Tuznik v Revenue & Customs [2009] UKFTT 299 (TC)

FTT-Tax
Tuznik v Revenue & Customs
[2009] UKFTT 299 (TC) · 2009-11-06
[1]We were satisfied that Mr Tuznik had been given notice of the hearing. He had been requested to provide inconvenient dates for the hearing and had previously written to the tribunal. We postponed the start of the hearing for about half an hour to allow for an, ultimately unsuccessful, attempt to contact Mr Tuznik. Miss Hadfield told us that Mr Tuznik had not recently contacted HMRC.[2]There were elements of Mr Tuznik’s letters which suggested either that he did not realise that the tribunal worked by giving the parties a chance to present their arguments and evidence orally, or that he was content that we should consider the matter on the written representations he had made. Given that the tribunal sent a map of the location of the tribunal with its notice of the date for the hearing we inclined to the latter view although we were concerned that the tribunal’s notice did not make it abundantly clear that Mr Tuznik was entitled, if not expected, to turn up for, or to be represented at the hearing.[3]Miss Hadfield submitted that Mr Tuznik’s correspondence indicated that he was fluent enough in English to understand the tribunal’s letters or had access to someone who was. The Respondents, she said, would prefer the hearing to go ahead: the additional costs which would arise to them if the hearing was postponed would be about the same as if there was a later new hearing after a successful application to set aside any decision.[4]We decided that it was in the interests of justice to continue with the hearing in Mr Tuznik’s absence. He is entitled under rule 38 of the Tribunals Rules to apply for our decision to be set aside. Such an application would be granted only if it were just in all the circumstances so to do. If Mr Tuznik desires to make such an application it must be made in writing so that it is received within 28 days after the date this decision is sent to him. Background[5]On 30 September 2007 Mr Tuznik was stopped by HMRC’s officers as he entered the UK from a car ferry coming from France and arriving at Dover. The officers seized 7,260 cigarettes and Mr Tuznik’s car.[6]Mr Tuznik wrote to HMRC after the seizure indicating that he would like his car back. His letter was treated as a request for the restoration of his car. On 14 November 2007 HMRC wrote to Mr Tuznik saying that his car would not be restored. Mr Tuznik wrote again to HMRC on 14 December 2007 asking that his case be reconsidered.[7]On 22 January 2008 Mrs Deborah Hodge, one of HMRC’s Customs Review Officers, wrote to Mr Tuznik with the results of her review, or reconsideration, of the original decision not to restore the car. She set out the facts she had considered, described the relevant legislation and HMRC’s policy in relation to it, and concluded that the vehicle should not be restored.[8]Mr Tuznik appeals against that decision.

(i) The provisions relating to payment of duty on importation

[9]In pursuance of EU Council Directive 92/12, section 2(1) of the Tobacco Products Duty Act 1979 provides for the imposition of excise duty on cigarettes imported into the UK. The Tobacco Products Regulations 2001, made inter alia under section 7 of that Act, prescribe the method of charging and collecting that duty. Regulation 13 provides that the duty is payable by the persons holding tobacco products at the ‘excise point’. Regulation 12 provides that the excise duty point for tobacco products is the time when tobacco products are charged with duty. Regulation 12 (1A) provides a relief (by authority of the Customs and Excise Duties (General Reliefs) Act 1979 and in pursuance of Articles 8 and 9 of EU Directive 92/12) that in the case of tobacco products acquired by a person in another Member State for his own use and brought by him to the UK the excise point is the time when those products are first held for a commercial purpose (if ever). Regulation 12(1B) contains rules in relation to whether or not products are held for own use or a commercial purpose and subparagraph (c) contains factors to be taken into account in determining whether goods are held for a commercial purpose.

