[2010] UKFTT 416 (TC)

TC00686
	
Appeal number: TC/2010/01037

Notice of assessments to Excise Duty – rebated fuel in a road vehicle 

FIRST-TIER TRIBUNAL

TAX 

	BALDEV SINGH SAHOTA	Appellant

	- and -

	THE COMMISSIONERS FOR HER MAJESTY’S
	REVENUE AND CUSTOMS	Respondents

		TRIBUNAL: 	Miss Blewitt (TRIBUNAL JUDGE)							Mrs Dean (MEMBER)		

Sitting in public at Birmingham on 3 August 2010

Mr Sahota, unrepresented, for the Appellant

Ms Tilling, instructed by the General Counsel and Solicitor to HM Revenue and Customs, for the Respondents

© CROWN COPYRIGHT 2010

DECISION

1.	This is an appeal against the Respondent’s decision contained within a Notice of Assessments to Excise Duty dated 1 December 2009 in the sum of £990.00. The assessment relates to red diesel found in the Appellant’s vehicle on 7 September 2009 and dates from date of purchase on 11 March 2008 to date of detection on 7 September 2009.
2.	In summary, the background to the case is that the Appellant was stopped in his Mercedes Sprinter vehicle, registration KP02 FCG on 7 September 2009. The Appellant stated he was delivering goods to the Trafford Centre in Manchester. Fuel in the vehicle was tested and found to be red in colour. The Appellant was interviewed on the same date, during which he stated he was a self-employed van driver who had owned the vehicle for approximately 18 months. The Appellant did not dispute the finding of rebated fuel in the vehicle and stated that he had bought the diesel in drums from a male in the car park of The Pheasant Public House in the West Midlands area. He stated he did not know until the officers informed him that it is illegal to run a road vehicle off red diesel and although he initially stated this was the first time he had bought drums of diesel, the Appellant subsequently admitted to officers that it was in fact the fifth time. The Appellant paid £500 for the release of his vehicle. 
3.	HMRC subsequently wrote to the Appellant asking for information to assist in assessing the extent of the use of rebated fuel. The Appellant contacted HMRC by telephone asking if this information was still required as the vehicle had been sold and the paperwork passed to the new owner. The Appellant stated he did not have any paperwork as he was not running a business, although he would carry out deliveries for payment.
4.	On 10 November 2009 the Appellant provided HMRC with proof of sale of the vehicle and 13 receipts for fuel amounting to 638.05 litres. Subsequently a further 11 receipts were provided on 1 December 2009 for 376.54 litres of fuel, totalling 1014.59 litres of fuel the Appellant could account for. The Appellant estimated that the vehicle did 25 to 28 miles per gallon.
5.	Examination of the vehicle showed an odometer reading of 100,182 miles. HMRC assessed an average annual mileage by dividing that figure by 7 (the number of years the vehicle had been registered) giving a figure of 14,000 per annum or 38 miles per day. Taking into account the receipts provided by the Appellant, HMRC made assessments to excise duty in the sum of £990.00.
6.	The Appellant appealed by Notice dated 7 January 2009 (which the Tribunal inferred should read 2010) which stated that the amount of £990.00 is excessive. The Appellant stated that he paid the fine of £500 for the return of the vehicle and could not accept the shortfall of 2353.41 litres that HMRC contend he has used. All receipts that could be found had been provided and the Appellant stated he did not use the vehicle to the extent suggested by HMRC.
7.	The Tribunal heard evidence from Mr Tidmarsh, Officer of HM Revenue and Customs and considered a statement made by him. Mr Tidmarsh considered the information provided by the Appellant both in interview when the vehicle was tested, in a telephone call on 2 November 2009 and paperwork subsequently provided. Mr Tidmarsh concluded that using best judgement resulted in an assessment of £990.00 calculated as set out above. In evidence Mr Tidmarsh accepted that the Appellant had not been asked to estimate the total mileage or weekly mileage of the vehicle when stopped on 7 September 2009, nor was he aware of the Appellant ever being asked for this by HMRC. Instead the Appellant had been asked to provide MOT documents and fuel receipts.
8.	The Tribunal had the benefit of hearing the Appellant give evidence. The Tribunal found the Appellant to be a credible witness; accepting that there had been inconsistencies in his account when stopped by HMRC officers on 7 September 2009but explaining to the Tribunal that this was due to the pressure he felt in such a situation and the concern he had that his vehicle would not be returned. Mr Sahota explained that the vehicle was used for personal use and therefore not all receipts were kept by him, however he had made every effort to find all that he could to provide to HMRC. The Appellant stated that he advertised in shop windows and supermarkets to assist with deliveries, but that this was not a business nor was there any set pattern to work he could receive. 
9.	The Appellant explained that he had purchased 3 drums of rebated fuel which was sufficient to fill his vehicle. He said that the male from whom he purchased the fuel was not always at the public house on a Saturday and did not always have sufficient fuel to sell him, but that he had purchased the fuel as it was cheaper. The Appellant told the Tribunal that he would drive approximately 150 miles per week. 
10.	The Appellant accepted that he had purchased fuel from the male on 5 occasions and that since being stopped on 7 September 2009 he had only purchased kerosene from the male on one occasion as he was not aware that this was illegal. 
11.	The Tribunal considered the evidence and submissions of both parties carefully and also bore in mind the authorities referred to by HMRC. The Tribunal found as a fact that the evidence given by the Appellant was an honest and candid account and accepted his explanations as to the extent of use of his vehicle. The Tribunal took the view that HMRC had failed to take account of the verbal information provided by the Appellant, and relied wholly on receipts provided by him and the total mileage of the vehicle, including the period before t was owned by the Appellant. Whilst HMRC could not be criticised for such an approach, the credibility of the Appellant, taken together with information provided by him which was consistent in terms of how often the vehicle was used and amount of fuel required, led the Tribunal to reassess quantum in deciding the issue as to what amount of tax is properly due from the Appellant. In so doing, the Tribunal considered all of the material before it and assessed the amount due based on the oral evidence it accepted from the Appellant.
12.	On the basis that the Appellant drove approximately 150 miles per week, taken over the period the Appellant had owned the vehicle would give a total of 11,700 miles for the relevant period as opposed to 20,748 as assessed by HMRC. Division by 28 miles per gallon as per the Appellant’s evidence gives a total of 417 gallons required to complete the mileage travelled, which amounts to 1899 litres per gallon. Taking into account the fuel receipts produced gives a figure of 885 litres which would give a revised assessment figure of £372.00.
13.	The Tribunal concluded that the correct assessment is £372.00
14.	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.

TRIBUNAL JUDGE
RELEASE DATE: