DECISION
Background
1.
This is an application by the respondents to strike out the appeal on
the grounds either that the tribunal does not have jurisdiction to hear the
appeal, alternatively that there is no reasonable prospect of the appeal
succeeding.
2.
The appeal is in relation to an assessment to excise duty in the sum of
£2,317 made on 27 April 2012 (“the Assessment”). The Assessment was made
following the seizure of a quantity of cigarettes, tobacco and wine at the
appellant’s home address on 4 August 2011. It was made on the basis that the
goods seized had been released for consumption without payment of excise duty.
On this appeal the appellant seeks to contend that the goods were purchased
legitimately by way of cross border shopping.
3.
Put briefly, the respondents contend that the effect of the decision of
the Court of Appeal in Revenue and Customs Commissioners v Jones and Jones
[2011] EWCA Civ 824 precludes the appellant from asserting that the seized
goods were purchased legitimately. If he had wished to do so, he should have
challenged the legality of the seizure in condemnation proceedings.
4.
It is not my function on this application to determine any issues of
fact. The respondents contend that whatever the underlying factual dispute as
to the circumstances in which the appellant obtained the goods, I am bound as a
matter of law to strike out the appeal.
Statutory Framework
5.
The Customs and Excise Management Act 1979 (“CEMA 1979”) provides as
follows:
"139(1) Any
thing liable to forfeiture under the customs and excise Acts may be seized or
detained by any officer…
…
141(1) …where any thing has
become liable to forfeiture under the customs and excise Acts -
(a) any ship, aircraft,
vehicle, animal, container (including any article of passengers' baggage) or
other thing whatsoever which has been used for the carriage, handling, deposit
or concealment of the thing so liable to forfeiture, either at a time when it
was so liable or for the purposes of the commission of the offence for which it
later became so liable; and
(b) any other thing mixed,
packed or found with the things so liable,
shall also be liable to
forfeiture.
…
152 The Commissioners may
as they see fit –
… (b) restore, subject to
such conditions (if any) as they think proper, anything forfeited or seized
under [the Customs and Excise Acts]…"
6.
Paragraph 1 Schedule 3 CEMA 1979 provides for notice of the
seizure to be given in certain circumstances. Paragraph 3 Schedule 3 CEMA
1979 then states:
“Any person claiming that
any thing seized as liable to forfeiture is not so liable shall, within one
month of the date of the notice of seizure or, where no such notice has been
served on him, within one month of the date of the seizure, give notice of his
claim in writing to the Commissioners …”
7.
Where notice of a claim is given under paragraph 1, condemnation proceedings
are commenced in the magistrate’s court. Where no notice of claim is given Paragraph
5 Schedule 3 CEMA 1979 provides:
"If on
the expiration of the relevant period under paragraph 3 above for the giving of
notice of claim in respect of any thing no such notice has been given to the
Commissioners, or if, in the case of any such notice given, any requirement of
paragraph 4 above is not complied with the thing in question shall be deemed to
have been duly condemned as forfeited."
8.
The assessment, review and appeals procedure in relation to the recovery
of excise duty is contained in Finance Act 1994. In particular section
12(1A) gives the respondents power to assess excise duty where it appears that
a person is a person from whom excise duty has become due.
9.
Section 14 Finance Act 1994 makes provision for a person to
require a review of a decision of HMRC under section 152(b) CEMA not to
restore anything seized from that person. Section 15A provides for HMRC
to offer a review of a “relevant decision” which includes the Assessment under
appeal in the present appeal.
10.
Section 16 Finance Act 1994 sets out the jurisdiction of the
tribunal on an appeal against the review carried out by HMRC in the present
case. The decision to make the Assessment and confirm it on review is not an
ancillary matter. As such the tribunal’s jurisdiction is not limited to
considering whether the decision of the review officer was reasonable under section
16(4). The tribunal has what is called a full appellate jurisdiction under section
16(5). Hence it can consider whether liability to the assessment is
justified as a matter of law and if so whether or not the assessment is
excessive.
11.
