[2010] UKFTT 518 (TC)

TC00773

Appeal number TC/2009/13248

EXCISE DUTY – Restitution of vehicle seized at the time of a importation of excise goods on which the duty was sought to be evaded – whether Officer’s decision that there was no evidence of exceptional hardship justifying a departure from the Revenue’s policy in cases such as the instant case not to offer a vehicle for restoration was unreasonable – evidence as to the Appellant’s ability to work and his health considered – held the Officer’s decision was not unreasonable – appeal dismissed 

FIRST-TIER TRIBUNAL
TAX CHAMBER

	DARYL FLAGG	Appellant

	- and -

	DIRECTOR OF REVENUE FOR THE
	U K BORDER AGENCY	Respondents

				TRIBUNAL: 	JOHN WALTERS QC
						JOHN AGBOOLA FCCA						

Sitting in public in Norwich on 16 September 2010

The Appellant in person

Ms. Alison Graham-Wells, Counsel, for the Respondents

© CROWN COPYRIGHT 2010

DECISION

1.	Mr. Flagg (the Appellant) appeals against the decision of HM Revenue and Customs (“HMRC”) (whose duties and responsibilities in this connection have been assumed by the Director of Revenue for the UK Border Agency (“the Respondent”), communicated in a letter (“the review letter”) dated 24 June 2009 not to restore to him a Peugeot 206 Estate vehicle, registration number DS04 UBB, which had been seized from him at Dover Eastern Docks on 1 May 2009.
2.	The appeal came before the First-tier Tribunal (Judge Avery Jones) on 27 November 2009, when he dismissed an application by HMRC that the appeal should be struck out as being out of time.  On that occasion the Tribunal received from the Appellant certain medical evidence which had not theretofore been considered by HMRC or the Respondent.  Judge Avery Jones in terms expressed the hope in his written Direction that HMRC would take this evidence into account.  
3.	The Appellant gave evidence before us as did Mr. David Michael Harris (Higher Officer of the UK Border Agency), who had written the review letter.  Officer Harris served a Witness Statement with exhibits.  Although his Witness Statement was dated 6 December 2009, it is apparent that he had not at that time considered the medical evidence.  He had however done so by the time of the hearing and he said in evidence that the medical evidence had not (in his view) shown that the Appellant was suffering exceptional hardship as a result of the non-restoration of the vehicle which would amount to a reason for disapplying HMRC’s (and now the Respondent’s) policy that in circumstances such as those of the present case a vehicle should not be offered for restoration.
4.	Ms. Graham-Wells accepted that the Tribunal should effectively consider together the reasons given by Officer Harris in the review letter dated 24 June 2009 and Officer Harris’s evidence as to his reasons for not disapplying HMRC’s policy after his subsequent consideration of the medical evidence, in our determination of whether or not we are satisfied that HMRC, or Officer Harris could not reasonably have arrived at the decision not to restore the vehicle to the Appellant (see: section 16(4) Finance Act 1994).
5.	It is for us to consider and determine whether or not in this case Officer Harris (on behalf of HMRC and the Respondent) has taken into account irrelevant matters, or failed to take into account relevant matters in arriving at his decision, his decision for these purposes being his decision after considering the medical evidence not to modify in any way his earlier decision communicated in the review letter not to offer the vehicle for restoration.
6.	With this introduction, we turn to the facts of the case, which from the documentary and oral evidence received, we find as follows:
The facts
7.	The Appellant, while driving the vehicle, was stopped on 1 May 2009 at Dover Eastern Docks, returning from a day trip to Belgium and France.  He was questioned by Customs officers.  He was carrying a bicycle on the rack of the vehicle and stated to Customs officers that he had been to Brussels to deliver a petition to the European Commission and had parked the vehicle on the outskirts and cycled in to Brussels, a 10-mile cycle ride.
8.	When asked whether he had purchased any cigarettes or tobacco, he replied ‘only 200 cigarettes for the girlfriend’. When the officer insisted on searching the boot of the vehicle the Appellant produced a suitcase stating ‘three kilos for my granddad’. Eventually more hand-rolling tobacco was found in the vehicle, which the Appellant said was ‘all for family’.  The officer read to the Appellant a ‘commerciality statement’ and the Appellant elected to be interviewed.  He told officers that he was employed as a care assistant.  He signed a note of interview. The officer was satisfied that the total excise goods carried by the Appellant in the vehicle – 18½ kilograms of hand-rolling tobacco and 200 cigarettes – were held for a commercial purpose and all of them and the vehicle itself were seized pursuant to powers contained in the Customs and Excise Management Act 1979 (“CEMA”).
