

and –

THE COMMISSIONERS FOR HER MAJESTY'S REVENUE & CUSTOMS Respondents

Tribunal: HOWARD M NOWLAN (Chairman)

RUTH A.WATTS DAVIES, MHCIMA, FCIPD

Sitting in public in London on 5 February 2008

The Appellant was unrepresented and did not appear in person

Sarabjit Singh, counsel, on behalf of the Respondents

© CROWN COPYRIGHT 2008

DECISION

Introduction

This was a case where the Appellant and his daughter had travelled to Belgium (or rather the Appellant had travelled to Belgium and his daughter had seemingly preferred to pass the time at the Citie Europe shopping complex at the French end of the Channel Tunnel) for the purpose of buying a substantial quantity of hand rolled tobacco and a relatively small amount of wine, beer and spirits.

The Appellant and his daughter were both questioned on their return journey to the United Kingdom, and following questioning in which they were co-operative, though some of their responses to questions were alleged by the Customs officers to be inconsistent with the result that the goods purchased and the Appellant's Audi A4 car (estimated to be worth about £4,000), in which they were travelling, were both seized. Following correspondence in which the Appellant sought the return of the car and the goods, which HMRC refused, the Appellant appealed to the Tribunal.

The Appellant failed to appear in person at the hearing of his appeal, though had indicated in advance that he did not intend to appear in person, and had supplied written assertions in a Statement of Case.

We were somewhat troubled about the approach that we should follow in dealing with this case. On the one hand, we thought that there might well be an innocent explanation for the inconsistencies between the replies given by the Appellant and his daughter, and for the failure of the daughter to answer virtually any of the questions put to her by Customs officers. Equally we thought it possible that it was true that the hand-rolled tobacco bought by the Appellant (as distinct from that bought by or for his daughter) was either for own use or use by himself and his wife, or for delivery to various relatives on a cost-reimbursement and "not for profit" basis. The other possible finding of fact was the one contended for by the Respondents, namely that the inconsistencies of the various replies undermined the credibility of the Appellant; and that remarks about earlier cross-Channel journeys and earlier importations of tobacco, and the significant quantity of tobacco imported on this particular occasion made it reasonable to infer that the amounts of tobacco involved were too high to be consistent with "own use" and "not for profit" deliveries. Accordingly, on the Respondents' approach, the Appellant must have been operating on a minor commercial basis, and must have been intending to sell some of the tobacco at a profit.

Although the Appellant indicated in advance that he would not attend the hearing, so that he sent in written submissions as to why the car in particular should be restored, we felt unable to allow the Appellant's appeal by reference simply to his written submissions. The Appellant will have noted in advance that the Respondents' case was based on doubting the credibility of the claim that the tobacco imported was all imported either for own use or for "not for profit" delivery to relatives. In the light of this we found the written submission to be of relatively little assistance since while many points were made, virtually no attention was given to trying to support the proposition that none of the importations were "for profit". One aside in a paragraph principally dealing with the feature that cash was used to pay for all the purchases, made a reference to the fact that nothing was imported with a view to being sold for profit, and a summary paragraph, listing 13 points, merely said at one point that "Sales of the imported product were low".

We therefore think it appropriate to dismiss the appeal. We wish to make it clear however that the Appellant has a 14 day period from the release of this decision in which he can apply to the Tribunal for a re-hearing at which he himself could be present. It would be for the Tribunal to decide whether to concede that re-hearing and it is noteworthy that the Appellant's failure to attend the hearing before us was deliberate and not based on any good reason why he could not attend. We hope that the Tribunal would, however, accept that there should be a re-hearing, if the Appellant confirmed that he had not been aware how vital his and his daughter's evidence as to the facts and intentions would have been to the possible outcome of the hearing. In this context we add that counsel for the Respondents confirmed that were the Tribunal to find as a fact that none of the importations were intended to be sold for profit (but all were either for own use or to be delivered simply for reimbursement of cost – ignoring travelling cost) the Audi A4 would almost certainly be restored to the Appellant (albeit possibly on some conditions).

The facts in more detail

The Appellant was intercepted at the UK Control Zone at Coquelles, when returning in his Audi A4 car with his daughter to the UK. They had brought with them:-

15.5 kg Hand Rolling Tobacco of four different varieties, namely 7.5 kilos of Golden Virginia, 4 kilos of Old Holborn, 3.5 kilos of Drum and 0.5 kilos of Amber Leaf;

200 cigarettes;

12 litres of beer;

129 litres of mixed wine, and

2.7 litres of spirits.

Customs officials interviewed both the Appellant and his daughter. The interview with the Appellant's daughter was somewhat unsatisfactory in that although she suggested that she had purchased the Golden Virginia tobacco herself for her own use, her own responses failed to answer any of the questions as to how much tobacco she had bought; how much she had paid for it, or how much cash she had brought from the UK to fund the purchases. Her father's evidence disclosed that his daughter had in fact stayed in the Channel tunnel shopping centre, whilst he went to Belgium, which meant that as the invoice in respect of the Golden Virginia demonstrated that that tobacco had been purchased in Belgium, his daughter had not actually purchased that tobacco personally. The Golden Virginia had also cost £472.50, a substantial amount in view of the fact the estimate of her take home pay was £400 a month, although she mentioned that the cash that she had provided was partly funded out of savings. It was also revealed by the Appellant's evidence that his daughter had only provided him with cash of £200, and that she would pay off the balance "as and when". Finally there were different views about how long it would take the Appellant's daughter to consume the imported Golden Virginia. Without giving the exact details, the Respondents contended that the Appellant's daughter's estimate that she would consume the tobacco in 8 months was unrealistically low and that on her estimate of her level of smoking, the tobacco might last for up to three years, or on other calculations for one and a half years.

The Appellant's own responses to the questions posed by the Customs officer interviewing him were also unsatisfactory in some respects. Some of the alleged inconsistencies related to the purchase of the tobacco for his daughter and the feature of who had actually bought her tobacco and how it had been paid for. In our comments on the evidence we will revert to this later. Other inconsistencies dwelt on the amounts of tobacco purchased and whether it was credible that all were for own use of to be transferred at cost to relatives. Allegedly the Appellant had been given £450 by his brother to purchase Old Holborn whereas the receipt indicated that the price paid was only £252. The Appellant also said that the Amber Leaf had been purchased for his brother-in- law who had not yet paid for it. The quantity of Amber Leaf purchased was however relatively small and was certainly consistent with one person's modest smoking needs. As regards the Drum which was claimed by the Appellant to have been bought for his own use, the Customs officials asserted that it seemed improbable to them that he would have already consumed the 50 pouches of Drum which, on his own admission, he estimated to be the amount of Drum that he had brought back with him in November 2006 (and which he claimed to have finished). Another fact mentioned on which nothing much appeared to turn was that the Appellant disclosed that he had travelled to Bulgaria in a hired van in May or June 2006. No indication was given as to what this trip was for and as to why it was necessary to hire a van, but the Appellant anyway claimed that on that trip he saw no Drum, the tobacco that he appeared to like, and therefore did not purchase any tobacco.

The relevant law and Customs practice

We should simply mention that in this case there is no offence at all if the tobacco had been imported either for own use or so as to be given away. Where on the other hand, it was to be sold, even just for reimbursement of the cost of the tobacco, there is an offence because that importation ranks as one for "a commercial purpose". Although both the imported product and the vehicle in which it is carried can then be seized, Customs' practice is often to restore the vehicle:

• if the importation was of only a small amount; and

• if the importation was with a view to the "not for profit" sale of the product.

"Not for profit importations" are those where the relevant person's intention is to sell the product for no more than a reimbursement of the cost of the product, ignoring travelling cost. In the case of "not for profit importations", the vehicle may not be restored if there are aggravated circumstances. "Aggravated circumstances" are in turn defined to refer to and include previous offences, and importations of "large quantities", set at 6 kg in the case of hand rolled tobacco. The percentage of duty imposed in return for the restoration of the vehicle and ultimately the refusal to restore the vehicle escalate with further "detected aggravated offences".

The contentions on behalf of the Respondents

It was contended on behalf of the Respondents that it was not open to the Appellant to contend that there had been no offence at all because on his own admission, much of the tobacco had been purchased for non-travellers. Since it was not to be given to them, and since there was an offence once it was to be sold, even for reimbursement of the cost price, it could not be contended that there was no offence.

It was then contended that the inconsistencies in the answers given in the interviews, and the excessively high amounts of hand rolled tobacco purchased made in unlikely that the answers given by the Appellant were wholly true, and that there was thus an intention to sell some of the tobacco, other than in the ways mentioned. It was contended that although it was the published practice of HMRC not to seize and retain vehicles where the amount of tobacco imported could be regarded as "small" (i.e. not in excess of 6 kilos) and in cases where greater amounts were imported but only so as to be delivered in return for reimbursement of cost, the officers were rightly not satisfied that either of these conditions was satisfied in this case.

The contentions by the Appellant

The Appellant sent the Tribunal, as already mentioned, a Statement of Case in which a number of points were made. Many of the points were perfectly fair, but somewhat technical, suggesting that the paper had been prepared with the assistance of an adviser. We will not list the various points made, though we will mention that one or two were wrong (it having been admitted that some of the purchases were purchases that ranked as "commercial" such that there was plainly an offence) and others were fair and realistic points. These included claims that it was unfair to speculate about how long tobacco purchased on an earlier occasion had lasted because such matters were pure speculation. This was particularly so since it was only on account of the Appellant's own admission that it even emerged that he had probably purchased 50 pouches of Drum in November 2006.

Our Decision

This was a case where we decided that it was particularly appropriate that the Appellant, and also his daughter, should have given evidence in person. It was effectively conceded by counsel for the Respondents that if we had felt able to find as fact that all the tobacco purchased other than for own use was to be delivered to the Appellant's brother and brother-in-law for reimbursement of cost and we decided that there should be a further review in the light of this finding of fact, HMRC would have accepted that the Audi A4 should be returned to the Appellant.

In the written paper submitted by the Appellant, the inconsistencies between the answers given by the Appellant and his daughter, and the failure of his daughter to answer many simple questions was attributed to "shock and distress". Without trying to feed suggestions to the Appellant, should he apply for and be granted a re-hearing, it seemed to us to be far more likely that the inconsistencies were explained by the fact that the daughter had not accompanied her father to Belgium and so had no idea of the answers to questions that would have been simple to answer had she known the facts. For our part we doubt whether anything would have undermined her "own use" claim if she had admitted that she had remained at Citie Europe, rather than gone to Belgium. If (as appeared to be the case) she had provided her father with some of the money to make the purchase, and had asked him to buy tobacco on her behalf, we doubt whether Customs officials would have enquired into the fine distinction between whether the balance of the price paid (over the amount provided by the daughter) was provided as a loan by her father so that she could claim that she had paid the whole of the price (albeit being liable to repay the loan), or alternatively a case where he had paid the balance of the price, which was to be reimbursed later in the UK. Whatever the sensitivities on the part of the father and daughter on account of these points, it does appear that the fact that the daughter did not actually go to Belgium and personally make the purchase, and that her father may have collected her only a few minutes before they were stopped and questioned may well account both for her failure to answer questions, and for a concern as to whether it would or would not be damaging actually to admit that she had not travelled to Belgium.

Whilst the above factor may largely account for the inconsistencies between the father's and daughter's evidence, and for the lack of answers given by the daughter, we certainly note that the quantity of tobacco imported by the daughter (7.5 kg) was a large amount, and an amount that coupled with the officer's doubts about the evidence given by the daughter in relation to the period that it would take her to consume this tobacco, led to suspicion that justified the attitude and action taken by the Customs' officer. Those suspicions might have been removed, and might indeed still be removed, were appropriate evidence to have been given or to be given on oath, but they were not eliminated by the assertions sent in to the Tribunal in writing.

Much the same point applies as regard's the Appellant's claims that his tobacco was purchased either for own use or to be delivered on a "not for profit" basis. The Appellant will have seen the reasonable assertions in the Respondents' Statement of Case, to which he responded, that on balance his statements that the non own use tobacco was all simply to be transferred to two relatives on a "not for profit" basis were not to be believed. We were ready to accept that these statements that he had made might well be substantiated by proper evidence, but not by the two very peripheral asides made in relation to this aspect (mentioned in paragraph 5 above) that were contained in his written Statement.

We would like to add that we hope that the Appellant does apply for a re-hearing and that the Tribunal grants the request for such a re-hearing.

In the meantime we dismiss this Appeal, both because on the lack of evidence before us we consider that that is the right thing to do and because there must be finality to this case in the event that the Appellant does not request a re-hearing, or in the event (which we hope will be unlikely) that such a re-hearing is refused.

HOWARD M NOWLAN

CHAIRMAN

RELEASED: 22 February 2008

LON 2007/8101