Section 16(6) makes provision as to the burden of proof on an
appeal. For present purposes the burden at a final hearing of the appeal would
be on the appellant to satisfy the tribunal that the grounds of his appeal are
established. For present purposes, as indicated above, I am not concerned with
making findings of fact.
12.
In addition to the Assessment the respondents have also assessed a
penalty on the appellant of £892 pursuant to Schedule 41 Finance Act 2008. In
his notice of appeal the appellant has also appealed against the penalty on the
same grounds as his appeal against the Assessment. The respondent’s application
to strike out the appeal only extends to the appeal against the Assessment. The
respondents accept that there will still be a hearing of the appeal against the
penalty assessment.
The Respondents’ Case
on the Strike Out Application
13.
The application to strike out the appeal is made pursuant to Tribunal
Rule 8(2)(a), alternatively Rule 8(3)(c). These rules provide as follows:
“8(2) The Tribunal must
strike out the whole or a part of the proceedings if the Tribunal –
(a)
does not have jurisdiction in relation to the proceedings or part
of them
...
(3) The Tribunal may
strike out the whole or part of the proceedings if –
…
(c) the Tribunal considers there is no reasonable
prospect of the appellant’s case, or part of it, succeeding.”
14.
Rule 8(3)(c) is the equivalent of summary judgment. In appropriate cases
summary judgment can be given even where there is a factual issue but the
appellant has no reasonable prospect of establishing the facts necessary to
support an appeal. However that is not how the respondents put their case on
this application. The respondents say that the appeal has no reasonable
prospect of success because as a matter of law the appellant cannot assert that
excise duty had been paid on the seized goods or is not otherwise due.
15.
The basis on which the respondents seek to make good that submission is,
they say, to be found in the decision of the Court of Appeal in Jones &
Jones. In that case Mr and Mrs Jones were stopped at Hull Ferry Port with a large amount of tobacco, wine and beer which was seized on the basis that it
was for commercial use. The seizing officer reached that view following a
detailed interview with Mr and Mrs Jones. They were informed of their rights to
challenge the legality of the seizure and request restoration of the goods.
Initially they challenged the legality of the seizure by serving a notice of
claim pursuant to Paragraph 1 Schedule 3 CEMA 1979. They were also notified by
HMRC that if they decided to withdraw from the resulting condemnation
proceedings they would have to accept that the goods were legally seized, for
example that they were imported for commercial use. Subsequently Mr and Mrs
Jones, who at that time were represented by solicitors, withdrew from the
condemnation proceedings and pursued restoration of the goods.
16.
HMRC refused to restore the goods and Mr and Mrs Jones appealed to the
First-tier Tribunal (“the FTT”). The FTT made findings of fact that the goods
were for personal use and allowed the appeal. The Upper Tribunal upheld this
decision. HMRC appealed to the Court of Appeal maintaining that the FTT was not
entitled to make findings of fact inconsistent with the deemed forfeiture of
the goods from which it was implicit that the goods were not for personal use.
17.
The Respondents rely in particular on the judgment of Mummery LJ at [71]
which I shall set out in full:
“ I am in
broad agreement with the main submissions of HMRC. For the future guidance of
tribunals and their users I will summarise the conclusions that I have reached
in this case in the light of the provisions of the 1979 Act, the relevant
authorities, the articles of the Convention and the detailed points made by
HMRC.
(1) The
respondents' goods seized by the customs officers could only be condemned as
forfeit pursuant to an order of a court. The FTT and the UTT are statutory
appellate bodies that have not been given any such original jurisdiction.
(2) The
respondents had the right to invoke the notice of claim procedure to oppose
condemnation by the court on the ground that they were importing the goods for
their personal use, not for commercial use.
(3) The
respondents in fact exercised that right by giving to HMRC a notice of claim to
the goods, but, on legal advice, they later decided to withdraw the notice and
not to contest condemnation in the court proceedings that would otherwise have
been brought by HMRC.
