[2011] UKFTT 188 (TC)
TC01057
Appeal number:
TC/2010/03949
Restoration
of vehicle – whether owner of vehicle had shown lack of care in allowing
another to use vehicle – whether decision to restore for fee reasonable
FIRST-TIER TRIBUNAL
TAX
JOHN
EDWARD DAVIES Appellant
-
and -
DIRECTOR
OF BORDER REVENUE Respondents
TRIBUNAL:
Ms J. Blewitt (Judge)
Ms
S. Stott (Member)
Sitting in public at Manchester on 24 February 2011
Mr Davies, the Appellant, was
unrepresented
Ms Graham Wells, Counsel
instructed by the General Counsel and Solicitor to HM Revenue and Customs, for
the Respondents
© CROWN COPYRIGHT
2011
DECISION
1. Mr
Davies appeals against a decision contained in a letter dated 23 March 2010 in
which the Director of Border Revenue have offered to restore his vehicle, a
Ford Focus, Registration DF06 DDX, for a “fee” of £2,250.
2. In
these proceedings Mr Davies took no issue over the lawfulness or otherwise of
the actual seizure, which can be summarised briefly.
Facts
3. On
1 December 2009 the Appellant’s vehicle was stopped by an officer of the
Respondents at the UK Control Zone, Coquelles, France. Mr Andrew Davies, the
Appellant’s brother was driving the vehicle and the passengers were Mr Adam
Roberts, Ms Elaine Pritchard and Ms Ann Marie Edwards. In the vehicle, Officers
found a total of 12.05kg of hand rolling tobacco. Three receipts were found
from Inter-Tabac in Adinkerke, Belgium each for 3 kg of Golden Virginia hand
rolling tobacco costing £237 and a fourth receipt for 50g costing £3.95; a
total cost of £714.95. Officers also found a receipt issued by Tesco in Dover timed and dated 21:50 on 30 November 2009. The travellers stayed for interview at
the time of seizure, following which the interviewing Officer was satisfied
that the excise goods were held for a commercial purpose, which made them
liable to forfeiture under Section 49 (1) (a) (i) of the Customs and Excise
Management Act (“CEMA”) 1979 and Regulation 16 of the Excise Goods (Holding,
Movement, Warehousing and REDS) Regulations 1992. The vehicle was seized under
Sections 139 (1) and 141 (1) (a) of CEMA 1979 on the basis that it had been
used for the carriage of goods liable to forfeiture.
4. On
9 February 2010 the Appellant requested a review of the Respondents initial
decision dated 25 January 2010 not to restore the vehicle.
Review Decision
5. The
Review Decision took account of the circumstances of seizure and the
inconsistent and implausible explanations given by the travellers when
interviewed. The Officer concluded that the travellers had attempted to mislead
the interviewing officer about events and he therefore had good reason to doubt
their credibility.
6. The
Reviewing Officer took into account the fact that the travellers had imported
four times the Guidance Level of 3kg of hand rolling tobacco and concluded, on
the basis that the travellers were all unemployed with limited finances and
each gave unbelievable consumption rates for smoking, that Mr Davies had been
the organiser of this commercial venture. It was noted by the Reviewing Officer
that this was probably part of a series of smuggling trips on the same or
previous day (bearing in mind the receipt from Tesco in Dover, for which no
credible explanation was given) and that commercial records showed that Mr
Davies had made a previous trip from Calais to Dover on 29 September 2010,
during which Ms Pritchard recalled importing 7 ½ kg of tobacco, although Mr
Davies could not recall the trip.
7. The
Reviewing Officer was guided by the Respondent’s policy on restoration and
reached the conclusion that this was not a first offence of importation, nor
was the quantity of tobacco involved small. The trade value of the vehicle was
approximately £6,350 and the excise duty amount was £1,499. The Officer concluded
that the decision not to restore the vehicle was proportionate, taking into
account the aggravating features and the attempts to mislead the interviewing
Officer.
