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	First-tier Tribunal (Tax)
You are here: BAILII >> Databases >> First-tier Tribunal (Tax) >> Washingbay Agencies Ltd v Revenue & Customs [2009] UKFTT 143 (TC) (24 June 2009) URL: http://www.bailii.org/uk/cases/UKFTT/TC/2009/TC00111.html Cite as: [2009] UKFTT 143 (TC)

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[2009] UKFTT 143 (TC)

TC00111

Appeal number MAN/2008/8109

Excise Duty - S8 Hydrocarbon Oils Duties Act 1979 – fuel audit – assessment to test judgment on alleged imports of fuel in excess of vehicle running tank – Appeal Dimissed

FIRST-TIER TRIBUNAL

TAX

WASHINGBAY AGENCIES LIMITED Appellant

- and - THE COMMISSIONERS FOR HER MAJESTY'S REVENUE AND CUSTOMS (EXCISE DUTY) Respondents

TRIBUNAL : IAN WILLIAM HUDDLESTON

A.F. HENNESSEY

Sitting in Belfast on 1st May 2009

The Appellant appeared in person

Mr. B. Haley of the Solicitor's Office of HM Revenue and Customs for the Respondents

© CROWN COPYRIGHT 2009


 


DECISION

The Appeal

1. This Appeal relates to the disputed decision of HMRC in relation to an assessment to excise duty in the sum of £954 dated 16 June 2008. The assessment covers a period from the 8 May 2007 to the 21 November 2007 and was issued pursuant to Section 8 of the Hyrdocarbon Oils Duties Act 1979 ("HODA").
2. The assessment was the subject of a review and that review, contained in a letter dated the 27 August 2008, upheld the decision to assess the excise duty. It is that review decision which is the subject matter of this Appeal.

The Facts

3. The Appellant trades in the importation of furniture from the Far East. It subsequently distributes that furniture throughout Ireland from premises at 211A Washing Bay Road, Coalisland, County Tyrone, BT71 5EG.
4. For the purposes of distribution, the Appellant (during the operative period) used three vehicles:

(a) a commercial van, registration number R747SKW, with a running tank capacity of 130 to 140 litres;

(b) a lorry, registration number Y232LDV, with a running tank capacity of 230 to 240 litres; and

(c) a Mercedes van, registration number YCZ 6794, with a running tank capacity of 70 to 80 litres.

5. During the period in question the Appellant also made use of a hired van (registration number YIL9780) which was hired from Gilford Van Hire for the period from the 1 October 2007 until the 17 October 2007 – a fact which is also relevant for the purposes of this Appeal.
6. The Appellant company was incorporated in May 2007 and, prior to that date, had been a partnership between Mr. Tony McCuskey and Mr. Peter Bradley. As the business traded all over Ireland, a good deal of the fuel bought in connection with the business was purchased in the Republic of Ireland making use of a Stat Oil account and related fuel cards with the balance of the account then being invoiced monthly to the business.
7. The incident which led to this Appeal occurred on Saturday 15 December 2007 when HMRC carried out a fuel check on the Mercedes box van, registration number YCZ6794. When stopped, the fuel in the running tank was clear (ie unmarked), but further examination revealed that in the rear of the vehicle there were seven drums containing white diesel.
8. The driver of the vehicle, Barry McMarran, told the fuel officer that stopped him that the fuel had been purchased in Newry. After a subsequent inspection of the vehicle, a receipt for 147.46 litres issued by a fuel station in the Republic of Ireland was found. Mr. McMarran, an employee of the Appellant, subsequently indicated in an interview under caution that the fuel was for his personal use. The Appellant through its director, Mr. Bradley, gave evidence to the effect that, in his opinion, Mr. McMarran had been stealing fuel from them and that, immediately after the event outlined above, Mr. McMarran was fired. In any event, as a result of this incident HMRC wrote to the Appellant to commence a fuel audit. That letter was sent to the Appellants on the 14 January 2008 asking for details of all fuel receipts and invoices for the period from January 2005 until December 2007, together with details of the vehicles used in the business, average mileage, fuel invoices, tacographs and any other relevant information. The Appellant telephoned HMRC on the 21 January 2008 and provided some information to the processing officer, Ms. Linda Taggart. Ms. Taggart wrote to the Appellant on the 28 January 2008, having completed her fuel audit, indicating her intention to raise an assessment for the sum of £2,227 and providing a schedule itemising how she had reached that assessment. That schedule detailed, in date order, instances where commercial vehicles owned by the Appellant had been refuelled by cross referencing with Stat Oil invoices received by the business. In each case where the Stat Oil invoice showed literage in excess of the running tank of the vehicle to which the particular refuelling was attributed Ms. Taggart treated that as excess fuel and assumed that in relation to that excess fuel excise duty was due. For example, in an instance where the Mercedes van (YCZ6794) was refuelled and attributed 140 litres, that suggested to Ms. Taggart that given its running tank capacity of 80 litres, that there was 60 litres surplus in respect of which excise duty may not have been paid.
9. The Appellant telephoned Ms. Taggart on the 5 February 2008, disagreeing with the notice of intention to assess, and making the following points:

(a) that Mr. McMarran had taken responsibility for the initial offence, and that the company was not involved in the importation of diesel from the Republic of Ireland, and therefore no excise duty was due;

(b) Mr. McCuskey stated that the vehicle registration, which was often listed in the Stat Oil invoices beside each fuel purchase did not necessarily relate to the vehicle which was fuelling at that particular time. His position was that vehicle registration YCZ6794 was often inserted by drivers simply because it was the most frequently used vehicle, and therefore the registration number with which drivers were most familiar;

(c) Mr. McCuskey indicated that each card was attributable to a vehicle and that the particular registration number would automatically appear in the statement for each refuelling even if it was not, in fact, the vehicle which was refuelled;

(d) he stated that it was often the case on larger deliveries that two vehicles would travel in convoy and that therefore they would be fuelled together but only one entry made against a vehicle registration number;

(e) he referred to the fact that the business had hired the hire van referred to above for a period of 17 days in October 2007.

10. This telephone conversation was followed up by a letter from the Appellant in which it highlighted, on the schedule which Ms. Taggart originally had produced, the following:

(a) instances where the Appellant's lorry, vehicle registration R747SKV, was refuelled, but where the registration attributed to the Stat Oil invoice was input as registration number YCZ6794;

(b) dates when the Appellant had borrowed a lorry from Mr. McCuskey's brother – the lorry in question having a fuel capacity of 800 litres, but again being attributed to the van registration;

(c) dates when the hire lorry referred to above had been used by the business; and finally

(d) dates when vehicles were travelling in convoy and therefore two vehicles would have been refuelled using the one card (the whole quantity again being attributed to the single registration number).

11. HMRC raised the assessment, but then realised that the assessment pre-dated the incorporation of the Company. That resulted in an amended assessment which reduced the excise duty to £954 being the excise duty then attributed solely to instances of excess literage for the period from 8 May 2007 to the 21 November 2007. Again, HMRC issued a schedule detailing those instances where, in the fuel audit, literage refuelled exceeded the capacity of the running tank of the vehicle to which that refuelling was attributed, calculating a surplus to which the prevailing rate of duty was then applied to give the aggregate figure of £954. Mr. McCuskey asked for a review of this decision. That review was carried out by Mrs. Carol Kunderan who issued a review letter on the 27 August 2008 upholding the assessment of £954.
12. Mrs. Kunderan gave evidence to the Tribunal and gave the following reasons for upholding the assessment on review:

(a) Mrs. Kunderan indicated that she had sought for but the Appellant did not supply a letter from Stat Oil confirming that it was normal practice for a vehicle's registration number to be recorded against another vehicle. In the absence of that confirmatory evidence, she had decided not to accept the proposition put forward by the Appellant. In further support of that view, she pointed to a number of occasions when vehicle registration number R747SKW had been entered on fuel receipts and had taken this as further evidence that it was not simply the vehicle registration of the van (YCZ6794) that was used by the Appellants and their drivers in every case when vehicles were refuelled;

(b) Mrs. Kunderan discounted the use of the Appellant's brother's lorry, as again she did not find that there was any evidence to support the Appellant's contention;

(c) Mrs. Kunderan discounted the van hire receipt on the basis that there were no entries shown on the stat oil receipts against the vehicle in question during the period 1 October 2007 to the 17 October 2007, but in any event those entries had not been included in the assessment;

(d) finally, Mrs. Kunderan discounted the explanation that two vehicles travelled in convoy and fuelled together on the basis that the Appellant had been asked to provide evidence of those particular journeys and had failed to do so.