(4) The
stipulated statutory effect of the respondents' withdrawal of their notice of
claim under paragraph 3 of Schedule 3 was that the goods were deemed by the express
language of paragraph 5 to have been condemned and to have been
"duly" condemned as forfeited as illegally imported goods. The
tribunal must give effect to the clear deeming provisions in the 1979 Act: it
is impossible to read them in any other way than as requiring the goods to be
taken as "duly condemned" if the owner does not challenge the
legality of the seizure in the allocated court by invoking and pursuing the
appropriate procedure.
(5) The
deeming process limited the scope of the issues that the respondents were
entitled to ventilate in the FTT on their restoration appeal. The FTT had to
take it that the goods had been "duly" condemned as illegal imports.
It was not open to it to conclude that the goods were legal imports illegally seized
by HMRC by finding as a fact that they were being imported for own use. The
role of the tribunal, as defined in the 1979 Act, does not extend to deciding
as a fact that the goods were, as the respondents argued in the tribunal, being
imported legally for personal use. That issue could only be decided by the
court. The FTT's jurisdiction is limited to hearing an appeal against a
discretionary decision by HMRC not to restore the seized goods to the
respondents. In brief, the deemed effect of the respondents' failure to contest
condemnation of the goods by the court was that the goods were being illegally
imported by the respondents for commercial use.
(6) The
deeming provisions in paragraph 5 and the restoration procedure are compatible
with Article 1 of the First Protocol to the Convention and with Article 6,
because the respondents were entitled under the 1979 Act to challenge in court,
in accordance with Convention compliant legal procedures, the legality of the
seizure of their goods. The notice of claim procedure was initiated but not
pursued by the respondents. That was the choice they had made. Their Convention
rights were not infringed by the limited nature of the issues that they could
raise on a subsequent appeal in the different jurisdiction of the tribunal
against a refusal to restore the goods.
(7) I
completely agree with the analysis of the domestic law jurisdiction position by
Pill LJ in Gora and as approved by the Court of Appeal in Gascoyne. The key to
the understanding of the scheme of deeming is that in the legal world created
by legislation the deeming of a fact or of a state of affairs is not contrary
to "reality"; it is a commonly used and legitimate legislative device
for spelling out a legal state of affairs consequent on the occurrence of a specified
act or omission. Deeming something to be the case carries with it any fact that
forms part of the conclusion.
(8) The
tentative obiter dicta of Buxton LJ in Gascoyne on the possible impact of the
Convention on the interpretation and application of the 1979 Act procedures and
the potential application of the abuse of process doctrine do not prevent this
court from reaching the above conclusions. That case is not binding authority
for the proposition that paragraph 5 of Schedule 3 is ineffective as infringing
Article 1 of the First Protocol or Article 6 where it is not an abuse to reopen
the condemnation issue; nor is it binding authority for the propositions that
paragraph 5 should be construed other than according to its clear terms, or
that it should be disapplied judicially, or that the respondents are entitled
to argue in the tribunal that the goods ought not to be condemned as forfeited.
(9) It is
fortunate that Buxton LJ flagged up potential Convention concerns on Article 1
of the First Protocol and Article 6, which the court in Gora did not expressly
address, and also considered the doctrine of abuse of process. The Convention
concerns expressed in Gascoyne are allayed once it has been appreciated, with
the benefit of the full argument on the 1979 Act, that there is no question of
an owner of goods being deprived of them without having the legal right to have
the lawfulness of seizure judicially determined one way or other by an
impartial and independent court or tribunal: either through the courts on the
issue of the legality of the seizure and/or through the FTT on the application
of the principles of judicial review, such as reasonableness and
proportionality, to the review decision of HMRC not to restore the goods to the
owner.
(10) As
for the doctrine of abuse of process, it prevents the owner from litigating a
particular issue about the goods otherwise than in the allocated court, but
strictly speaking it is unnecessary to have recourse to that common law
doctrine in this case, because, according to its own terms, the 1979 Act itself
stipulates a deemed state of affairs which the FTT had no power to contradict
and the respondents were not entitled to contest. The deeming does not offend
against the Convention, because it will only arise if the owner has not taken
the available option of challenging the legality of the seizure in the
allocated forum.”
