E00990
EXCISE TRANSIT PROCEDURE - revocation of excise duty guarantee given by transporter under CEMA 1979 s 157 - AADs not accompanying consignments from UK to France under duty suspension - transporter purporting to create substitute AAD - excise goods consigned to France diverted to West Midlands - AAD purporting to show receipt of goods in France not proved - observations on reasonableness of revocation - appeal dismissed
MANCHESTER TRIBUNAL CENTRE
STATUS SUPPLIES LTD T/A
OLTON INTERNATIONAL Appellant
- and -
THE COMMISSIONERS FOR
HER MAJESTY'S REVENUE AND CUSTOMS Respondents
Tribunal: Michael Johnson (Chairman)
Marjorie Kostick BA FCA CTA
Sitting in public in Birmingham on 14-16 February, 16-17 May and 31 July 2006
Graham Brodie, counsel instructed by Patwa, Solicitors for the Appellant
James Puzey, counsel, instructed by the Solicitor for HM Revenue and Customs for the Respondents
© CROWN COPYRIGHT 2006
DECISION
Nature of the appeal
- This appeal, made under section 16(1)(a) of the Finance Act 1994 ("the 1994 Act"), is against a deemed confirmation by H M Customs and Excise ("Customs") of a decision contained in a letter dated 2 December 2004 written to the Appellant by Mrs Jackie Spenceley of Customs, in which she cancelled a guarantee required to be given to Customs on behalf of the Appellant under section 157(1) of the Customs and Excise Management Act 1979 ("the 1979 Act").
- There exists a review decision made by Mr William Brown of Customs, communicated by him to the Appellant by a letter dated 31 January 2005, in which he was expressed to uphold Mrs Spenceley's earlier decision. However notice of that decision was not given to the Appellant in time, ie within 45 days of the request for it. By section 15(2) of the 1994 Act, Customs are therefore to be assumed to have confirmed Mrs Spenceley's decision in any event. Strictly, therefore, the review letter dated 31 January 2005 is irrelevant.
- The cancellation of the guarantee was pursuant to section 157(2)(c) of the 1979 Act, and was stated by Mrs Spenceley to be because of "AAD movement irregularities" notified to the Appellant by Customs in a letter dated 4 November 2004. That letter was written by Mr Benjamin John Graham of Customs. Although the notice of appeal, served on 22 February 2005, states that letter to have contained the original decision, and the out-of-time review decision notified on 31 January 2005 to be the decision appealed against, neither of which is correct, this is purely technical. The tribunal has been concerned with the circumstances of the alleged "AAD movement irregularities".
- The cancelled guarantee was one entered into by a named insurance company, whereby that company undertook with Customs to pay any sum for which the Appellant might become liable to Customs, for any alleged irregularity resulting in the loss of inter alia excise duty. The guarantee was dated 21 May 2003 and was accepted by Customs on 23 May 2003.
- The jurisdiction being exercised by the tribunal is that under section 16(4) of the 1994 Act. Under that sub-section, we have the powers therein specified, if we are satisfied that the Commissioners of Customs and Excise or other person making the decision appealed against "could not reasonably have arrived at it". The single issue between the parties has therefore been, was the decision of Mrs Spenceley to cancel the guarantee, or, put more accurately, the deemed confirmation of that decision on review, such that Customs could not reasonably have arrived at?
- We were informed that Customs had issued certain assessments against the Appellant for excise duty and value added tax allegedly evaded, but that these had been withdrawn. Consequently any such assessments are not the subject of appeal.
Background and relevant legislation
- The Appellant, based at Hockley Heath, Solihull, is and was in business which included the transporting from the UK to France of goods under excise duty suspension, with accompanying administrative documents ("AADs"). As is not disputed by the parties to this appeal, AADs are the essential means under community law whereby the movement of goods being transported under duty suspension can be policed. There is an obvious potential for excise goods on which duty has not yet been paid to reach the wrong hands, so that payment of duty is evaded. Community law seeks to avoid that happening.
- Article 18(1) of Council Directive 92/12/EEC ("the Directive") provides that products subject to excise duty moving under duty suspension arrangements between Member States of the European Community shall be accompanied by a document drawn up by the consignor, whose form and content are to be established as the Directive provides.
- Article 19 of the Directive provides in detail for the drawing up of this document – the AAD – in quadruplicate, for what is to happen to the four copies of the document, for the information those copies are to contain, and for verification of the movement as between consignee and consignor.
