Appeal Number: LON/2009/10754

[2010] UKFTT 444 (TC)

TC00709

Appeal number: LON/2009/10754

EXCISE DUTY – seizure of goods – refusal to restore – whether reasonable? Yes on the facts – Appeal dismissed

FIRST-TIER TRIBUNAL

TAX

GARDNER SHAW (LONDON) LTDAppellant

- and -

THE COMMISSIONERS FOR HER MAJESTY’S

REVENUE AND CUSTOMSRespondents

TRIBUNAL: TRIBUNAL JUDGE: ADRIAN SHIPWRIGHT

TRIBUNAL MEMBER:MARK BUFFERY

Sitting in public in London on 20 and 21 May, 2010

Timothy Brown, Counsel, instructed by M&R Tax Advisers Ltd for the Appellant

Kerry Musgrave, Counsel, instructed by the General Counsel and Solicitor to HM Revenue and Customs for the Respondents

© CROWN COPYRIGHT 2010

1

DECISION

Introduction

1. This is an appeal by Gardner Shaw (London) Ltd (“the Company”) against the Respondents’ (“HMRC”) decision (“the Decision”) not to restore a consignment of beer (“the Goods”) attracting Excise Duty which had been seized. The Respondents’ decision was set out in a letter dated 28 May 2009 (“the Decision Letter”).

The Issue

2. The main issue in this case is whether or not the Tribunal should exercise its powers under Section 16 Finance Act 1994 to alter HMRC’s Decision set out in the Decision Letter not to restore the Goods.

3. To do this requires the Tribunal to be satisfied “...that the Commissioners or other person making that decision could not reasonably have arrived at...” that decision i.e. it is not within the range of possible reasonable decisions.

4. The essential question then is was the decision set out in the Decision Letter outside the range of possible reasonable decisions? It does not matter whether we would have reached the same or a different decision as we are not substituting our own decision.

5. Mr. Brown very properly confirmed that he was not seeking to challenge the legality of the seizure. It was accepted that this might go to the reasonableness of the Decision.

6. Ms Musgrave also very properly confirmed that HMRC were not suggesting that the Company was complicit in any crime.

7. HMRC were concerned as to the ownership of the Goods but we were told HMRC did not wish to take any jurisdictional points in this regard.

8. We reminded ourselves that the onus is on the Company to prove its case.

9. The Tribunal asked if it was sought to rely on the Cheques Act 1957. It was told it was not sought to do so. No evidence was led specifically in this context. Accordingly, we have not considered this further.

10. It was common ground that no condemnation proceedings had been requested.

The Law

11. The legislation in this area is well known and is found principally in Sections 49, 100 and 152 of the Customs and Excise Management Act 1979 (“CEMA”). There are also a number of relative regulations including the REDS regulations applicable here.

12. Broadly, goods are liable to forfeiture if duties should have been paid but have not been so paid.

13. Where items are seized HMRC are given power to restore anything so seized and may do so subject to such conditions (if any) as they think proper.

14. Sections 14-15 Finance Act 1994 give a taxpayer the right to require HMRC to review a decision not to restore items seized.

15. The taxpayer is given a limited right of appeal as regards such a review if dissatisfied with it. However, the Tribunal’s power is only that set out in section 16 FA 1994.This, so far as is relevant, is set out in the next paragraph.

16. The Tribunal if it finds that the decision is outside the range of reasonable decisions then has power:

“(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 review or further review as appropriate 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 review or further review as appropriate, 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”.

17. That is the extent of the Tribunal’s powers in this context laid down by Parliament. There is no power to substitute its own decision if HMRC’s decision is within the range of possible reasonable decisions.

18. We are not concerned in this decision with whether or not the seizure of the Goods was technically legal or not. We are only concerned with whether the Decision set out in the Decision Letter not to restore the Goods was unreasonable in the sense of a decision that could not reasonably have been arrived at as being one within that range of possibilities.

19. We were provided with a bundle of authorities by the Appellant which we have carefully read and considered. This contained:

Singh vs CCE Decision Number E00201

Witkowski vs HMRC Decision Number E01050

CCE vs Corbitt [1980] STC 231

Gascoigne vs CCE [2004] EWCA Civ 1162

Gora vs CCE [2003] EWCA Civ 525

Lindsay vs CCE ['s 202] 1 WLR 1766

The Evidence

20. We were provided documentation by each party. The documents were all admitted in evidence no objection having been taken to any of the documents.

21. We heard oral evidence from:

(1) Kamaljit Kaur Virk, the director of the Company

(2) Alice Angela Stewart, Higher Officer, HMRC who carried out the review;

22. A witness statement was provided for each of them and they were cross examined. The Facts

23. .From the evidence we make the following findings of fact.

(1) The Company

(a) The Company is a company incorporated in England on 21 February 2003.

(b) It carries on business in three main areas, namely, the wholesale of alcohol and non-alcoholic drinks to its customers in the UK, the wholesale of beer under duty suspension to France and the purchase of beer under duty suspension from EU suppliers for onward sale to its UK customers.

