TC01093

Appeal number TC/2010/01495

EXCISE DUTY –goods confiscated-seizure of vehicle used to transport the goods- appeal against decision of reviewing officer not to restore vehicle to the owner who was not present at the seizure and was unaware that it had been taken abroad – appeal allowed

FIRST-TIER TRIBUNAL

TAX 

	MRS LORRAINE SMITH	Appellant

	- and -

	DIRECTOR OF BORDER REVENUE	Respondents

				TRIBUNAL: S.M.G.RADFORD
						N.L.COLLARD

Sitting in public at 45 Bedford Square, London WC1 on 21 February 2011

The Appellant in person

Miss S O’Kane, instructed by the General Counsel and Solicitor to HM Revenue and Customs, for the Respondents

© CROWN COPYRIGHT 2011

DECISION

1.	This is an appeal for the restoration of a Vauxhall Zafira, registration LS07 XWL (“the vehicle”) which was seized by the UK Border Agency (“UKBA”) on 3 September 2009.
2.	The Appellant and Mr Collins of UKBA gave evidence.
Background and Facts
3.	On 3 September 2009 the UKBA stopped the vehicle at the UK control zone at Coquelles, France. The vehicle was being driven by the Appellant’s husband, Mr D.Smith, and Messrs Anderson, Budgen, Barnard, Godfrey and C.Smith (the Appellant’s son) were passengers.
4.	On questioning it was established that the occupants of the vehicle had been away for the day and had travelled to Belgium. Each individual had purchased 60 pouches of Golden Virginia making a total of 18 kilos of tobacco and additionally 200 cigarettes had been purchased.
5.	Mr D Smith stated that the vehicle was his and that he had owned it for eighteen months. He said that he and all the others had travelled to Belgium the previous week but had not bought anything as they were just checking the prices. Mr D Smith also said that he had made a trip two weeks previously when he had bought wine and beer.
6.	A search of the vehicle however revealed a receipt under the driver’s seat dated 20 August 2009 from a tobacconist in Adinerke, Belgium for 60 pouches of Golden Virginia tobacco. 
7.	The UKBA officer then interviewed the individuals after which he was satisfied that the tobacco and cigarettes were held for a commercial purpose which made them liable to forfeiture. The tobacco and cigarettes were seized under Section 139(1) of the Customs and Excise Management Act 1979 (“CEMA”) as liable to forfeiture. The vehicle was seized as liable to forfeiture under Section 141(1)(a) of CEMA as it was used for the carriage of goods liable to forfeiture.
8.	Neither the travellers nor the Appellant challenged the legality of the seizure of the tobacco and cigarettes within the one month limit or at all. The tobacco and cigarettes were therefore condemned as forfeit to the Crown by the passage of time under paragraph 5 of Schedule 3 of CEMA.
9.	On 14 September 2009 the Appellant wrote asking for the vehicle to be restored to her. She stated that the vehicle belonged to her and that she was estranged from her husband. She had five children three of which were still at school. She stated that she was unaware that her husband was planning to go to France. He did borrow the vehicle a few times a week and she allowed him to use it only to help picking up and dropping off the children at school and occasionally overnight if when he  needed it to look for work. She stated that on the day that the car was seized she had lent him the vehicle to look for work. She also included proof of her ownership of the vehicle.
10.	On 5 October 2009 the Respondents received a completed questionnaire from the Appellant pertaining to the circumstances of the loan of the vehicle to her husband.
11.	On 12 October 2009 an officer of the UKBA wrote to the Appellant refusing to restore the vehicle.
12.	On 17 November 2009 the Appellant requested a review of this decision. She again stressed that she had been separated from Mr D Smith and was seeking a divorce. She stated that although Mr D Smith was insured to drive the vehicle she had not given him permission to drive it abroad. He was allowed to use it to look for employment in their area as otherwise she would not have had his help with the children. She was entirely innocent and would like the vehicle restored.
13.	On 3 December 2009 the UKBA officer wrote to the Appellant explaining the review process and inviting her to provide any additional information in support of her request for a review. Nothing more was received before the review decision was made.
14.	On 30 December 2009 the reviewing officer confirmed that having conducted a review the vehicle would not be restored.
15.	It was later established that Mr D Smith had made at least four trips abroad around the time of the seizure of the vehicle. Mr Collins, the reviewing officer gave evidence to the Tribunal concerning his review and produced to the Tribunal a trip report dated 17 December 2009 which showed that the vehicle had travelled from Dover to Coquelles and back on 28 July 2009, 13 August 2009, 20 August 2009 and 3 September 2009. Mr Collins stated that the cameras did not necessarily pick up every journey.
16.	He said that the journey from Portsmouth where the travellers lived to Adinkerke in Belgium is 206 miles according to the RAC route planner produced to the Tribunal.
17.	On 29 January 2010 the Appellant lodged an appeal to the Tribunal.
18.	The Appellant stated that she actually had five children of 11, 13, 15, 20, 23and two stepchildren aged 26 and 28. Her 23 year old son was disabled and had a disabled partner. At the time of the seizure of the vehicle they had two children but now they had three children. One of them, Alisha, is severely disabled and lives with her most of the time. She produced a report on Alisha to the Tribunal which confirmed Alisha’s severe disablement.
19.	She allowed her husband to use the vehicle to pick up the 11, 13 and 15 year old children and drop them off at school and then pick them up at the end of the school day.
20.	Her husband had left her on 14 July 2009. He had been seeing someone else. She did not want him to use the vehicle to pick up other women or for general purposes but allowed him to use it to look for employment. On those days he would keep the vehicle overnight and her friend up the road would take the children to school. Her friend did not work on Thursdays so that was the day on which she was able to help out by taking the children to school. She only let her husband take the car overnight if her friend was able to take the children to school and he picked them up after school.
21.	On 3 September 2009 he phoned her to say that he could not pick up the children from school and so she had to get a cab in order to pick them up. She had no idea that he had taken the vehicle abroad. Her husband had told her that he had sold his own car which was a BMW.
22.	Her mother died on 31 July 2009 and was cremated on 14 August 2009 and so at the time of her husband’s trips abroad she was still in mourning and battling to cope.
23.	The insurance on the vehicle which named her husband as a permitted driver had been taken out before her husband left her. Her father had lent her £7,000 to buy the vehicle as she needed a large car – the Zafira was a seven seater - so that she could help out her disabled son and his partner and children. She was the main carer of the disabled couple. She still owed her father the money for the vehicle.
24.	She had not noticed that the vehicle had done extra mileage when her husband brought it back. Her main concern was that it should have petrol on its return.
25.	Miss O’Kane told the Appellant that her husband on being questioned had stated that he was earning between £25,000 and £30,000 a year but the Appellant said that this was not correct as at the time he did not have a job.
26.	The Appellant confirmed to Miss O’Kane that on 23 October 2009 she had bought an old banger Y836 SCR for £200 but that it had broken down within two weeks. Since 17 January 2010 she had a Kia which her father had bought her costing £1500.
27.	Miss O’Kane asked the Appellant why a letter to her husband dated 13 August 2009 had been sent to the Appellant’s address if he was not living there. However this letter was concerned with his claim for the Jobseekers Allowance and seemed to confirm that her husband was unemployed and living on his own.
28.	The Appellant also produced letters showing that she was receiving income support. 
The Legislation
29.	Section 2(1) of the Tobacco Products Duty Act 1979 provides that:
“There shall be charged on tobacco products imported into or manufactured in the United Kingdom a duty of excise at the rates shown…. in the Table in Schedule 1 to this Act.”
30.	Regulation 4 of the REDS Regulations and Regulation 12 of The Tobacco Products Regulations 2001, each as amended by the Excise Goods, Beer and Tobacco Products (Amendment) Regulations 2002, provide that:
“(1A) In the case of excise goods acquired by a person in another member state for his own use and transported by him to the United Kingdom, the excise duty point is the time when those goods are held or used for a commercial purpose by any person.

