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	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 >> Tilburn v Revenue & Customs [2006] UKVAT(Excise) E00989 (07 September 2006) URL: http://www.bailii.org/uk/cases/UKVAT/Excise/2006/E00989.html Cite as: [2006] UKVAT(Excise) E989, [2006] UKVAT(Excise) E00989

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E00989

EXCISE DUTY – Non Restoration of excise goods and restoration of vehicle on terms – Appellant contended goods for own use – Appellant seeking compensation for damage done to vehicle whilst in Respondents'– No jurisdiction to entertain own use Gascoyne applied – No power to entertain a claim for damages – Review Officer addressed relevant facts for non restoration of excise goods but disregarded matters to which he should have given weight for restoration of the vehicle on terms – review decision unreasonable in respect of the vehicle– appeal allowed in part – further review directed.

MANCHESTER TRIBUNAL CENTRE

JOHN ALAN TILBURN Appellant

- and -

HER MAJESTY'S REVENUE and CUSTOMS Respondents

Tribunal: MICHAEL TILDESLEY OBE (Chairman)

WARREN SNOWDON JP (Member)

Sitting in public in York on 14 July 2006

The Appellant appeared in person

Elizabeth McClory, counsel instructed by the Acting Solicitor for HM Revenue & Customs, for the Respondents

© CROWN COPYRIGHT 2006


 


DECISION

The Appeal

1. The Appellant was appealing against the Respondents' decision on review dated 19 April 2004 refusing restoration of excise goods and the restoration of a Ford Transit van, registration number P295 SWT, subject to the payment of a fee in the sum of £1,129.65
2. The excise goods involved upon which the review was based were 4,200 cigarettes, 2.4 kilos of hand rolling tobacco, 100 cigars, 1.5 litres of cider, 8.25 litres of sparkling wine, 21 litres of still wine, 1 litre of Martini, 101.12 litres of beer and 24.1 litres of spirits.
3. The Appellant disputed the quantity of excise goods because of errors that had occurred when Customs Officers initially recorded the goods. The Appellant doubted the accuracy of the quantity recorded for cigarettes. Mr Brenton, the review officer, accepted that errors had been made in the past. However, he stated that the amounts had been investigated by Mr Cobb and were correct. We decided to deal with the Appeal on the basis of the quantities recorded in paragraph 2 above.

The Issues in Dispute

4. The Appellant contested that he had purchased the excise goods for a commercial purpose. He challenged the fee that he was required to pay for restoration of the Ford Transit van. The Appellant was also seeking compensation for damage done to the van whilst in the Respondents' custody.
5. The Respondents contended that it was not open to the Tribunal to determine the issue of personal use/commercial purpose because this issue went to the lawfulness of the seizure of the goods which was a matter for the magistrates' court not the Tribunal. Further the Tribunal had no jurisdiction to entertain the Appellant's application for compensation in respect of damage to the Ford Transit van. In the Respondents' view the Tribunal was restricted to considering the reasonableness of the Commissioners' decision not to restore the excise goods and to restore conditionally the Ford Transit van for a fee.

The Background

6. On 22 May 2002 Customs Officers at Portsmouth stopped the Appellant and Mr Conway in a Ford Transit van. They had travelled to France to deliver furniture to Mr Conway's house in France. The Appellant and Mr Conway had been friends for 40 years. They brought back excise goods which were readily visible in the rear of the van. The Appellant told the Customs Officers that the cigarettes and tobacco were for himself and his wife and for distribution at trade fairs where tobacco would be put in dishes for people to make their own cigarettes. The alcohol had been purchased principally for a Jubilee party and Mr Conway's farewell party. The Customs Officers found pieces of paper in the Ford Transit van which contained details of excise goods cross referenced to named persons. The Appellant denied that they constituted orders from people. He stated that the pieces of paper represented people's suggestions for drinks for the various parties. The Appellant visited the USA in February 2002 when he brought back 200 cigarettes. Apart from the visit to the USA the Appellant had not imported excise goods before the visit on 22 May 2002. The Officers seized the excise goods and the Ford Transit van.
7. On 19 June 2002 the Appellant requested return of the excise goods and the Ford Transit van^[1]. On 10 July 2002 the Appellant informed the Respondents that he did not wish to instigate condemnation proceedings. On the 18 July 2002 the Respondents treated the Appellant's letter of 19 June 2002 as a request for restoration of the goods and van. On 22 July 2002 the Respondents refused restoration. On 7 August 2002 the Respondents carried out a review which upheld the decision to refuse restoration. On 17 August 2002 the Appellant lodged a Notice of Appeal against the review decision. Following an Application by the Respondents, the Tribunal without hearing the merits directed that the Respondents carry out a further review.
8. Mr Brenton conducted the further review on 19 April 2004 where he confirmed the non-restoration of the excise goods but offered to restore the Ford Transit van on payment of £1,129,65 which was equal to the duty evaded on the excise goods. On 16 May 2004 the Appellant appealed against the review decision.
9. The Appellant decided to pay the restoration fee on the understanding that it did not compromise his right of Appeal to the Tribunal. He collected the van on 15 July 2004 from Portsmouth which was not in same condition as it was when seized by the Respondents in May 2002. The Appellant pursued a claim for compensation in respect of the damage to the van with the Respondents' complaints section.
10. The Appeal was listed for hearing on 14 July 2006 following a number of direction and pre-trial hearings.
11. Mr Conway instigated condemnation proceedings for return of the excise goods and was successful before Hampshire magistrates on 4 November 2003. The Respondents appealed to the Crown Court which allowed their Appeal on 28 May 2004. Mr Conway has disputed the validity of the Crown Court decision. Mr Conway has also reported to Hampshire police an alleged theft of property from the Appellant's vehicle during their questioning by Customs Officers on 22 May 2002.

The Evidence

12. We heard evidence from the Appellant and from Mr Brenton, the officer who conducted the review on 19 April 2004. A bundle of documents was presented to the Tribunal.

The Respondents' Review Decision of 19 April 2004

13. Mr Brenton considered the decision refusing restoration of the goods and Ford Transit van afresh from the information available to the Commissioners when the decision was made and subsequent correspondence and representations. Mr Brenton took account of the following matters in upholding the non restoration of the excise goods:

(1) The Appellant's declaration that some of the excise goods were destined for trade fairs. Thus although the goods were to be given away, they were to be used in connection with the Appellant's business which took it outside the scope of relief as own use.

(2) The lists found in the Appellant's vehicle were indeed shopping lists and the goods named on those lists were to be sold on either for profit or at cost.

14. Mr Brenton, however, having regard to recent changes in the Respondents' policy considered that the circumstances of the case merited restoration of the Ford Transit van on payment of £1,129.65 which was equivalent to the excise duty evaded on the excise goods.

The Respondents' Policy for Restoration of Vehicles

15. The policy considered by Mr Brenton was as follows:

"The Commissioners' general policy regarding private vehicles used for the improper importation or transportation of excise goods is that they will not be offered for restoration. This policy is designed to be robust in order to protect legitimate UK trade and revenue and prevent illicit trade in excise goods.

However at the discretion of the Commissioners, vehicles may be offered for restoration or restoration on terms in the following circumstances:

Where the excise goods were destined for supply on a not for profit basis, for example for reimbursement.

Where the excise goods were destined for supply for profit; providing the quantity of excise goods is small and it is a first occurrence.

Where the vehicle was owned by a third party owner who was not present at the time of the seizure of the vehicle, and was either blameless or had taken reasonable steps to prevent smuggling in the vehicle".

Mr Brenton's Evidence

16. Mr Brenton decided to give the Appellant the benefit of doubt in respect of selling the excise goods at a profit, however, he was satisfied from the lists found in the Appellant's van and the Appellant's own admission regarding the trade fairs that the goods were being used for a commercial purpose. He considered that the circumstances straddled the two limbs of the Respondents' vehicle policy regarding "small quantity and first occurrence" and "a not for profit basis" which justified his decision to restore the van on terms.
17. Mr Brenton pointed out that he had complete discretion about the level of the fee for restoring the van. However, he chose to base it on the value of the evaded excise duty which was calculated by means of a computer programme set at the value of the duty at the time of the review. His evidence conflicted with his letter of 23 June 2004 to the Appellant which stated that the duty was computed at the rates extant at the time of the seizure.
18. Mr Brenton accepted that he did not carry out a recount of the cigarettes seized. He based his review on the quantities revealed in Mr Cobb's letter who had carried out a thorough investigation in November 2002.
19. He told the Tribunal that his review had not been tainted by the previous review carried out in August 2002, although had he been conducting the review two years earlier he would have reached the same decision. Since the August 2002 decision the Respondents' policy had changed as a result of the Hoverspeed and Lindsay decisions.
20. Mr Brenton also questioned the Appellant's account regarding the Customs Officers' selection of the van for stopping at Portsmouth.

The Appellant's Evidence

21. The Appellant accepted that he travelled with Mr Conway to France and brought back excise goods. However, the Appellant was adamant that they were for his own use, although he acknowledged that some of the goods were to be given away at trade fairs. He denied that the pieces of paper were shopping lists, if they had been lists he would have them in his pocket not in the glove compartment of the van.
22. The Appellant was very critical of his treatment by the Customs Officers at Portsmouth. The Appellant considered that they had been singled out. He was not given the chance to count the goods seized and pointed out the discrepancies in the various Respondents' documents about the quantities of the seized goods. The Appellant stated that whisky, cigarettes and a lighter belonging to him had been stolen from the glove compartment of the van when he was being questioned by Customs Officers.
23. The Appellant chose to take restoration proceedings before the Tribunal to recover the goods and the Transit van. He did not take the route of condemnation proceedings because the Respondents told him that he would have to attend court in Portsmouth and that the Tribunal was the cheapest route..
24. The Appellant was a sole trader in the business of the repair, sale and operation of gaming machines. The annual turnover of the business was £770,000, employing seven members of staff. He purchased the Ford Transit van on 2 December 1999 for £5,000 plus VAT. The Appellant used the van in his business for transporting pool tables which could not be carried by the other smaller vans of the business. For the first six months following the seizure the Appellant borrowed vehicles to do the work previously undertaken by the Transit. Eventually he decided to purchase a Transit van for £900 as there was no end in sight to his dispute with the Respondents. The importance of the seized Transit van to his business was underlined by the Appellant's offer of a £5,000 bond in return for his van with the Respondents entitled to cash the bond if the restoration proceedings went against the Appellant. The senior Customs Officer at Portsmouth declined the offer of the bond.
25. The Appellant considered that it was disproportionate to seize the Transit van with a value of £5,000 for excise goods which had cost him £842.
26. Following the review decision on 19 April 2004 the Appellant decided to pay the fee to recover the Transit van without prejudice to the ongoing Tribunal proceedings. When he collected the van on 15 July 2004 it was not in the same condition as when it was seized in May 2002 when the condition was recorded on "Vehicle Condition Form". According to the Appellant, the vehicle's bodywork and offside mirror had been damaged. The front tyres of the van were bald, the battery was flat and the alternator defunct. The radio cassette which had been in the vehicle at the time of seizure had been replaced with a radio. There was no diesel left in the van and the milometer reading revealed that the van had travelled 141 miles since the date of seizure. The Appellant assessed the damage to the vehicle at £1,447.35.
27. The Appellant accepted the witness statement of Jo-anne Newman, Customs Officer, which showed that the value of the Transit van depreciated by £950 whilst in the custody of the Respondents
28. The Appellant indicated that Mr Brenton's decision to offer conditional restoration would have been reasonable if made at the time of the first review. His complaint was principally about the length of time he was deprived of the vehicle and the damage caused to it whilst in the Respondents' custody. The Appellant also objected to paying a further £1,000 for the tax evaded on the excise goods.

The Jurisdiction of the Tribunal

29. The Respondents' power regarding restoration of goods and 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".

30. 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".

31. In this Appeal our jurisdiction is limited to considering whether Mr Brenton's review decision was reasonable. In order for his decision to have been reasonable Mr Brenton must have considered all relevant matters and must not have taken into consideration irrelevant matters.
32. The Court of Appeal decision in Gascoyne v HM Customs and Excise [2004] EWCA Civ 1162 established that that under domestic law an Appellant could not raise in restoration proceedings whether the excise goods purchased were for own use or commercial purposes because such an issue went to the lawfulness of the seizure, which was a matter for the magistrates in condemnation proceedings. The Court of Appeal, however, recognised that under the European Convention on Human Rights an Appellant may be able to ventilate matters about the lawfulness of seizure in restoration proceedings where no condemnation proceedings have been taken in respect of the seized property. In such circumstances an Appellant did not have an unfettered right to challenge the lawfulness of the seizure. The Tribunal still had to decide whether to re-open the question of lawfulness, having regard to whether the Appellant had abused the process by choosing restoration proceedings instead of condemnation.
33. In this Appeal the Appellant chose not to go down the route of condemnation proceedings. Although his choice was influenced by the advice given to him by the Respondents, we were satisfied that he made an informed choice. We, therefore, hold that it would be an abuse of process to reopen the issue of whether the Appellant purchased the excise goods for his own use. We note that his fellow traveller, Mr Conway, successfully challenged the seizure in the magistrates' court but was overturned in the Crown Court. We were made aware of the misgivings of the Appellant and Mr Conway regarding the proceedings before the Crown Court, however, we are not entitled to look behind the Crown Court decision. In any event the fact that Mr Conway took condemnation proceedings was not relevant to our decision about whether the Appellant could challenge the lawfulness of seizure in the Tribunal.
34. The Appellant contended that we had the power to consider his claim for compensation in respect of the damage done to the Ford Transit van whilst in the Respondents' custody. The VAT & Duties Tribunal in William Leonard Powell (LON/04/8035) decided that it had jurisdiction to consider the reasonableness of the Respondents' ex gratia payment for restoring a car which could not be restored. The decision in Powell has no application to this Appeal because in this instance the Appellant's claim for compensation did not derive from the Respondents' decision on restoration. Under section 16(4) of the Finance Act 1994 we are restricted to considering whether the Respondents' decision on restoration was reasonable. We have no power under that section to decide the Respondents' liability for damages to the Transit van whilst in their custody. The Appellant's remedies for damages are either to pursue the Respondents through their complaints procedure or to take action in the County Court.

Was the Decision of Mr Brenton Reasonable?

35. Mr Brenton's consideration concentrated upon determining the degree of the Appellant's culpability concluding that he was effectively importing goods on a "not for profit" basis. We are satisfied that Mr Brenton considered the relevant facts regarding the restoration of the excise goods, particularly in view of our decision not to entertain arguments of own use. We, therefore, find that his decision upholding the non-restoration of the excise goods reasonable.
36. The Respondents' policy on restoration of vehicles, however, required a wider consideration of the circumstances than that for restoration of excise goods. The vehicles policy went into considerably more detail about the circumstances which may merit the Commissioners exercising their discretion in favour of restoration or restoration on terms. The vehicles policy reflected the Court of Appeal ruling in Lindsay v Commissioners of Customs and Excise [2002] EWCA 267:

"But where the importation is not for the purpose of making a profit, I consider that the principle of proportionality requires that each case should be considered on its particular facts, which will include the scale of importation, whether it is a first offence, whether there is an attempt at concealment or dissimulation, the value of the vehicle and the degree of hardship that will be caused by forfeiture. There is open to the Commissioners a wide range of lesser sanctions that will enable them to impose a sanction that is proportionate where forfeiture of the vehicle is not justified".

