Cook v Director of Border Revenue [2010] UKFTT 381 (TC)

FTT-Tax
Cook v Director of Border Revenue
[2010] UKFTT 381 (TC) · 2010-08-17
[1]This is an appeal against the decision of the Customs review officer to refuse to restore goods seized from the Appellant on 12 July 2007.[2]The Appellant and Mr Harris, the review officer for the UK Border Agency, gave evidence. Background and facts[3]On 12 th July 2007 the Appellant was stopped by an Officer of HM Revenue and Customs at Gatwick Airport having arrived on a flight from Malaga (Spain). She was travelling with a Mr Peter George Whatling.[4]The Appellant had met Mr Whatling whilst she was in Cornwall staying with friends and they developed a relationship. He was retired and travelled abroad frequently on short trips taking cheap fares that he found on the internet.[5]In 2007 the Appellant turned 60 and Mr Whatling turned 65 and he asked her if she would like to travel with him and celebrate their birthdays abroad together. The Appellant had never been abroad or flown before and needed to acquire a passport. They went to Benidorm for one night in March and then to Girona twice for one night. In evidence the Appellant stated that these trips were exciting for her and Mr Whatling paid for her each time having booked cheap trips on the internet.[6]They were to go together to Girona a third time in June but the Appellant was ill and could not go. Instead she collected Mr Whatling from Stansted airport where he told her that he had been stopped by Customs carrying an excess amount of tobacco. Mr Whatling did not smoke but when she asked him why he was bringing back tobacco he just winked.[7]The Appellant’s children and grandchildren had given her a fabulous party to celebrate her sixtieth birthday so when they went abroad in July for the second time that month she decided to buy them all cigarettes and tobacco as a thank you gift. Although she was only living on the state pension she regularly raised extra funds by taking part in car boot sales. She also had savings and birthday present money.[8]On the trip ending at Gatwick airport on 12 July 2007 she brought back 3,200 cigarettes and 3 kilograms of tobacco which cost £456. Mr Whatling paid for them with his credit card and then she repaid him in England. At that time she was not familiar with Euros and the exchange rate but she had agreed to reimburse him in sterling on their return to the UK.[9]The Appellant stated that this was the first time that she had brought back her full allowance of tobacco goods. Over her previous four trips she had brought back a total of one carton of 200 cigarettes and a little tobacco for herself.[10]At Gatwick airport when stopped by Customs the Appellant and Mr Whatling were asked some initial questions. They handed the customs officer their passports as a means of identification. Mr. Whatling informed the Officer that they had been away for a couple of days and that the purpose of the trip was to “escape the weather we have been having here.” The customs officer then asked whether they had any goods to declare and Mr. Whatling stated that he had a bit more than his recommended allowance of tobacco and Mrs Cook had the recommended amount. After identifying which bags belonged to each of them and telling the Officer that they understood that certain goods were either prohibited or restricted the Officer conducted a search of their baggage. The search produced 21 kilograms of hand rolling tobacco and 3,400 cigarettes. The Appellant stated that of the goods seized 3 kilograms of tobacco and 3,200 cigarettes belonged to her.[11]When asked, Mr Whatling said that he had had some goods seized at Stansted recently. The Appellant said she had not had any goods seized from her in the past.[12]After conducting some further checks the customs officer came back and arrested them both on suspicion of evasion on dutiable goods. He gave them both the criminal caution.[13]The Appellant was then interviewed under caution. In the notes made from the tape of her interview with customs officer Beauchamp, which appears to be a little incomplete, he states “You just said that when you went to Santander last week you didn’t bring back any cigarettes or tobacco”[14]On completion of the interview, the customs officer was satisfied that the excise goods were held for a commercial purpose which made them liable to forfeiture.[15]In evidence the Appellant was emphatic that when the excise goods were seized she was not informed that she could challenge the legality of the seizure in a Magistrates’ Court by sending Customs a notice of claim within 1 month of the date of seizure.[16]This appeared to be confirmed in the notes of her interview at Crawley police station on 30 August 2007 when she asked the interviewing officer how she could claim back the confiscated goods. Although the interviewing officer at Crawley agreed to give her this information at the end of the interview this did not happen.