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	United Kingdom VAT & Duties Tribunals (Excise) Decisions
You are here: BAILII >> Databases >> United Kingdom VAT & Duties Tribunals Decisions >> United Kingdom VAT & Duties Tribunals (Excise) Decisions >> Harpur Hill Indutrial Estate Ltd v Customs and Excise [2005] UKVAT(Excise) E00871 (22 March 2005) URL: http://www.bailii.org/uk/cases/UKVAT/Excise/2005/E00871.html Cite as: [2005] UKVAT(Excise) E00871, [2005] UKVAT(Excise) E871

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EO0871

HYDROCARBON OILS ––articulated tractor unit – hired to another company controlled by the same family– inappropriate use of rebated (red) diesel - previous incidents of use of "red diesel – section 12 Hydrocarbon Oil Duties Act 1979 - appeal dismissed

MANCHESTER TRIBUNAL CENTRE

HARPUR HILL INDUSTRIAL ESTATES LIMITED Appellant

- and -

THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents

Tribunal: David Porter (Chairman)

Carole A Roberts (Member)

Sitting in public in Manchester on 11 January 2005

Timothy Carroll for the Appellant

Christopher Middleton of counsel instructed by the Solicitor for the Customs and Excise, for the Respondents

© CROWN COPYRIGHT 2005


 