9.	When the excise goods and the vehicle were seized, the Appellant was given a ‘Seizure Information Notice’ and Customs Notice 12A which explained that the owner could challenge the legality of a seizure in a Magistrates’ Court by sending a notice of claim within 1 month.
10.	The Appellant did not challenge the legality of the seizure and in consequence the excise goods and the vehicle were condemned as forfeit under paragraph 5, Schedule 3 to CEMA. 
11.	On 7 May 2009, the Appellant wrote to HMRC Post Seizure Unit at Plymouth asking for restoration of the vehicle.  He wrote:
“This car I feel need not have been taken, as I had a 200 mile trip home.  I had my bike on the back of the car which you also have, and when I asked how I get home, I was told to use my bike! This in itself was rude and not called for, and should be reviewed.
My car should be returned to me as I have no other way to get to work.  I am a care worker and often have to do home visits.  This is now not possible.  Some work I have even had to pass to others, therefore not having my car is losing me a wage.  As I do not have any savings I am not able to pay any fines, and due to losing work I fear my wage at the end of May will not be enough to be able to pay my rent and other bills.
…
Please if you could get back to me as soon as possible, as without my car for much longer I will also be without a job! Please note that I cannot send proof of owning this car, as customs have the reg document.”
12.	On 13 May 2009, HMRC Post Seizure Unit replied acknowledging the Appellant’s letter and requesting proof of ownership of the vehicle, and saying that his request for restoration of the vehicle would receive consideration.
13.	On 26 May 2009, HMRC Post Seizure Unit wrote again to the Appellant informing him of their policy on restoration of vehicles seized for carrying excise goods liable to forfeiture.  The officer (A. Harvey) stated in the letter that he had concluded that there were no exceptional circumstances which would justify a departure from HMRC’s policy not to restore the vehicle and confirming that the vehicle would not be restored.
14.	On 1 June 2009, the Appellant replied, for the first time claiming restoration of the seized excise goods and protesting at the decision not to restore the vehicle.  He stated:
“I see no reason why you are refusing to give my car back to me.  This does not belong to you in any way.  I have no ways of being able to afford another car and see no reason why I should have to.
I have just been told that due to a back problem, which I have had for many years, has now got a lot worse [sic]. My movement is not great and have been told I cannot work for a year [sic].  After a year this will be reviewed.  If I am now having to live of state benefit, how do you suggest I find the money to purchase another car like the one you have taken?”
15.	On 3 June 2009, HMRC Review Team responded to the Appellant’s letter saying that a departmental review would be conducted.
16.	The review letter was sent on 24 June 2009, as stated above.  Officer Harris stated in the letter that he was guided by HMRC’s policy, not fettered by it.  He concluded in relation to the excise goods that they should not be restored because in his opinion:
“they, or a significant proportion of them, were in fact to be sold for profit and in coming to this conclusion I placed particular importance on [the Appellant’s] dishonesty in failing to declare all the excise goods; the frequency of travel [the Appellant had made earlier cross-Channel trips]; and the dishonesty in answering relevant questions asked by the Officer.  Non-restoration is fair, reasonable and proportionate in these circumstances.”
17.	In relation to the vehicle, he stated that as he had concluded that the excise goods were held for profit, it followed that non-restoration of the vehicle was fair, reasonable and proportionate.  He stated that the amount of hand-rolling tobacco seized, 18½ kilograms, was greater than any amount which would qualify as ‘first offences involving small quantities of excise goods’, in relation to which HMRC’s policy was to consider restoration of a vehicle.  He compared the trade value of the vehicle (£2,950 per Glass’s Guide) with the amount of revenue sought to be evaded (£2,292) and considered that non-restoration on this basis was proportionate.  
