Ivanavicius v Director of Border Finance [2011] UKFTT 295 (TC)

FTT-Tax

Ivanavicius v Director of Border Finance

[2011] UKFTT 295 (TC) · 2011-05-06

[1]Mr Aidinas Ivanavicius, who lives in Lithuania, was not present when this appeal was due to be heard. An attempt to contact him by the Tribunal clerk proved unsuccessful. However, on checking the file it was clear that notice of the hearing had been sent to Mr Ivanavicius at the address he had given in his Notice of Appeal. We were therefore satisfied that the Appellant had been notified of the hearing and as we considered that it was in the interests of justice to do so, we proceeded to hear the appeal in his absence as permitted under Rule 33 of the Tribunal Procedure (First-tier Tribunal)(Tax Chamber) Rules 2009.

[2]This is an appeal against the decision of the UK Border Agency (“UKBA”) contained in a letter dated 31 March 2010 in which they notified Mr Ivanavicius that after conducting a further review they would not restore a Mercedes Sprinter (the “Sprinter”) that was used to carry 6,260 cigarettes, attracting £969.42 in excise duty that was seized on 21 September 2008. Background

[3]The Sprinter, being driven by a Mr Arturas Staskunas was stopped by Customs at approximately 23.15 hours on 20 September 2008 at Dover Eastern Docks. It contained two drivers and eight passengers and when searched a total of 6,260 cigarettes were found concealed underneath the large rubber access bungs under the front seat carpet, behind the internal wall panel on the nearside of the vehicle behind the driver’s seat, and behind the “B” pillar. The goods and the Sprinter were seized.

[4]Two weeks later, on 4 October 2008 at approximately 16.45 hours in the UK control zone in Coquelles, France, Mr Ivanavicius, the Appellant, was stopped by Customs in a Mercedes Minibus (the “Minibus”) which was towing a trailer carrying a Peugeot motor vehicle. He told the Customs Officers that he was carrying six passengers to Peterborough, there were three drivers, including Arturas Staskunas, and that he was staying for one day and would then return. He said that the vehicle on the trailer belonged to one of his colleagues and had been taken to Lithuania for repairs because repairs were cheaper there. When asked about excise goods Mr Ivanavicius told the Officers that there were four blocks of cigarettes and ten bottles of beer and thirty bottles of vodka in his vehicle. After the passengers had removed their luggage and excise goods the Minibus was searched and officers found cigarettes concealed within the boxes of beer and within the minibus seats and on the vehicle in the trailer. A total of 7,180 cigarettes, 45.5 litres of beer and ten litres of mixed spirit were found. The goods and Minibus were seized.

[5]The legality of the seizure of the goods, the Sprinter and the Minibus were not challenged and these were confirmed as condemned as forfeit to the Crown by the passage of time under paragraph 5 Schedule 3 to the Customs and Excise Management Act 1979. However, by separate letters dated 6 October 2008 Mr Ivanavicius wrote to the UKBA asking for both of the vehicles to be restored.

[6]After seeking and obtaining further information in relation to the Sprinter the UKBA wrote to Mr Ivanavicius on 7 November 2008 notifying him that neither the Sprinter or Minibus would be restored. A request for a review of this decision was made by Ward Gethin Solicitors, on Mr Ivanavicius’s behalf, on 16 December 2008. By a letter dated 23 January 2009 the Review Officer David Harris confirmed the decision not to restore the Sprinter or the Minibus.

[7]Mr Ivanavicius appealed to the Tribunal against this decision on 19 February 2009 and his appeal was heard on 14 December 2009. The decision of Tribunal Judge Fionagh Green sitting with Elizabeth Bridge which is reported at

[2010] UKFTT 83 (TC)

, was released on 5 February 2010. The Tribunal dismissed the appeal against the seizure of the Minibus but directed the UKBA to “further review the evidence in respect of the above findings of fact relating to the restoration of the [Sprinter] seized on 20 September 2008.”

[8]A further review was subsequently undertaken by Mr Brian Rayden, a Customs Review Officer of the UKBA. This concluded that the Sprinter should not be restored to Mr Ivanavicius. Law

[9]The Customs and Excise Duties (Travellers’ Allowances and personal Reliefs) (New Member States) Order 2004 as amended by the Customs and Excise (Travellers’ Allowances and Personal Reliefs) (New Member States) (Amendment) Order 2006 provides that the maximum allowance for cigarettes imported into the United Kingdom from Lithuania shall be 200 cigarettes. There is no maximum on other tobacco products provided that they are for personal use.

