Lewis v Revenue & Customs [2015] UKFTT 640 (TC)

FTT-Tax
Lewis v Revenue & Customs
[2015] UKFTT 640 (TC) · 2015-04-19
[1]This is a decision in relation to applications by HMRC and The Director of Border Revenue to strike out three appeals made by Mr Lewis. The appeals relate to the seizure of Mr Lewis’s goods and car at Coquelles on 16 March 2013, and concern:(1) a decision taken by the Home Office not to restore Mr Lewis’s car (the “restoration appeal”),(2) an assessment to duty in respect of the goods made by HMRC (the “assessment appeal”) , and(3) a penalty assessed by HMRC (the “penalty appeal”) .[2]On 28 May 2015, following a hearing on 19 April 2015 the Tribunal made directions relating to the applications (the “Directions”). The Directions are annexed to this Decision as an Appendix and should be read with this Decision. They set out the background to the appeals, the facts which were not disputed at the hearing of the application, the relevant statutory provisions and the arguments of the parties. They also contain a number of issues raised by the tribunal to which the Respondents were asked to respond. In compliance with those directions the Respondents provided a joint response to the tribunal; following this Mr Lewis made a reply.[3]The Respondents argue that the appeals should be struck out because(a) the tribunal does not have jurisdiction to consider the grounds of appeal advanced by Mr Lewis, or(b) Mr Lewis has no reasonable prospect of success. These are grounds on which the tribunal is given power by Rule 8 of its rules to strike out an appeal. (a) Does the tribunal have jurisdiction to consider the grounds of appeal advanced by Mr Lewis?[4]The Respondents argue that the effect of paragraph 5 Sch 3 CEMA is that this tribunal must assume that Mr Lewis’s goods were lawfully seized because they were dutiable goods imported otherwise than for his own use, and that Mr Lewis’s grounds of appeal in relation to all three appeals are that his goods were for his own use. They say that as a result the tribunal does not have power to consider Mr Lewis’s grounds of appeal. There are three points to make in relation to this contention.[5]First , to the extent that Mr Lewis’s grounds of appeal are that the seizure of his goods was unlawful, we agree with the Respondents that the tribunal does not have power to consider those grounds.[6]Second, to the extent that the effect of the statutory deeming in paragraph 5 carries with it the conclusion that Mr Lewis did not import the goods for his own use, any argument Mr Lewis may have that the goods in fact were for his own use cannot be considered by this tribunal. We deal with this issue under the heading “Own Use” below, after considering the following issue.[7]Third, even if this tribunal cannot entertain any argument that the seizure was lawful or that Mr Lewis’s goods were for his own use, if there are other grounds apparent in Mr Lewis’s appeal or grounds on which the tribunal considers that the appeal could succeed, the tribunal remains possessed of jurisdiction to hear and determine the appeals by reference to those grounds.[8]In the case of an unrepresented appellant the tribunal should be slow to conclude that all the relevant arguments can be ascertained by a semantic or legalistic view of the pleadings. Rule 2 of the tribunal’s Rules requires the tribunal to avoid unnecessary formality and to seek flexibility. That to our minds requires us in the interests of justice and fairness to consider whether the facts as represented by such an appellant give rise to arguments which could be put in a more formal legalistic manner. Further, where the tribunal is aware of a legal argument which such an appellant has not made but which could be relevant to his or her case, it is incumbent on the tribunal to consider and determine that argument.[9]As we noted in para [43] of the Directions, Mr Lewis’s complaints were not limited to arguing that the seizures were illegal or that the goods were for his own use. In his notice of appeal and before us Mr Lewis gave his account of the circumstances of his arrival in the UK and surrounding the seizure and related his own personal and financial circumstances. Those issues could be relevant to the reasonableness or otherwise of the decision not to restore his car and to the adjudication of the level of any penalty. The consideration of those issues is not outside the jurisdiction of the tribunal.[10]Further, in relation to the assessment to duty, we note that in Murray v HMRC [2015] UKFTT 371 (TC) , Fleming v HMRC [2015] UKFTT 362 (TC) and Staniszewski v HMRC [2015] UKFTT 349 (TC) , cases relating to duty assessments, Judge Walters QC declined to strike out appeals and gave the appellant an opportunity to reconsider the grounds of appeal in relation to the “Consumption point” and the “Proportionality point”. These were explained by Judge Walters in Staniszewski as follows:
“25 … the Consumption point was that the assessment in Williams was bad because it was not compliant with the spirit of the Excise Directive (Directive 2008/118/EC). This was said to be because the Directive makes it clear that excise duty is a duty on consumption and should not be charged where goods have been destroyed or irrevocably lost. The suggested importance of consumption being the justification for excise duty to be levied was said not to have been reflected in the Excise Duty (Holding, Movement and Duty Point) Regulations 2010 under which the assessment in Williams , as in this case, was raised. It was submitted in Williams that HMRC cannot properly act contrary to the aims of the Directive by assessing for excise duty on goods which they have seized and condemned, or, alternatively, even if duty is chargeable, it ought to be remitted back in the circumstances, and so it was not reasonable to raise an assessment to excise duty in the first place. 26. The Proportionality point was that the assessment to excise duty was bad in that to raise it in addition to seizing the goods was a disproportionate response and a duplicated remedy for a perceived wrong ( viz: the evasion of duty).”