18.
Mr Shaw submits that the crucial aspect of the present appeal is that
the appellant took no action to challenge the legality of the seizure, hence the
effect of the deeming provision in Schedule 3 CEMA 1979 is that he can no
longer do so. In short, he says that the appellant’s opportunity to put forward
his factual case that no excise duty was payable on the goods was in
condemnation proceedings and not before the tribunal. He argues that the
tribunal has no jurisdiction to consider the issues raised by the appellant and
the appeal should therefore be struck out pursuant to Tribunal Rule 8(2)(a).
Alternatively because the appellant has no right to raise the issue as to
whether duty had been paid on the seized goods the appeal has no reasonable
prospect of success and should be struck out pursuant to Tribunal Rule 8(3)(c).
19.
In the circumstances Mr Shaw submits that the extent of the tribunal’s
jurisdiction on this appeal is to consider whether the Assessment is
technically deficient in some way. For example if it assesses the wrong person,
it is out of time or the amount is incorrectly stated. There is no suggestion
of any such deficiencies in the present case.
Discussion
20.
I have had cause to deal with similar issues in previous appeals, most
recently in a case called B & G Liquor Store Limited v Commissioners
for HM Revenue and Customs [2013] UKFTT 339 (TC). In the particular
circumstances of that case I refused to strike out the appeal. I considered
that if the appellant made good its factual case then it had been trying
immediately following the seizure to obtain information necessary for it to
challenge the seizure but this had not been provided by HMRC. It had not
received Notice 12A and it had not been advised by HMRC that there was a time
limit of 1 month for the bringing of condemnation proceedings which could not
be extended. Further it had not been informed that if it did not pursue
condemnation proceedings then the grounds on which it could resist an
assessment to excise duty on the seized goods would be severely limited.
21.
I decided that it was arguable on the facts of that case that there would
be a procedural unfairness and possible infringement of the appellant’s Convention
rights under Article 1 if it was not entitled to put its case that the goods
were duty paid. If the appellant were to be denied the opportunity to challenge
the legality of the procedure in the tribunal its Convention rights may have
been infringed. It could not be said that the appellant had no reasonable
prospect of succeeding in the appeal.
22.
I understand that the respondents considered an appeal against that
decision but they did not seek permission to appeal.
23.
The present application to strike out is factually very different from B
& G Liquor Store Ltd. Having said that the appellant says in support of
the present appeal that he was told by the seizing officer that he could appeal
the seizure of goods. If he wished to do so he should put it in writing and the
appeal would come to the seizing officer but that he would not be getting the
goods back. The appellant says that he did write to the seizing officer but
nothing happened and at the time of the assessment the respondents told him
that they had no record of any appeal against the legality of the seizure.
Whether or not these exchanges ever happened is not a question I am invited to
resolve on this application. I must therefore take it that the appellant would
have a reasonable prospect of establishing that these events did happen.
24.
For the same reasons as I gave in B & G Liquor Store Ltd it
seems to me that the appellant does have an arguable case that there would be a
procedural unfairness and possible infringement of the appellant’s Convention
rights under Article 1 if he is not entitled to put his case that no excise
duty was payable in relation to the goods.
25.
The present application also highlights two further aspects of such
appeals.
26.
Firstly the time between the date of seizure and the date of the
assessment to excise duty. In the present case there was a period of some 8
months between the date of seizure and the date of the assessment. In
comparison there is a time limit of one month from the date of seizure within which
the appellant must notify the respondents that he wishes to challenge the
legality of the seizure. There is no provision to extend that time limit.
27.
When the period of one month expired the appellant was not in a position
to know whether the respondents would be issuing an assessment for the excise
duty involved. Nor is there any evidence that he was told that if he wished to
challenge any subsequent assessment to duty on the grounds that no excise duty
was payable then he should make a claim under Paragraph 1 Schedule 3 CEMA
1979.
28.
