[2011] UKFTT 638 (TC)
TC01480
Appeal number
TC/2010/05212
TC/2010/05589
APPLICATION
FOR LEAVE TO APPEAL OUT OF TIME - whether reasonable excuse - seven months
delay –appellant aware of demands but not of liability- facts unclear – permission
granted.
FIRST-TIER TRIBUNAL
TAX
MATTHEW
RICHARD GRIFFITHS Appellant
-
and -
THE
COMMISSIONERS FOR HER MAJESTY’S
REVENUE
AND CUSTOMS Respondents
TRIBUNAL:
DAVID S PORTER (TRIBUNAL JUDGE)
Sitting in public at Alexandra
House, Manchester on 16 and 17 August 2011
Nigel Gibbon for the Appellant
Jonathan Cannan, of counsel,
instructed by the General Counsel and Solicitor to HM Revenue and Customs, for
the Respondents
© CROWN COPYRIGHT
2011
DECISION
1. The
Appellant (Mr Griffiths) applies to the Tribunal for leave to appeal out of
time the two post-clearance C18 demands dated 17 September 2009 in the sums of
£144,365 and £15,178 respectively. The appeal should have been lodged by 30
October 2009, but was not in fact raised until 27 May 2010 some seven months
later. Mr Griffiths says that he understood the liability related to American
Pick Up Company Limited (the Company), which was in liquidation and that he had
been told that the demands were not personal to him. He also said that he had
not received any correspondence subsequent to the liquidation of the Company. The
Respondents (HMRC) say that Mr Griffiths was well aware of the demands as he
had received them at the offices previously belonging to the Company, and in
any event occupied by his other company European Left Hand Drive Limited
(European). He only chose to appeal the matter when the bailiffs attended.
2. Mr
Jonathan Cannan (Mr Cannan), of counsel, appeared for HMRC and called Mrs
Michelle Brierley and Ms Tracy Mary Clowry, who gave evidence under oath. He
also provided the Tribunal with agreed bundles. Mr Nigel Gibbon (Mr Gibbon)
appeared for Mr Griffiths and called Alan Henderson and Mr Griffiths’ both of
whom gave evidence under oath.
3. I
have been referred to the following cases:
·
TC 00656 [2010] UKFTT 374 (TC) Lighthouse Technologies Limited
v HNRC.
·
TC 00624 [2010] UKFTT 342 (TC) David C Pledger v HMRC.
·
TC 00592 [2010] UKFTT 305 (TC) B Fairall Limited (in
liquidation) v HMRC.
·
TC 00476 [2010] UKFTT 172 (TC) Alasdair Macdonald v HMRC.
·
19859 The Medical House PC v HMRC
·
A2/2001/2845 [2002] EWCA Civ 645: Michael Patrick Sayers v
Clarke Walker (a firm)
·
TC 00714 Former North Wilshire District Council
The facts
4. The
only facts with which I am concerned are those giving rise to this appeal and
the actions taken by Mr Griffiths during the seven months since he should have
lodged an appeal. The Company went into a creditors’ voluntary liquidation on
15 October 2008, arising from a meeting with Mr Griffiths and the liquidators on
23 September when Mark Beesley of Beesley & Company was appointed
liquidator. Ms Clowry was the Licensed Insolvency Practitioner at Beesley &
Company dealing with the Company’s liquidation. At the date of the liquidation
the Company had a VAT liability of £22,833 and arrears of custom charges of
£144,365 and £15,179.56. Ms Clowry arranged for all mail relating to the
Company to be re-directed to her office from 11 November 2008. A post-clearance
demand for £147,168.48 was issued by HMRC on 27 April 2009 to Beesley & Company,
the letter was sent to Mr Griffiths. As a result Mr Griffiths went to see Mr
Henderson in May 2009.