[11]These are issues of law in relation to the Mr Lewis’s assessment appeal which are within the jurisdiction of this tribunal. An issue affecting the assessment may also affect Mr Lewis’s liability to a penalty. We understand that appeals are to be heard by the tribunal in which these issues may be ventilated. In these circumstances it would not be right to strike out Mr Lewis’s appeal against the assessment or the penalty.[12]As a result we conclude that, whatever the proper conclusion in relation to Own Use, the tribunal has jurisdiction to hear Mr Lewis’s appeals and that they should not be struck out on the grounds of lack of jurisdiction. (b) No reasonable prospect of success.

(i) The assessment appeal and the penalty appeal

[13]Given Judge Walters’ refusal to strike out the appeals cited above, we cannot say that Mr Lewis has no prospect of success in his appeals against the assessments and the penalty.[14]We note however that, if the issues on which Judge Walters stayed the cited appeals were determined against Mr Lewis, either as a result of the decision of a higher tribunal or by a decision of the First tier tribunal which bound Mr Lewis or we decided to follow, it appears to us that there would be no grounds of appeal disclosed by Mr Lewis either in his formal grounds of appeal or in his representation to us in relation to the assessment appeal open to Mr Lewis other than the Own Use ground discussed below. (ii) the penalty appeal[15]In relation to the penalty appeal, the only other ground of appeal evident to us from Mr Lewis’s representations appears to be that the manner and circumstances of his disclosure of the goods was such that any penalty (assuming that duty is in fact due) should be assessed on the basis that his disclosure was unprompted, that the goods were not concealed and that there was no deliberate dealing in goods on which duty was outstanding.[16]In this context, Mr Lewis asserted that the arrangements for cars at Coquelles were such that the only opportunity given to him to declare that he had the goods was when he was asked by a Officer if he had anything to declare. It seems to us that depending on the precise circumstances , a tribunal might, if Mr Lewis’s account were proved, conclude that his declaration was unprompted because his declaration caused the Officer to become aware of the goods and was therefore not made when Mr Lewis had any reason to believe that HMRC were otherwise about to discover his possession of the goods. (It would be different of course if it were shown that Mr Lewis had reason to believe that the officer was about to search his car.)[17]In this context the nature of the arrangements at Coquelles enabling a person to declare goods may be significant. Our experience of entry points into the UK has been of green and red channels and we have understood that by offering two channels HMRC/Border Force ask whether the entrant has anything to declare. By walking into the red channel we have understood that the entrant answers that question “yes” and awaits the question “what?”. If the arrangements at Coquelles are such that the only place where that question is asked and may be answered is at the passport barrier, then we find it difficult to see a difference between the person who goes into a red channel at the kind of entry point we are used to and the person who answers “yes” at the passport barrier. Unless a person entering the red channel or saying “yes” to the question at the passport barrier had reason to believe that HMRC were, otherwise than as a result of his or her declaration (by conduct or words), already about to discover the goods on which duty should be paid, it seems to us to be arguable that that the declaration was unprompted.[18]We also had no evidence as to whether the person who asked Mr Lewis was in fact an officer of HMRC, and no evidence from HMRC/The Border Force as to the detail of the arrangements at Coquelles.[19]In their response to the Directions HMRC make a number of assertions about the circumstances of the seizure, and it may be that a tribunal would regard those circumstances, if proved, as indicating that the goods were concealed or that any disclosure was prompted. But we did not hear the evidence of the officers involved, nor did we see a plan or photograph of the area, or a photographic evidence of the alleged concealment of the goods, or hear from any of those travelling with Mr Lewis. We cannot say that merely because HMRC and The Director of Border Revenue make assertions as to what occurred that Mr Lewis would have no reasonable prospect of proving that their account was wrong.[20]Accordingly for this reason too we would not strike out Mr Lewis’s appeal in relation to the penalty appeal. (iii) the restoration appeal.[21]In the Directions we suggested six issues which arose from Mr Lewis’s representations, and which, if proved by Mr Lewis, might potentially be relevant to the reasonableness or otherwise of the decision not to restore Mr Lewis’s car. In their response HMRC and The Director of Border Revenue addressed these issues. These issues were the following.