[17]On 7 September 2007 the Appellant was again travelling with Mr Whatling and stopped by Customs. She was carrying 2,000 cigarettes and 1.5 kilograms of tobacco. These were seized by Customs. She confirmed to the Customs officer that she had last brought cigarettes back to the UK on a trip from Santander on 3 August that year. On that occasion she had not been stopped.[18]When the excise goods were seized, the Appellant was issued with a Form C156 “Seizure Information Notice” and Customs Notice 12A “Goods and/or vehicles seized by Customs”. The Notice explained that the Appellant could challenge the legality of the seizure in a Magistrates’ Court by sending Customs a notice of claim within 1 month of the date of seizure.[19]On receiving this notice the Appellant realised for the first time that she could have challenged the legality of the seizure of the goods on 12 July 2007.[20]The Appellant did then challenge the legality of that seizure and sought restoration of the excise goods however the claim was not valid as it was made outside of the statutory one month time limit as set out in Schedule 3 to CEMA. Accordingly with the passage of time, the excise goods were condemned as forfeit under paragraph 5 of Schedule 3 of CEMA (‘deemed condemnation’) and their ownership passed to the Crown. She was informed of this on 19 September 2007 by an Officer of the Post Seizure Unit of HMRC.[21]The Appellant’s case was subsequently put on hold pending her trial with Mr Whatling to defend the allegation that the goods were imported in order to evade the duty upon them.[22]Originally the Appellant also challenged the seizure of the goods taken when she was stopped on 7 September 2007 but on reflection she withdrew this second appeal thinking that she was now in serious trouble.[23]On 6 April 2009 the Appellant wrote to HMRC seeking compensation for the goods seized on 12 July 2007 and also goods seized from her on 7 September 2007. She informed them that the criminal case against her had been dismissed.[24]On 26 May 2009 HMRC received a letter from the Appellant seeking an update on her case.[25]On 8 June 2009 Mr Dillon of the Post Seizure Unit of HMRC wrote to the Appellant. She was informed that although the criminal prosecution against her at the Crown Court had been dropped this did not mean the goods had been incorrectly seized. The Appellant was told that her appeal against the seizure made on 12 July 2007 was received outside the statutory time limit. In the second seizure (7 September 2007) the Appellant had appealed in time but subsequently withdrawn the appeal. The Appellant did however seek restoration of those goods from the seizure on 7 September 2007 which resulted in a review of the non-restoration decision. That review upheld the decision and the Appellant chose not to challenge that review to an independent Tribunal.[26]On 11 August 2009 the Appellant was informed of the decision that the goods seized on 12 July 2007 would not be restored to her by the Respondents. On 19 August 2009 the Appellant wrote asking for a review of that decision. She emphasised that she had not been issued with Customs Notice 12A or told verbally how to seek restoration of the goods, that she had never been stopped nor had goods seized before 12 July 2007 and that the goods seized were gifts for her family and within her allowance.[27]On 21 August 2009 an officer of the Respondents wrote explaining the review process and inviting her to provide any further information in support of her request for a review.[28]On 24 August 2009 the Appellant addressed a letter to the Respondents reiterating the same points as made in the review request letter of 19 August 2009. On 16 September 2009 the Respondents informed the Appellant that after conducting a review they had decided to uphold the decision not to restore the goods to her.[29]The review was conducted by Mr Harris of the Respondents who gave evidence to the Tribunal and whose letter of review was produced to the Tribunal. In his long comprehensive letter he set out the sequence of events. He set out all the trips she had made and the history of the seizure on 12 July 2007.[30]He appeared to place some reliance on the fact that the Appellant had confirmed in her interview on 12 July 2007 that she had bought cigarettes on her previous trip to Santander 8 days previously. The Appellant vigorously denied this.[31]He concluded from his understanding of the interview on 7 September 2007 that she was a regular importer of excise goods although in that interview she had confirmed that she could not afford to buy tobacco goods each time she travelled although she had bought them when she travelled to Santander in early August.[32]He also placed reliance on the fact of her low income and could not therefore understand how she could afford to buy the tobacco products.[33]On 30 September 2009 the Appellant wrote making further representations. On 7 October 2009 the Respondents wrote confirming the decision of 16 September 2009 not to restore the seized excise goods. On 18 October 2009 the Appellant lodged an appeal to the Tribunal. The Law[34]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.”
