Grupa Euro-Mix Spolka ... v The Director of The Border Revenue (EXCISE DUTY RESTORATION OF VEHICLE (see also EXCISE APPEAL) : Owner not user) [2016] UKFTT 418 (TC)
FTT-Tax
Grupa Euro-Mix Spolka ... v The Director of The Border Revenue (EXCISE DUTY RESTORATION OF VEHICLE (see also EXCISE APPEAL) : Owner not user)
[2016] UKFTT 418 (TC) · 2016-04-13
[32]Ground five (that the matter contravenes the Human Rights legislation) has been dealt with previously in HMRC v Jones [2011] EWCA Civ 824 and most recently by the Court of Appeal in European Brand Trading Ltd v HMRC [2016] EWCA Civ 90 . In the latter case, Lord Justice Lewison said ‘Some tribunal judges have expressed dissatisfaction with HMRC v Jones . In reality, however, what they are dissatisfied with is the statutory scheme. But since this court has held in HMRC v Jones that the statutory procedure is Convention compliant, any perceived shortcomings in the scheme are matters for Parliament and not for the courts or tribunals. Their duty is to apply HMRC v Jones . ’ This Tribunal is bound by the Court of Appeal in this matter and we therefore dismiss this ground of appeal. 33. We shall take grounds two and three together. Ground two is that the original decision not to restore was unreasonable, and ground three is that the review decision was unreasonable. Ground two is not the decision being appealed in this hearing, as the appeal is against the review. However, since similar points were made by Dr Morgan in relation to both decisions, we will cover these together, treating all as made in appeal against the review. 34. Under grounds 2 and 3 it was argued that the Border Force:(1) Took no account of the notice of claim on 15 May 2015(2) Referred to a seizure on 7 April(3) Failed to take (proper) account of the letter of 14 July(4) Treated the lessor as the carrier(5) Speculated about the companies being ‘inextricably linked’, and that it was unreasonable to do this(6) Referred (and continued to refer) to the earlier seizure (where the vehicle was restored to the Appellant)(7) Failed to consider (and continued to fail to consider) the disproportionate effect between the lost duty and the loss of the vehicle(8) Was wrong to hold (and continue to hold) that ownership had not been proven(9) Disregarded the Appellants reasonable steps to prevent smuggling in its vehicles 35. Points one, three, four and five are all linked. In essence the argument from the appellant is that the companies are separate legal entities. Lease documents have been provided which show the lease, and termination documents to show the lease was terminated after the smuggling attempt. The argument from the Border Force is that they are well aware that the companies are separate, but they have similar names indicating they may be members of a group, they appear to share a common director, they appear to share an address, and therefore it is reasonable to conclude they are linked, and that restoring the vehicle to the appellant is tantamount to restoring to the company responsible for the smuggling attempt. In the experience of the officer, leases such as this one are often used to try to circumvent Border Force policy in this area. 36. We remind ourselves that the onus of proof is on the appellant in such cases. We also remind ourselves that our jurisdiction in this matter is supervisory only, that is to say, was it unreasonable for the officer performing the review to come to the conclusion she did. 37. The first letter from the Border Force states ‘I have treated [the Appellant] as the haulier because no evidence has been provided to support the claim that there are two separate companies involved in the lease agreement. The second letter (the review subject to this appeal) puts the point more clearly ‘Your case for restoration relies on the fact that there are two separate Grupa Euro-mix companies and one leases the vehicles to the other and therefore [the Appellant] is an innocent third party. Technically, you may be correct. However, as far as restoration is concerned, my view is that the two companies are inextricably linked and you have not demonstrated otherwise....It is my belief that the arrangement has been set up in order to circumvent the Border Force restoration policy’ 38. We find it reasonable for the officer to conclude, on the basis of the information she held, that the companies were inextricably linked, and therefore to apply the Border Force policy as if the Appellant was the haulier in this case. The Appellant was asked, in the original decision letter and in the review letter, to provide fresh evidence if they so wished. No evidence has been produced (other than the lease documents, which are not conclusive for the reasons set out by Ms Hodge) that the companies are not ‘inextricably linked’. 39. Point two was an administrative error and made no difference to the actual decision. 40. At point six the Appellant argues that because an earlier seizure had resulted in the restoration of the vehicle, the either that earlier seizure should be disregarded, or, that earlier decision somehow shows that this second decision is unreasonable. 41. Ms Hodge explained in her evidence that she was aware that there was an earlier seizure, and that she was aware that the vehicle had been restored. She did not read any papers surrounding the earlier seizure. 42. The previous seizure had been from a lessee different to the lessee in this case. 43. We do not consider that the mere fact that restoration had taken place at an earlier seizure has any bearing on this case. In fact, given that the earlier seizure would have been a first seizure, restoration is more likely than in this case, which is a second seizure. 44. The appellant makes the point that it is a large logistics company that also leases vehicles out, and does the best it can to prevent smuggling but cannot be held responsible for the actions of the drivers of the lessee companies. 45. However, that does not fully address the main points of this case, which is that the Border Force suspect a strong link between the Appellant and the lessee company, which has not been disproved. 46. We were not fully advised of the Border Force Policy in this area, where, at a first seizure, the lessor company is (presumably from the fact of restoration) determined not to have been responsible, but at a second seizure a different view is taken. 