DECISION

1. Harpur Hill Industrial Estates Limited (the Appellant) appeals against the second refusal by the Commissioners to restore the Appellant's Seddon Atkinson articulated truck registration number M278VPT (the vehicle), which was seized on 25 August 2002. On the first occasion, by a letter dated 14 November 2002 the Appellant requested restoration. The Commissioners failed to conduct the review within the prescribed time limit and the decision not to restore was deemed to be confirmed (see section 15(2) Finance Act 1994). The Appellant appealed to the Tribunal and at a full hearing the tribunal directed that there should be a further review and after such review, the Commissioners by a letter of 22 July 2004, refused to restore the vehicle.
2. The Appellant hired out the vehicle to Moss Rake Calcite Limited (M R Calcite), which is responsible for the use of the rebated (red) fuel. M R Calcite operate the Moss Rake West Quarry and rebated fuel is used legitimately in their off road vehicles. An explanation and clarification of the structure of the two companies is given below. On the basis of the interaction between the two companies, and Mr Shatwell's involvement in both, the Commissioners consider that the Appellant was fully aware that the vehicle had been run on red diesel.
3. We heard evidence on oath from Mr Shatwell who was the original owner of the Appellant and father of the managing directors of both companies. Mr Carroll, a friend of Mr Shatwell, appeared at the request and on behalf of the Appellant. He produced a bundle of documents. Mr Middleton of counsel appeared for the Commissioners and produced a bundle of documents.
4. It is helpful for the purposes of the decision to understand the structure of the two companies. Mr Shatwell originally owned the Appellant and Moss Rake Calcite Works Limited (M R C Works). The Appellant originally purchased, developed, sold and rented land and buildings and operated from Harpur Hill, Buxton. As we understand it, in 1996 Mr Shatwell sold the property belonging to the Appellant to Quango Investments Limited, but retained some investment property. The company continued to trade and is now run by his second wife June and his daughter Norma. He also owned M R C Works, which extracted and sold specialized aggregates from Moss Rake West Quarry. In that capacity that company was entitled to use red diesel for its earth moving equipment. M R C Works went into liquidation in 1997. Mr Shatwell's other daughter Gail, with her partner Richard Salt and June's son Julian Cartwright started the business of M R Calcite, which effectively continued the same business as M R C Works. Both the Appellant and M R Calcite operated from the same office premises at Harpur Hill separated only by a partition. They also shared the fax machine. Red diesel is stored at this location and transported to the quarry as needed.
5. Mr Shatwell had helped to finance the setting up of M R Calcite by giving his house to his daughter Gail, presumably to secure the appropriate funding. The relationship between Mr Shatwell and his daughter Gail has deteriorated, we understand that the cause of the rift is because he has requested that his house is given back and she refuses to return it to him. He has started court proceedings against his daughter for the return of his house.
6. In 1997 Mr Shatwell says that he retired from both the Appellant and M R C Works. In spite of his evidence we are not satisfied that Mr Shatwell had entirely retired from the businesses of the Appellant and MR Calcite and we believe that he assisted both businesses from time to time. Mr Salt in his interview indicated to the officer that Mr Shatwell was responsible for the ordering of the fuel. Mr Shatwell had been stopped on 20 August 1999 driving a vehicle for M R Calcite, which was using "red" diesel. He claimed that this was the only occasion that he had driven a vehicle for M R Calcite. We find it less than credible that he was stopped on the only occasion that he was driving for that company. Another vehicle belonging to M R Calcite had previously committed a road fuel offence on 9 May 2001. On both occasions the Appellant had paid the penalties.
7. We find the following facts in relation to the forfeiture of the vehicle. Customs officers attended at Harpur Hill on 25 August 2002 and detected red diesel in an E R F Tipper, which was detained but not seized as it was not roadworthy. The Commissioners had contacted Mr Shatwell when the seizure took place and he had referred them to Mr Salt. The appropriate notices of seizure and sampling were served on Mr Salt. The seizure documents were not served on the Appellant in the first instance. That is not surprising as Mr Salt claimed to be representing the owner and the vehicle disc identified M R Calcite as the owner. The Customs officers also seized an Isuzu Trooper at the home of Mr Salt, which we shall refer to later. Although Mr Shatwell had spoken to Mr Salt following the seizure he appeared to be content to leave the matter to him. It was some six weeks later that Mr Shatwell complained to the Commissioners and asked for the return of the vehicle.
8. Mr Salt was interviewed on 4 September 2002. He confirmed that he had been driving the vehicle. He was unaware at the time that the vehicle contained red diesel but he thought that the trace of "red" diesel may have arisen because the fuel tank had been changed from another vehicle and had become contaminated. Mr Carroll produced a letter dated 1 November 2002 to the tribunal in which Mr Salt had re-iterated that the fuel tank had been changed and re-filled from a 5-gallon drum, which was used to carry "red" diesel to the quarry. We are not persuaded that is correct. Vehicles belonging to M R Calcite have been stopped on two previous occasions. It is also apparent from the interview notes that M R Calcite had falsified some of the fuel invoices. Mr Salt must have been aware of the misuse of the "red" diesel.
9. The Appellant has attempted to distance itself from the offence on the basis that it hired the vehicle to M R Calcite and that it had warned them not to commit further offences in using "red" diesel. The Appellant's business at the time of the offence in question appears, in part, to be the hiring out of vehicles. It bought the vehicle for £2500. Mr Shatwell alleged that money had been spent on it but we are not persuaded that is the case. The Appellant purported to hire the vehicle to M R Calcite. The hire agreement is a standard form of hire agreement but was not fully completed. M R Calcite agreed to pay £1000 per month plus VAT for the hire of the vehicle. In spite of the fact that there is a signed agreement between the companies we do not think it is credible, given the close relationship between the companies that M R Calcite would agree on a commercial basis to pay £1000 per month plus VAT for the vehicle. It would be aware of the value of the vehicle and it would have made more business sense for M R Calcite to buy it. We are satisfied that the hire agreement was not a genuine commercial arrangement. It is against the above background that the seizure took place.
10. Mr Carroll and Mr Shatwell were both concerned that his daughter Gail had successfully had restored to her the Isuzu Trooper referred to earlier. Although that vehicle belonged to her, it was registered to Richard Salt for insurance purposes. The tribunal to which she appealed had decided that her case should be reviewed because she produced evidence from a farmer, who confirmed that he had filled the vehicle with red diesel so that she could return home when the Isuzu Trooper ran out of fuel. The facts in that case were different from those in this case and that decision can have no bearing on this appeal.
11. Mr Middleton submitted that the Appellant had not proved on the balance of probabilities that it was innocent as to the use of the "red" diesel. The suggestion that the tank had been changed and had become contaminated because of the use of fuel from of the 5-gallon drum had not been raised at the previous hearing. The Appellant had not chosen to call the fitter who might have verified the position. The Appellant had been content to leave the matter to Mr Salt and had not requested the return of the vehicle for some considerable time. The hire agreement for the vehicle was unsatisfactory and there could be no commercial justification for the rental of £1000 per month plus VAT for the vehicle. The two companies were inextricably connected. The Appellant had paid the penalties for M C Calcite on the two previous occasions. Mr Shatwell was still working for both companies at the time of the seizure and appeared to be responsible for the purchasing of the fuel. The Commissioners had acted proportionally and the review had been carried out reasonably.
12. Mr Carroll submitted that the notices had been incorrectly served in that they should have been served on the Appellant at the start. The vehicle belonged to the Appellant and the two companies functioned quite separately and the letter from Mr Salt suggesting the way in which the tank had become contaminated was reasonable. He mentioned again that Gail Shatwell had had her vehicle returned to her even though there was more than a trace of "red" diesel in the fuel tank. In the circumstances the vehicle should be restored o the Appellant.
13. My colleague and I have considered the facts and are satisfied that the reviewing officer acted reasonably in refusing to restore the vehicle. We believe that the Appellant was fully aware of the activities of M R Calcite. The two companies occupied the same premises and were owned by the same families. Mr Shatwell had controlled both companies before he handed them over to his daughters. He undoubtedly took a close interest in the running of both of them and was well aware that M R Calcite had used "red" diesel in the past. He had insisted that they did not use it when he purported to hire the vehicle to M R Calcite. Mr Shatwell continued to help out in both companies until relations deteriorated between him and his daughter Gail over the issue of his house. It is not reasonable to treat the two companies separately and we dismiss the appeal.
14. The Commissioners did not ask for any costs to be awarded to them and we award none.

DAVID PORTER

CHAIRMAN

RELEASE DATE: 22 Marsh 2005

MAN/04/8088