13. On that basis the assessment was upheld on review and it is that review decision that is the subject of this Appeal.

The Appellants' Case

14. Mr. Peter Bradley, a director, gave evidence on behalf of the Appellant. It was clear to the Tribunal that the incident which had triggered this unfortunate series of events had not been of the Company's making. The action of the Appellant's former employee, Mr. McMarran and the discovery of the seven drums of white diesel in the van (registration YCZ6794) had undoubtedly triggered the fuel audit that led to this appeal. Having said that, the reason why the fuel audit was carried out is not strictly relevant to the proceedings before this Tribunal. The question for this Tribunal is if HMRC have been reasonable in raising their assessment (and the method of calculation on which it was based) and if the Appellant had either before or during the Tribunal produced sufficient evidence to counter it.
15. It was explained to Mr. Bradley that the onus of proof lay with the Appellant in relation to the matter. Mr. Peter Bradley then took the stand and gave his evidence to the Tribunal.
16. In relation to the usage of the fuel cards and the discrepancies that appeared on the Stat Oil invoices, Mr. Bradley explained that very often and then through convenience, either till cashiers simply processed the number which appeared on the fuel card (regardless of whether it actually reflected the vehicle which had been refuelled or not) or drivers – through familiarity with a particular registration number – attributed that registration number to the transaction – again regardless of whether it actually reflected the vehicle refuelled. In either event, Mr. Bradley suggested that the Stat Oil fuel statements did not necessarily reflect accurately the vehicles which were refuelled and that, therefore, it was incorrect for HMRC to issue an assessment based on the assumption that in each case where the van registration YCZ6794 appeared that there was an automatic surplus over the 80 litres of the running tank attributed to that vehicle. Specifically on that point, and referring to the schedule which he had produced to HMRC previously, Mr. Bradley referred to:

(a) instances where his brother's lorry (with a running tank of 800 litres) might have been used;

(b) other instances where two or more commercial vehicles might have travelled in convoy to make deliveries to certain customers (usually Dublin based).

17. Mr. Bradley was asked what information he had to support these suggestions. In response, he indicated that he did have some delivery notes, but had not produced them either to HMRC or to the Tribunal, because he was not entirely clear of their relevance.
18. It was put to Mr. Bradley that, based on the schedule on which the assessment of £954 was based, that there were at least eight instances out of a possible 23 recorded refuellings where even if the vehicles were travelling in convoy, and even assuming that the larger capacity vehicles were being utilised, that the running tanks of both would have had to have been at empty to allow refuelling of the literage attributed. No clear explanation of that position could be given. In cross examination it was put to the Appellant that on the Stat Oil statements themselves there were unexplained instances of where (for example) the Stat Oil invoice might have been attributed to refuellings within minutes of each other to the one vehicle, which was not then consistent with the schedule which the Appellants had completed where, for example, they might have attributed that particular instance to use of the lorry.
19. The Tribunal found the evidence provided by both Mr. Bradley and his co-director Mr. McCloskey to be entirely credible but, faced the same difficulty as HMRC in that, firstly, it was largely unsubstantiated by any supporting or secondary documentation and, secondly, there were instances of refuelling that could not be explained or were inconsistent with the earlier marked up schedule submitted by the Appellant.

Decision

20. As we have indicated above the circumstances which led to this fuel audit were unfortunate and not of the Appellant's making. Nonetheless, where a fuel audit is carried out, it is the trader's responsibility to be in a position to explain the questions and demands put to them by HMRC. On the evidence which had been supplied, namely the Stat Oil invoices, one could easily see why HMRC had assumed that there were irregularities when one compared the running tank of the vehicle attributed to each refuelling. In those circumstances it was not unreasonable for HMRC to require further evidence to be produced to give a cogent explanation as to what actually had occurred. Whilst the Appellant had clearly tried to do that, both in the preliminary stages and before this Tribunal, the regrettable fact was that no cogent evidence had actually been supplied – or at least not sufficient to dispel the burden of proof that lay with the Appellant.
21. Mr. Bradley both in his examination in chief and in cross-examination had indicated to the Tribunal that he might have had delivery dockets which would have substantiated some of the factual assertions which had been made. The reality, however, was that that evidence was not available to the Tribunal and therefore could not be considered.
22. On that basis, therefore, the Tribunal finds that the assessment has been correctly made and dismisses the Appellants' Appeal.
23. No order as to costs.
TRIBUNAL JUDGE RELEASE DATE: 24 June 2009