[35]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.”
[36]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.”
[37]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.”
[38]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.”
[39]Section 141(1) of CEMA states that: “…where any thing has become liable to forfeiture under the customs and excise acts (b) any other thing mixed, packed or found with the things so liable, shall also be liable to forfeiture”.[40]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.[41]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 . The Appellant’s submissions[42]The Appellant submitted that the 12 July 2007 was the first time that she had ever brought her full allowance of tobacco products back into the country after a trip abroad. Previously over her four trips away she had only ever brought back one carton of cigarettes and a little tobacco.[43]She had only started travelling abroad in March 2007 as previously she had not even had a passport. The tobacco products seized by Customs were intended as thank you gifts to her large extended family including children, sons-in-law and grandchildren over 16 for the fabulous party they had given her on the occasion of her sixtieth birthday.[44]Although Mr Whatling had paid for the confiscated goods at the time of purchase she had repaid him the £456 they had cost from her savings.[45]Although her main source of income was her state pension she made extra at car boot sales from which she was able to save some money. She also had birthday present money.[46]She would not have fought so hard and endured all the worry over the last three years if she had not so sincerely believed that the goods had been wrongly confiscated in that instance and that the value of the goods ought to be repaid to her.[47]There were mistakes in the review officer’s letter; namely it stated that when questioned on 12 July 2007 she had confirmed that she had bought cigarettes on a trip to Santander earlier that month. This was incorrect and she had not said this. Additionally Mr Whatling had not previously paid for her tobacco goods. It was correct that in her interview on 7 September 2007 she had admitted bringing her full allowance of tobacco goods back to the UK from Santander on 8 August 2007 and not having been stopped.[48]At no time during her interview on 12 July 2007 was she either verbally informed or handed a notice which informed her of her rights with regard to the confiscated goods and that she had one month to apply for the goods to be restored to her. She was interviewed until 11pm at night and had had nothing to eat since 11am that morning.[49]She had tried searching on the internet, telephoning the officials at Gatwick airport who were not available when she called and the National Advice Service of HMRC in order to discover how she could claim the goods back but it was not until she was handed Customs Notice 12A when stopped in September that she appreciated the formalities required if she wished to have any confiscated goods restored to her.[50]She had withdrawn her claim for restoration of the goods seized in September because by then she realised that she was in serious trouble having a criminal trial pending.[51]Nevertheless at the criminal trial the charges against her were dismissed and she was discharged and felt fully justified in claiming restoration of the goods seized in July 2007. HMRC’s Submissions44. Mr Jones for the Respondents contended that even if it was correct that she did not receive a notice she should have informed herself of the law and her ability to appeal.45. It was apparent from the grounds of appeal and the Appellant’s pre-review correspondence that she was seeking to argue that the goods were for her ‘own use’ rather than a ‘commercial purpose’ or at least that they were unlawfully seized. In the circumstances of this case, the Respondents contend that it would be an abuse of process for the Appellant to argue before the Tribunal that the goods were for the Appellant’s personal use and/or that seizure was unlawful.46. In Gora and Ors v Customs & Excise Commissioners [2004] QB 93 , the Court of Appeal established that the Tribunal did not have the jurisdiction to reconsider the legality of the forfeiture and seizure of goods. However, in