37. Mr Brenton in justifying his decision to restore the Ford Transit van on terms simply stated he was satisfied that the Appellant's case fulfilled the criteria for restoration on terms after having taking into account recent changes in Customs Policy. Mr Brenton explained in his evidence before the Tribunal that the Appellant fell within the exception of "small quantity of excise goods and first occurrence". The policy, however, required him where an exception applied to consider not only restoration on terms but also restoration. Mr Brenton gave no reason why he selected restoration on terms rather than restoration. The Court of Appeal in Balbir Singh Gora and Others v The Customs and Excise Commissioners [2003] 3 WLR 160 at paragraphs 37-39 agreed with Counsel for the Commissioners that the Tribunal had a fact finding jurisdiction in order to determine whether the decision on restoration was reasonable.
38. We make the following findings of fact in relation to the Respondents' decision to restore the Ford Transit van on terms:

(1) The quantities of excise goods imported by the Appellant were below the guide levels set out in The Excise Goods, Beer and Tobacco Products Regulations 2001 and 2002, except for cigarettes and spirits.

(2) The Appellant paid £842 for the excise goods.

(3) The Appellant did not conceal the excise goods from the Customs Officers.

(4) The Appellant did not mislead the Customs Officers about the excise goods.

(5) The scale of the importation was small and unlikely to do damage to legitimate UK trade and revenue.

(6) The excise goods were purchased for a mixture of uses on a "not for profit basis".

(7) The Appellant had no previous record for evading duty on importation of excise goods.

(8) The Appellant was deprived of the use of his vehicle for two years.

(9) The Appellant suffered financial hardship arising from the loss of vehicle which included the purchase price of a replacement vehicle.

39. Mr Brenton in his consideration did not examine the scale of importation, whether the Appellant attempted to conceal the goods, the Appellant's culpability, the degree of hardship suffered by the Appellant, particularly as he was deprived of his vehicle for almost two years. More importantly he did not weigh up all the options to arrive at a proportionate response to the Appellant's contravention. He gave no reason for excluding restoration bearing in mind that the Appellant suffered a financial loss of £842 on the purchase of the excise goods and that he had been deprived of his vehicle for almost two years.
40. We are satisfied that Mr Brenton disregarded matters to which he should have given weight when making his decision to restore the Ford Transit van on terms. We hold that his decision to restore the Ford Transit van on terms was unreasonable.

Decision

41. We hold that Mr Brenton's decision of 19 April 2004 to refuse restoration of the excise goods was reasonable, however, his decision to restore the Ford Transit van on terms was unreasonable. We, therefore, allow the Appeal in part.

Orders

42. We make the following orders pursuant to our decision to allow the Appeal in part and in accordance with section 16(4) of the Finance Act 1994:

a. The decision to restore the Appellant's vehicle on payment of a restoration fee shall cease to have effect from the date of release of this decision.

b. The Commissioners shall conduct a further review of the decision to restore the vehicle on payment of the restoration fee 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 in paragraphs 37, 38 and 39 of this decision.

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 Customs and Excise, 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.

43. We make no order for costs.

MICHAEL TILDESLEY

CHAIRMAN

RELEASE DATE:7 September 2006

MAN/

Note 1   The Statement of Case stated that the date of request for restoration was 23 May 2002, and the date of refusal 14 June 2002. The documents referred to related to a request from Mr Gentle, the Transport Manager of the Appellant’s firm. On 22 July 2002 the Respondents treated the Appellant as the person making the request for restoration, hence the dates recited in the Tribunal decision relate to correspondence from and to the Appellant.     [Back]