- Article 15(3) provides for a system of guarantees to cover what are described as "the risks inherent in intra-Community movement". Such guarantees are to be given on behalf of the authorised warehousekeeper of the goods, or may be given by the transporter or the owner of them. In this case, we are concerned with such a guarantee given by the transporter.
- The significance of AADs is shown by the provision in article 15(4) that the liability of the authorised warehousekeeper of despatch, and, if the case arises, that of the transporter may only be discharged "by proof that the consignee has taken delivery of the products, in particular by the [AAD] referred to in article 18 under the conditions laid down in article 19."
- It is moreover not in dispute between the parties to this appeal that the relevant operations of the Appellant were covered by the Excise Goods (Accompanying Documents) Regulations 2002 SI 2002/501 ("the Regulations").
- Under regulation 6(1)(a) of the Regulations, the AAD must not be amended, save as provided in regulation 6(4) and (5), and under regulation 6(1)(b), the AAD "must accompany the excise goods to which it relates at all times until those goods arrive at their ultimate destination."
- Under regulation 20(1), every transporter of excise goods to which the Regulations apply "must ensure, so far as it is in his power to do so, that the Community provisions are complied with at all times." This is fortified by regulation 20(2), under which the transporter must, "whilst the goods remain in his custody or under his control", be ready to produce to an officer any AAD covering the goods, when required to do so.
- The alleged "AAD movement irregularities" referred to in the letter from Customs dated 4 November 2004 all occurred during a short period commencing on 22 September 2004. They involved three road tractor units, to which trailers were attached, forming articulated "sets". These tractors had the Registration Nos T441ADN, T442ADN and V350GGS respectively.
- With regard to T441ADN and V350GGS, the burden of Customs' complaints has been that AADs had become separated from the loads to which they related, and, in one of those cases, that a purported duplicate AAD had been created when it should not have been. As there is no dispute as to the relevant facts underlying the movements of these two vehicles, we can summarise in a fairly short compass the position relating to them.
T441ADN
- On 22 September 2004, the tractor T441ADN collected a trailer load of lager from Brandford bond, Oldham, consigned to France. The tractor took the trailer to a vehicle park in Braintree, Essex. On 24 September 2004, the tractor took the trailer to Ashford, Kent, where it was transferred to another tractor, V51GBM.
- The AAD for the load was not passed to the driver of V51GBM. The AAD was found by Customs in the cab of tractor T441ADN as that tractor proceeded to France with another (empty) trailer.
- Mr Martyn Moseley, a director of the Appellant, purported to create a duplicate AAD for the load, which he sent to Ashford by car to be handed to the driver of V51GBM. The load was then taken to France and was on the face of it delivered to the recipient French warehouse, EDW, Wimille.
- It is thus beyond dispute that the AAD found by Customs was not with the load throughout the time that the load was under the control of the Appellant as transporter.
V350GGS
- On 23 September 2004, the tractor V350GGS collected a trailer load of lager from Rangefield bond, Purfleet, Essex, consigned to France. The load was taken to Braintree. The trailer was uncoupled and the tractor V350GGS departed without leaving the AAD with the load.
- The trailer was then hitched up to another tractor, M652VOO, and the load left the Braintree premises without its AAD. When stopped by Customs, the tractor and trailer were not on the face of it bound for France.
- Subsequently, the tractor V350GGS returned to Braintree with the AAD for the load.
- Again, therefore, it is not disputed that the relevant AAD was not with the load throughout the time that the load was under the control of the Appellant.
Explanations for the irregularities in respect of the loads initially pulled by T441ADN and V350GGS respectively
- The Appellant's explanations for these irregularities are as follows.
- In respect of the load initially pulled by T441ADN, Mr Moseley was concerned that the load might be seized by Customs, who were known to be interested in what was going on at the Braintree premises. The Appellant therefore wished to get the load away from Braintree promptly, and to that end it switched tractors for the load. When Mr Moseley realized that the AAD was no longer with the load, he attempted to get Brandford bond to issue a duplicate AAD. Brandfords declined to do this, so Mr Moseley made a duplicate AAD himself. In so doing, he regarded himself as in the position of the warehousekeeper, seeing that he had control of the excise goods for the time being as the transporter of them. In creating the duplicate AAD, he sought to correct the wrongful state of affairs that he realized had arisen by reason of the true AAD having become separated from the load to which it related.
- In respect of the load initially pulled by V350GGS, the driver of that tractor forgot to leave the AAD with the load when he left Braintree. As soon as he realized what had happened, he returned to the Braintree premises with the AAD. Meanwhile, the driver of tractor M652VOO, an employee of London Transport, had asked to "borrow" the trailer containing the load, so that he could carry out a rolling valve test on the unit. He is said not therefore to have been bound for anywhere in particular when he left Braintree, with his tractor hitched to the trailer containing the load. It is not clear if and when the trailer might have been returned to Braintree, or gone to France, as the unit was stopped by Customs on the open road heading away from Braintree.
