BAILII
British and Irish Legal Information Institute


Freely Available British and Irish Public Legal Information

[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback]

United Kingdom VAT & Duties Tribunals (Excise) Decisions

You are here: BAILII >> Databases >> United Kingdom VAT & Duties Tribunals Decisions >> United Kingdom VAT & Duties Tribunals (Excise) Decisions >> Woodmore v Revenue & Customs [2008] UKVAT(Excise) E01152 (24 November 2008)
URL: http://www.bailii.org/uk/cases/UKVAT/Excise/2008/E01152.html
Cite as: [2008] UKVAT(Excise) E01152, [2008] UKVAT(Excise) E1152
[New search] [Printable RTF version] [Help]
David Woodmore v Revenue & Customs [2008] UKVAT(Excise) E01152 (24 November 2008)
    E01152

    EXCISE DUTY – Non-restoration of vehicle – Appellant asserting own use – Appellant chose not to appeal to the magistrates – Appellant not entitled to introduce evidence of own use – in any event satisfied Appellant purchased goods for onward sale at a profit – the non-restoration of the vehicle disadvantaged the Appellant's mother and had serious financial consequences for the Appellant – relevant facts for determining exceptional hardship which were not considered by the Review Officer – was the decision not to restore the vehicle reasonable – no – appeal allowed and further review directed.

    MANCHESTER TRIBUNAL CENTRE

    DAVID WOODMORE Appellant

    - and -

    HER MAJESTY'S REVENUE and CUSTOMS Respondents

    Tribunal: MICHAEL TILDESLEY OBE (Chairman)

    MARJORIE KOSTICK FCA CTA (Member)

    Sitting in public in Birmingham on 29 September 2008

    The Appellant appeared in person

    Vinesh Mandalia counsel instructed by the Solicitor of HM Revenue & Customs, for the Respondents

    © CROWN COPYRIGHT 2008

     
    DECISION
    The Appeal
  1. The Appellant was appealing against the Respondents' decision on review dated 29 February 2008 refusing restoration of a Vauxhall Astra registration number AJ03 YWN (hereinafter referred as the vehicle).

  2. We heard evidence from the Appellant and Barbara Woodmore, his mother. Raymond Brenton, the review officer, gave evidence for the Respondents. We received in evidence the bundle of documents together with other documents supplied by the Appellant at the hearing.

    3. Background
  3. On 8 December 2007 the Appellant travelled with a Mr John Palmer, the boyfriend of the Appellant's sister, from Nottingham to Belgium via the Channel Tunnel to purchase hand rolling tobacco. On their return at around 1515 hours they were stopped by Customs Officers in the United Kingdom Control Zone at Coquelles, France and found to be in possession of 20 kilograms of Cutter's Choice hand rolling tobacco which had been bought for £980 from Tobacco Alley, Adinkerke, Belgium.

  4. In interview the Appellant stated that he and Mr Palmer planned their visit the previous year. They split the cost of the tobacco. The Appellant insisted that the tobacco was for own use, declaring that he and his girlfriend smoked about three to four packs of tobacco weekly. The Appellant expected that his share of the tobacco would last him between nine months and one year. The Appellant was unemployed receiving £170 fortnightly in benefits. He saved £10 a week for a year to fund the tobacco purchase. The Appellant also obtained a loan of £775 from Income Support for furniture about three weeks prior to the visit. The Appellant initially stated that he made no trips abroad in the preceding 12 months. Later in the interview he accepted that he travelled to France the week before with Mr Palmer but they could not find their way to Belgium and returned home without buying any tobacco.

  5. Mr Palmer in interview stated that he intended to give the majority of his tobacco (three kilograms) to family and friends. He also smoked the Cutter's brand of hand rolling tobacco, which cost him about £9 a packet in the United Kingdom compared with about £2 (2.45 euros) in Belgium. Mr Palmer told the Officers that the cost of the tobacco purchased on 8 December was shared equally between himself and the Appellant. At first he informed the Customs Officers that he paid £180 for his portion of the tobacco but this was changed to £490 towards the end of his interview. Mr Palmer was unemployed when he was stopped. However, he envisaged that he would soon get a job as a crane operator.

