Davies v Director of Border Revenue [2011] UKFTT 188 (TC)

FTT-Tax
Davies v Director of Border Revenue
[2011] UKFTT 188 (TC) · 2011-03-17
[1]Mr Davies appeals against a decision contained in a letter dated 23 March 2010 in which the Director of Border Revenue have offered to restore his vehicle, a Ford Focus, Registration DF06 DDX, for a “fee” of £2,250.[2]In these proceedings Mr Davies took no issue over the lawfulness or otherwise of the actual seizure, which can be summarised briefly. Facts[3]On 1 December 2009 the Appellant’s vehicle was stopped by an officer of the Respondents at the UK Control Zone, Coquelles, France. Mr Andrew Davies, the Appellant’s brother was driving the vehicle and the passengers were Mr Adam Roberts, Ms Elaine Pritchard and Ms Ann Marie Edwards. In the vehicle, Officers found a total of 12.05kg of hand rolling tobacco. Three receipts were found from Inter-Tabac in Adinkerke, Belgium each for 3 kg of Golden Virginia hand rolling tobacco costing £237 and a fourth receipt for 50g costing £3.95; a total cost of £714.95. Officers also found a receipt issued by Tesco in Dover timed and dated 21:50 on 30 November 2009. The travellers stayed for interview at the time of seizure, following which the interviewing Officer was satisfied that the excise goods were held for a commercial purpose, which made them liable to forfeiture under Section 49 (1) (a) (i) of the Customs and Excise Management Act (“CEMA”) 1979 and Regulation 16 of the Excise Goods (Holding, Movement, Warehousing and REDS) Regulations 1992. The vehicle was seized under Sections 139 (1) and 141 (1) (a) of CEMA 1979 on the basis that it had been used for the carriage of goods liable to forfeiture.[4]On 9 February 2010 the Appellant requested a review of the Respondents initial decision dated 25 January 2010 not to restore the vehicle. Review Decision[5]The Review Decision took account of the circumstances of seizure and the inconsistent and implausible explanations given by the travellers when interviewed. The Officer concluded that the travellers had attempted to mislead the interviewing officer about events and he therefore had good reason to doubt their credibility.[6]The Reviewing Officer took into account the fact that the travellers had imported four times the Guidance Level of 3kg of hand rolling tobacco and concluded, on the basis that the travellers were all unemployed with limited finances and each gave unbelievable consumption rates for smoking, that Mr Davies had been the organiser of this commercial venture. It was noted by the Reviewing Officer that this was probably part of a series of smuggling trips on the same or previous day (bearing in mind the receipt from Tesco in Dover, for which no credible explanation was given) and that commercial records showed that Mr Davies had made a previous trip from Calais to Dover on 29 September 2010, during which Ms Pritchard recalled importing 7 ½ kg of tobacco, although Mr Davies could not recall the trip.[7]The Reviewing Officer was guided by the Respondent’s policy on restoration and reached the conclusion that this was not a first offence of importation, nor was the quantity of tobacco involved small. The trade value of the vehicle was approximately £6,350 and the excise duty amount was £1,499. The Officer concluded that the decision not to restore the vehicle was proportionate, taking into account the aggravating features and the attempts to mislead the interviewing Officer.[8]The Reviewing Officer went on to consider the fact that where a vehicle is owned by a third party, who was not present at the time of seizure and who can show they were both innocent and blameless, then consideration may be given to restoring the vehicle for a fee. If the third party can show, in addition to being blameless and innocent, that he had taken reasonable steps to prevent smuggling in the vehicle, then consideration may be given to restoring the vehicle free of charge.[9]The Reviewing Officer noted that the Appellant’s brother was insured to drive the car and that the Appellant had not demonstrated that he had taken reasonable steps to prevent smuggling. The Officer noted that Mr Andrew Davies had used the car on a previous trip to France and that while there was no suggestion that the Appellant was complicit in the smuggling, the Reviewing Officer concluded that the Appellant must have been reckless of “turned a blind eye” in failing to monitor use or the vehicle.[10]In those circumstances, the Officer decided that restoration for a fee of 1 ½ times the excise duty amount was fair and reasonable, and varied the decision accordingly. Evidence[11]We heard evidence from the Reviewing Officer, Mr Raydon, who confirmed that he had taken into account in reaching his decision, correspondence from the Appellant to the Respondent dated January 2010 and from the Appellant’s brother to the Respondent dated November 2009 and received by the Respondent on 9 December 2009. The Appellant had also filled in a questionnaire provided by the Respondent which stated that the vehicle was only lent to the Appellant’s brother, who had borrowed the vehicle before, that the car was insured to account for his brother and driving abroad and that the Appellant was unaware that the vehicle was to be taken abroad or used to purchase excise goods. The Appellant annexed a note to the questionnaire which explained that he had an ongoing arrangement with his brother to use the car when the Appellant was working away from home. The Appellant stated that the purpose of the arrangement was so that his brother could take their elderly mother shopping and that he was unaware of his brother’s trip to France.[12]In evidence to the Tribunal, the Reviewing Officer confirmed that although the Appellant had not been present, he had taken the view that the Appellant had not taken reasonable steps to prevent the smuggling attempt, nor had the Appellant been aware of his brother’s previous trip to France. The Officer concluded that this was one in a series of commercial smuggling attempts and that he believed the Appellant’s brother to be the organiser/importer. On the basis that the Appellant had allowed his brother unrestricted access to the vehicle, the Officer concluded that the decision to restore the vehicle for a fee of 1 ½ times the excise duty was reasonable.[13]The Appellant gave evidence to the Tribunal. He explained to us that he owns two vehicles; a van he uses for work and the vehicle which is the subject of this appeal. The Appellant explained that the Ford Focus vehicle was purchased at his wife’s request and that due to vandalism issues where he lives, it s kept at his mother’s address where his brother also lives. The Appellant explained that the vehicle is not used frequently as he works away from home regularly as a joiner and that he had asked his brother to keep the car “ticking over” by taking their elderly mother to the shops or to visit family. The Appellant stated that he had never checked the mileage on the vehicle.