Principal factual dispute between the parties
- Most of the time of the tribunal has been occupied by the alleged movement irregularities in respect of the load initially pulled by tractor T442ADN – the second movement.
- It is not in dispute that that tractor collected a trailer-load of 480 cases of Special Brew, 480 cases of Skol Super, 480 cases of Kestrel and 540 cases of Tennents from Rangefield bond on 22 September 2004, consigned to France.
- It is further not in dispute that T442ADN pulled that load as far as the Braintree premises, where the trailer containing the load was unhitched from the tractor.
- At the heart of this appeal is what happened to the load next.
- The Appellant is adamant that the load was collected from Braintree for transportation to France by a driver of unknown identity acting on behalf of La Manche Eurl. The tribunal has been provided with copies of the AAD indicating on its face that the consignment reached EDW, Marck, France, on 23 September 2004, and was endorsed by French Customs as having done so. The customer for the consignment was Europlus Trading Ltd.
- The Appellant has not, however, been able to shed any light on the actual movement of the goods from Braintree to France. Mr Moseley's position has been, in essence, that that was out of his hands. He has stated that the load left Braintree, so far as he is aware, at about 3 am on 23 September 2004. The Appellant did not take responsibility for transporting the load to France because, so Mr Moseley maintains, it was required in France more quickly than he could arrange to transport it.
- Nevertheless, the AAD records the Appellant as transporter of the goods, and it identifies T442ADN as the tractor. The question arises how the Appellant, which clearly had control of the load at least until Braintree, discharged its responsibility for the load from the moment T442ADN was unhitched from the trailer containing the load.
- The case of H M Revenue and Customs ("HMRC") as to what happened to the load after reaching Braintree is very different from that of the Appellant.
- HMRC say that Customs mounted an observation operation over the trailer-load at Braintree. Customs had been observing the load ever since it had left Rangefield bond. They observed – and indeed filmed – what they believed was the unloading at Braintree of the trailer containing the load, using a fork-lift truck, and the placing of the load onto a different trailer. That trailer was then hitched to a tractor, Registration No N63ECC, and it left Braintree.
- Customs proceeded to follow the unit, keeping it under observation, until it arrived at industrial premises in Woden Road, West Bromwich at about 5.45 am on 23 September, where the trailer was unloaded. The case of HMRC is therefore that this load, consigned under duty suspension arrangements, was diverted from its intended destination, namely France, to an industrial unit in the West Midlands, presumably for distribution without payment of excise duty.
- The factual case of the Appellant and that of HMRC are thus in stark contrast. Both explanations of the destination of the goods cannot be right. The tribunal must find the true facts, and having done so, decide whether cancellation of the guarantee was a matter that could not reasonably be justified, taking account of the other irregularities that there have been in the Appellant's case.
Analysis of the alternative factual positions
- There is no overlap between the alternative factual positions.
- HMRC are not in a position to disprove collection of the load by an unknown French driver, early in the morning of 23 September 2004, if the load that Customs observed being transferred to another trailer, and pulled away to the West Midlands by tractor N63ECC, was not the load collected by T442ADN the previous day from Rangefield bond.
- On the final day of the hearing, HMRC sought to use certain written evidence which we ruled to be inadmissible by reason of the Crime (International Co-operation) Act 2003. That evidence, if admitted, might have cast doubt on the validity of the AAD apparently evidencing the arrival of the goods at EDW. Having regard to section 9(2) of that Act, Mr Puzey, who appeared for HMRC, rightly did not press for that evidence to be admitted.
- Similarly, on the final day of the hearing, the Appellant sought to use written evidence relating to EDW that, in the absence of the attendance of the witness for cross-examination, was excluded pursuant to rule 21(4) of the Value Added Tax Tribunals Rules 1986 (as amended) ("the tribunal rules").
- In respect of that evidence, we had taken the view on 17 May 2006 that we would wish to receive evidence from or relating to EDW, bearing in mind the intensity of the conflict of evidence between the alternative factual positions of the parties. In view of that conflict, we were not of the opinion that we ought to regard the AAD evidencing the arrival of the ex-T442ADN load at EDW as a self-proving document; we were concerned that no evidence vouching for it had been produced by the Appellant; we were concerned to respect rule 21 of the tribunal rules; and, in view of the need to adjourn the hearing to a later date in any event, we were prepared to allow, as we did, an adequate opportunity for the AAD to be properly proved.