[10]The Excise Duty Points (etc) (New Member States) Regulations 2004 as amended by the Excise Duty Points (etc) (New member States) Amendment Regulations 2006 provide that the duty on any excess quantities must be paid at the excise duty point, and the Channel Tunnel (Alcoholic Liquor and Tobacco Products) (Amendment) Order 2004 applies the arrangements to importations through the Channel Tunnel.11. Article 4 of the Customs and Excise Duties (Travellers’ Allowances and Personal Reliefs) Order 2004 also provides that goods shall be liable to forfeiture if the conditions of relief are not complied with: 4- (1) The reliefs afforded under this Order are subject to the condition that the goods in question, as indicated by their nature or quantity or otherwise, are not held for a commercial purpose, nor are used for such purpose, and if that condition is not complied with in relation to any goods, those goods shall, unless the non-compliance was sanctioned by the Commissioners, be liable to forfeiture .

12. Section 49(1) of the Customs and Excise management Act 1979 (“CEMA”) provides: 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 – (b) unshipped in any port, (c) any imported goods are concealed or packed in any manner appearing to be intended to deceive an officer Those goods shall … be liable to forfeiture.

13. Section 139(1) CEMA provides that: 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.

14. Under s 141(1) CEMA: where any thing has become liable to forfeiture under the Customs and Excise Acts - (a) any ship, aircraft, vehicle, animal, container (including any article of passengers’ baggage) or other thing whatsoever which has been used for the carriage, handling, deposit or concealment of the thing so liable to forfeiture, either at a time when it was so liable or for the purposes of the commission of the offence for which it later became so liable; and (b) any other thing mixed, packed or found with the fittings so liable, shall also be liable to forfeiture

15. Section 152 CEMA establishes that: The Commissioners may, as they see fit – (a) … (b) restore, subject to such conditions (if any) as they think proper, anything forfeited or seized under the Customs and Excise Acts.”

16. Section 14(2) of the Finance Act 1994 provides that: 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.

17. Section 15(1) of the Finance Act 1994 states: 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.

18. Section 16(4) to (6) of the Finance Act 1994 sets out the powers of the Tribunal on an appeal against a decision as follows: (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 sections hall 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 sections hall 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. Discussion

19. The issue for us to determine, in the light of the above legislation, is not whether the Sprinter should be restored to Mr Ivanavicius but whether the decision taken by the UKBA not to restore the Sprinter is one that could reasonably have been reached. Lord Phillips of Worth Maltravers MR (as he then was) said in Lindsay v Commissioners of Customs and Excise

[2002] STC 508

at [40]:

“the Commissioners will not arrive reasonably at a decision if they take into account irrelevant matters, or fail to take into account all relevant matters”

[20]In reaching his decision as to whether or not to restore the Sprinter Mr Rayden was required by the decision of the Tribunal (at [34]) to “further review the evidence in respect of the above findings of fact relating to the restoration of the [Sprinter] seized on 20 September 2008.” It is therefore necessary for us to consider the decision of Judge Green to ascertain the “findings of fact” and consider the extent to which these have been taken into account by Mr Rayden in reaching his conclusion.

[21]The decision of the Tribunal is set out in separate sections each with its own heading. Paragraph 1 which is headed ‘Introduction’ sets out the nature of the appeal. The factual background to the case is set out in paragraphs 2 – 12 under the heading ‘Background’ with the issue to be determined by the Tribunal contained in paragraph 13 under the heading ‘The Issue’. Paragraph 14, which is headed ‘The Law’ sets out the applicable legislation and paragraph 15 sets out the contentions of the parties. Finally we come to paragraphs 16 – 34 which are headed ‘Findings of Fact and Decision’. 22. Mr Rupert Jones, who appeared before us for the UKBA, submitted that, given its heading, it was not clear what part of this final section was a finding of fact or which paragraph contained the decision. He suggested that in paragraphs 16 – 27 the Judge was reciting the evidence given to the Tribunal by Mr Ivanavicius and that findings of fact relating to the restoration of the Sprinter could be those summarised in the final paragraph of her decision which we have set out below: [34] Having carefully considered all of the evidence and the case law it was decided that the Respondents should further review the evidence in respect of the above findings of fact relating to the restoration of the [Sprinter] seized on 20 September 2008. The Appellant was not a driver and was not present in the vehicle, the seizures were 14 days apart in time and we were satisfied that Mr Staskanus was not driving the vehicle as part of the Appellant’s business.

