[2013] UKFTT 167 (TC)
TC02583
Appeal number
TC/2010/4263
Excise
Duty – duty suspended movement –whether alcohol left the UK
FIRST-TIER TRIBUNAL
TAX CHAMBER
LOGISTICAL
TRANSPORTATION LIMITED Appellant
-
and -
THE
COMMISSIONERS FOR HER MAJESTY’S
REVENUE
& CUSTOMS Respondents
TRIBUNAL:
JUDGE CHARLES HELLIER
JAMES MIDGLEY
Sitting in public at 45 Bedford Square, London WC1 on 18 February 2013
Timothy Brown instructed by
Vincent Curley & Co LLP for the Appellant
Ewan West, instructed by the General
Counsel and Solicitor to HM Revenue and Customs, for the Respondents
© CROWN COPYRIGHT
2013
DECISION
1. This
appeal relates to the dispatch of a consignment of Gallo wine from Edwards
Beers and Minerals Ltd ("Edwards") in Leighton Buzzard on 15 July
2009 for delivery to Contrama Logistique in Bologne in France.
2. HMRC
say that the consignment did not leave the UK; the appellant that it arrived at
its destination. If the appellant can show that it is more likely than not that
the assignment did arrive it will succeed in this appeal.
3. The
appellant company is owned by Mr. Tahir Aziz. He set up the company in 2008 and
managed its operations on a part-time basis while he remained in employment
elsewhere. He told us that his object was to develop a logistical business for
the company.
4. Mr.
Aziz found a customer for his transport services in the form of Century Trading
in Belgium. That company wished him to transport consignments of alcoholic
drinks from the UK to France.
5. The
alcohol was held in bond in the UK (i.e. with the payment of duty suspended - see
below) and was to be transported to a bonded warehouse in France. Mr. Aziz was required by Century to provide an excise duty guarantee to HMRC. He
applied to HMRC for the approval of a form of guarantee, and a guarantee in the
sum of £20,000 was agreed in February 2009.
6. The
company then started arranging the transport of the consignments for Century.
Between 6 April 2009 and 18 January 2010 the company arranged the transport of
41 consignments for Century. By 12 October 2009, 23 consignments had been
transported from Edwards, all but six of which had been to Contrama. In almost
all cases Mr. Aziz arranged for Fast Haul Limited to pick up and deliver the
goods. But in a few cases the transport was carried out by Accelerate 2000.
7. HMRC
made a visit to Mr. Aziz in November 2009. They selected four movements of
goods for further checking. They asked for details of the lorries which
transported the goods - the registration number of the tractor unit and the
number of the trailer.
8. Having
obtained this information they checked with their internal databases which
recorded the movements of vehicles across the Channel to France.
9. Eventually
HMRC satisfied themselves that three of the four consignments had left the UK on the trailers ascribed to them, although pulled by tractor units which were different
from those which had picked up the goods from Edwards.
10. But for one
consignment of wine, picked up on 15 July 2009, HMRC’s records indicate that
the tractor unit which Mr Aziz had told them was taking the wine across the
channel, WLZ 2046 ("WLZ") with its accompanying trailer, 112 (“112”)
had left the UK empty. After visits to Fast Haul and Accelerate, HMRC's
officers concluded that the wine had not left the UK, and on 15 March 2010
assessed the appellant for the excise duty on the wine, at £26,251.
11. The appellant
sought a review of the decision to assess, and on 26 April 2010 Allan Donnachie
of HMRC wrote to the appellant setting out his conclusion that the decision to
assess should be upheld. The appellant appeals against the decision.
The relevant law.
12. Alcoholic liquor
produced in, or imported into, the UK becomes in principle liable to excise
duty when it is produced or imported. But the liability to pay the duty is
delayed and arises only at the "excise duty point". This is usually
the point at which the alcoholic liquor is released for consumption. But the
duty point may be postponed and the duty ‘suspended’ if the liquor is taken to
an approved excise warehouse (a “bonded warehouse”). The outline for the
management of the duty was at the relevant time provided for in Directive
92/12/EC.