- On the final day of the hearing, the Appellant was allowed to reopen its case for that purpose. Mr Brodie's instructing solicitor, Ms Fatema Patwa, explained in a witness statement made on that day that the witness that the Appellant intended to call to prove the AAD, Mr Manuel Gluck, was unavailable, and the reasons for this. We found the reasons for his absence to be unconvincing. In consequence, given that his written evidence was objected to by HMRC, we were not prepared to admit it.
- The result is that the tribunal has had no evidence specifically directed to the receipt of the goods in France, apart from what is evidenced by the AAD on its face.
- The position of the Appellant is that the disputed load is shown to have gone to France, and that the observations of Customs at Braintree, and the goods that may thereafter have gone to the West Midlands and been unloaded there, did not relate at all to the disputed load. The position of HMRC is that the evidence adduced in support of their case related to the disputed load, so that the load cannot have gone to France as alleged by the Appellant. So the finding of the tribunal as to which of these conflicting matrices is correct is decisive of this aspect of the appeal.
Evidence received by the tribunal
- The tribunal has received a good deal of evidence in this case. The following witnesses gave oral evidence:
For the Appellant:
Mr Martyn Moseley;
Mr Mark Thomas Sumner (the driver of T441ADN on 22 September 2004);
Mr Michael David Welham, Warehouse Manager at Rangefields, Purfleet (he had no specific recollection of the movements with which we are concerned; his evidence had to do with the loading methods used for wagons carrying beer that he was familiar with).
For HMRC:
Ms Tracey Gail Wright of HMRC (her evidence related to a previous movement incident, involving excise goods transported by the Appellant, which occurred on 20 August 2003);
Ms Lorraine Susan Ashwell of HMRC (she was involved in mobile surveillance of T442ADN on 22 September 2004 as it went from Purfleet to Braintree, and then kept watch at the Braintree premises on 23 September 2004 and made a video recording);
Mr Douglas Murray Rowe of HMRC (he observed V350GGS at Rangefield bond, Purfleet on 22 September 2004 and later made observations at Braintree);
Mr Jonathan Grellier, Primary Contract Manager of Carlsberg UK Ltd (he had no personal knowledge of the movements with which we are concerned; his evidence had to do with loading methods used for wagons carrying beer that he was familiar with);
Mr Kevin Chapman, Packaging Process Engineer of InBev UK (he also had no personal knowledge of the movements with which we are concerned; his evidence also had to do with loading methods used for wagons carrying beer that he was familiar with);
Mr Benjamin John Graham of HMRC (his evidence related to Customs' dealings with Mr Moseley, having regard to the Appellant's explanations of the movements in dispute).
- The witnesses who gave oral evidence had all also made at least one written witness statement – three such statements, in the case of Mr Moseley.
- In addition, the following witness statements were specifically read or referred to, without objection:
Ms Lynne Veronica Norris of HMRC (who interviewed Mr Raymond Norman Groves, driver of T442ADN on 23 September 2004);
Mr Adam Michael Hanrahan of HMRC (who questioned the driver of M652VOO on 23 September 2004);
Mr Vincent Dean Baker of HMRC (who operated a video camera, recording happenings at the Braintree premises on 22 and 23 September 2004);
Mr Andrew Graham, an unemployed lorry driver (who has not heard of the Appellant or Mr Moseley, has not worked for them, but was arrested in June 2002 – ie long before the incidents with which we are concerned – on suspicion of being concerned with the evasion of excise duty involving EDW);
Ms Jacqueline Spenceley of HMRC (who gave the original decision in issue in this case);
Mr Kevin William Harvey Davies of HMRC (his evidence has had the object of placing before the tribunal photographs, taken at the Queens' Warehouse, Dover on 3 April 2006, of the packaging of beer on pallets); and
Mr Matthew Christopher Parsons of HMRC (giving his experience of the packaging of beer on pallets, and of the diversion of excise goods between the UK and France; the evidence of opinion contained in the statement is, by agreement between counsel, disregarded by this tribunal).
- Reference was also made to and reliance placed on the contents of the logs of those officers of Customs who had followed T442ADN and N63ECC respectively on their journeys. Those logs were treated at face value and the authors of them were not required for cross-examination. The tribunal had before it a lever-arch file and a supplemental bundle containing witness statements from a number of other witnesses besides those mentioned above. No reliance was specifically placed by either party on those statements. We also had the assistance of a paginated folder of relevant documents.