(x) any other circumstances that appears to be relevant …”

[10]The Excise Duty Points (Etc) (New Member States) Regulations 2004 (the “New Member Regs”) provided different rules for cigarettes imported from Poland, a new Member State, in the period to 31 December 2008. Regulation 3 provided that:
“ (1) The excise duty point for tobacco products acquired in a new Member State is the time when the tobacco products are charged with duty. (2) For the purposes of paragraph (1) above, tobacco products acquired in a new Member State shall mean – (a) cigarettes acquired by a person in [Poland] for his own use and transported by him to the United Kingdom …”
[11]It seems to us that when Reg 3 above is read together with Reg 12 of the Tobacco Products Order 2001, one concludes that Reg 3 is to be construed as containing particular provisions which override the more general provisions of Reg 12. The words of both Reg 3(1) and 12(1) are capable of two interpretations, one is that the charge arises (the goods are charged) at the excise point; the other is that the excise point is defined as being the time when the goods are charged. In the context of section 2 of the Tobacco Products Duty act 1979 “There shall be charged on tobacco products … duty of excise at the rates …”, it seem to us that the first interpretation is to be preferred. Accordingly both Reg 3(1) and 12(1) are effectively charging provisions. The specificity of Reg 3 to new Member States thus persuades us that the general Member State freedom allowed by Reg 12(1A) is overridden by Reg 3(1) which does not contain such a provision. (Before us and in her later written submissions Miss Hadfield relied upon the provisions of the Reliefs Order (see below) as support for the charge to duty. We do not think they can be so interpreted: the giving of an exemption may presuppose a provision creating a charge, but cannot be read as itself imposing a charge.)[12]Thus in relation to cigarettes imported from Poland we conclude that the New Member Regs supplant the general rule for EU imports in the Tobacco Products Regulations that the excise point arises only when they are held for a commercial purpose and replace it, without an exception, with an excise point that arises when they are acquired for ‘own use’.[13]The Customs and Excise Duties (Travellers’ Allowances and Personal Reliefs) (New Member States) Order 2004 (the “Reliefs Order”) gave some relief against this measure. Regulation 3 provided that a person travelling from Poland be relieved from duty on ‘relevant tobacco products’ acquired in Poland. Regulation 4 and the schedule to that Order indicate that “relevant tobacco products” from Poland means up to 200 cigarettes held otherwise than for a commercial purpose.[14]Thus, prior to 31 December 2008, a person importing cigarettes from Poland was not entitled to the potentially unlimited relief from duty for imports for his own use which was available for imports from older Member States, and was liable to duty if he imported more than 200 cigarettes even if they were for his own use. Thus if Mr Tuznik brought his cigarettes from Poland, duty would be payable on at least 7,060 of them. (ii) provisions relevant to seizure and forfeiture[15]Section 49(1) Customs and Excise Management Act 1979 (“CEMA”) provides that goods are liable to forfeiture if:
“(a) being [imported goods] chargeable on importation with … dutyare without payment of that duty …unshipped at any port … ” or ... “(f) any imported goods are concealed or packed in any manner appearing to be intended to deceive an officer.”
[16]Thus, if Mr Tuznik’s cigarettes were chargeable with duty on importation which was not paid when he left the ship at Dover, or if they were so concealed, they would be liable to forfeiture.[17]Section 88 of the same Act makes a car liable to forfeiture if it has been within the limits of any port while adapted or fitted for the purpose of concealing goods. Additionally, section 141 provides that where anything has become liable to forfeiture “any … vehicle … which has been used for the carriage … or concealment of the thing liable to forfeiture… when it was so liable” shall also be liable to forfeiture.[18]Thus if Mr Tuznik’s cigarettes were liable to forfeiture, or if his car was adapted for concealing them, or the cigarettes were otherwise concealed in it, then his car was liable to forfeiture.[19]Section 139 of the same Act provides that an officer of HMRC may seize anything liable to forfeiture. (iii) Challenge and Restoration[20]Schedule 3 CEMA contains provisions enabling a person to contest the seizure of something which is said to be liable to forfeiture. He must serve notice of his claim in one month whereupon HMRC are required to commence proceedings to determine the issue in the Magistrates court. But if no notice is served then paragraph 5 provides that the thing in question shall be deemed to have been duly condemned as forfeited.[21]There was no suggestion in the papers before us that Mr Tuznik had sought to contest the legality of the seizure or had not been given a fair opportunity of so doing. Accordingly we must presume that the cigarettes and the car were properly forfeit.[22]But even if something is properly forfeit, section 152 CEMA gives power to HMRC “to restore subject to such conditions … as they think proper anything forfeited or seized”. If they decide not to restore under that section, then they may be required to review that decision under section 15(1) Finance Act 1994. If a person is unhappy with that review then he may bring an appeal against the outcome of the review under section 16 of that Act to this tribunal.