5. Mr
Henderson of Omnis Customs Consultancy, gave evidence under oath. He stated
that Mr Griffiths had come to see him in May 2009 because he had received a C18
post-clearance demand in the sum of £147,168.48. The post-clearance demand
referred to some 51 vehicles. The list reveals the dates that the vehicles were
received by the Company, the last being at the end of August 2008, but HMRC
were unable to advise when the goods left the premises giving rise to the
post-clearance demands. Although the form had been sent to 3-5 Clark Way Mr
Henderson understood that the claim was personal to Mr Griffiths and he wrote
to HMRC asking for a review. On 8 June 2009 Mrs Jan Pond telephoned Omnis to
speak to him but, as he was engaged, she spoke to Mr Gibbon, his colleague. Mrs
Pond advised Mr Gibbon of Omnis that, as the demand was against the company, Mr
Griffiths had no appropriate authority to request a review. Mr Gibbon wrote to
Mrs Pond on 22 June 2009 in the following terms:
“I refer to our telephone
conversation of 8 June 2009 in relation to our above named client, Matthew
Griffiths. In that conversation you informed me that the above mentioned C18
Demand had been issued to the limited company (American Pick Up trucks Limited)
and not to Mr Griffiths personally. You also noted that the limited company was
in liquidation and that our firm is not instructed by the liquidator….. However,
we are quite happy to accept your assurance that the Demand has been issued to
the limited Company, particularly because we could not understand how it would
have been legally possible to issue it to Mr Griffiths personally. On that
basis we formerly withdraw our request for you to review the issue of the C18
demand.”
Mrs Pond acknowledged receipt of the letter by email on 6
July 2009. A far as we know the matter has been taken no further by her. No
evidence has been provided as to why she considered Mr Griffiths was not
personally liable and whether her view remains unchanged.
6.
Mr Henderson was consulted again by Mr Griffiths about the C18 demands
in September 2009. A letter from HMRC dated 17 September 2009 referred to the
issue of the previous C18 demand and it was clear that the current demands were
connected to the earlier ones although the figures were different. Mr Cannan
confirmed to the Tribunal that the demands were connected.. Mr Henderson
completed an authority form 64-8, which Mr Griffiths had signed in blank and Mr
Henderson inserted 3-5 Clark Way as the address for correspondence with Mr
Griffiths. He wrote to Mrs Hulse on 17 December 2009. He received a detailed
reply from her on 13 January 2010, a copy of which he sent to Mr Griffiths. He
was unaware that Mr Griffiths had vacated the premises at 3-5 Clark Way. There
had been a delay of some 4 months from Mr Griffiths visit and Mr Henderson’s
letter to HMRC on 17 December 2009. Mr Henderson explained that he and Mr
Gibbon had ceased to be partners in Omnis and that Mr Gibbon had set up
Northgate during this period and he thought that might have been the reason for
the delay. He had never seen the schedule relating to the demands until the
hearing. He said that he had not tried to contact Mr Griffiths again and he
accepted it would have been prudent for him to have done so. Mr Griffiths told
us that he had not received a copy of Mr Henderson’s letter of 17 December
addressed to HMRC.
7.
Mr Griffiths confirmed that the receipt of the letter from HMRC in
September 2009 had triggered his second visit to Mr Henderson. Mr Griffiths told
us that he always thought that he had no personal liability in light of the
conversation which Mr Gibbon had had with Mrs Pond in June 2009. He had not
pursued the matter after his visit to Mr Henderson in September 2009 on the
basis that ‘no news was good news’. He expressed surprise that HMRC had not
written to him at his home as they had his personal address. He would have
expected them to do so if they had been unable to obtain a reply to letters
addressed to 3-5 Clark Way. He only thought about the matter again in May 2010
when HMRC’s debt management unit tried to enforce the debt. He had spoken to
Mrs Hulse at that time, who confirmed that the C18 demands were the same as the
original ones that he had received in May 2009 and confirmed that he was
personally liable. He had instructed Mr Gibbon to appeal. He indicted that he
had not appreciated that Mr Gibbon had appealed on the basis that he had not
received the September C18 demands. That was not correct and Mr Gibbon must
have misunderstood his instructions. On 22 June 2010 Mrs Hulse issued a civil
fraud penalty addressed to Mr Griffiths at his home on the grounds that the
unauthorised removals of the vehicles from the warehouse, which ‘may’
have occurred, were attributable to Mr Griffith’s dishonesty. The penalty was
appealed by Mr Gibbon on 30 June 2009 on the grounds that:
‘There was no evidence that
the Company, of which Mr Griffiths was a director, dishonestly evaded customs
duty and there is no evidence that the conduct of the Company was attributable
to the dishonesty of Mr Griffiths’.