(c) The Company is a registered owner of goods under the Warehouse Keepers and Owners of Warehouse Goods Regulations 1999. It also has its own movement guarantee registered with HMRC for duty suspended movements of excise goods from the UK.

(2) The Consignment of the Goods

(a) In November 2008 the Company purchased the Goods, a consignment of beer from one of its suppliers, Erasmus Logistics in Rotterdam.

(b) The parties agreed that Erasmus Logistics would arrange the transportation of the Goods.

(c) The Goods were dispatched by Wybo Transports SARL on 18 November 2008 at 17.30. Wybo Transports is a tax warehouse in France.

(d) The price was some £20,563. It was not paid for the Goods then.

(e) The Erasmus Logistics document provided "Terms and conditions: Until full payment is received, all goods remain the property of Erasmus Logistics".

(f) The Company had dealt with Erasmus Logistics for about seven or eight months. The Company was approached by Erasmus Logistics as Mrs Virk had been seeking suppliers. We were told that the Company did proper due diligence on Erasmus Logistics. Mrs Virk said that the Company “had done about 25 consignments with Erasmus”.

(g) The Goods ordered from Erasmus Logistics were directed to go straight to Abbey Forwarding Limited ("Abbey").

(h) The Accompanying Administrative Document ("AAD") (AAD number 47646) showed in box 17 that the movement had an estimated journey time of 72 hours.

(i) The Goods consisted of the following:

Quantity
Cases / Description / ABV
% / Content
cl / DCIS
560 / Stella / 5.2 / 50 / 59194
630 / Carling / 4.1 / 50 / 59194
480 / Fosters / 4.0 / 50 / 59194
100 / Tennents / 9.0 / 44 / 59194
80 / Special Brew / 9.0 / 50 / 59194
80 / Skol Super / 9.0 / 50 / 59194
80 / Kestrel / 9.0 / 50 / 59194

(j) The Goods were transported duty suspended.

(k) The Goods were delivered at Abbey in London on Monday 24 November 2008. This was more than the 72 hours specified in the AAD, in fact, about twice as long.

(l) We were told that Abbey was too busy to receive the Goods on Friday 21 November 2008. This was not corroborated and no reason was given why Abbey was too busy.

(3) The Transport

(a) The Goods were collected from Wybo on 18 November, 2008. This was seemingly done by CEM logistics to whom McCann Transport had subcontracted the load. The driver seemingly had to take a break because he had completed his available hours. The transport took more than 72 hours.

The Goods left France on 18 November and were delivered 24 November 2008 in England. No clear explanation was given of this.

(b) Whatever the reason for the delay the Goods were on a vehicle which was parked over the weekend at the Titan truck stop, Oliver Road, Thurrock. This was Mrs Virk’s evidence. This was a normal truck stop and again raised the question as to why it was used. It was not unreasonable for HMRC to wish to be satisfied on this point which they were not.

(4) The Seizure

(a) On 24 November 2008 HMRC Specialist Investigation Team Officers were at Abbey’s premises.

(b) The team examined the Goods which were being unloaded at the time.

(c) As the driver was unable to identify himself, the travelling time had been exceeded and the lorry had been left in an unsecured yard, the Goods were detained on 24 November 2008.

(d) The Goods were later seized. This was done by letter dated 16 December 2008.

(e) There was no appeal against the seizure of the Goods. It was accepted that the Goods were deemed to have been condemned as forfeit to the Crown (see paragraph 3 Schedule 3 Customs and Excise Management Act 1979).

(5) Ownership of goods

(a) The Company decided to pay for the Goods notwithstanding that the Company was aware that the Goods had been detained. We were told this was a commercial decision.

(b) The Company paid Erasmus Logistics for the goods on 15 December 2008. This was the day before the seizure of the goods was notified. It seems the Company had been informed that the Goods would be seized the following day.

(c) Those acting on behalf of the Company requested restoration of Goods which was refused by HMRC in a letter dated 16 January 2009.

(d) A review was requested and the original decision was upheld and notified by letter dated 28 May 2009 which is the Decision appealed against.

(e) The payment was made by cheque by special clearance.

(f) Mr Virk's evidence was that she knew some goods would be seized but thought it was okay as far as these goods were concerned and so she paid why waste time?

(g) As noted above Erasmus’s terms were that property in the Goods remained with Erasmus until Erasmus received payment.

(6) Payment and value given

(a) Payment was made into a UK bank, HSBC where Erasmus had an account. This was at the same branch as the Company.

(b) Payment was made some three weeks after the goods had been despatched and after the goods had been detained.

(c) The cheque was issued by Mrs Virk’s secretary seemingly on her and Peri’s say so. Mrs Virk said she was unaware of it.

(d) However, the transfer from the company's bank account was posted for 15 December, 2008. There was no clear evidence as to when Erasmus Logistics was given value for it or when Erasmus Logistics treated payment as having been made so that title and property passed. Accordingly, we make no finding of fact as to when Erasmus received value as we have no reliable evidence on which to base such a finding.