(1B) For the purposes of paragraph (1A) above- 
(b) “own use” includes use as a personal gift,
(c) if the goods  in question are –
(i) transferred to another person for money or money’s worth (including any reimbursement of expenses incurred in connection with obtaining them), or
(ii) the person holding them intends to make such a transfer,
those goods are to be regarded as being held for a commercial purpose.
(d) if the goods are not duty and tax paid in the member State at the time of acquisition, or the duty and tax that was paid will be or has been reimbursed, refunded or otherwise dispensed with, those goods are to be regarded as being held for a commercial purpose.
 
(e) without prejudice to sub-paragraphs (c) and (d) above, in determining whether excise goods are held or used for a commercial purpose by any person regard shall be taken of –
 
(i) that person’s reasons for having possession or control of those goods; 
(ii) whether or not that person is a revenue trader (as defined in section 1(1) of the Customs and Excise Management Act 1979);
(iii) that person’s conduct, including his intended use of those goods or any refusal to disclose his intended use of those goods;
(iv) the location of those goods;
(v) the mode of transport used to convey those goods;
(vi) any document or other information whatsoever relating to those goods ;
(vii) the nature of those goods including the nature and condition of any package or container,

(viii) the quantity of those goods , and in particular, whether the quantity exceeds any of the following quantities –
……….
3,200 cigarettes,
………
3 kilogrammes of any other tobacco products….