The position can therefore be contrasted with the issue in Jones
& Jones where the Court of Appeal was concerned with an application for
restoration. If an individual wants his goods back he knows that if he wishes
to challenge the legality of the seizure he must initiate condemnation
proceedings by making a claim to the respondents. Alternatively if he wants his
goods back but does not wish to challenge the legality of the seizure, then he
can still ask HMRC to exercise their discretion to restore. Either way, HMRC
have his goods and he wants them back.
29.
In a case such as the present an appellant for one reason or another may
not want the goods back. For example he may consider that he does not want to
be exposed to any risk as to the costs of condemnation proceedings. However, he
does not know whether HMRC will be making an assessment to duty. At most he
knows that there is a risk of such an assessment. Indeed Mr Shaw accepted at
the hearing that it is only relatively recently that HMRC have sought to make
assessments on persons unlawfully importing excise goods.
30.
Secondly, there is also the possibility of a penalty being assessed. A
penalty was assessed in the present case although not until more than a year
after the date of seizure. It is notable that the respondents have not applied
to strike out the appeal against the penalty assessment. Having said that Mr
Shaw argued that even in relation to the penalty appeal Jones & Jones may
limit the extent of the tribunal’s jurisdiction to make findings of fact
inconsistent with the deemed lawful condemnation of the goods.
31.
It seems to me that if an individual decides to accept forfeiture of the
goods rather than embark upon potentially costly condemnation proceedings in
the magistrate’s court, he should not be forced to bring such proceedings
simply to guard against the possibility that there may subsequently be an
assessment to duty and/or a penalty assessment.
32.
During the course of the hearing my attention was drawn to a summary
decision which I made in the case of Ryan Eccles TC/2012/07689. In that
case I struck out an appeal against an excise duty assessment on the basis that
following Jones & Jones it was not open to the appellant to assert
that the goods were for private use. In relation to that decision I note that
there was no suggestion of any attempt to challenge the legality of the seizure
within the period of one month allowed by Schedule 3 CEMA 1979. Nor on
that occasion did I fully consider the timing differences described above. In
the present appeal, as in B & G Liquor Stores Ltd, the appellant
claims that he did attempt to challenge the seizure.
33.
I invited Mr Shaw to identify any other tribunal decisions where the
present issue has arisen in relation to duty assessments. I was referred to a
number of other decisions of the First-tier Tribunal including Repertoire
Culinaire v HMRC [2013] UKFTT 278 (TC). None of those decisions involved
any detailed consideration as to the application of Jones & Jones to
appeals against assessments to excise duty.
34.
On one view a claim by an appellant that he has somehow been frustrated
by HMRC in an attempt to challenge the legality of seizure is something which
should be brought by way of judicial review, rather than an appeal to the tribunal.
However I do not consider that the appellant in the present case and in B
& G Liquor Stores Ltd are seeking to challenge the conduct of HMRC in
relation to prospective condemnation proceedings. Rather they are seeking to
challenge assessments to excise duty in circumstances where they contend that
they should not be precluded from doing so because they had not initiated the
condemnation procedure.
35.
In all the circumstances I do not consider that it is appropriate to
strike out this appeal. In particular:
(1)
It is arguable that Jones & Jones does not limit the
jurisdiction of the tribunal in relation to an appeal against an assessment to
excise duty.
(2)
If the appellant satisfies the tribunal that he was frustrated in a
genuine attempt to challenge the legality of the seizure then the Tribunal
arguably must give him a remedy in order to vindicate his rights under Article
1 which include the right to a procedurally fair hearing.
(3)
The same factual issues will in any event arguably arise at the hearing
of the penalty appeal.
(4)
In so far as the strike out application raises issues of law, I do not
consider it appropriate to determine those issues without a full investigation
of the facts (Cp Barratt v London Borough of Enfield [1999] UKHL 25).
36.
For these reasons I refuse the application to strike out. I further
direct that the respondents should serve their statement of case within 63 days
from the date this decision is released.
37.
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.
JONATHAN
CANNAN
TRIBUNAL JUDGE
RELEASE DATE: 10 September 2013