  6. Following the interviews the Officers were satisfied that the Appellant was involved in a commercial importation. They seized 20 kilograms of tobacco and the vehicle. The Appellant was then issued with a Seizure Information Notice, Customs Seizure of Vehicle Notice, a Customs Warning Notice and a Customs Notice 12A. The last Notice explained the two routes available to the Appellant for appealing against the seizure. The Appellant did not appeal to the magistrates' courts but instead chose the restoration route. On 14 December 2007 he requested restoration of the vehicle, stating that the vehicle was his lifeline. He needed it to travel to appointments and interviews, and for transporting his children. On 21 December 2007 the Respondents refused his request for restoration. On 16 January 2008 the Appellant's Member of Parliament requested a review of the refusal. On 25 January 2008 the Appellant supplied further information about the hardship caused from the loss of his vehicle. He produced a loan agreement for the purchase of the vehicle which stated that the total sum owing under the loan was £9,124.03, payable by monthly instalments of £151.17. Mr Brenton conducted the review and confirmed the non-restoration of the vehicle on 29 February 2008.

    7. Issue in Dispute
  7. 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 Mr Brenton, the review officer, must have considered all relevant matters and must not have taken into consideration irrelevant matters.

  8. The Appellant contended that Mr Brenton's decision was unreasonable because the tobacco purchased was for own use and that he and his mother suffered hardship as a result of the vehicle being seized.

    9. The Review Decision
  9. In his review Mr Brenton stated that he looked at all the circumstances but did not consider the legality or the correctness of the seizure itself, including any claim by the Appellant that the hand rolling tobacco was for own use. Mr Brenton considered that he was entitled to take this view because the Appellant did not appeal to the magistrates' court against the seizure of the goods.

  10. Mr Brenton took account of the following factors in deciding to refuse restoration of the vehicle:

    11. (1) The quantity of the hand rolling tobacco imported which was more than three times the guide level of six kilograms for two persons as specified by the REDS regulations. Amounts above the guide level were indicative of a commercial importation.
    (2) The Appellant provided an inconsistent account of how he funded the purchase. At first he stated that he used savings accumulated over 52 weeks by putting away £10 each week. Later he said that he used the money from the income support loan to buy the tobacco.
    (3) The amount spent on the tobacco by the Appellant was disproportionate to his income of £170 a fortnight.
    (4) The Appellant's misleading statement to the Customs Officer that he did not travel to France in the 12 months preceding his trip on 8 December 2007, which he later corrected by admitting a prior visit to France the previous week.
    (5) Mr Palmer's contradictory account of the value of his tobacco share. Originally he stated that his share cost £180 which was changed to £490 at the end of his interview.
    (6) The implausibility of Mr Palmer's explanation that he would give away a substantial amount of his tobacco despite being unemployed.
  11. Mr Brenton concluded from the above factors that the Appellant was the principal purchaser of the tobacco, and that Mr Palmer was there to make up the numbers to give an illusion of legitimacy to the quantity and reason for the importation. Further Mr Brenton decided that the Appellant intended to make onward sales of the tobacco at a profit.

  12. Mr Brenton relied on the Court of Appeal decision in Lindsay v. Customs and Excise Commissioners [2002] EWCA Civ 267 for his view that non-restoration of the vehicle was a proportionate response for the Appellant's contravention of using his vehicle for a commercial importation.

  13. Mr Brenton did not consider that the Appellant's difficulties in taking his children to school and the disruption to his family life arising from the loss of his vehicle constituted grounds for exceptional hardship.