[23]However, this tribunal is not given power to consider for itself whether the goods should be restored – it cannot substitute its opinion for that of HMRC – instead it is limited to considering whether HMRC could reasonably have arrived at the conclusion that they did (see section 16(4) FA 1994). In other words, whethe r, on the evidence before the tribunal, the officer took into account relevant factors, did not take into account irrelevant factors and did not make a decision which no reasonable person could have made, or made an error of law. The Evidence and our Findings of Fact[24]We had before us a bundle of copy documents including copies of the manuscript notes made by HMRC’s officer at the time Mr Tuznik was stopped, copies of correspondence between Mr Tuznik and HMRC, and his appeal to the tribunal. We also had oral evidence from Mrs Hodge.[25]The manuscript notes indicate that Mr Tuznik was stopped at Dover at 9.45pm on 30 September 2007. He was asked if he had photographic ID on him and produced his Polish passport. He was asked for his boat ticket which he also produced. He was also asked for his vehicle documents which he produced. In response to further questions from the officer he indicated that he had come from Poland where he had been for two weeks and that he was travelling to Bristol where he had lived for three years. When asked whether he had any spirits, cigarettes, tobacco or beers with him in the vehicle he said no. The notes then indicate that the officer searched the vehicle. In the back of it he says that here was an LPG tank which gave a dull sound when hit with a screwdriver. He indicated that 7,260 cigarettes were found inside the LPG tank and notes “Tank-Scan Xray”. The cigarettes and the vehicle were then seized and Mr Tuznik was given a record of the seizure and of HMRC’s notice 12A (which sets out rights to contest seizure and to seek restoration).[26]Mr Tuznik’s first letter to HMRC is said to be dated 11 October 2007 (no date is apparent on the copy in the tribunal bundle). He asks how much he has to pay, indicates that he is willing to pay the full amount, and asks when he can pick up the car.[27]Mr Tuznik’s second letter, to The Review Officer of HMRC, is dated 14 December 2007.[28]In that letter he says:
“The decision you made is very unfair and vicious. By taking my car you take all I achieved in UK thanks to my hard work and many sacrifices. I was treated like a cheat. And I made a just one little mistake – for the first and last time. I do admit that I did it. “… I would also like to mention that I do not know English and I did not know English regulations.”
[29]The third letter was dated 19 May 2008 and written to the tribunal. In the main paragraph of that letter he says:- “I would like to explain that on the day I was stopped I was not able to communicate and I did not understand the officer, because I did not know English. Nobody called for an interpreter. There were around 10 people, they were all talking to me at the same time. I was really scared. I did not understand the questions. I was treated like I was a big criminal. If an interpreter had been called I would have explained everything and would have answered every question. Using my hands I explained that I do not read and write English. I have been in the UK for a few years now, I work and pay taxes.”[30]Mrs Hodge told us that her understanding of HMRC’s practise at Dover was that where a person’s command of English was very poor a support interpretation service was relied upon. In her view the interview notes suggested that Mr Tuznik’s command of English was enough to answer the questions put to him.[31]We asked Mrs Hodge, whether, given that Mr Tuznik was travelling on the ferry from France the cigarettes might have been bought in France rather than Poland. She told us, and we accept, that cigarettes were significantly cheaper in Poland than they were in France.[32]HMRC’s reply to Mr Tuznik’s letter of 11 October 2007 contains this in its second paragraph:- “You have requested restoration of vehicle Y726 ECH and 50 x 6 bottles of Champagne seized at UK Customs Controls Coquelles on 30 September 2007.” There was nothing in the notes before us relating either to champagne or Coquelles. Mrs Hodge told us that she did not investigate the apparent error.[33]Although HMRC’s first letter refusing restoration gave no account of the questions asked by the officer at Dover, Mrs Hodge’s letter gave a clear and fair summary of the account in the manuscript notes. Mr Tuznik has made no specific objection to any part of Mrs Hodge’s letter.[34]There were three issues which caused us to pause when considering the manuscript account:-(i) we were unclear whether, if the LPG tank were metal, an X-ray would reveal cigarettes or cigarette packaging within it. Mrs Hodge was not able to provide any clarity on this point. Even if the items would not have shown up under an X-ray, there was however a possibility that the tank was not metal or that some other form of scan had been used;(ii) Mr Tuznik’s statements that his command of English was not good could cast some doubt on what he understood or intended at Dover. However, in his letter of 19 May 2008 he says he had lived in the UK for a few years and works here. His letters may have been written with some help but they do not indicate to us that he was wholly or substantially unable to understand English. Overall we believe that he understood the questions asked of him and gave the replies noted;(iii) the first letter from HMRC to Mr Tuznik dated 23 October 2007 speaks of his “champagne” being seized at “Coquelles” rather than his cigarettes at Dover. There was no explanation of this inconsistency which casts some shadow of doubt on HMRC’s accuracy or record keeping, or might even suggest two separate seizures. We did not find this enough on its own to call the officer’s notes or the other evidence into question.