(ix) whether that person personally financed the purchase of those goods ; 
(x) any other circumstance that appears to be relevant.”
31.	Regulation 16 of the REDS Regulations provides that:
“Excise goods, in respect of which duty has not been paid, shall be liable to forfeiture where a breach of regulation 6 above (which states that “excise duty shall be paid before the excise duty point”) or any other regulation contained in part IV, V, or VI of these Regulations, or of any condition or restriction imposed by or under such a regulation, relates to those excise goods.”

32.	Section 49(1) of CEMA states:
“Where-
a) except as provided by or under the Customs and Excise Acts 1979, any imported goods, being chargeable on their importation with customs or excise duty, are, without payment of that duty- 

(i) unshipped in any port,
 those goods shall…be liable to forfeiture.” 
33.	Section 139(1) of CEMA provides:
“Any thing liable to forfeiture under the customs and excise Acts may be seized or detained by any officer or constable or any member of Her Majesty’s armed forces or coastguard.”
34.	Section 141(1) of CEMA states that:
		 “…where any thing has become liable to forfeiture under the customs and excise acts
(a) any …vehicle…or other thing whatsoever which has been used for the carriage, handling, deposit or concealment of the thing so liable to forfeiture…..; and 
 (b) any other thing mixed, packed or found with the things so liable,
shall also be liable to forfeiture”.
35.	Section 152 of CEMA establishes that:
     The Commissioners may, as they see fit-
b) restore, subject to such conditions (if any) as they think proper, anything forfeited or seized under the Customs and Excise Acts.

36.	Sections 14 to 16 of the Finance Act 1994 provide: 
Section 14 (2):
 (2)     Any person who is—
(a)     a person whose liability to pay any relevant duty or penalty is determined by, results from or is or will be affected by any decision to which this section applies,
(b)     a person in relation to whom, or on whose application, such a decision has been made, or
(c)     a person on or to whom the conditions, limitations, restrictions, prohibitions or other requirements to which such a decision relates are or are to be imposed or applied,
may by notice in writing to the Commissioners require them to review that decision.”

Section 15(1):

“Where the Commissioners are required in accordance with this Chapter to review any decision, it shall be their duty to do so and they may, on that review, either-
(a) confirm the decision; or
(b) withdraw or vary the decision and take such further steps (if any) in consequence of the withdrawal or variation as they may consider appropriate.”

Sections 16 (4) to (6):
“(4) In relation to any decision as to an ancillary matter, or any decision on the review of such a decision, the powers of an appeal tribunal on an appeal under this section shall be
confined to a power, where the tribunal are satisfied that the Commissioners or other person making that 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; and
(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 the decision to have been unreasonable and to give directions to the Commissioners as to the steps to be taken for securing that repetitions of the unreasonableness do not occur when comparable circumstances arise in future.
(5)     In relation to other decisions, the powers of an appeal tribunal on an appeal under this section shall also include power to quash or vary any decision and power to substitute their own decision for any decision quashed on appeal.
(6)     On an appeal under this section the burden of proof as to—
(a)     the matters mentioned in subsection (1)(a) and (b) of section 8 above,
(b)     the question whether any person has acted knowingly in using any substance or liquor in contravention of section 114(2) of the Management Act, and
(c)     the question whether any person had such knowledge or reasonable cause for belief as is required for liability to a penalty to arise under section 22(1) or 23(1) of the Hydrocarbon Oil Duties Act 1979 (use of fuel substitute or road fuel gas on which duty not paid),
shall lie upon the Commissioners; but it shall otherwise be for the appellant to show that the grounds on which any such appeal is brought have been established.