    14. The Facts Found
    First Disputed Issue: Own Use?
  14. The Appellant contended that the tobacco was purchased for own use. He referred to advice given on the Respondents' website that there were no limits on the amount of tobacco and alcohol imported provided they were for personal use only. The Appellant produced a letter from a Mr Kooner who stated that the Appellant purchased large amounts of pouch tobacco, three or four times a week, from his shop in Nottingham.

  15. The Respondents submitted that the Appellant was not entitled to rely on the defence of own use. This was a matter which he should have raised before the magistrates in condemnation proceedings. The Appellant requested restoration rather than appealing to the magistrates. The Respondents referred to the Court of Appeal decision in Gascoyne v Customs and Excise Commissioners [2004] EWCA Civ 1162 which stated that the Tribunal should apply the principle of proportionality to the particular facts of the case having in mind considerations of abuse of process when deciding whether to reopen the issue about the lawfulness of the original seizure. In Commissioners of Customs and Excise v Albert Charles Smith ChD (2005) unreported, Mr Justice Lewison decided that if an Appellant failed to institute condemnation proceedings it would, in most cases, preclude a subsequent challenge to the lawfulness of seizure in restoration proceedings. In such circumstances the Tribunal should consider the Appellant's response to two questions when deciding whether to re-open the facts of the original seizure. The first question is: why did the Appellant not institute condemnation proceedings? The second question is: should he have done so?

  16. The Appellant stated in evidence that he did not know about his right of Appeal to the magistrates. However, it transpired that he received Customs' Notice 12A which clearly explained the two routes of Appeal. He admitted that he had read Notice 12A. Further the Appellant used Letter B to commence the restoration proceedings. The contents of Letter B pointed out that restoration should not be used for claims based on own use, directing potential claimants in such cases to follow the procedure in section 2 of Notice 12A (condemnation proceedings). On these facts we are satisfied that the Appellant was aware of his right of Appeal to the magistrates. The Appellant did not put forward a valid reason for not challenging the seizure of the cigarettes before the magistrates. Thus we hold that he is not entitled to rely on arguments of own use before us in his claim for restoration.

  17. Regardless of whether the Appellant was entitled to advance arguments of own use, we consider that the evidence presented in this Appeal overwhelmingly pointed to the Appellant being involved in a commercial importation. This conclusion was supported by the facts of the quantity imported, the disproportionate relationship between the amount expended on tobacco and his regular income, and the inconsistencies in his interview and with Mr Palmer's interview. Further we did not believe the Appellant when he stated that he did not buy tobacco on his trip to France the previous week. He was there for five hours and spent £70 in petrol and the cost of the ferry in travelling there. We find it inconceivable that he did not buy tobacco during that time, if only to justify the travel costs which were high compared with his income.

    18. Exceptional Hardship
  18. The Appellant in his original application for restoration stated that he required the vehicle to take his children to school, and fetch his son from Mansfield. In his evidence before the Tribunal he accepted that his children were able to attend school without recourse to his vehicle. The Appellant either borrowed a vehicle or relied upon his nephew or girlfriend to pick up and return his son from Mansfield at the weekend.

  19. The Appellant had been unemployed for five years. He secured a loan of £9,124.03 which included the cost of credit to purchase the vehicle. The monthly instalment of the loan was £151.17 which was roughly half his monthly income. His mother helped him with the loan payments by contributing £100 each month. In return the Appellant would take his mother in the vehicle to visit members of her family. Since the vehicle was seized, his mother had not see her relatives who were in poor health and unable to visit her. His mother had not thought about taking taxis because she had always gone with her son. She also stopped making her contribution of £100 towards the loan repayment. The Appellant had been unable to maintain the loan instalment payments and was now being chased by bailiffs.

  20. The value of the vehicle at the time of the seizure was £4,860 whilst the amount of excise duty payable on the imported tobacco was £2,274.80.

    21. Was the Review Decision of 29 February 2008 Reasonable?
  21. Mr Brenton refused restoration of the vehicle on the ground that it was a commercial importation which was aggravated by the large quantity of tobacco involved. We consider that Mr Brenton was correct in having regard to these features of the case, which were supported by our findings of fact.

  22. Mr Brenton justified his decision by reference to the Court of Appeal decision in Lindsay in which Lord Phillips and Lord Justice Judge ruled that it was proportionate to seize vehicles of those persons who smuggle for a profit subject to exceptional individual considerations.

  23. Mr Brenton dealt with the question of exceptional hardship by using the standing wording which appears in all review decisions considered by this Tribunal. The standard wording in this Appeal has been adjusted slightly with the insertion of the Appellant's difficulties in taking his children to school, and general family life. The review decision on the face of it suggested that Mr Brenton adopted a formulaic approach to the question of exceptional hardship rather than an active consideration of the Appellant's individual circumstances.

  24. At the hearing we heard fresh evidence about the effect of the seizure on the Appellant's mother. She was unable to visit her relatives, and lost her investment in the vehicle, having paid a substantial proportion of the loan instalments. Mr Brenton in his evidence before the Tribunal did not consider that the mother's evidence and the Appellant's difficulties with his loan repayments constituted exceptional hardship. Respondents' counsel submitted that there was nothing in the Appellant's evidence which took the facts beyond the ordinary consequences of having a car seized. He pointed out that the Appellant's mother was still able to visit her relatives, albeit by other means.

  25. The issue we are deciding, however, is whether Mr Brenton considered all relevant matters in refusing restoration. We find that the impact of the non-restoration of the vehicle on the Appellant's mother was a relevant consideration, which may constitute exceptional hardship, in particular the loss of her investment in the vehicle and the restriction on her mobility.

  26. We are satisfied that the Appellant's plea of exceptional hardship in relation to his children attending school or collecting his son from Mansfield lacked substance. However, we consider that the Appellant's dire financial situation, and his inability to repay his loan for the vehicle were factors to which Mr Brenton should have had regard in assessing the proportionality of the penalty to the Appellant's contravention. Whilst we accept that a finding of smuggling would normally take the Appellant beyond the threshold of a lesser penalty than non-restoration, it were still necessary to consider whether the personal circumstances of the Appellant were exceptional to justify departure from non-restoration. We find that Mr Brenton did not pay sufficient attention to the Appellant's personal circumstances in reaching his decision.

    27. The Decision
  27. We, therefore, conclude that Mr Brenton's decision of 29 February 2008 was unreasonably arrived at within the meaning of section 16(4) of the Finance Act 1994, in so far as he failed to have full regard to the facts of exceptional hardship in relation to the Appellant and his mother. We, therefore, allow the Appeal. We make no order for costs, as none was requested.

    28. Orders
  28. We are not entitled to order the Respondents to restore the vehicle to the Appellant with or without conditions. In exercise of our powers on Appeal under section 16(4) of the Finance Act 1994 we make the following orders:

    29. a. The decision to refuse restoration of the vehicle shall cease to have effect from the date of release of this decision.
    b. The Commissioners shall conduct a further review of the decision not to restore the vehicle and serve the same on both the Appellant and the Tribunal within 30 days of release of this Decision.
    c. An Officer not previously involved with the case shall conduct the further review.
    d. The further review shall be on the basis of the Tribunal's findings of fact set out above.
    e. The Review Officer shall take account of any further material or representations made by the Appellant within 14 days from release of this decision. The representations shall be made to HM Revenue and Customs Review Team, Detection South Region, Crownhill Court, Tailyour Road, Crownhill, Plymouth, PL6 5 BZ.
    f. The Appellant will have a further right of appeal to the Tribunal if dissatisfied with the outcome of the further review.

    MICHAEL TILDESLEY OBE
    CHAIRMAN
    RELEASE DATE: 24 November 2008

    MAN/2008/8021

About BAILII - FAQ - Copyright Policy - Disclaimers - Privacy Policy amended on 25/11/2010