8. The
Reviewing Officer went on to consider the fact that where a vehicle is owned by
a third party, who was not present at the time of seizure and who can show they
were both innocent and blameless, then consideration may be given to restoring
the vehicle for a fee. If the third party can show, in addition to being
blameless and innocent, that he had taken reasonable steps to prevent smuggling
in the vehicle, then consideration may be given to restoring the vehicle free
of charge.
9. The
Reviewing Officer noted that the Appellant’s brother was insured to drive the
car and that the Appellant had not demonstrated that he had taken reasonable
steps to prevent smuggling. The Officer noted that Mr Andrew Davies had used
the car on a previous trip to France and that while there was no suggestion
that the Appellant was complicit in the smuggling, the Reviewing Officer
concluded that the Appellant must have been reckless of “turned a blind eye” in
failing to monitor use or the vehicle.
10. In those
circumstances, the Officer decided that restoration for a fee of 1 ½ times the
excise duty amount was fair and reasonable, and varied the decision
accordingly.
Evidence
11. We heard
evidence from the Reviewing Officer, Mr Raydon, who confirmed that he had taken
into account in reaching his decision, correspondence from the Appellant to the
Respondent dated January 2010 and from the Appellant’s brother to the
Respondent dated November 2009 and received by the Respondent on 9 December
2009. The Appellant had also filled in a questionnaire provided by the
Respondent which stated that the vehicle was only lent to the Appellant’s
brother, who had borrowed the vehicle before, that the car was insured to
account for his brother and driving abroad and that the Appellant was unaware
that the vehicle was to be taken abroad or used to purchase excise goods. The
Appellant annexed a note to the questionnaire which explained that he had an
ongoing arrangement with his brother to use the car when the Appellant was
working away from home. The Appellant stated that the purpose of the
arrangement was so that his brother could take their elderly mother shopping
and that he was unaware of his brother’s trip to France.
12. In evidence to
the Tribunal, the Reviewing Officer confirmed that although the Appellant had
not been present, he had taken the view that the Appellant had not taken
reasonable steps to prevent the smuggling attempt, nor had the Appellant been
aware of his brother’s previous trip to France. The Officer concluded that this
was one in a series of commercial smuggling attempts and that he believed the
Appellant’s brother to be the organiser/importer. On the basis that the
Appellant had allowed his brother unrestricted access to the vehicle, the
Officer concluded that the decision to restore the vehicle for a fee of 1 ½
times the excise duty was reasonable.
13. The Appellant
gave evidence to the Tribunal. He explained to us that he owns two vehicles; a
van he uses for work and the vehicle which is the subject of this appeal. The
Appellant explained that the Ford Focus vehicle was purchased at his wife’s
request and that due to vandalism issues where he lives, it s kept at his
mother’s address where his brother also lives. The Appellant explained that the
vehicle is not used frequently as he works away from home regularly as a joiner
and that he had asked his brother to keep the car “ticking over” by taking
their elderly mother to the shops or to visit family. The Appellant stated that
he had never checked the mileage on the vehicle.
14. The Appellant
stated that he had not, and would not have given permission for his brother to
take the vehicle to Belgium and that his brother had abused the trust placed
him by doing so. The Appellant explained that his brother was unemployed and
that he has simply tried to assist his brother and mother by allowing use of
the vehicle. He said that the seizure of the vehicle had caused a rift between
them as he found his brother’s actions to be foolish and embarrassing. The
Appellant explained that he had had the car returned, but had been forced to
sell it to meet the fee required by the Respondent.
15. The Appellant did
not dispute the Officer’s conclusion that his brother had been involved in a
commercial smuggling attempt, and such was his candour to the Tribunal he added
that his brother does not even smoke.
16. When asked, the
Appellant stated he was unaware as to whether the insurance allowed his brother
to travel abroad and that he had not checked this when filling in the
Respondent’s questionnaire. The Appellant apologised for the Officer’s view
that the information provided was limited; stating that he was a tradesman who
could express himself orally but found paperwork difficult. The Appellant
confirmed in cross examination that he did not speak to his brother regularly
due to his long working hours and that the basis of their arrangement over use
of the vehicle was to take their mother shopping or visit his sisters. The
Appellant stated that it never occurred to him that his brother may use the
vehicle to smuggle excise goods into the UK and that, consequently, he had
never specifically stated to his brother that he must not do so.