- We also viewed at some length the video recording relied upon by HMRC as showing that the load collected from Rangefield bond, Purfleet by T442ADN and observed entering the Braintree premises was decanted into another vehicle at that location, preparatory to its journey to the West Midlands.
- We were also invited to look at and consider the evidence of bundles of colour photographs purporting to show the movements of the vehicles so involved.
Findings of fact made by the tribunal in respect of the second movement
- As we see it, we are not required to make findings of fact on every disputed matter raised in evidence; only such as will enable us to decide the issue in this appeal, as identified above.
- It is true to say that the video recording made of events at the Braintree premises is less than entirely clear, and we cannot be satisfied from the video that the goods shown being lifted off one trailer and (apparently) placed onto another trailer were those removed from Rangefield bond by T442ADN on 22 September 2004 for transportation to France.
- There must, however, be little or no scope for Customs to have mistaken the identity of the trailer shown being decanted.
- It was strenuously urged upon the tribunal that the trailer shown being decanted must have been a different one from that followed from Purfleet, because the video shows that two different trailers appear to have been involved, one bearing the words "Transamerica Leasing" on its curtain, and the other not.
- At the beginning of the video, one sees a trailer bearing those words on its curtain. Thereafter it is not apparent that the trailer being decanted bore those words on its curtain. However it does not follow that the trailer formerly hitched to T442ADN was different from the trailer being videotaped.
- The logs make mention of a red trailer at Purfleet with "Transamerica Leasing" on its curtain pulled by a tractor having the Registration No R170XVW, and of another such trailer (blue) at Braintree pulled by a tractor having the Registration No 94 RN 1969. By contrast, when T442ADN and its (red) trailer are described at Purfleet, no mention is made of the trailer having "Transamerica Leasing" on its curtain. Yet when tractor T442ADN has been detached from its trailer at Braintree, the log is at pains to mention that the tractor is attached to a (blue) "Transamerica Leasing" trailer. We conclude that the logs mention "Transamerica Leasing" when this is apparent from the curtain of the trailer, but not otherwise.
- What weighs with us is the evidence of the observers, without whom the video would not have been made, and who made the video to corroborate their observations, in so far as it was capable of doing so. We do not think that the video affords a great deal of corroboration; equally, however, it does not appear to us to contradict the evidence of the witnesses.
- Without the video, we would still consider that it has been shown by HMRC, through the evidence given by its witnesses who took part in the operation involving the following of the consignment from Purfleet onwards, that the contents of the trailer that left Purfleet were, on a balance of probabilities, those that ended up in the West Midlands. There has been no challenge to their evidence successfully mounted by the Appellant, and their evidence does not appear to us to be suspect. Consequently we accept it.
- Our acceptance of this evidence is significant, because the burden of proof in this appeal lies not on HMRC but on the Appellant.
- The original driver of the load, Mr Raymond Groves, took a different load to France, and when questioned by Customs at the time, gave inconsistent accounts. He appears to have reacted suspiciously when informed by Customs that he had been followed from Purfleet, in replying "no comment" when asked if he wished to change his story. Not having heard from Mr Groves, we have kept an open mind about his record of interview.
- We have not been assisted by the well-meant and interesting evidence of those witnesses who have described ways of palletising and of loading and unloading (with or without a pump truck) various sorts of lorry with different kinds of beer. The reason for this is simple: none of these witnesses is speaking from actual knowledge of this particular load. At best, these witnesses can speak from supposition of how the consignment might have been, or ought to have been, loaded. That has no bearing on how the consignment was loaded in this particular instance.
- In the same way, we have not been influenced at all, in viewing the video, by ideas of what the load might be. Mr Moseley had various confident suggestions as to what particular pallets must have contained. The quality of the video was such that our eyes could not confirm what he suggested. At the end of the day, therefore, those suggestions too have resided in the realm of supposition.
- We are unhappy with the evidence of Mr Moseley. We note that his evidence was quite comprehensive about every aspect of the movements in question, save for the movement from Braintree of the goods pulled by T442ADN from Purfleet. As to that, we consider that his evidence became vague.
- Just as Mr Moseley was apparently unable to add detail to the assertion that the goods went to France via a French driver – he had no idea who that driver was, and no idea who employed him – so his evidence became unpersuasive. He could not provide the registration of the French truck. He could not produce a "faxed" confirmation of the movement. He could not give the name of the Frenchman he arranged matters with. He said that a written confirmation was "not needed". He told us that he wasn't going to go to Braintree himself to supervise the movement – he arranged matters over the telephone.