(7) The Decision

(a) The Decision is contained in a letter dated 28 May 2009.

(b) The Decision set out how the goods were seized and the procedural background. This was not contentious. It then went on to mention the relevant legislation.

(c) The Decision then set out the Departmental Policy on Restoration. In so far as relevant to this read:

"The general policy of the Commissioners is that excise goods will not normally be restored, except in exceptional circumstances. However, every case is dealt with on its individual merits, and all relevant matters are taken into account.

(d) It also said “This policy, which is designed to disrupt illicit trade in excise goods, is confirmed in Notice 12 A Goods and/or vehicles seized by Customs and Excise, which states:

‘We will consider all such requests on their individual merits, all relevant facts will be taken into account. However, our policy is normally not to return (restore) seized excise goods (such as alcohol or tobacco products), or any seized prohibited items…"”

(e) The Decision Letter continued "… However a claim for restoration may only be made by the owner of the goods. The Commissioners are still not clear as to who actually owns the goods, which were detained by HMRC on 24 November 2008 and subsequently seized on 16 December 2008. GSL [the Company] issued a cheque for payment of the goods on 15 December 2008, the same day as Officer Bailey advised that it was his recommendation to seize the goods. You advised that GSL ’recalled’ the cheque, which in banking terms normally means of payment has been withdrawn. Officer Bailey has advised me that you had informed him that GSL had not paid for the goods did not own them. However you now contends that GSL are the owner of the goods [sic]. AAD 47646 dated 18 November 2008 showed travelling time of 72 hours from the time it left the despatching warehouse in France. The consignment did not arrive until 24 November 2008. Mr Gerard McCann of McCann transport said in his letter to GSL, which is undated but has a fax transmission dates of 19 November 2008, that the reason for the delay was "my vehicle loaded at Wybo France Tuesday evening 18/11/08 and the driver was that the driving hours on his tachograph. He had to take a compulsory 45 hour break, on completion of his rest he proceeded to Calais where he met Trainer transport on Friday at midday…"

Mr McCann's letter to GSL dated 1 April 2009 states that he sometimes subcontracts leads to other hauliers and arranged for this load to be collected by CEM logistic from Wybo on 18 November 2008.

Both explanations presented to HMRC are in contradiction of each other and I am therefore an agreement with officer Bailey that no satisfactory explanation has been presented to the commissioners to account for the delay".

(f) It was said in the Review Conclusion "it is still unclear whether GSL of the owner of the goods or not. However any case, no satisfactory explanation has been presented to HMRC to account for the delay in reaching Abbey Forwarding Limited, London". Accordingly it was decided not to restore the Consignment.

(8) General

(a) We find that it was not unreasonable for HMRC's have suspicions about the Goods for the reasons they set out. The delay required explanation. The reasons given for the delay did not immediately allay suspicions and, as HMRC pointed out, were contradictory. The use of the word "recall" in respect of the cheque was unfortunate as it was thought to be used in the technical sense rather than just asking for it back. However, when value was given for the cheque such that property passed is unclear. Accordingly, it was not unreasonable for HMRC to query ownership of the Goods. The history of the transport of the Goods was also such that it was not unreasonable for HMRC to have suspicions about it particularly in respect of the stop at Titan trust.

(b) Accordingly, we find that the Decision was within the range of possible reasonable decisions. We also considered it to be proportionate.

The Submissions of the Parties

The Appellant’s Submissions in outline

1. In essence, the Appellant submitted that the decision not to restore the goods was unreasonable and disproportionate.
2. In particular, it was argued HMRC have not taken into account all the circumstances including the vires and supposed reason for the seizure.
3. The Appellant submitted HMRC failed to take into account the following relevant matters and all took into account irrelevant matters when making the decision not to restore the goods, inter alia:

(a) The seizure notice was defective in that is only allowed 14 days for the Appellant to appeal instead of the statutory one month;

(b) HMRC believed that the Appellant was not the owner of the goods, thereby preventing it from appealing within the time limit anyway;

(c) There is no statutory EU or UK provision requiring the arrival of duties suspended goods to occur within a fixed amount of time from dispatch, therefore no irregularity occurred;

(d) The AAD was only invalid if the goods were not the same goods as were loaded at Wybo, of which there was no evidence to suggest they were not;

(e) It appears HMRC have not attempted to carry out further investigations to trace any of the goods back to Wybo;

(f) The Appellant is an innocent party, which purchased the goods in good faith;

(g) The Appellant did not arrange for the transportation of goods and therefore had no control over the movement; and

(h) The Appellant acted in bona fide manner in paying its suppliers for the goods in the knowledge they have been detained by HMRC

HMRC’s Submissions in outline

1. In essence, HMRC submitted that the seizure was lawful and could not be challenged and that the decision not to restore the goods was reasonable and proportionate. This should be judged as the time of seizure.
2. In particular, the burden was on the Appellant to show that the decision not to restore the goods was unreasonable. The Appellant had not discharge that burden.
3. In particular it should be noted that:

(a) The Goods left France on 18 2008 but were not delivered till 24 November 2008;