13. Article 15 of
that Directive provides for arrangements permitting the movement of excise goods
between tax warehouses. These are "duty suspended movements". Article
15(30 and the UK regulations require that an intra-community movement of excise
goods be covered by guarantee provided by the warehouse keeper or the transporter.
Such movements of goods are required to be accompanied by an "Authorised
Administrative Document” ( an “AAD”) This is a form prescribed by the
Directive and regulations. It contains a number of boxes most of which must be
filled in by the consignor. Four copies are prepared: one of the consignor, one
for the consignee, one to be receipted by the consignee (and if required also by
the fiscal authorities of the destination state) and returned to the consignor,
and the fourth for those fiscal authorities. All but the first copy must
accompany the goods whilst in transit.
14. In this appeal
the AAD for the movement in question was prepared by Edwards and specified the
guarantor as the appellant. It also provided in box 11, ‘Other transport
details’ the registration number P6 DHT, a trailer number “112” and a seal
number for the consignment. The appellant produced a copy of the AAD receipted
by Contrama, and indicating that the consignment had been checked (as required
by Art 19(2) of the Directive).
15. The Excise Duty
Points (Duty Suspended Movements of Excise Goods) Regulations 2001 provided for
the occurrence of an excise duty point where there was an
"irregularity" in the course of the duty suspended movement.
16. Regulation 3
provides:
"(1) This regulation applies where:
(a) excise goods are:
(i) subject to a duty suspended movement
starting in the United Kingdom ...and
(b) in relation to those goods
and that movement there is any irregularity which occurs or is detected in the United Kingdom.
(2) Where the Commissioners are satisfied that the
irregularity occurred in United Kingdom, the excise duty point shall be the
time of the occurrence of the irregularity or, where it is not possible to
establish when the irregularity occurred, the time when the irregularity first
comes to the attention of the Commissioners
(3) Where it is not possible to establish in which member
states the irregularity occurred, the excise duty point shall be the time of
the detection of the irregularity or, where it is not possible to establish
when the irregularity was detected, the time when the irregularity first comes
the attention of the Commissioners.
...
17. The regulations
define “irregularity” to mean “an irregularity or offence within the meaning of
Article 20 of the Directive. Article 20 is not particularly informative:
"1. Where an irregularity or offence has been
committed in the course of a movement involving the chargeability of excise
duty, the excise duty shall be due in the Member State where the offence or
irregularity was committed from the natural or legal person who guaranteed
payment of the excise duties in accordance with article 15 (3), without
prejudice to the bringing of criminal proceedings."
18. However it seems
clear that a movement of excise goods so that they are released into free circulation
when they should have been moving between warehouses under duty suspension
arrangements is an irregularity. If alcohol destined for France did not leave the UK there must have been an irregularity which occurred in the UK.
19. Regulation 7
provided:
"7. (1) Subject to paragraph (2) below, where there
is an excise duty point as prescribed by regulation 3 ... above, the person
liable to pay the excise duty on the occurrence that excise duty point shall be
the person shown as the consignor on the accompanying administrative document
or, if someone other than the consignor or is shown in box 10 of that document
as having arranged for the guarantee, that other person."
20. In this appeal
the appellant had arranged to give a guarantee and its name was in box 10. Thus if an excise duty point occurred the appellant would be liable for the duty
which had thitherto been suspended.
21. Sections 14 to
15F of the Finance Act 1994 provide that the commissioners may be required to
review certain decisions including certain decisions to assess excise duty.
Section 16 permits an appeal in relation to such decisions of the commissioners
on review. Section 16 (6) provides:
"On an appeal under this section the burden of proof
…as to [certain matters not relevant to this appeal] shall lie upon the
commissioners; but it shall otherwise be for the appellant to show the grounds
on which any appeal is brought have been established."
22. In this appeal
the appellant’s grounds of appeal are:
(1)
The review officer was asked for information about the reasons for the
assessment but did not reply. The officer thus closed his mind to the
information the appellant could have provided in response;
(2)
The assessed consignment was properly discharged at the approved
warehouse in France.