8.
It is not entirely clear why the second C18s were issued. There is, in
the bundle, a copy of the letter addressed to the Company at Beesley &
Company dated 17 September 2009, referred to above, from Ms S Bellingham at
HMRC in the following terms:
“I am now in a position to be
able to issue 2 C18 demand notes which were going to be sent by Mr Kirk. The
explanation for the debts is below.
A previous C18 demand was
issued but, due to departmental processes, had to be withdrawn.
…. We are issuing 2 C18
demand notes. The reason for the 2 demands is that on 18 December 2008 Michelle
Brierley and Graham Kirk identified a number of imported vehicles which were
still in stock. The customs warehouse approval, however, had been withdrawn
previously due to the insolvency of American Pick Up Trucks. These goods have
been unlawfully removed as per 2913/92 Article 203 Schedule (1). The remainder of
the imported vehicles which were not in stock and for which you have not
provided proof of payment of the charges are the subject of the PN300 action. …
We have issued the C18s to Mr Griffiths, who we have identified as being
jointly and severally liable”.
Mr Cannan confirmed at the hearing that the second C18s
arose from the first set of C18s and were the same.
9.
On 23 December 2009, a demand notice from HMRC addressed to Mr Griffiths
was received by Ms Clowry. She returned the notice to HMRC marking the envelope
‘do not redirect’. It would appear that this letter never reached Mr Griffiths.
Mr Griffiths has denied that he received any further information after his
visit to Mr Henderson in September 2009. Evidence has been given by Ms Clowry
and Mrs Brierley that they had had extensive correspondence with Mr Griffiths
from September 2008 to June 2010 in relation to European, which also operated
from 3-5 Clark Way. Mr Griffiths said that that correspondence related to
European, as all correspondence in relation to the Company went to Beesley
& Company. Mr Griffiths said that he had left 3-5 Clark Way in January 2010
for a new unit in Stockport and that the workshop at 3-5 Clark Way was being
used by two of his former employees, He has suggested that he would not have
seen any correspondence in relation to the Company as he and his former
employees would only have been concerned with correspondence with regard to
European. Ms Clowry stated in her witness statement that Mr Griffiths
eventually attended at the premises at 3-5 Clerk Way on 11 June 2010 to secure
items that belonged to him when the bailiffs attended to forfeit the lease.
10.
HMRC have produced evidence of Mr Griffiths’ disqualification as a
Director of a limited company on 8 April 2011. Mr Griffiths did not appear at
the hearing in the Manchester County Court as he had given an undertaking that
he would not act as a director for a period of 10 years. Mr Bird, on behalf of
the Secretary of State, indicated at the hearing that Mr Griffiths had misappropriated
some £280,000 and that 77 vehicles were unaccounted for. Mr Bird considered
that Mr Griffiths had shown himself to be wholly dishonest. I have been
supplied with no further evidence in this regard and, as Mr Griffiths did not
attend the Court, he has had no opportunity to dispute the facts.
The Law
11. The appeal is
pursuant to the provision of section 16 (1B) Finance Act 1994 which requires an
appeal to be made within 30 days beginning with the date of the document
notifying an appellant of the decision. Section 16 (1F) of the Act provides
for appeals to be made after that period where the Tribunal gives permission to
do so.
Rule 20 (4) of The Tribunal Procedure (First-tier
Tribunal) (Tax Chamber) Rules 2009 ( the Rules) provides:
“20 (4) If the appellant
provides the notice of appeal to the Tribunal later than the time required by
paragraph (1) (the time limit imposed by any enactment) or by an extension of
time allowed under Rule 5 (3) (a) (power to extend time) –
(a)
the notice of appeal must include a request for an extension of time and
the reasons why the notice of appeal was not provided in time; and
(b)
unless the Tribunal extends time for the notice of appeal under rule
5(3)(a) (power to extend time) the Tribunal must not admit the notice to
appeal.