Appellant’s Submissions
37.	The Appellant stated that she now had considerable difficulty in helping her disabled son and his partner. Alisha lived with her most of the time and needed a more spacious car than the Kia as did her son and his partner. She also had her young children to take to school.
38.	The vehicle was clearly registered to her and she was both the legal and beneficial owner of the vehicle. She had provided appropriate evidence to support this.
39.	 The reviewing officer’s decision appeared to be based solely on the assumption that Mr Smith was her partner at the relevant time but this was not true. She was separated from him at the time and seeking a divorce although she could not afford the legal fees.
40.	He was insured to drive the vehicle but she only gave him permission to use the vehicle so that he could help her pick up the children and drop them off at school.
41.	He certainly did not have unrestricted access to the vehicle and she had never given him permission to take the vehicle abroad. If she had known that he intended to use the vehicle for this purpose she would never have agreed.
42.	When they discussed him using the vehicle she told him that it was strictly to be used for picking up or dropping off the children or looking for employment in their area as otherwise he would not be able to help with the children. She had made it clear that it was not to be used for any other reason.
43.	The whole episode had caused her considerable stress, worry and financial difficulty. She had now banned him permanently from using her current vehicle and had taken him off the insurance for good. He had never had any car keys and so there was no way that he could ever use the vehicle again.
44.	She was a third party to those involved in the incident, clearly owned the vehicle, was not present at the time of the seizure and was totally innocent.
45.	Her husband had told various lies during his interview. He had also told her that he had sold his BMW car and any correspondence should have gone to his new address.
UKBA Submissions
46.	To the extent that the Appellant was arguing that the decision not to restore the vehicle was unreasonable, UKBA contended that the review decision was one that could reasonably been arrived at because the review officer had examined the circumstances of the case carefully.
47.	If the excise goods were held for profit the vehicle should not normally be restored. The reviewing officer had concluded that there were no exceptional circumstances that should result in its restoration and to refuse to do so was fair, reasonable and proportionate in all the circumstances.
48.	The general policy was that private vehicles used for the importation or transportation of goods should not normally be restored. A vehicle would not normally be restored to a third party in a situation that would be tantamount to restoring it to the person responsible for the smuggling attempt. However if the vehicle was owned by a third party who was not present at the time and could show that they were both innocent of and blameless for the smuggling attempt then consideration might be given to restoring the vehicle for a fee. If in addition to being both innocent and blameless the third party demonstrated that they have taken reasonable steps to prevent smuggling in the vehicle then consideration may be given to restoring the vehicle free of charge.
49.	The review officer had examined this point in relation to the Appellant’s submissions. However Mr D Smith had made no mention of being estranged from the Appellant and even stated that part of the tobacco was for her. The Appellant had stated that she had three children still at school but the husband had said that his children were 18, 21, 24 and 26 all of whom smoked. The husband had said that he owned the vehicle and had done so for eighteen months.
50.	The review officer concluded that the fact that the Appellant had stated that her husband borrowed the vehicle a few times a week to transport the children to and from school displayed that he had unrestricted access to the vehicle.
51.	The reviewing officer had discovered that her husband had been the registered owner of a BMW since 17 September 2008 which was registered at the same address as the Appellant.
52.	The reviewing officer had paid particular attention to the degree of hardship caused by the loss of the vehicle. He did not regard either the inconvenience or expense in the Appellant’s case to be over and above what one should expect. He had seen that the Appellant’s husband appeared to have a car.
Findings
53.	We found that the Appellant gave her evidence in a truthful and straightforward way. She had allowed her husband to borrow the vehicle as she was anxious for her husband to get a job as soon as possible and was grateful for his help in transporting the children whilst she was caring for her disabled son and his partner and their children.
54.	We noted that three of the four trips made by her husband were on a Thursday when her friend could take the children to school in the morning.
55.	We noted on checking the times that the vehicle was clocked as departing or arriving at the Channel port and the distance to be travelled that it would have been possible on those days for her husband to have made the trip and been back in time to pick up the children from school.
56.	We found that in making his decision the reviewing officer had been influenced by the lies told by her husband in his interview. The Appellant’s husband had stated that he owned the vehicle and had done so for 18 months, had four children of 18 or over all of whom smoked and he had not mentioned that he was separated from his wife. 
57.	We accepted that the Appellant believed that he had sold his car. She stated that she was worried that he might use the vehicle to pick up other women. If she thought that he still had the BMW this would not have been a worry to her.
58.	We found that in the light of all her responsibilities to both her own children, Alisha and her disabled son and partner the Appellant needed a multi-seated car such as the Zafira for which she still owed her father money. Although the reviewing officer had dismissed the problems of transporting the children and her disabled relations on the grounds that she had another car the Kia was too small for her purposes and she had suffered exceptional hardship as a result of the seizure of the vehicle.
59.	We found that the Appellant had taken reasonable steps to prevent her husband using the vehicle for smuggling. He was only allowed to keep the vehicle overnight to look for employment and had to be there to pick up the children after school. We found that the Appellant had done everything she could to prevent any future smuggling in the vehicle. She had taken him off the insurance for her current vehicle and he had never had his own keys to the vehicle.
60.	We were satisfied that the decision made at by the reviewing officer was not one at which he could have reasonably arrived.
61.	We found that the decision was not fair, reasonable and proportionate in the circumstances. We found the Appellant innocent and blameless. We believed her when she said she had no idea that the vehicle was being taken abroad. Her husband had planned it carefully so that she would have no reason to suspect what he was up to. The transcript of his interview showed him to be a liar who constantly changed his story.
Decision
62.	We declare that the decision was unreasonable and direct that the decision of the reviewing officer should cease to have effect forthwith.
63.	The appeal is allowed.
64.	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: 7 April 2011