23. So far as
concerns ground (1) the Commissioners deployed their evidence before us and the
appellant was able to reply to it. In the context of this appeal therefore
there was no need to consider this ground further. So far as concerns (2) by
reason of section 16(6), the burden is on the appellant to show that the wine
did get to the warehouse in France. .
24. To summarise: if
the goods do not arrive at the warehouse in France then there must have been an
irregularity. If the irregularity occurred in the UK then a duty point arises
and the appellant is liable for the duty as guarantor. If it is not possible to
determine where the irregularity occurred, a duty point nevertheless occurs and
the appellant as guarantor is liable.
The Decision Letters.
25. In the original
decision which gave rise to the assessment, and in Mr Donnachie’s review, the
reason for the assessment is given as being because the goods did not leave the
UK. As the guarantor of the movement of the goods, the appellant was liable
for the duty.
The Evidence and Our Findings of Fact.
26. We heard oral
evidence from Mr. Aziz, from Mrs Gurbahsh Donanjh, the officer of HMRC
responsible for the assessment under appeal, from Mr. Donnachie, and from Karen
Buckthorpe of P&O who provided evidence of the records and procedures at
P&O ferry terminals.
(1) Evidence relating to the dispatch of the goods.
27. Mr. Aziz told us
that on 14 July 2009 he was contacted by Century and asked to move a
consignment from Edwards to Contrama.
28. On the same day
a "release note" was sent by Coral Management Limited of Isleworth to
Edwards asking Edwards to release from goods held for Coral:
(1)
150 cases Gallo red Zinfandel
(2)
1120 cases Gallo W/Grenache
(3)
224 cases Gallo Shiraz Rose
(4)
1232 cases Gallo White's internal.
to Contrama, and indicating that
Coral’s customer Century would arrange their own transport. That was a total of
2726 cases.
29. Mr. Aziz told us
that on the same day he telephoned Fast Haul to ask them to move the wine, but
he was told that they had no driver. Fast Haul recommended that he tried
Accelerate 2000. He called Accelerate and was told that they could do the job.
30. Mr. Aziz sent a
collection note to Accelerate to pick up 2726 cases of mixed wines on 15 July
2009 from Edwards and deliver them to Contrama on 16 July 2009.
31. A Movement
Guarantee fax from the appellant to Edwards dated the next day, 15 July 2009,
confirms that the appellant had arranged for Accelerate to collect at 12
o'clock on 15 July 2009 a ‘full load’ of wines from Coral's account for
delivery to Contrama, and that the wines would be collected by tractor number
P6 DHT ("P6") and trailer FH 112. [There was some uncertainty over
the date of this fax since the fax header looks as if its date was two days
later, 17 July at 13.19, but it was possible that the fax machine had been set
wrongly].
32. Tractor unit P6
belonged to Fast Haul.
33. It appears that
Edwards prepared an AAD showing P6 as the tractor and 112 as the trailer, and
specifying the wines noted at [28] above as collected on 15 July 2009.
34. Mr. Aziz also
told us that after 12 o'clock on that day he would have phoned Edwards and
asked if the load had been taken. He would then have been given the vehicle
number. Later he would have confirmed with Accelerate that they had picked up
the goods and been told where they were. That would have been between 4 and 5
pm. He could not however remember what Accelerate told him about where the
goods were. He said that on 16 July he would have rung Contrama to check that
the goods have arrived. He would then have awaited the CMR which came in due
course.
35. But it seems
that after collection the tractor unit was switched to WLZ which belonged to
Accelerate. The evidence in relation to this is somewhat confused:
(1)
HMRC’s enquiries of Fast Haul resulted (in March 2010) in a telephone
call in which a caller identifying herself as the director of Fast Haul
confirmed that they had been asked to transport the goods on 15 July 2009 but
had not been able to do so, and that Logistical Transportation had asked
Accelerate to do it. But she said that Fast Haul had lent its truck (P6) to
Accelerate and that the truck had been picked up from Fast Haul by Accelerate’s
driver;
(2)
HMRC’s enquiries of Accelerate resulted in a discussion with a Mr.