In considering the appeal the
Tribunal must also take account of Rule 2 (1);
“2(1). The overriding
objective of these Rules is to enable the Tribunal to deal with cases fairly
and justly
It has been suggested that this
Tribunal is bound by CPR and rule 3.9 in particular. This Tribunal is not bound
by those rules, but it is clearly sensible to have a regard to those provisions
when considering an application for an appeal to be brought out of time
The Cases
12. I have been
referred to several cases and would observe that they all depend on their own
facts. I refer specifically to Ogedegbe v HMRC LON/2009/0200 (not
referred to by the parties) in which Sir Stephen Oliver said:
“While this Tribunal has got power to extend the
time for making an appeal, this will only be granted exceptionally”
Time limits are imposed for good reasons and cannot be
overridden without equally good reasons by the Tribunal.
Tribunal Judge Kevin Poole has given a useful comment on
the position under the new Rules in the case of TC 00624 [2010] UKFTT 342 (TC) David
C Pledger v HMRC in which he states:
“ The Tribunal does have a general obligation to
give effect to the overriding objective expressed in Rule 2 of the Rules to
deal with cases fairly and justly when it “exercises any power under these
Rules” or “interprets any rule or practice direction” (Rule 2(3) (a) and (b)).
These general obligations must be borne in mind when exercising the case
management powers under Rule 5:
Rule 5(3) …the Tribunal may by direction:
“(3) extend or shorten the
time for complying with any rule, practice direction or direction, unless such
extension or shortening would conflict with a provision of another enactment
setting down a time limit;…”
I propose to adopt Judge Poole’s approach that the Tribunal’s
discretion in permitting the present appeal to proceed “out of time” is to be
applied in line with its obligations under Rule 2 dealing with the case “fairly
and justly”.
Submissions
13. Mr Cannan
submitted that Article 203 imposes the liability to duty on Mr Griffiths as he
was responsible for the removal of the vehicles. Article 203 states:
“A custom debt on importation shall be incurred
through:
·
The unlawful removal from customs supervision of goods liable to
import duties
The debtors shall be:
·
The person who removed the goods from customs supervision
·
Any person who participated in such removal and who were aware or
should reasonably be aware that the goods were being removed from customs
supervision
Various letters were addressed to Mr Griffiths at 3-5
Clark Way. Mr Griffiths also operated through European from the same address to
which other letters had been addressed. Mr Gibbon had originally alleged that
Mr Griffiths had not received the letters of 7 August 2009 and 17 September 2009
and he was unaware that the C18s had been issued to him personally. European
had vacated 3-5 Clark Way before those letters had been sent. Mr Gibbon and Mr
Griffiths have accepted that that was untrue and had been caused by confusion
between them. Mr Griffiths contends that by December 2009 he was no longer
involved with business activities at 3-5 Clark Way and that was why Mr
Henderson had not been able to contact him. Mr Cannan submits that this is
demonstrably untrue. The evidence clearly establishes that Mr Griffiths,
through his company European, was in occupation of 3-5 Clark Way until June
2010.
14. The factors
which a Tribunal must take into account on an application to extend the time of
service of a Notice of Appeal have been considered in a number of Tribunal
cases. Mr Cannan submits that the provisions of rule 3.9 of the CPR should be
taken into account. Namely:
(a) The interests of the
administration of justice;
(b) Whether the application
for relief has been made promptly .
(c) Whether the failure to
comply was intentional.
(d) Whether there is a good
explanation for the failure.
(f) Whether the failure was
caused by the party or his legal representatives
(h) The effect which the
failure to comply had on each party; and
(j) The effect which the
granting of relief would have on each party
Mr Cannan submitted that it is only where the case for
granting relief is evenly balanced that the Tribunal should have any regard to
the merits. (See A2/2001/2845 [2002] EWCA Civ 645: Michael Patrick Sayers v
Clarke Walker (a firm).
15. Mr Cannan
submits that the relevant circumstances to be considered are as follows:
a. It
is not in the interest of the administration of justice to permit appeals after
long periods of delay, where the grounds of the application are demonstrably
untrue. The decision appealed against was made in September 2009 and relates to
vehicles entering the customs warehouse as far back as May 2006. the delay in
serving the Notice of Appeal amounts to some 8 months
b. Mr
Griffiths must have made a conscious decision not to appeal during this period.