[35]Taking these considerations together with Mr Tuznik’s statements in his letters that he just made “one little mistake” and that he did admit he “did it”, we accept the account in the officer’s notebook as fairly representing what happened.[36]As a result, were the question of the legality of the forfeiture an issue for us to decide (which it is not) we would have decided that the cigarettes were liable to forfeiture because they were concealed or packed in a manner which appeared to be intended to deceive an officer, and that the car was liable to forfeiture because it had been used for the carriage of the cigarettes concealed or packed in such a manner.[37]We also consider that at least 7,060 of Mr Tuznik’s cigarettes were liable to duty which was not paid.[38]We now turn to consider Mrs Hodge’s letter setting out her decision on review. The facts as found by us above are relevant in that consideration to whether or not Mrs Hodge took into account all relevant facts and did not take into account irrelevant facts. Mrs Hodge’s letter of review dated 22 January 2008: Discussion[39]Mrs Hodge sets out a summary of the events at Dover which we accept is correct.[40]She says that she has not considered the legality of the seizure. It seems to us that this was correct. In our opinion she would need to do so only if there was something in the circumstances which clearly called into question the legality of the seizure or indicated that Mr Tuznik had not had a fair opportunity to instigate an appeal against forfeiture.[41]By implication Mrs Hodge also does not consider the question of whether the cigarettes were for Mr Tuznik’s own use. Again, in these circumstances we believe that was correct. She would need to do so only if both:(i) it was likely that the cigarettes had been bought in an older EU country, such as France, in which case all 7,260 of the cigarettes (rather than only 200) could potentially have been free of duty if they were for Mr Tuznik’s own use (having regard to the provisions of Regulation 12(1B) outlined above) . It does not seem to us that this was likely because Mr Tuznik had come from Poland, because, as we have accepted, cigarettes were significantly cheaper in Poland, and because they were concealed; and(ii) there was something in the circumstances which called into question whether the deemed legality of the forfeiture necessarily meant that the cigarettes were to be deemed to be otherwise than for Mr Tuznik’s own use (such as for example where the forfeiture was legal because own use cigarettes had been mixed with other forfeitable cigarettes). There was in our view nothing in the circumstances which suggested such a state of affairs.[42]Mrs Hodge then sets out HMRC’s policy on restoration. We consider she was entitled to have regard to such a policy so long as it is not blindly followed. Mrs Hodge did not in our view blindly follow that policy. Indeed later she says that she would consider that exceptional hardship caused by a seizure could persuade her not to apply the policy. She made her decision with the policy in mind however.[43]HMRC’s policy is that vehicles used for improper importation should not normally be restored. It seems to us that on the facts it was reasonable to conclude that Mr Tuznik’s car was so used. The policy indicates that restoration on conditions might be given if inter alia the goods were intended to be supplied on a “not for profit” basis. There was no evidence before us or before Mrs Hodge which would trigger the application of this part of the policy. Mrs Hodge’s later conclusion that the policy would not lead to restoration was in our view a reasonable one.[44]Mrs Hodge then says that two particular circumstances provide reasons why the vehicle should not be restored:-(i) that a false declaration was made to the Customs officer; and(ii) that the goods were concealed with intent to deceive. “For this reason alone”, she says, “she was satisfied that the vehicle should not be restored.”[45]In relation to (i) Mrs Hodge told us she had taken into account Mr Tuznik’s statement that his English was not good but had concluded that it was good enough to understand and answer the questions put to him. We do not regard that as an unreasonable conclusion.[46]In relation to (ii) it seems to us that dishonest concealment might be grounds not to restore but need not always lead to that conclusion. For example, if a person concealed goods he thought were dutiable but, in fact, they were not, the goods would properly be liable to forfeiture but the circumstances might be such as to make restoration of the vehicle in which they were concealed a reasonable response or possibly the only reasonable response. In any event, we consider Mrs Hodge’s implicit conclusion that the concealment was with intent to deceive a reasonable one .[47]However, Mrs Hodge goes on to consider other factors – the quantity of cigarettes on which duty was not paid and the question of hardship - before reaching her conclusion that the car should not be restored. It is plain to us that she does not rest her conclusion only on dishonest concealment.[48]Mrs Hodge considers the hardship which resulted to Mr Tuznik from the seizure of his car. She concludes that it was not exceptional hardship. This consideration was in our view relevant and her conclusion not unreasonable.[49]It seems to us that Mrs Hodge considered all of the relevant information before her, took account of HMRC’s policy, but did not follow it slavishly, did not take into account any irrelevant factors, made no errors of law, and reached a reasonable conclusion.[50]We dismiss the appeal. The Appellant has a right to apply for permission to appeal against this decision pursuant to Rule 39 of the Rules. 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. CHARLES HELLIER TRIBUNAL JUDGE Released: 6 November 2009