18.	As regards hardship, Officer Harris wrote:
“I have also paid particular attention to the degree of hardship caused by the loss of the car.  I sympathise with your difficulties in travelling to work.  One must expect a considerable inconvenience as a result of having a car seized by Customs, and perhaps considerable expense in making other transport arrangements or even in replacing the car.  Hardship is a natural consequence of having a vehicle seized and I would consider only exceptional hardship as a reason not to apply the policy not to restore the vehicle.  Replacement of a seized vehicle with another does not necessarily require replacement with a vehicle of equal specification and value if a more basic and/or cheaper vehicle will perform adequately. I do not regard either the inconvenience or expense in your case as exceptional hardships over and above what one should expect.  I see from official records that you are shown as the keeper of a Leyland DAF van, registration number L938 CVM since 4 April 2009.  The records also show another van registered at your address, E171 GLW since 22 November 2008, a Renault Megane, registration P240 EOD since 27 April 2009 and a Peugeot 106 registration P251 XNW.  With these other vehicles available to you I am at a loss why you say in your letter dated 7 May 2009 ‘My car should be returned to me as I have no other way to get to work’.  The only conclusion apparent to me why you would state this is that you have continued with your inability to tell the truth, which seems to be a common thread throughout this case.  In the circumstances I do not consider that you have suffered exceptional hardship by the loss of the car.  I conclude that there is no reason to disapply the Commissioners’ policy of not restoring the car …”
19.	  On 8 July 2009, the Appellant wrote to HMRC (with a copy to the Tribunal Service) in response.  He stated that the Leyland DAF van and the other van (a Ford Transit) were not roadworthy and were being used for storage.  He had just sold the Leyland DAF van.  He also stated that Renault Megane was bought as a project (presumably a restoration project), but his bad health had forced its sale. He also stated that the Peugeot 106 had been bought recently because he had no other working car.  He said: “It is very small and [I] have been told it will cost a lot more than it’s worth to get through its next MOT.  He added:
“Due to my illness, which has been getting worse [over] the last 6 months, I am not working and have been signed off sick for one year by a doctor at the department for work and pensions.  I therefore need a car to get about as my working is becoming harder and harder.”
20.	 On 17 July 2009, Officer Harris replied to the Appellant’s letter of 8 July 2009, stating that he had not found ‘within your correspondence any reason to vary my decision on Review’.
21.	The Appellant appealed to this Tribunal by a Notice of Appeal dated 11 August 2009. As stated above, HMRC applied for the appeal to be struck out as being made out of time.  This application came before Judge Avery Jones on 27 November 2009 and was dismissed.
22.	In the meantime, the Appellant had obtained the medical evidence to which we made reference at the beginning of this Decision.  He sent copies to the Border Force Complaints Team, with a copy to HMRC Post Seizure Unit, on 4 November 2009. The medical evidence was as follows:
•	A copy of a letter dated 21 September 2009 sent by Dr. T. Marshall, Consultant Rheumatologist at James Paget University Hospitals NHS Foundation Trust, Great Yarmouth.  In the letter, Dr. Marshall reports on an examination of the Appellant, who was 30 years old at the time of the examination, with a long history of back pain and joint pain. Dr. Marshall did not state a definite diagnosis, commenting that the Appellant’s symptoms struck his as ‘a lot of tenderness in his soft tissues … more of a chronic pain situation, rather than being inflammatory arthritis’.  He noted, among other things, that the Appellant did not smoke.
•	A copy of a letter dated 23 June 2009 sent by Dr. Soo-Mi Park, Locum Consultant in Medical Genetics at Cambridge University Hospitals NHS Foundation Trust.  Dr. Park had examined the Appellant at his request and stated that she believed he had evidence of early arthritis, possibly osteoarthritis. 
•	A copy of a letter dated 15 October 2009 from Dr. Kay Bouch, a GP practising in Lowestoft.  This letter was explicitly written for ‘use as supporting evidence’.  Dr. Bouch’s statement was as follows:
“I confirm that you have a problem with a chronic pain affecting your back, hip and leg.  This impairs your mobility.  You walk with a stick.  Your symptoms vary from day to day: some days you might manage 50 metres, another day you might be able to walk a quarter of a mile.  You have problems getting about, attending appointments in Lowestoft and would benefit from the use of your car.  You have been without your car since May 2009.  It would be helpful if your car could be returned to you as soon as possible.”
•	A copy of a statement dated 21 October 2009 by Ben Parish, Senior Physiotherapist at Great Yarmouth and Waveney Community Services Physiotherapy Department to the effect that the Appellant had been attending physiotherapy since August 2009 with regard to his low back pain and that he had restricted movement in his lumbar spine due to pain and that this affects his physical abilities.
23.	The Appellant stated (and we accept) that his health problems have got worse since the summer of 2009. At the hearing he appeared to be in some physical discomfort and to have difficulty in walking. He also stated that since early in 2010, his partner, with whom he lives, has got full time work and his benefits have been stopped and he is in no position to buy another car. He stated that he suffered from fibromyalgia.  The seized vehicle was not adapted for disabled use and he is able to drive a normal car, although he now has a disability badge. He was aggrieved because he felt he was made fun of by the officers at Dover Eastern Docks and he felt he had been misled by them in relation to their interviewing and seizure procedures. He stated that he was not pursuing his claim for restoration of the excise goods.  He did want to press his claim for restoration of the vehicle.
24.	In evidence, Officer Harris, when asked what he considered were exceptional circumstances which would justify a departure from HMRC’s policy not to restore a seized vehicle stated: ‘something above and beyond what one would normally be expected to suffer having had a vehicle seized’, adding, circumstances where one was ‘not able to carry on life without a vehicle’.
25.	Officer Harris gave an example of a case where he had restored a vehicle on exceptional hardship grounds, when the claimant was a taxi driver, whose taxi had been seized.  He stated that there was no policy in the interpretation of ‘exceptional hardship’.  He also stated that he would have restored the vehicle in this case if he had thought that the medical evidence did show exceptional hardship, even though the medical evidence had not been before him on 24 June 2009, when he made his decision.  Such restoration might have been on terms (e.g. conditional on a fee being paid).
The submissions
26.	The Appellant simply submitted that the decision not to restore his vehicle to him was in all the circumstances unreasonable.
27.	Ms. Graham-Wells, for the Respondent, submitted that the Tribunal could not make a finding of fact on the issue of whether or not the importation was ‘for profit’.  All we could do was to consider the reasonableness of Officer Harris’s conclusion that the importation had been ‘for profit’.
28.	On ‘exceptional hardship’, she submitted that the Tribunal could not make a finding of fact that the Appellant had suffered ‘exceptional hardship’.  All we could do was to make a finding on the reasonableness of Officer Harris’s decision that the Appellant had suffered no ‘exceptional hardship’ and, if we found that that decision was unreasonable, direct a further review explaining why we had made such a finding.
29.	She drew to our attention that the Appellant had not pleaded exceptional hardship as opposed to inconvenience arising from the loss of the vehicle.  She submitted that there was no evidence of exceptional hardship as opposed to inconvenience, such as might ordinarily be expected to be suffered following a seizure of one’s vehicle.
30.	She contended that the evidence showed that whereas the Appellant’s original case was that he needed his vehicle for his work, after the seizure of the vehicle, later in the summer of 2009 he had had to stop working on health grounds.  She submitted that there was no evidence that the Appellant had made any enquiries as to entitlement to disability or mobility allowances or to help with hospital transport.  The availability of any or all of these would lessen the hardship suffered from the loss of the vehicle.
Discussion and Decision