Dickinson v Customs and Excise Commissioners [2004] 1 WLR 1160 the High Court ruled that the Tribunal could still make a finding of fact that goods were imported for private use. 46. The more recent decision of the Court of Appeal in Gascoyne v Customs and Excise Commissioners [2005] Ch 215 has provided important guidance on this issue. The Court of Appeal stated that where there have been no condemnation proceedings and thus the goods have been deemed lawfully forfeited by virtue of the deeming provisions under paragraph 5 of Schedule 3 of CEMA, an importer should not be “completely shut out” from ventilating before the Tribunal the matters deemed to be decided against him (para 54). However, the Tribunal would have to be very conscious of issues of abuse of process when deciding whether such matters should in fact be ventilated before it (para 55). The Court of Appeal held that “ the mere fact that the applicant has not applied to the Commissioners, and therefore there have been no condemnation proceedings ” was not be enough to enable issues of ‘own use’ to be raised before the Tribunal (para 56). 48. The High Court considered the implications of Gascoyne in Commissioners of Revenue and Customs v Albert Charles Smith (17 th November 2005, unreported). Lewison J stated that:
“There must, therefore, be something more than a failure on the part of the applicant to invoke condemnation proceedings before the Tribunal is empowered to question the legality of the forfeiture” (para 20). Lewison J went on to say that: “The Tribunal’s function, therefore, is analogous to a sentencing court once a defendant has been convicted. No matter that the defendant still protests his innocence of the charge against him, the function of a sentencing court is to accept mitigation but not to question the original conviction” (para 22; see also paras 30, 32 and 33). 49. In CCE v Weller [2006] EWHC 237 (Ch) , Evans-Lombe J agreed with the approach of Lewison J in Smith, “ namely, that, whether or not an importer, having suffered a deemed forfeiture under paragraph 5 of schedule 3, is able to raise the validity of the forfeiture on a review by the Commissioners and on appeal from them to the Tribunal, depends on two questions, first, did the importer have a realistic opportunity to invoke the condemnation procedure and, secondly, if he did, are there nonetheless reasons, disclosed by the facts of the case which should persuade the Commissioners or the tribunal to permit him to reopen the question of the validity of the original seizure on an application for return of the goods” (para 16). 50. To the extent that the Appellant is arguing that the decision not to restore the goods was unreasonable and/or that the Appellant is allowed to argue ‘own use’ by the Tribunal, the Respondents contend that the review decision was one that could reasonably have been made. 51. It was submitted that the goods were not intended for ‘own use’, as defined by the legislation rather they were held for a commercial purpose. Mr Jones contended that various factors support this contention such as: (i) From her interview it appeared that the Appellant was a regular importer or excise goods. Indeed she told the customs officer that she had brought in goods on 4 July 2007 (8 days before). Therefore the review officer was at a loss as to why she would therefore be bringing in more excise goods only 8 days later. Equally, in her letter of 6 April 2009 the Appellant made mention of a subsequent seizure of 2,000 Superking cigarettes and 1.55 kilograms of hand rolling tobacco on 7 September 2007. (ii) The review officer was also drawn to the fact that the Appellant appeared to be on a very limited State provided income and therefore he did not see how she could afford such a quantity of goods from such a limited income. (iii) The review officer noted that during the interview connected to the seizure on 7 September 2007 (some two months later) she said that she owned all the goods but needed to look at the receipts as was unsure how much the goods had cost because they had been purchased on three occasions. The Appellant told the Officer that the goods were for children, step children, other family members and for her. The Officer then asked, “Can you break that down for me please?”