Goldsworthy who said that they had only one tractor unit, WLZ, and had only
done one alcohol movement which was for Fast Haul. He said that he had been
asked by Fast Haul to do a job and his driver (Mayfield) had met Fast Haul at
junction 9 on the M1, swapped trailers (presumably to take 112 on W LZ) and
gone to France and returned the same trailer. He had charged Fast Hall for the
job.
(3)
A copy (sent, we believe, by Accelerate to HMRC) of a fax from Fast Hall
to Accelerate asks for Accelerate to collect 112 from P6 at junction 9 M1 lorry
park on 15 June 2009 (without a time) and deliver to Contrama;
(4)
Mr. Aziz produced an invoice from Accelerate for the movement and
evidence of the appellant’s payment of it.
(5)
P&O's records (to which we shall return below) indicate that WLZ
travelled to France on 15 July with trailer 112, and that the driver's name was
Gould (not Mayfield). They also indicate that WLZ returned the next day with a
different trailer.
(6)
Mr. Aziz said that the tractor and trailer numbers (P6 and 112) on the
movement guarantee fax he had sent to Edwards were given to him by Accelerate.
36. We had
difficulty making sense of this evidence. We could not understand why
Accelerate should borrow P6 to pick up a load from Edwards, but then switch
tractor units to WLZ after picking up the wine. We could not work out, if First
Haul did not have a driver, who was driving P6 when it arrived to do the
trailer swap at junction 9. We could not understand why, if Mr. Aziz
commissioned Accelerate directly, First Haul should have written to Accelerate
asking them to do a swap. We could not understand why WLZ was recorded as
returning with a different trailer.
37. The only clear
conclusion we could derive was that P6 was not intended to be the tractor which
took 112 across the Channel on 15 July, and that it was likely that it was
intended that WLZ should. That WLZ took 112 across the Channel so was confirmed
by the P&O records (and also by an annotation on the CMR). There was no
suggestion that P6 went to France that day.
(2) The evidence in relation to the journey across the
Channel.
38. Mrs Buckthorpe
produced a copy of the waybill from P&O's computer records. The bill showed
for a sailing at 5:30 pm on 15 July 2009:
(1)
WLZ with trailer 12,
(2)
driven by D Gould with no other passengers,
(3)
weighing 15,740 kg,
(4)
described as "empty", and
(5)
for the haulier ‘ACCELERATE’.
39. Mrs Buckthorpe explained
that lorries would go to a weighbridge on arrival at the terminal and obtain a
weight ticket. Then they would go to the booths. As they arrived their
registration numbers would be taken and when they stopped the number would be
confirmed with the driver. The booth operator would enter the weight,
registration number, driver's name, the haulier and whether the vehicle was
empty or not into the computer. The booth operator would normally take the
driver's word for whether or not the vehicle was empty unless there was some
discrepancy. The booth operators dealt with many hundreds of lorries in a year.
40. Mrs Buckthorpe
told us that a tractor weighed 9 to 12 tons, and an empty trailer about 6
tonnes: together some 15 to 17 tonnes. She explained the weights of the lorries
were important to P & O for safety in the loading of their ships.
41. Mrs Buckthorpe
was frank and straightforward. We accepted her evidence.
42. We were shown a
printout from HMRC's computer records, part of the information for which was
drawn from P&O's computer systems. This printout recorded movements of WLZ
on the Dover/Calais ferry between 29 June and 28 July 2009 (eight crossings in
all). Those records recorded the carrier variously as:
(1)
Accelerating 2000
(2)
Xlr 2000
(3)
ACCELERATE
(4)
Accelerate
(5)
Exelorate 2000
(6)
ACCELERATE 2000
(7)
Accelerate 2000
43. Mr. Brown points
to these variations. He says that they indicate a lack of precision by the
booth operators, and suggests that the same lack of precision and possible
error extends to the waybill produced as a result of the entries made by the
booth operator. As he set as a result he says we should take the weight of
15,740 kg, and the record of the vehicle as being "empty" with a
pinch of salt. There may have been a mix up between two different lorries. He
asks how one could know that the weighbridge was accurate.