- We find this to be unsatisfactory. Mr Moseley told the tribunal that he was happy to rest upon his guarantee if things went wrong. However, as we see it, the point is that the Appellant would need to maintain such a level of care in its dealings as would both protect the guarantee and respect the system under which intra-state excise duty suspension movements were and are lawfully allowed to take place.
- Having regard to the lack of supervision by Mr Moseley in this instance, we find that it has not been proved to the tribunal that the load departed for France in the way supposed. Rather, we conclude that the excise goods that left Rangefields bond in Purfleet duly arrived in the West Midlands, as alleged by HMRC, where they were unloaded into an industrial unit there.
- The point has been fairly made by Mr Brodie that the goods actually found in the unit when inspection of the unit took place some hours later did not equate to those described in paragraph 29 above. However, we are satisfied that the opportunity existed for goods to be removed from, and added to, the stocks contained in the unit between the time of arrival of the disputed load and the time of the inspection, so that it does not follow that precisely the goods that arrived would be found in situ some hours later. The key point in that regard, as we see it, is that the goods that were observed to arrive at the unit were, on the balance of probabilities, the goods that had left Rangefields bond at Purfleet.
Submissions for HMRC
- For HMRC, Mr Puzey submitted that, whilst it was open to the tribunal to infer that the Appellant was knowingly involved in irregularities, it sufficed to make reasonable the decision of HMRC to revoke the guarantee that the tribunal should conclude that there had been repeated lack of care on the part of the Appellant in fulfilling the requirements of the Directive and the Regulations. He submitted that, whilst considered in isolation individual breaches might not appear in themselves to be sufficient for revocation, when the breaches were regarded collectively, it was not unreasonable for Customs to have decided to revoke.
- Mr Puzey invited us to disregard the attacks made by the Appellant on the acceptability of the observations at the Braintree premises, which were part of an operation commencing at Purfleet and not ending until the goods that left Rangefield bond were unloaded in the West Midlands. He submitted that there was no obvious scope for a mistake to have been made in respect of the trailer shown to have been decanted at Braintree. He drew attention to the suspicious explanations given by the driver, Mr Groves, with regard to the loads he had been responsible for pulling.
- By contrast, Mr Puzey submitted, the Appellant had sought to attach the greatest significance to the AAD purporting to show the arrival of the goods at EDW, Marck, when this document had not been properly proved, as the tribunal had required. He invited us to regard that document as doubtful, and to prefer the evidence adduced by HMRC as to the progress of the disputed load originally pulled by T442ADN.
- The decision to lapse the movement guarantee, Mr Puzey submitted, was both reasonable and proportionate, having regard to the risk to the Exchequer posed by the irregularities in this case. Revocation of the guarantee was the sanction that properly remained after it had been decided not to pursue the Appellant by other means open to Customs.
- Mr Puzey invited us to dismiss the appeal.
Submissions for the Appellant
- For the Appellant, Mr Brodie submitted that the movements involving T441ADN and V350GGS respectively were not controversial. He said that those movements were not such that should lead to criticism of Mr Moseley. They did not involve loss of revenue to the Exchequer, and were minor in the context of the very large number of vehicle movements taking place all the time.
- Mr Brodie submitted that the creation by Mr Moseley of a new AAD in respect of the movement involving T441ADN was not a matter relied upon by Customs in their decision letter. He submitted that Mr Moseley had tried his best, consonant with regulation 20(1), to rectify the absence of an AAD covering the load, and that he was not strictly liable for breaches of the Regulations.
- With regard to the movement involving T442ADN, Mr Brodie accepted that there were major disputes. He submitted firstly that the AAD showing the arrival of the disputed load at EDW, Marck indicated that the customer must have received the goods in dispute. He said that, unless the customer was involved in a conspiracy, as to which there was no evidence, the customer would have protested if the load had not duly reached its destination. He invited us to treat the AAD as self-proving.
- Secondly, Mr Brodie submitted, there were inadequacies in the observations made by Customs of the load allegedly ex-T442ADN. He directed our attention to the video, and to the photographs, appearing to show that a trailer originally marked "Transamerica Leasing" on its curtain then had no mention of those words when shown as being decanted. He submitted that it was inconceivable that it was the same trailer that was decanted.
- Thirdly, Mr Brodie submitted that the evidence of how beer is placed and transported on trailers, the size of pallets and the use of pump trucks, gave the lie to the conclusion that what had been observed was the decanting of the load of beer said to have been collected from Purfleet. The height of the pallets observed on the video had shown that it was not beer on the trailer. The way in which the contents of the trailer were arranged, and the method of decanting the same, were also suggestive that this was not the load emanating from Purfleet.