31.	As an introductory point, we note that Ms. Graham-Wells in her Skeleton Argument warned us against abusing our process by making any decision in relation to the legality of the seizure.  In particular, she submitted that we should not entertain any argument to the effect that the excise goods had in fact been imported for the Appellant’s own use or otherwise on a not-for-profit basis.  She cited the well known authorities of Gora v Customs and Excise Commissioners [2003] EWCA Civ 525, Gascoyne v Customs and Excise Commissioners [2004] EWCA Civ 1162, Commissioners of Customs and Excise v Albert Charles Smith CH/2005/APP/0117 and Revenue and Customs Commissioners v Dawkin  [2008] All ER (D) 83.
32.	The Appellant before us did not seriously challenge the legality of the seizure, or claim that the excise goods were imported for his own use or otherwise on a not-for-profit basis.  He concentrated his argument entirely on the alleged unfairness or unreasonableness of HMRC’s refusal to restore the vehicle to him.
33.	In these circumstances, we do not consider further the legality of the seizure.  We are satisfied that it would in this case be an abuse of our process to do so. We would add that even if we had done so, we consider it highly likely that we would have concluded that the Officers’ decision that the excise goods were imported for commercial purposes was entirely reasonable.
34.	We turn then to the real issue in the case, the reasonableness of Officer Harris’s decision not to restore the vehicle to the Appellant.
35.	Clearly the policy of not restoring seized vehicles in ‘aggravated not for profit cases’ – such as this case – is in principle reasonable.  We refer to paragraph [63] of Lindsay v Customs and Excise Commissioners [2002] EWCA Civ 267, in which Lord Phillips of Worth Matravers MR said:
“Those who deliberately use their cars to further fraudulent commercial ventures in the knowledge that if they are caught their cars will be rendered liable to forfeiture cannot reasonably be heard to complain if they lose those vehicles.  Nor does it seem to me that, in such circumstances, the value of the car used need be taken into consideration.  Those circumstances will normally take the case beyond the threshold where that factor can carry significant weight in the balance.  Cases of exceptional hardship must always, of course, be given due consideration.”
36.	This leads us to the issue of exceptional hardship.  The Appellant originally claimed that the hardship he suffered in consequence of the loss of his vehicle was that he had ‘no other way to get to work’ (his letter dated 7 May 2009).  He was a care worker and often had to make home visits and this was not possible once he had lost his vehicle.  Only on 1 June 2009 did he raise for the first time his health problems related to back pain and restricted movement.  By then he had been told he could not work for a year and was living off state benefit.
37.	In the review letter dated 24 June 2009, Officer Harris disputed the truth of the Appellant’s statement in his letter dated 7 May 2009 that he had had ‘no other way to get to work’.  He did so on the basis of independently obtained official evidence that there were a number of other vehicles available to the Appellant.
38.	We accept the Appellant’s evidence that three of the four other vehicles were not roadworthy and that the fourth, the Peugeot 106 had been acquired by him after 7 May 2009.  We note that the acquisition of this car and the evidence of the sale of two of the other vehicles casts doubt on the truth of his assertion that he could not afford to replace the seized vehicle with any other car.
39.	 Nevertheless, our acceptance of the Appellant’s evidence with regard to the four other vehicles means that we must also find that Officer Harris was unreasonable in concluding (without asking for any explanation from the Appellant, as he should have done) that he was lying when he said in his letter dated 7 May 2009 ‘My car should be returned to me as I have no other way to get to work’. It appears that Officer Harris’s view of the Appellant’s mendacity was a factor in his conclusion that he had not suffered exceptional hardship by the loss of the car by reason of his restricted ability to work. 
40.	As to whether the evidence relating to the Appellant’s health establishes a ground for holding that Officer Harris’s decision that he had not suffered exceptional hardship by the loss of the car, we find that the Appellant’s health has materially deteriorated since 1 May 2009. It appears that the Appellant was able to, and did, bicycle a distance of 10 miles in Brussels on that day.  The medical evidence dates from June to October 2009 and establishes a developing condition of, or akin to, early arthritis or possibly osteoarthritis.
41.	We reject the reasoning contained in Ms. Graham-Wells’s submissions that the Appellant had not (and should have) investigated any entitlement to disability or mobility allowances or to help with hospital transport.  
