United Kingdom VAT & Duties Tribunals (Excise) Decisions

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Cite as: [2008] UKVAT(Excise) E1106, [2008] UKVAT(Excise) E01106

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Darreth Arthur Morgan v Revenue & Customs [2008] UKVAT(Excise) E01106 (15 April 2008)

E01106

EXCISE DUTY- seizure of vehicle – refusal of restoration – whether refusal reasonable in the circumstances? No – Appeal allowed – Further review ordered bearing in mind Tribunal's findings

LONDON TRIBUNAL CENTRE

DARRETH ARTHUR MORGAN Appellant

- and -

THE COMMISSIONERS FOR HER MAJESTY'S

REVENUE AND CUSTOMS Respondents

Tribunal: Adrian Shipwright (Chairman)

Ruth Watts Davies

Sitting in public in London on 7 January 2008

The Appellant in person

Sarabjit Singh, Counsel, instructed by the Solicitor for HM Revenue and Customs, for the Respondents

© CROWN COPYRIGHT 2008

DECISION

Introduction

This is an appeal against a decision on review by the Respondents ("HMRC") contained in a letter dated 9 May 2007. This upheld the earlier HMRC decision not to restore a car, a Jaguar Type V, registration number FD02 FBY ("the Car").

The Issue

The issue in this appeal is whether the Respondents "could not reasonably have arrived at" the disputed decision.

The Law

The relevant law is well-known and is contained in sections 88, 139 and 152 CEMA and sections 14 to 16 Finance Act 1994 and various Statutory Instruments.

The Evidence

A bundle of documents was produced all of which were all admitted in evidence. This included the Witness Statement of Officer Debbie Gillespie (née Hodge) and its exhibits (which were the relevant documents in the case).

We heard Oral Evidence from Officer Gillespie. A Witness statement was provided (see above). We also hear oral evidence from Mr Morgan.

Findings of Fact

From the evidence we make the following findings of fact

(1) The Appellant was stopped at the UK Control Zone at Coquelles in France.

(2) He was driving the Car. Ms Julie McGrath was a passenger in the Car.

(3) They were asked if they had bought back any tobacco. Ms McGrath held up a small bag. When asked if that was all she indicated there was some more in the boot.

(4) The Appellant and Ms McGrath were interviewed separately.

(5) Both Mr Morgan and Ms McGrath signed the officers' notebook.

(6) The Respondents concluded that some 31 kilograms of hand rolling tobacco and 200 cigarettes were held for a commercial purpose. The Car and the goods were seized.

(7) On 11 February 2007 the Appellant requested restoration of the vehicle. HMRC declined to restore the goods or the vehicle this was communicated by letter dated 8 March 2007.A review was requested on 23 March 2007. This upheld the decision not to restore and is contained in a letter dated 9 May 2007, the decision under review.

(8) Mr Morgan when asked "how long do you expect the tobacco to last" replied "about two years".

(9) Mr Morgan told us he has not got "social friends" as he works all the time.

(10) We accept that the previous visit to Belgium in December 2006 was"just to have a look" not to buy tobacco and we so find as a fact.

(11) We also find that the purchase of the tobacco for own use made financial sense to Mr Morgan. The reasoning is as follows.

(a) If he smoked 60 roll ups a day this would be about 21,900 roll ups a year.

(b) On HMRC's calculations 31 kg of hand rolling tobacco would produce about 50,000 roll ups (see paragraph 21d) of the Statement of Case).

(c) On that basis the tobacco would last about 2years 3 months which accords with Mr Morgan's reply to HMRC (see above).

(d) We were told it would cost about £4,800 to buy the equivalent amount of tobacco in the UK.

(e) There was thus a saving of about £2,900 (£4,800 – 1900). This accords with what the Appellant said that he would have "paid" for the tobacco in the cost saving in about 8 months as he was saving £200 - £250 per month.

(12) The tobacco was for own use.

There was no actual evidence of commercial activity in respect of tobacco. HMRC "... concluded that it was likely that the goods were to be sold for profit" (emphasis supplied).

On the evidence before us we do not find that it was likely that the goods were to be sold for profit. We find as a primary fact that the goods were for personal use.

In the review letter it is said "In considering restoration I have looked at all the circumstances surrounding the seizure but I have not considered the legality or correctness of the seizure itself. Your client confirmed that he did not wish to challenge the legality of the seizure. Although you asked for condemnation proceedings to be initiated, you were outside the one month time limit".

We confirm that we have concerned ourselves only with the matters taken into account by HMRC in deciding not to make restoration and have not considered the legality of the seizure. The reviewing officer said in the review letter "… I consider it likely that the goods were to be sold for profit" taking into account the preceding maters including the sum of money involved and a suggestion that the tobacco was to be used in a year notwithstanding Mr Morgan's reply in interview (see above).

Submissions of the Parties

Appellant's arguments in outline

The Appellant's grounds of appeal can be paraphrased as follows;

(1) the seizure of the Car caused hardship:

(2) it has resulted in the Appellant being overdrawn;

(3) consequently he had had to put his flat up for sale.

The notice of appeal said " I would like the opportunity to personally explain why I find the decision that my car will not be restored to be incorrect: all the decisions I find to be false assumptions. As mentioned in my reviews I still owe £8,000 on my car, my only remaining solution is to sell my property. I will bring my wage slips to show how hard I worked and how I work to achieve what I have in the 4 years since I have return to my country ".

We understood the Appellant essentially to be saying that the tobacco was acquired for personal use say that it was unreasonable for HMRC to refuse to restore the car "on the basis he was a smuggler" as he was not.