(1) If Mr Lewis declared the goods openly and without prompting. The Respondents say: (a) that it was clear from the officer’s notes that this was not the case. This is an issue of fact on which we heard no evidence from the officers. We could not conclude that Mr Lewis had no reasonable prospect of showing that the Respondents’ assertion was wrong; and (b) that whether a disclosure is “prompted” is an objective test being not what the person believed but what the facts gave him reason to believe. We accept that for the purposes of the penalty provisions that this is correct, but in the context of the characterisation of the circumstances of seizure for the purpose of testing the reasonableness of the decision the strict approach to “prompted” is not relevant – the point is that Mr Lewis could assert that he made his declaration as soon as he could or without having reasons for believing that the officer was or would be of a different view; and that such could be a relevant consideration.(2) If Mr Lewis truly thought that the goods were not dutiable. The Respondents say that this is another way of looking at the Own Use question. We disagree: there is a difference between whether something is true and whether a person believes it is true. Even if the goods are, as the Respondents claim, deemed not to have been for own use, that does not carry with it the consequence that the appellant thought that they were dutiable. The appellant’s mindset is about culpability rather than chargeability. That is a matter for the tribunal hearing the evidence.(3) If the actions of the border officers were less than impartial, The Respondents say that this would be a serious allegation and the appellant had an opportunity to take up a complaint with the Border Force. It does not seem to us that the ability to take up such a complaint with another body is a reason for saying that the complaint could not be established by evidence before the tribunal. Mr Lewis asserts that his discussion with the officer was heated. If the asserted record of the events which the Respondents say suggests that the goods were concealed or that Mr Lewis gave inconsistent accounts was inaccurate as a result of proven animosity or lack of impartiality in the dealings with Mr Lewis, the tribunal might find that the picture obtained of the seizure by the person deciding on restoration would have been relevantly different.(4) If his own financial and personal circumstances were such as made the loss of the car burdensome; in particular if he had to borrow money from his family to provide a replacement car to transport his sick wife (rather than already having a second car as the decision letter might be read as suggesting). The Respondents say that only exceptional hardship would be a reason to restore a vehicle, and cite Edge LJ in Lindsay , “ …it is acceptable and proportionate that, subject to exceptional individual considerations, …the vehicles of those who smuggle for profit...should be seized as a matter of policy”. We note that Edge LJ makes clear that individual circumstances may be relevant. Whether the circumstances of Mr Lewis were exceptional is not a matter we could decide without further evidence.(5) If Mr Lewis could show that the goods or some of them were destined for others on a not for profit basis so that the terms of the Home Office policy quoted above relating to the restoration of cars for a fee might apply. The Respondents say that this position cannot be established. In this submission they appear to us to be concerned, not with deemed Own Use, but with the records of the statements made by Mr Lewis as they assert are recorded in the officers’ notebooks. There was no basis on which we could say that Mr Lewis had no reasonable prospect of showing that any such records were misleading or false. We cannot therefore say that Mr Lewis has no reasonable prospect of showing that this policy was applicable and that it was unreasonable not to have regard to it.(6) If the addition of a duty assessment and a financial penalty to the penalty of losing his car made the effect of non-restoration more than plainly harsh. The Respondents say that non restoration and the imposition of a penalty is reasonable. The question of the proportionality of the combination of the assessment and non restoration was one of Judge Walters’ reasons for refusing to strike out the assessment appeals in the cases cited earlier. It may be that the decision not to restore was made before and in ignorance of the decision to assess Mr Lewis, but witout more detailed evidence we could not say that Mr Lewis has no reasonable prospect of succeeding on this ground.[22]In paragraph [15] of the Directions we suggested that a relevant consideration in relation to any argument made by the Respondents that by failing to seek condemnation proceedings Mr Lewis had admitted wrongdoing could be that Mr Lewis had been told that such proceedings exposed him to potential costs of £2,500. The Respondents disagree. They say(i) Mr Lewis only found out from the internet at a later time about the costs, and(ii) suggest that such a conclusion was contrary to the view expressed by Richards J in Dawkin v HMRC. In reply Mr Lewis says that he obtained this information from Plymouth Border control when he rang to ask about his car.