United Kingdom VAT & Duties Tribunals (Excise) Decisions

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Cite as: [2008] UKVAT(Excise) E01128, [2008] UKVAT(Excise) E1128

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Andrew Gilmore v Revenue & Customs [2008] UKVAT(Excise) E01128 (29 July 2008)

E01128

MANCHESTER TRIBUNAL CENTRE MAN/07/8071

ANDREW GILMORE Appellant

- and -

THE COMMISSIONERS FOR

HER MAJESTY'S REVENUE AND CUSTOMS Respondents

Tribunal: Ian Huddleston, Chairman

Ms. Patricia Gordon

Sitting in private in Belfast on 3rd July 2008

The Appellant did not appear and was not represented

Bernard Haley of the Solicitors Department of

HM Revenue & Customs for the Respondents

DECISION

The Appeal

The Appeal in this case is against an assessment to excise duty in the sum of £2,013, as notified to the Appellant in an assessment and covering letter dated the 20^th April 2007, issued pursuant to Section 13(1A) Hydrocarbon Oil Duties Act 1979 ("HODA").

The Appellant did not appear and the Tribunal decided to proceed pursuant to Rule 26 of the Tribunal Rules.

On behalf of the Commissioners, the Tribunal heard oral evidence from the reviewing officer, Mr. Craig Clark, a Higher Officer based at Ruby House, Aberdeen.

Facts

The facts of the case are that on the 8^th February 2007 the Appellant's vehicle, a Peugeot 406, registration number UBZ 5952 was stopped by the Road Fuel Testing Unit and, as a result of its investigation, marked rebated gas oil was detected in the fuel tank.

In an interview under caution, the Appellant confirmed that he owned the vehicle and that he used it in connection with his business as a self-employed taxi driver – a business he had started on 1^st May 2006. In that interview the Appellant admitted that he had fuelled the vehicle with rebated gas oil from a pump in a garage at Whiteabbey earlier that day, but indicated that he had not knowingly fuelled the vehicle with rebated gas oil previously. The vehicle was seized and then restored subject to a restoration fee of £510. The Appellant was then asked to produce books and records pertaining to purchase and use of fuel over the last three years, which he subsequently duly did.

As part of the interview under caution, the Appellant indicated that his average mileage was 800 to 900 miles per week.

In support of this fuel usage, the Appellant left with the Respondents 51 fuel receipts documenting the purchase of 740.63 litres of DERV, showing an average purchase of approximately 4.5 litres per purchase. That information was passed to an assessing officer, Ms. Claire-Louise Corrin for consideration. Ms. Corrin made her assessment on the following basis:

(a) the Appellant had owned the vehicle since 29^th October 2005;

(b) the vehicle mileage on the date of acquisition (ie. 29^th October 2005) was 148,000 miles;

(c) the mileage on the date that the fuel was detected (ie. 8^th February 2007) was 206,507 miles – the difference between the two being 58,507, or an average of 125.28 miles per day;

(d) that the audit period should be 283 days, calculated from the 1^st May 2006 (the date upon which the Appellant became self-employed) to the 28^th February 2007. Periods prior to 1^st May 2006 she discounted on the basis that it was private as opposed to commercial use, in line with the Respondents' current standard practice;

(e) she calculated, on a pro-rata basis, the distance travelled per day to the audit period and calculated the mileage covered as 35,455;

(f) she estimated the fuel required to cover this mileage as 5,036.93 litres of DERV calculated at an average of 32 miles per gallon which, the Respondents contended, was the information provided by a local Peugeot dealership;

(g) she then calculated the amount of DERV purchased over the period by the Appellant (as verified by the 51 receipts which the Appellant had left with her) as 740.63 litres;

(h) she deducted the amount of DERV purchased (ie. 740.63 litres) from the amount required (5,036.93 litres) to arrive at a shortfall of 4,296.30 litres;

(i) there were two relevant duty periods – from the 1^st May 2006 to the 6^th December 2006 – where the duty rate was 0.0644 (which amounted to total duty evaded of £1,564.07) and a second duty period from the 7^th December 2006 to the 8^th February 2007 at a rate of 0.0769 (which amounted to alleged duty evaded of £449.42);

(j) as a result therefore, Ms. Corrin assessed the Appellant to unpaid excess duty in the amount of £2,013.00.

The exact details of Ms. Corrin's calculation and the assessment were sent to the Appellant by Ms. Corrin in her assessment and letter dated the 20^th April 2007.

At the request of the Appellant a review was carried out by Mr. Craig Clark who, in a letter of the 20^th June 2007 to the Appellant upheld Ms. Corrin's assessment and the methodology adopted. It is against that review decision that the Appellant now appeals.

Appellant's Appeal

The grounds of the Appellant's appeal are stated in his Appeal Notice in which (and here I paraphrase) he felt it unfair that he was being assessed for duty in respect of the total mileage simply because he did not keep receipts for the diesel he said that he had bought.

Details of Personal Use

As indicated, the Appellant did not appear, but he did write to the Tribunal on the 14^th June 2008, again alleging that he had not knowingly filled the vehicle with marked DERV before the occasion on which he was stopped and the marked oil traced, and indicating that he felt it unfair to penalise him in this manner for what he regarded as one simple mistake.

The Law

Under Section 12(2) HODA, it is not permitted to use rebated oil in a vehicle. Section 13(1A) HODA allows the Commissioners, where fuel is taken into a vehicle in contravention of Section 12(2), to assess an amount equal to the rebate, and to raise that assessment against the person responsible for its use.

From the interview under caution and, indeed, the subsequent correspondence from Mr. Gilmore, there is no doubt that he accepted that he knew it was illegal to run the vehicle on marked or rebated diesel. The receipts he submitted were the only ones he could find. He did not provide any further information to record his purchase of legitimate fuel. In his interview under caution, he had indicated that his weekly mileage was in the region of 800 to 900 miles per week. Ms. Corrin's assessment (calculated as indicated above) suggested that the total distance travelled during the audit period was 35,455 miles. If one accepts the Appellant's sworn statement in the interview under caution then, by his own admission, it would seem reasonable to suggest that he had travelled around 34,000 miles during the audit period.

In a case such as this the onus of proof is clearly on the Appellant. He did not appear in person, nor did he produce to the Respondents any further information which would discharge that onus or establish that the fuel used during the audit period had been legitimately acquired. On the evidence before us we cannot fault the approach taken by the Commissioners, which appears to be entirely reasonable and logical. The Commissioners, as a matter of practice, do not seek to impose excise duty in respect of periods of personal use. In discounting the period before the Appellant became self-employed, the Respondents adhered to that policy – although there is no requirement on them to do so under Section 12(2) and Section 13(1A) of HODA. For the audit period Ms. Corrin and the Review Officer had taken all known factors into account and acted reasonably. It was for the Appellant to establish otherwise and, on the facts, he had failed to do so.

Conclusion

On that basis, therefore, we dismiss the Appeal.

Mr. Haley made no application for costs, and no order is made.

Under rule 26(3) of the Value Added Tax Rules 1986 (as amended) the Tribunal may set aside any decision or direction given in the absence of a party on such terms as it thinks just, on the application of that party, or of any other person interested, served at the appropriate Tribunal Centre within 14 days after the date when the decision or direction of the Tribunal was released.

Ian Huddleston

Chairman 29 July 2008