HMRC's arguments in outline

Mr Singh for HMRC argued in essence:

(1) In the circumstances, it would be an abuse of process for the Tribunal to make a finding of fact that the goods were imported for own use. He relied on (inter alia):

(a) Gora v CCE [2004] QB 93;

(b) Dickinson v CCE [2004] 1 WLR 1160;

(c) Gascoyne v CCE [2005] Ch 215;

(d) CCE v Albert Charles Smith (17 November 2005 Unreported)

(e) CCE v Weller [2006] EWHC 237

(2) In any event the decision was reasonable. The reasons for this included the following:

(a) The Appellant's acquiescence in just showing the small bag when there was more in the boot;

(b) The sheer quantity of the goods ie 31 Kilograms of Hand Rolling Tobacco – over ten times the guide level;

(c) The amount spent on the goods – some £1860 in cash;

(d) The varying levels of consumption given. If it was a year's supply he would have to smoke 120 roll ups a day which is practically impossible ;

(e) Ms McGrath said she and her son did not smoke or no more than socially.

(f) The previous visit to Belgium in December 2006. It was unlikely the Appellant travelled just to have a look;

(g) in the light of the circumstances HMRC properly concluded that it was likely that the goods to be sold for profit;

(h) The appellant applied their usual policy;

(i) Non-restoration was reasonable and proportionate in the light of the Lindsay case.

Discussion

Introduction

There are two questions that arise from the parties arguments.

(1) Whether it would be an abuse of process for the Tribunal to make a finding of fact that the goods were imported for own use? And

(2) Whether or not the goods were imported for personal use and so whether HMRC's decision was reasonable?

Abuse of Process

We do not consider that it would be an abuse of process of the Tribunal to make a finding of fact that the goods were imported for own use.

Such a finding does not go to the legality of the seizure it goes to the reasonableness of the decision to refuse restoration.

We raised the Mills case at the hearing. Mann J said in HMRC v Mills [2007] EWHC 2241 (Ch)

"The power of the Tribunal to make its own decisions on questions of primary fact is established by authority - see Golobieswska v Commissioners of Customs & Excise [2005] EWCA Civ 607. It appears that the Tribunal is entitled, amongst other things, to investigate whether the primary facts on which the Commissioners have based their decision are correct. Quite where that takes one in any particular case will, of course, depend on the facts of that case. …

So far as the quality of the findings is concerned, any attack on those will suffer from the usual difficulties of a challenge in an appellate tribunal to facts found below on the basis of oral evidence. Miss Darroch did not embark on a sustained and detailed attack on the findings. I did not even have the transcripts. It is apparent enough from the Tribunal's decision that it considered the evidence carefully, and of course it had the opportunity of seeing the witnesses themselves. It plainly had in mind the excess of the tobacco over the quantities that HMRC would normally consider to be appropriate for personal use. Having considered all that material it came to the conclusion that Mr Mills was indeed importing for own use. It matters not that the conclusion might be surprising in view of the quantities involved. I cannot say that it was a conclusion that it was not entitled to reach.

That conclusion helps to deal with another point which was raised, which is the directions given to the reviewing officer for the next review. Those directions include a direction to conduct the review on the footing that the tobacco was brought in for own use. If the proceedings on the appeal had been narrowly confined to the matters necessary to consider the procedural correctness of the reviewing officer the Tribunal would not have heard evidence which would have entitled it to make such a direction. But it was allowed to range more widely, and in those circumstances it seems to me impossible to say that it should not be entitled to pass on the fruits of that exercise to the reviewing officer who has to conduct the next review. In fact there are benefits in that being done. If it were not done then the officer would have to reach a conclusion on own use. Any such conclusion would not take place with the benefit of the first- hand material available to the Tribunal - the reviewing officer would be unlikely to conduct an oral hearing with sworn testimony. The Tribunal's exercise was more thorough on the own use point than anything which would be done by the reviewing officer. In those circumstances, while one can anticipate that HMRC would not like the starting point that Mr Mills imported the tobacco for his own use, someone has to decide the point, and the Tribunal has done so as a result of a procedure in which HMRC acquiesced".

We respectfully adopt Mann J's reasoning. We heard the evidence without objection. We have carefully considered all the evidence before us and taken time to do so.

Personal Use

We have found that the goods

(1) were not to be sold for profit; and

(2) were for personal use.

Accordingly, we find that in the circumstances HMRC's decision not to restore the Car was unreasonable. We are "…satisfied that the Commissioners or other person making that decision could not reasonably have arrived at it…" The decision was made (inter alia) taking into account an irrelevant consideration namely that the goods were for commerce no personal use. We have found as a primary fact that this was not the case. The goods were for personal use. It also took into account irrelevant considerations including that the Appellant had said the tobacco would be used up in one year rather than two and so lead to a physically impossible rate of consumption (see page 7 of the review letter). It also proceeded on the basis that the earlier trip had involved the purchase of tobacco which we have found as a fact not to be the case.

Conclusion

We, having had the benefit of considering all the evidence and see the witnesses, find that, in the particular circumstances HMRC, "could not reasonably have arrived at" the disputed decision within the meaning of section 16 FA 1994.

Consequently, in accordance with section 16(2) (b) FA 1994 we "…require the Commissioners to conduct, in accordance with the directions of the tribunal, a further review of the original decision". We direct that the review take into account that we have found that the goods were for personal use and not for commerce and that the original decision not to make restoration based on commercial use was unreasonable and the rest of this decision.

The appeal is allowed. In accordance with the limited jurisdiction available to us we direct that there be a further review as detailed above.

ADRIAN SDHIPWRIGHT

CHAIRMAN

RELEASE DATE: 15 April 2008

LON/2007/8056