[23]However, after careful consideration of the decision of the Judge we do not consider that this can be correct. In the final paragraph the Judge refers to the “above findings of fact” not the “following” findings which she could have done had it been intended that the only facts to be taken into account by the UKBA in undertaking the further review were that Mr Ivanavicius was not a driver and was not present in the Sprinter, the seizures were 14 days apart in time and that Mr Staskanus was not driving the vehicle as part of the Mr Ivanavicius’s business.

[24]Although paragraphs 16 – 27 of the Tribunals decision may record the evidence of Mr Ivanavicius, including what he said under cross examination, this does not, in our judgment, prevent it from also being a finding of fact by the Judge. Given that these particular paragraphs are set out under the heading ‘Findings of Fact and Decision’ and are clearly not a decision, we conclude that they do indeed contain findings of fact by the Tribunal. 25. In his letter of 31 March 2010 upholding the decision not to restore the Sprinter Mr Rayden referred to the decision of the Tribunal as follows: The combination of ‘Findings of Fact’ and ‘Decision’ into one paragraph with a common heading makes it difficult for me to distinguish between the parts of the overall decision. In the final paragraph the Tribunal wrote:

“Although there are similarities between the two incidents on 20 September 2008 and 4 October 2008 they are not considered sufficiently similar”

Although it is not clear what is a finding of fact or a part of the decision I do not believe that it can be a finding of fact. The Tribunal appears to be inviting me to consider that you, who admit, together with Mr Staskunas both concealing and smuggling the cigarettes in your vehicle on the second occasion, knew nothing about Mr Staskunas’ attempt to conceal and smuggle cigarettes in your vehicle on the first occasion; furthermore that the two smuggling attempts should not be considered together, the second being irrelevant when considering the first. On the second occasion you concealed cigarettes with the intention of smuggling them into the UK. On those grounds alone, I have good reason to doubt your credibility. After referring to several Tribunal decisions dealing with the issue of credibility the letter continues: I accept the Tribunal’s findings that you were not present at the first incident, the minibus was not being used for your business and the vehicle was not adapted for smuggling. However, bearing in mind all of the above, I believe that it is very unlikely that you were telling the truth when you said that you were not involved in Mr Staskunas’ smuggling attempt on that day: in my opinion you were indeed involved in an attempt to smuggle cigarettes on that occasion. Mr Rayden then went on, in the letter, to consider the UKBA policy on the restoration of vehicles concluding that the cigarettes were held for profit and that in accordance with that policy the Vehicle “should not normally be restored.” Further in the letter Mr Rayden wrote: If the vehicle were owned by a third party who was not present at the time of the seizure, and can show that they were both innocent and blameless for the smuggling attempt, then consideration may be given to restoring the vehicle for a fee: If in addition to being both innocent and blameless the third part demonstrates that they had taken reasonable steps to prevent smuggling in the vehicle then consideration may be given to restoring it free of charge. I have not applied this provision because I do not consider you to be an innocent [party] or that you had taken reasonable steps to prevent smuggling in the vehicle. Furthermore, it would be wrong to restore the vehicle to you as that would be restoring it to a person complicit in the smuggling attempt. 26. This contradicts the finding of fact by the Tribunal at [24] that: The Appellant did not know and did not have reason to believe that his friend and neighbour Mr Staskunas, or some other person travelling with Mr Staskunas on 20 September 2008 had concealed and transported goods prohibited to be imported to the United Kingdom. The Appellant knew and trusted Mr Staskunas and had asked him to look after his vehicle as his own.

[27]As such we find that in reaching the decision not to restore the Sprinter the UKBA has taken into account irrelevant matters and has failed to take into account all relevant matters. Conclusion

[28]Having regard to the circumstances of this case, we are satisfied that the decision of the UKBA not to restore the Sprinter to Mr Ivanavicius, which was upheld on the review by Mr Rayden, was not reasonably reached and therefore allow the appeal. Direction 29. In accordance with s 164(4)(b) Finance Act 1994, having been satisfied that the UKBA making the decision “ could not reasonably have arrived at it ” we direct that there be a further review of the original decision not to restore the Sprinter having regard to the following findings of fact made of the Tribunal in the decision released on 5 February 2010:(a) The Appellant (Mr Ivanavicius) was not present either as a driver or a passenger of the Sprinter at Dover Docks on 20 September 2008;

(b) The Appellant did not know and did not have reason to believe that his friend and neighbour Mr Staskunas, or some other person travelling with Mr Staskunas on 20 September 2008 had concealed and transported goods prohibited to be imported to the United Kingdom; and

[30]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. JOHN BROOKS TRIBUNAL JUDGE RELEASE DATE: 6 May 2011