[14]The Appellant stated that he had not, and would not have given permission for his brother to take the vehicle to Belgium and that his brother had abused the trust placed him by doing so. The Appellant explained that his brother was unemployed and that he has simply tried to assist his brother and mother by allowing use of the vehicle. He said that the seizure of the vehicle had caused a rift between them as he found his brother’s actions to be foolish and embarrassing. The Appellant explained that he had had the car returned, but had been forced to sell it to meet the fee required by the Respondent.[15]The Appellant did not dispute the Officer’s conclusion that his brother had been involved in a commercial smuggling attempt, and such was his candour to the Tribunal he added that his brother does not even smoke.[16]When asked, the Appellant stated he was unaware as to whether the insurance allowed his brother to travel abroad and that he had not checked this when filling in the Respondent’s questionnaire. The Appellant apologised for the Officer’s view that the information provided was limited; stating that he was a tradesman who could express himself orally but found paperwork difficult. The Appellant confirmed in cross examination that he did not speak to his brother regularly due to his long working hours and that the basis of their arrangement over use of the vehicle was to take their mother shopping or visit his sisters. The Appellant stated that it never occurred to him that his brother may use the vehicle to smuggle excise goods into the UK and that, consequently, he had never specifically stated to his brother that he must not do so.[17]It was put to the Appellant that his brother, when interviewed at the time of seizure, had stated that the Appellant was aware that he was going away with his girlfriend. The Appellant responded that he was unaware that his brother had said that and that the statement was untrue. The Appellant submitted that the Reviewing Officer’s decision was unreasonable given that he was an innocent party.[18]We gave the Reviewing Officer an opportunity to respond to the Appellant’s evidence. Mr Raydon conceded that there was no evidence of any involvement by the Appellant in the smuggling attempt but stated that commercial smugglers should not get away without punishment and that the Appellant’s best recourse was to seek the fee due from his brother. Mr Raydon stated that he believed his decision was correct. Decision[19]The issue before us was whether, as the Respondent contended, the Appellant had acted with insufficient care or recklessness in allowing his brother use of the vehicle and whether he had taken reasonable steps to prevent smuggling. In all the circumstances it had (so they contended) been reasonable for them to have imposed the £2,250 fee as the “price” of restoration.[20]We have had the advantage of hearing Mr. Davies give evidence and of considering the answers he gave during searching cross examination. We both formed the impression that Mr. Davies is a truthful, responsible and genuine person, who treats his family with much consideration. It is not asserted by the Respondents that the Appellant had any knowledge or involvement in what was clearly a commercial enterprise to smuggle goods into the UK. We accept his evidence and we are satisfied that when he gave permission to his brother to use the vehicle to assist his elderly mother, he had no reason whatever to suspect that it would be used for any unlawful purpose, let alone smuggling excise goods into the UK.[21]We bore in mind the well-established principles set out in Lindsay v Customs and Excise Comrs [2002] 1 WLR 1766 , 1774 as per Lord Phillips of Worth Matravers MR, referred to us by the Respondent:
“ Those who deliberately use their cars to further fraudulent commercial ventures in the knowledge that if they are caught their cars will be rendered liable to forfeiture cannot reasonably be heard to complain if they lose those vehicles…”
We fully accept that those involved in smuggling, no matter how peripheral their involvement, should be penalised. Having found as a fact that the Appellant had no involvement, knowledge or suspicion as to the smuggling attempt by his brother, we do not accept that this principle applies to the Appellant.[22]We also note the comments of the Strasbourg Court in AGOSI v United Kingdom (1986) 9 EHRR 1 at paragraph 54:
“ The striking of a fair balance depends on many factors and the behaviour of the owner of the property, including the degree of fault or care which he has displayed, is one element…”
[23]We found as a fact that the Appellant was an innocent victim of his brother’s abuse of the trust placed in him. We carefully considered the Respondent’s submissions that the Appellant did not exercise reasonable care in imposing restrictions and controls on the use of the vehicle. We do not accept that this was the case; we accept the Appellant’s evidence that the arrangement between himself and his brother allowed use of the vehicle locally and to assist his elderly mother while the Appellant was working away. We do not accept that any reasonable person in such a situation would go further in specifying restrictions or providing a “check-list” as to what the vehicle could be used for, as contended by the Respondent. Even if we accepted this submission, having found that there was no basis upon which the Appellant could suspect that his brother would use the vehicle to import excise goods into the UK, it would defy common sense to suggest that the Appellant should have specified such a restriction to his brother.[24]We also paid regard to the fact that a decision not to restore must be proportionate to the legitimate aim of preventing the evasion of excise duty. We take the view that any “fee” imposed on restoration must have a similar aim. Having found as a fact that the Appellant was entirely innocent and blameless, we do not accept that the “fee” of 1 ½ times the excise duty amount reflects our findings.[25]We direct that the matter should go back for a further review and that the facts found by us in this Decision be taken into account as relevant considerations.[26]This document contains full findings of fact and reasons for the decision. Any party dissatisfied with this decision has a right to apply for permission to appeal against it pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009. The application must be received by this Tribunal not later than 56 days after this decision is sent to that party. The parties are referred to “Guidance to accompany a Decision from the First-tier Tribunal (Tax Chamber)” which accompanies and forms part of this decision notice. TRIBUNAL JUDGE RELEASE DATE: 17 March 2011