44. We accept that
human error is a possibility. However we are not convinced it was likely. The
weight of 15,740 kg is consistent with the trailer being empty. The figure of
15,740 kg does not appear likely to be a typographical error for a laden
weight: 2726 cases of wine are likely in our estimation to weigh some 20 to 25
tonnes (9 litres (12 x 75cl) of wine will weigh about 9 kg and the bottles will
add something to that) ; the laden weight would therefore be some 35 tonnes.
That does not seem to be easily transcribed as 15 tonnes. We think it unlikely
that both an error in the weight and an error in the recording of whether or
not the lorry was empty would take place at the same time. We think it unlikely
that the keying in of entries for a vehicle standing at the booth would be
muddled with entries for a prior or subsequent vehicle.
45. In our judgement
Mrs Buckthorpe’s evidence gave weight to, and enabled us to rely upon, the
waybill.
(3) Evidence in relation to Arrival.
46. We were shown a
copy of the AAD bearing a signature for, and a stamp of, Contrama dated 16 July
2009 and also a stamp showing arrival at 9:48 am on 16 July 2009. Mr. Aziz also
produced a letter from Contrama which enclosed copies of Contrama’s stock
records showing the receipt from Century of the consignments of wine with an
identifying number replicated on the AAD, and the record of a later dispatch
(also on 16 July) of most of the wine from Century's account.
47. In addition we
were shown a CMR stamped and signed on behalf of Contrama bearing what looked
like the date of 16 July showing the carriage of 2726 cases of wine.
48. One of the
copies of the CMR had, in the box containing the carrier’s details (which
included “P6” and “112”) the additional words "onto WLZ" which was
consistent with the change of tractor unit. No such annotation had been made to
the AAD..
49. The AADs noted
seal numbers. Mr. Aziz told us that the trailers were sealed with numbered
plastic tags. The numbers were entered on the AADs. The receiving warehouse he
said would check that the seals had not been broken and then identify the load.
50. There was
nothing inconsistent in this evidence (save perhaps the failure also to
annotate the AAD to record the change in the tractor unit). But we were unable
to determine the procedures and checks undertaken by Contrama or to assess the
care they had taken in checking details.
Our conclusions on the evidence
51. We had to decide
whether the appellant proved that the goods left the UK. We must make that decision
on the evidence before us. There are, as outlined above three parts to that
evidence: (1) that relating to the departure of the wine from Edwards, (2) that
relating to WLZ's journey via the P&O ferry, and (3) the evidence of the
CMRs, AADs and Contrama’s records.
52. We do not find
that (1) provides any weight in favour of a conclusion that the goods arrived
at Contrama or left the UK. There were oddities and inconsistencies in the
evidence.
53. That leaves us
to balance (2) against (3). If WLZ and 112 were empty when they went on to the
ferry at Dover, we can see no way in which the wine can have been delivered by
WLZ the next day. Likewise if the wine arrived on WLZ and 112 on 16 July it
must be that the waybill was wrong. We have to decide which is more likely.
54. In relation (2)
we were convinced that it was very unlikely that P & O's record was wrong:
the evidence of Mrs Buckthorpe enabled us to test the reliability of the
record.
55. In relation to
(3) the copies of Contrama’s records and forms supported the AADs and CMRs but
provided little to help us test the reliability of the systems which gave rise
to those records.
56. We therefore
attached greater rate weight to (2) than to (3). We decided as a result that it
was not shown that it was more likely than not and that the goods left the UK or arrived at Contrama.
57. That failure to
arrive was an irregularity. It was not possible to say it took place in France, therefore it is to be treated as taking place in the UK (and indeed we find that HMRC’s conclusion
that the wine did not leave the UK is not disproved). Thus an excise point
arises in the UK. The appellant, being the guarantor of the delivery is liable
for the duty. There was no dispute as to the amount of the duty. The assessment
was therefore properly made.
58. In the
circumstances therefore it is not necessary for us to consider whether there
was any other irregularity.
Disposal
59. We dismiss the
appeal.
Rights of Appeal
60. 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 JUDGE
RELEASE DATE: 6 March 2013