- Fourthly, Mr Brodie criticized HMRC for presenting no evidence as to the ownership of the tractor unit that pulled the trailer to the West Midlands, no evidence of any investigation into the industrial unit at which the goods transported on that trailer were received, and no evidence as to the reasons for the withdrawal of the assessments to excise duty and value added tax mentioned in paragraph 6 above. By way of contrast, he said, evidence that HMRC had sought to adduce had been properly rejected – see paragraph 41 above. He submitted that there was "something profoundly unsatisfactory" in the manner in which HMRC had addressed the appeal insofar as relating to the second movement.
- Mr Brodie also referred us to the tribunal decision in Chip Logistics Ltd v the Commissioners for H M Revenue and Customs (2005) Excise Decision 00914, in which Mrs Kostick formed part of the tribunal. In that case, the tribunal allowed an appeal against the cancellation of a guarantee under section 157(2)(c) of the 1979 Act. We gratefully adopt the reasoning of the tribunal in paragraph 3 of that decision with regard to our jurisdiction, which seems to us to be entirely correct.
- Mr Brodie submitted that the case for HMRC had changed from one originally alleging fraud, impropriety or significant irregularity to one in which the proposition was advanced that serious failures of care would suffice to justify dismissal of the appeal. But that was not, he said, the basis of the decision appealed against.
- Mr Brodie submitted that the revocation of the guarantee was not called for. It constituted a disproportionate threat to Mr Moseley's livelihood. Mr Brodie invited us to allow the appeal by ruling the revocation to have been unreasonable, and he submitted that we should exercise our powers under section 16(4) of the 1994 Act.
Decision of the tribunal with reasons
- The AAD in dispute – being the one copied at pages 59-60 of the folder of relevant documents – is, on its face, conclusive that the consignment arrived at EDW, Marck.
- However, as we mention above, the AAD shows the transporting tractor as T442ADN. Neither party contends that T442ADN took the consignment to France.
- Seeing that we find that, on a balance of probabilities, the consignment found its way to the West Midlands, the AAD must be wrong, so far as it purports to prove the arrival of that consignment in France.
- This tribunal would have preferred to have decided the validity of the AAD from evidence dealing with its provenance. That evidence has not been forthcoming, despite the best efforts of this tribunal.
- As it is, the document should not, we think, be regarded as self-proving, for the reasons we have given in paragraphs 43 and 44 of this decision. Normally, we would apply rule 28(3) of the tribunal rules and accept the document as genuine. However in this case, we have directed to the contrary.
- It is possible that the AAD might evidence the arrival of goods other than those collected from Rangefields in Purfleet, ie substituted similar goods. That explanation would be consistent with the findings of fact that we have made, but such a conclusion would be speculative.
- The lack of evidence that the customer ever received its goods is not, as we see it, of significance. The customer may have received equivalent goods. We are, moreover, not in a position to decide whether the customer ever in reality expected to receive the particular goods consigned to it. We should not assume that an irregularity involving the customer did not exist, simply because a conspiracy has not been alleged by HMRC.
- In our view, a major doubt hangs over the AAD as relating to the consignment in issue. It is not a doubt that the Appellant has been able to dispel.
- This tribunal can only allow this appeal if we are satisfied that the Commissioners or other person making the decision under appeal could not reasonably have arrived at it.
- In relation to the movements involving T441ADN and V350GGS respectively, we agree with Mr Puzey that the Appellant failed to perform its duty, in allowing the AADs relating to those movements to become parted from the consignments in question.
- The breach of duty in relation to the movement involving T441ADN would in our view have been relatively trivial, but for the action of Mr Moseley in creating a purported substitute AAD to supposedly rectify matters. He had no power to do that. His explanation as to why he regarded himself as being in a position to do that is nonsense, seeing that, as he himself accepts, he was without the authority of the consignor in that regard.
- As mentioned in paragraph 8 above, it is up to the consignor to draw up the AAD. The authorized warehousekeeper is the consignor for that purpose, and it is for the warehousekeeper and any person authorized to act on its behalf to ensure that the Community provisions are complied with when the AAD is completed: see regulation 5(1) of the Regulations. It follows that to draw up an AAD, substitute or otherwise, without the authority of the warehousekeeper is a breach of the Regulations. The same is true of amendments to AADs, where these are permitted: see regulation 6(4).