She replied, “I can list the people but not what they will all get – The Drum and some of the cigarettes are for myself; the rest of the cigarettes are for my sister; my 21 year old grand daughter; my 20 year old niece and my three daughters. The tobacco is for my son, my sons in law and my 12 grand children; eight are over the age of 16 and most of them smoke. My three sons in law will all get some of the tobacco and cigarettes.” She added that all of those goods were to be gifts. She said she smoked 30 tailor made cigarettes per day and if she rolls her own cigarettes would consume 25 grams. She confirmed that this equated to 3.5 pouches per week. She then said she got about 130 to 150 rolled cigarettes from a 50 gram pouch of tobacco. (iv) The Appellant said that she was retired and was in receipt of £480 per month and had outgoing of about £300 per month leaving a disposable income of £180 per month. She said that she had a small amount of savings. (v) The reviewing office reasonably concluded that the Appellant was a frequent traveller to the Continent and a regular importer of excise goods. For a person on such a restricted income she would seem to be purchasing large amounts of excise goods which on the balance of probabilities was doubted to be distributed as gifts without the Appellant receiving some form of recompense.[52]Further, the Respondents contend that non-restoration of the goods was reasonable and proportionate in light of Lindsay v Customs & Excise Commissioners [2002] 1 WLR 1766 . The inconvenience and expense caused to the Appellant was not exceptional hardship over and above what one should expect in the circumstances. The Appellant has not demonstrated any hardship suffered by non-restoration in any event.[53]It was submitted that non-restoration was fair, reasonable and proportionate in the circumstances and that there were no other exceptional factors that militate towards disapplying the Respondents’ policy of not restoring the seized goods. The reviewing officer acted reasonably and was not fettered by policy but carefully considered the individual merits of the case and whether any exceptional circumstances applied.[54]The Tribunal were required to consider whether the review decision was reasonable under all the circumstances. Findings[55]The Tribunal found that the Appellant had consistently argued by letter and in her evidence that she had not been given a Customs Notice 12A notice or been verbally informed of her rights to appeal the seizure.[56]Additionally and as was evidenced by the notes of her interview on 12 July 2007 she had not stated in that interview that she had brought back tobacco goods eight days previously.[57]There was some suggestion that she had brought the goods back on Mr Whatling’s behalf but each time he was stopped it appeared that he brought only an excess of tobacco and did not usually bring back cigarettes.[58]We find that the goods brought back by the Appellant on 12 July 2007 were for her “own use” as defined in the statute because they were to be a personal gift to her family.[59]It did appear that she had tried to find out whether she could claim her goods back but had not been successful in her enquiries.[60]The Tribunal were concerned at the apparent misconceptions regarding her knowledge of her rights to appeal against the seizure and the misrepresentation of what she had stated in her interview on 12 July 2007 concerning her trip abroad eight days previously.[61]She accepted that she could not realistically expect to be successful in challenging the second seizure on 7 September 2007 although Mr Harris had taken this into consideration in making his decision.[62]She was not having “a second bite at the cherry of lawfulness having failed in condemnation proceedings or let them go by default” as stated by Buxton, LJ in his judgement in Gascoyne v Customs and Excise Commissioners [2005] Ch 215 because she had not been made aware of her rights to invoke such proceedings.[63]She had not had a realistic opportunity to invoke the condemnation procedure which was one of the questions required to be asked as stated by Evans-Lombe J in CCE v Weller and it did appear to the Tribunal that there were reasons disclosed by the facts of the case which should persuade us to permit the Appellant to reopen the question of the validity of the original seizure on an application for return of the goods. Decision[64]As a result of the Appellant not having been given an opportunity to challenge the seizure of the goods and the reliance placed by the Respondents and the reviewing officer on the misconception that she had already brought her full allowance of tobacco goods back into the UK just eight days previous to 12 July 2007 we have decided that the decision of the review officer was not reasonable under all the circumstances and we allow the appeal.[65]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. MRS.S.M.G.RADFORD TRIBUNAL JUDGE RELEASE DATE: 17 August 2010