47. We do not think it unreasonable for either the original decision or the review to take the view that they did, where the seizure is taken both as a second seizure (but one where the lessee company is different from the first seizure), and one in which the lessee and lessor companies are linked, the combination of which results in the decision not to restore. 48. Point seven was that hardship (or disproportionality) had not been considered. The review letter makes it clear that hardship had been considered, but that exceptional hardship the reviewer did not think that this was a case of exceptional hardship. Once again it is important to bear in mind that the onus is on the Appellant in this case, both at this Appeal and when providing information to the Border Force, to prove their case. The Appellant’s solicitor said, in a letter dated 15 May 2015 ‘due to the vehicles being seized my Client has suffered a great financial loss and therefore asks for their prompt restoration’. This appears to be the entirety of the argument that exceptional hardship has been suffered. At the hearing Mr. Morgan argued that the seizure of the vehicles was ‘disproportionate to the loss of revenue’. However we Border Force policy is made to ensure compliance, not to punish in strict proportion to an offence. Border force policy does recognise proportionality in that it deals differently with matters depending on whether the loss of revenue was greater or less than £50,000. We can see no compelling evidence that exceptional hardship has been suffered by the appellant and we therefore do not think it is unreasonable of Ms Hodge to decide that this was not a case of exceptional hardship. 49. Point eight relates to ownership and is relevant to the trailer only. The vehicles have been described both by their registration numbers (tractor KRA1333C, trailer KRA367P) and by their chassis numbers. When asked to prove ownership, the appellant produced an invoice for the tractor detailing the chassis number WMA06XZZ0BM574945, which matched the unit that was held by the Border Force. The invoice produced by the Appellant purporting to relate to the trailer had a chassis number WSM00000005039989. This did not match the trailer held by the Border Force, where the chassis number ended 5080755. We hold it entirely reasonable for the Border Force to conclude that this did not prove ownership of the trailer. 50. Point 9 was that the Border Force paid no attention to the steps taken to prevent smuggling in the vehicles. 51. In the review letter dated 31 July 2015, Ms Hodge states ‘In a letter dated 12 May 2015 you gave further details explaining that the vehicle was leased to a Company with a similar name, which was a completely separate legal entity. You stated that your client bears no responsibility for the illegal actions of their lessees’ drivers. You then went on to say that your client takes preventative measures to discipline their drivers against illegal actions...’. Ms Hodges was asked about this paragraph in the hearing, and referred to the letter written by the Appellant’s solicitors on 12 May. This letter states ‘Please note that my Client deals with international logistics professionally and uses plenty of vehicles for transportation. They sometimes hire their vehicles which are later usufructed by third parties. This is what happened in this particular case. My Client cannot be responsible for the actions of their lessees and especially for the actions of their lessees’ drivers. My Client has acquired information that the drivers charged with smuggling offences were immediately fired. Moreover, my Client takes preventative measures to discipline their drivers against any illegal actions. Having committed any illegal action, drivers are obliged to take financial responsibility and get fired disciplinarily. They get monitored and undergo random checks. My client is a reliable entrepreneur, vehicles used by their direct employees have never been seized under smuggling offences...’ 52. Ms Hodge confirmed in the hearing that she believed the sentence ‘Moreover, my Client takes preventative measures to discipline their drivers’ was referring to the drivers of the (as she suspected, closely linked) company. Hence her use of ‘You then went on to say...’ in her review. 53. However, on reading this we believe that is not what the relevant paragraph in the letter states. It states, firstly, that the [Appellant] is itself a professional logistic company that uses vehicles [and drivers]. They then go on to say they sometimes hire vehicles out. They say they cannot be responsible for the actions of the lessee [nor the lessees drivers]. They then go on to say that for their own drivers, where they can be responsible, these are the measures they take. They then add that no direct employee has been involved in smuggling. 54. We therefore consider that in reading this paragraph as further evidence of the linked nature of the companies, where it was trying to distinguish between direct and indirect employees, Ms Hodge took notice of an irrelevant fact. 55. We consider that she did take notice of the steps to prevent smuggling (as she refers to the points being made by the Appellant in the letter of 12 May when writing her review letter) but considered these were not sufficient. 56. In such a case, the Tribunal may decide not to interfere, even if something irrelevant has been taken onto account, if the decision would inevitably have been the same (as held by the Court of Appeal in John Dee Ltd v Commissioners of Customs and Excise [1995] STC 941 ). 57. This Tribunal considers that this is such a case. We consider that although Mrs Hodge’s erroneous interpretation of the letter was an irrelevant fact, this was only one of a number of facts that led to her taking the view that the two companies in question were ‘inextricably linked’ and therefore deciding not to restore. The other facts supporting her view were the similarity of the names, the common address and the common director. The Appellant was given the opportunity to show that the companies were not inextricably linked, but has not done so. It has merely argued that the two companies are separate legal entities, a fact that is not in dispute. 58. We therefore dismiss this appeal. 59. 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. SARAH ALLATT TRIBUNAL JUDGE RELEASE DATE: 14 June 2016