[23]It seems to us quite clear that the risk of cost in litigation is a sensible commercial reason for not undertaking it. It is widely accepted that litigation is an expensive and sometimes uncertain activity. Many cases are settled because of such concerns. A person may act wholly reasonably in deciding not to pursue a claim or not to defend a claim if he or she considers that the risk of costs is too great to bear. There is a difference between accepting a financial loss by not pursing or defending a claim, and accepting guilt. We do not consider that the failure to bring condemnation proceedings can be taken as indicative of acceptance of wrongdoing.[24]Given that the circumstances in which Mr Lewis failed to bring proceedings are disputed, we cannot say that Mr Lewis has no reasonable prospect of rebutting an argument that he admitted wrongdoing because he failed to bring such proceedings.[25]Whether or not items should be restored is a matter of discretion. Where the discretion is exercised reasonably this tribunal cannot interfere with it even if it would have exercised the discretion differently. In order to succeed in challenging the decision not to restore his car, Mr Lewis would have to show that the officer making the decision took into account irrelevant matters, failed to take into account relevant matters, made a relevant mistake of law or reached a decision which no reasonable officer could have made.[26]Taking all these considerations together, whilst we cannot say that Mr Lewis has a strong case or is likely to succeed, we cannot say that he has no reasonable prospect of showing that the decision was unreasonable.[27]On these grounds we dismiss the application to strike out the restoration appeal and allow Mr Lewis’s appeal to proceed. Own Use[28]In our Directions we raised the issue of whether or not Mr Lewis was by virtue of paragraph 5 Sch 3 deemed to have imported the goods otherwise than for his own use. At paragraph [45] we suggested that Mr Lewis’s goods might have been deemed to have been legally seized because they were mixed or packed with goods belonging to Mr Knight, and not because they were goods liable to duty.[29]We expanded that argument in [51] to [57] of the Directions and sought the Respondents’ comments on the argument.[30]The Respondents say that it would be an incorrect statement of fact and law to say that the goods were seized as they were mixed or packed with those of Mr Knight. They say that the statement does not accord with the seizing officer’s reasons for seizure.[31]The Respondents say that it cannot be said that the goods were seized for no particular reason. There must be some reason for the seizure, and they must be deemed forfeit for that reason.[32]We agree that if goods are legally forfeit the legality of the seizure carries with it “any fact that forms part of the conclusion”. The question however is what fact is relevant? Goods may be legally seized for a number of different reasons: they may be prohibited weapons, illegal drugs, goods used in the carriage of dutiable forfeitable goods, goods mixed or packed with forfeitable goods, or goods on which duty should have been paid but has not been. Which of these factors is to be taken as a fact which is a necessary component of the legality of their forfeiture?[33]There is nothing to our minds in the quotations from Jones in the Respondents’ reply which answers this question. In that case there was no other reason suggested for the seizure by the officer or in the circumstances of the seizure.[34]Contrary to the remarks in [34] and [35] of the Directions, (and perhaps the logic of paragraph [26] in Race ) the Respondents suggest that it is the opinion of the officer making the seizure of the reasons for her seizing the goods which is deemed to be part of the conclusion that the goods were legally seized. The alternative, set out in those paragraphs of the Directions, being that it is to be determined objectively from the circumstances of the seizure. The two bases may have different consequences in some cases: if tobacco containers were be seized because the officer considered they contained prohibited drugs, then, if paragraph 5 applied and the Respondents are correct, duty might not be collectable on the tobacco.[35]However, even if the Respondents are correct, we did not have any evidence from the seizing officer. The officer did not give evidence and was not cross examined. We cannot say what the seizing officer’s reasons were. Further, Mr Lewis’s account of the seizure indicates some friction between him and the officer which a tribunal might find has a bearing on the decision to make the seizure or its reasons. We cannot assume that there is no reasonable prospect of showing that the reasons for the seizure were not as stated by the officer or by the Respondents.[36]As a result we cannot conclude that the tribunal would have to assume that the goods were not for Mr Lewis’s own use. Conclusion[37]The appeals are not struck out.[38]Finally we should note that many of our reasons derive from the fact that the strike out application was not a hearing at which we heard evidence. In any hearing of the appeals the nature and quality of the evidence of Mr Lewis, those who travelled with him and the officers involved may be very significant. Rights of Appeal[39]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 CHARLES HELLIER TRIBUNAL

Cited in 5 later judgments