42.	She said that the availability of any or all of these would lessen the hardship suffered from the loss of the vehicle, but, with respect, that does not seem to us to be the point.  The exercise Officer Harris was engaged on was whether loss of the vehicle would cause exceptional hardship to the Appellant – that is, whether the Appellant’s unique circumstances were such that the loss of the car would create exceptional hardship for him.  It seems to us that his ability (or not) to make other arrangements which might mitigate any hardship does not negate the fact that his circumstances may have caused exceptional hardship – indeed, to a certain extent it reinforces that fact.
43.	In evidence, Officer Harris, when asked what he considered were exceptional circumstances which would justify a departure from HMRC’s policy not to restore a seized vehicle stated: ‘something above and beyond what one would normally be expected to suffer having had a vehicle seized’, adding, circumstances where one was ‘not able to carry on life without a vehicle’.
44.	Officer Harris’s example of the case of the taxi driver, to whom he had restored a vehicle on exceptional hardship grounds shows what he regarded as a reasonable approach to the ‘exceptional hardship’ issue.  If evidence had been put before Officer Harris and considered by him, which showed that the Appellant’s health was such that his need for a vehicle, particularly a vehicle of the type or with the characteristics of the one which had been seized, caused him hardship ‘above and beyond what one would normally be expected to suffer having had a vehicle seized’, so that he was, in broad terms ‘not able to carry on life without a vehicle’, then a decision not to restore the vehicle, at least on terms, would have been unreasonable.
45.	 However, we consider that the evidence does not go as far as this.  The seized vehicle was not adapted for disabled use and the Appellant is able to drive a normal car, although he now has a disability badge. 
46.	 His medical condition, on the basis of the medical evidence, is, we find, not so grave as to make it essential for the Appellant to have a vehicle.  Dr. Bouch’s statement was in terms that the Appellant ‘would benefit from the use of [his] car’ and that ‘it would be helpful if [his] car could be returned to [him] as soon as possible’.  We consider that if Dr. Bouch had thought that it was essential for the Appellant’s health and general well-being that the vehicle should be restored to him, she would have said so.  
47.	On the basis of this evidence we find that Officer Harris’s decision to refuse restoration of the vehicle to the Appellant on the grounds of exceptional hardship in relation to his health was not unreasonable.  The claim that the Appellant suffered exceptional hardship from the loss of the vehicle because it seriously impeded his ability to work, or prevented him from working, cannot be maintained after he stopped working on health grounds in June 2009.  Officer Harris’s view of the Appellant’s mendacity, which we have found to be overstated, was a factor in his conclusion that he had not suffered exceptional hardship by the loss of the car by reason of his restricted ability to work.  As that basis for a claim that the Appellant has suffered exceptional hardship from the loss of the seized vehicle has effectively fallen away, we consider that Officer Harris’s view of the Appellant’s mendacity has not affected the reasonableness of his decision. 
48.	In the result we find, on the basis of all the evidence, that Officer Harris’s decision that there were no exceptional circumstances in this case warranting a departure from HMRC’s policy not to offer a seized vehicle for restoration was reasonable. We uphold Officer Harris’s decision not to restore the vehicle to the Appellant as being a reasonable decision.  The Appellant has failed to make out a case within the terms of section 16(4) Finance Act 1994 that the decision could not reasonably have been arrived at, and we dismiss the appeal.
Right to apply for permission to appeal
91. This document contains full findings of fact and reasons for our decision. Any party dissatisfied with this decision has a right to apply for permission to appeal against it pursuant to Rule 39 of the Rules.   The application must be received by this Tribunal not later than 56 days after this decision is sent to that party.  The parties are referred to “Guidance to accompany a Decision from the First-tier Tribunal (Tax Chamber)” which accompanies and forms part of this decision notice.

                             JOHN WALTERS QC

JUDGE OF THE FIRST-TIER TRIBUNAL
RELEASE DATE: 27 October 2010