17. It was put to
the Appellant that his brother, when interviewed at the time of seizure, had
stated that the Appellant was aware that he was going away with his girlfriend.
The Appellant responded that he was unaware that his brother had said that and
that the statement was untrue. The Appellant submitted that the Reviewing
Officer’s decision was unreasonable given that he was an innocent party.
18. We gave the
Reviewing Officer an opportunity to respond to the Appellant’s evidence. Mr
Raydon conceded that there was no evidence of any involvement by the Appellant
in the smuggling attempt but stated that commercial smugglers should not get
away without punishment and that the Appellant’s best recourse was to seek the
fee due from his brother. Mr Raydon stated that he believed his decision was
correct.
Decision
19. The issue before
us was whether, as the Respondent contended, the Appellant had acted with
insufficient care or recklessness in allowing his brother use of the vehicle
and whether he had taken reasonable steps to prevent smuggling. In all the circumstances it had (so they contended) been reasonable
for them to have imposed the £2,250 fee as the “price” of restoration.
20. We have had the advantage of hearing Mr. Davies give evidence and of
considering the answers he gave during searching cross examination. We both
formed the impression that Mr. Davies is a truthful, responsible and genuine
person, who treats his family with much consideration. It is not asserted by
the Respondents that the Appellant had any knowledge or involvement in what was
clearly a commercial enterprise to smuggle goods into the UK. We accept his evidence and we are satisfied that when he gave permission to his brother
to use the vehicle to assist his elderly mother, he had no reason
whatever to suspect that it would be used for any unlawful purpose, let alone
smuggling excise goods into the UK.
21. We bore in mind the well-established principles set out in Lindsay
v Customs and Excise Comrs [2002] 1 WLR 1766, 1774 as per Lord Phillips of
Worth Matravers MR, referred to us by the Respondent:
“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…”
We fully accept that those involved in
smuggling, no matter how peripheral their involvement, should be penalised.
Having found as a fact that the Appellant had no involvement, knowledge or
suspicion as to the smuggling attempt by his brother, we do not accept that
this principle applies to the Appellant.
22. We also note the comments of the Strasbourg Court in AGOSI v United Kingdom (1986) 9 EHRR 1 at paragraph 54:
“The striking of a fair balance
depends on many factors and the behaviour of the
owner of the property, including the degree of fault or care which he has
displayed, is one element…”
23. We found as a fact that the Appellant was an innocent victim of his
brother’s abuse of the trust placed in him. We carefully considered the
Respondent’s submissions that the Appellant did not exercise reasonable care in
imposing restrictions and controls on the use of the vehicle. We do not accept
that this was the case; we accept the Appellant’s evidence that the arrangement
between himself and his brother allowed use of the vehicle locally and to
assist his elderly mother while the Appellant was working away. We do not
accept that any reasonable person in such a situation would go further in
specifying restrictions or providing a “check-list” as to what the vehicle
could be used for, as contended by the Respondent. Even if we accepted this
submission, having found that there was no basis upon which the Appellant could
suspect that his brother would use the vehicle to import excise goods into the UK, it would defy common sense to suggest that the Appellant should have specified such a
restriction to his brother.
24. We also paid regard to the fact that a decision not to restore must
be proportionate to the legitimate aim of preventing the evasion of excise
duty. We take the view that any “fee” imposed on restoration must have a
similar aim. Having found as a fact that the Appellant was entirely innocent
and blameless, we do not accept that the “fee” of 1 ½ times the excise duty
amount reflects our findings.
25. We direct that the matter should go back for a further review and
that the facts found by us in this Decision be taken into account as relevant
considerations.
26. This document
contains full findings of fact and reasons for the decision. Any party
dissatisfied with this decision has a right to apply for permission to appeal
against it pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal)
(Tax Chamber) Rules 2009. 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.
TRIBUNAL JUDGE
RELEASE DATE: 17 March 2011