- The creation of substitute AADs in the way described is a general invitation to fraud. We think that Mr Moseley's action was serious enough for it to have been reasonably considered that, for that reason alone if for no other, he should no longer be regarded as fit to hold a guarantee. Mr Moseley's knowledge of the nature and importance of AADs was such that his breach of the Directive and Regulations in this instance must be regarded as both blatant and serious.
- As Mr Brodie has pointed out, the action of creating a purported substitute AAD was not specifically relied upon in Mrs Spenceley's decision letter. However she did in that letter incorporate by reference the comments made by Mr Graham in his letter dated 4 November 2004. That letter did refer to the creation of a duplicate AAD as if it were an irregularity, which we have decided that it was. It appears to us, therefore, that this was one of the "AAD movement irregularities" upon which Mrs Spenceley relied.
- Those irregularities were not necessarily attributable to fraud on the part of the Appellant. They were breaches of the Directive and Regulations. Had the legislation been properly complied with, that would have tended to the avoidance of fraud, even though the Appellant were not a party to fraud.
- The movement involving V350GGS is problematical. One can understand how the AAD might become separated from the consignment, by V350GGS leaving the premises with the document by mistake. That might be regarded as a relatively trivial matter, seeing that the tractor in due course returned with the AAD. However, for whatever reason, good or bad, why allow the trailer with the load to leave the premises without first (a) verifying the whereabouts of the AAD; and (b) making sure that the load only departed with it? What was to prevent the load never being reunited with its AAD, once it had left the Braintree premises? The load, moreover, was apparently taken off by a person who was a stranger to the Appellant and its operation.
- We consider that negligence was demonstrated in the circumstances surrounding this movement, however understandable it may have been for anyone to wish to assist with a rolling valve test of M652VOO.
- If this were an isolated incident, it might be right for a tribunal to conclude that the breach involved could not reasonably justify what we accept is the draconian measure of revocation of a transporter's guarantee. But, coming on top of the breach mentioned above, namely that of the creation of a purported substitute AAD, this further breach cannot in our view properly be so regarded, and in our opinion it fortifies the reasonableness of the conclusion that the guarantee held by the Appellant should be revoked.
- In relation to the movement involving T442ADN, the diversion of the consignment to the West Midlands might have been prevented, had the Appellant shown a greater interest in protecting the load. If the AAD showing the arrival of this load in France were genuine, that would be no more than fortuitous for the Appellant, which took no pains at all to ensure that the consignment got to its proper destination, despite being the transporter responsible for the consignment.
- So we think that it is disingenuous for the Appellant to seek to justify itself by the existence of the AAD, when there is strong evidence that the goods were diverted because of a lack of concern on the part of the Appellant as to the goods left at the Braintree premises arriving at their proper destination.
- In the event, the Appellant has not shown that the AAD can be relied upon. The Appellant has conceded by its counsel that the cancellation of its movement guarantee would have been reasonable and the appeal would be properly dismissed if the allegation of HMRC concerning the second movement were to be factually well-founded. We have found that it was well-founded.
- We therefore decide that it was reasonable on the strength of this movement also for Customs to have decided that the guarantee should be revoked. As we see it, revocation would have been justified on this ground, without the other instances of breach of duty on which reliance has been placed.
- It is true, as Mr Brodie has submitted, that HMRC might have put forward evidence dealing with the matters mentioned in paragraph 80 above, but we do not attribute their failure to do so as due to anything other than forensic judgement. It has, in our opinion, been unnecessary for HMRC to adduce such evidence.
- In the premises we reject the submission of Mr Brodie that there is something "profoundly unsatisfactory" in the manner in which HMRC have addressed the appeal insofar as relating to the second movement.
- The case of Chip Logistics Ltd, cited by Mr Brodie, was an entirely different one to the present on its facts. In contrast to that case, we are of the view that the Appellant in the present case has been seriously at fault on more than one occasion, such that it cannot reasonably be contended that revocation of the guarantee was a disproportionate step.
- It follows that, in the event, it has been unnecessary for us to have regard to the alleged irregularity in 2003. Our conclusion is that the decision appealed against was not an unreasonable one, based solely upon the movement irregularities in September 2004 involving T441ADN, T442ADN and V350GGS respectively.
- We therefore dismiss this appeal.
- This appeal may be restored to the list by either party for the purpose of argument as to costs if desired, if these cannot be agreed. It may assist the parties and their advisers to know that, without having heard argument, we are provisionally of the view that the costs of and concerning the appeal should follow the event in the usual way, save where specific provision for costs has hitherto been made by the tribunal.
MICHAEL JOHNSON
CHAIRMAN
Release Date: 12 September 2006
MAN/05/8010