He first contacted Omnis on or about 22 September 2009. It was not until
December 2009 that Omnis made contact with HMRC. Even then, there was a period
from 13 January 2010 to the end of May 2010 when no action was taken by Mr
Griffiths in relation to the demands. Throughout the period from 22 September
2009 to 15 June 2010 Mr Griffiths had instructed experienced consultants.
c. The
only explanation for the failure to appeal within the time limit is not simply
bad, it is untrue. In the circumstances, the basis upon which Mr Griffiths
makes this application amounts to an abuse of process.
d. There is a
public interest in the finality of VAT and customs duty liabilities. There will
be prejudice to HMRC if that public interest is diluted allowing appeals such
as this out of time.
e. The
present application is not evenly balanced and the merits of the underlying
appeal are not therefore relevant. In any event it is impossible to say whether
Mr Griffiths would make out any case on a hearing of the appeal.
There is no ‘reasonable excuse’ for Mr Griffiths failing
to appeal within the time limit. The provision to extend time for appeal is
exceptional in nature and Mr Griffiths has not established any case for the
exception to be made. Mr Cannan therefore submitted the application should be
refused.
16. Mr Gibbon in his
submission rehearsed the history of the matter, which I do not intend to
repeat. He reiterated that Mrs Pond had confirmed that the first C18s did not
relate to Mr Griffiths and as a result he had no standing to ask for a review.
The second C18s issued in September 2009 were addressed to Mr Griffiths in
person. The letter referred to the previous demands and indicated that they had
not been processed as HMRC had wished to be fair to Mr Griffiths. This suggests
that the earlier letters had been addressed to Mr Griffiths personally,
which conflicted markedly with the confirmation from Mrs Pond that he could
ignore them. Mr Griffiths had thought that the second demands were addressed
to the company and because of the breakdown in communications between himself
and Mr Henderson, Mr Griffiths had not received the correspondence from HMRC.
It was not until 27 May 2010 that Mr Griffiths realised that the C18s had been
issued against him personally and the appeal was made timeously thereafter by
15 June 2010.
17. The Tribunal is
not bound by the tests in the CPR 3.9. (See TC 00714 Former North Wilshire
District Council). The Tribunal should exercise its discretion applying the
overriding objectives contained in Rule 2 (2) of the Rules to deal with cases
fairly and justly. Given the background and history to this matter, it is not
wholly unreasonable for Mr Griffiths to consider that the September C18 demands
had not been issued to him personally and that there was a need for him to
appeal. There is no prejudice whatsoever to HMRC if the extension of time is
allowed. The issue is whether or not there were unauthorised withdrawals from
the warehouse and, if so, who was responsible for those removals. HMRC are
unsure when the unauthorised removals occurred. The appeal in relation to the
penalty provision is in time and that issue will be fought on the same facts as
the present appeal. If the Tribunal found that there was, in fact, no
liability on Mr Griffiths for the customs duty and VAT he could still be liable
for the amounts due under the C18 demands currently issued. The loss and injury
which Mr Griffiths would suffer if the extension of time is refused totals
£159,543 far outweighs any prejudice to HMRC and the application for the
extension should be granted.
The decision
18. I have
considered the law and the evidence and I grant permission for Mr Griffiths to
appeal out of time. Mr Griffiths received the first demand and dealt with it in
time. He saw Mr Henderson and as a result of Mr Gibbon’s intervention received
confirmation that the demands were not served on him personally. He was told,
as a result, that he had no authority to ask for a review. Mr Cannan makes no
reference to this in his submissions. Some 4 months later he received a letter
addressed to him purporting again to create person liability. He went to see Mr
Henderson, who appears to have been confused as to the rationale for the new
demands. Mr Henderson could not understand why the figures had changed and he
eventually wrote to HMRC in December asking for an explanation. The delay appears
to have arisien from the change in the partnership and all that that would
involve. Mr Henderson received a reply from HMRC a copy of which he understood
he had sent on to Mr Griffiths. Mr Griffiths said that he did not receive that
corresponxence. Furthermore, both of them agreed that it would have been
prudent to have pursued the matter. Mr Cannan has produced substantial evidence
that Mr Griffiths was attending at 3-5 Clark Way and that he must have been
receiving all the correspondence that was sent to that address. On the balance
of probabilities that would seem to be a prudent observation. I am not however
convinced that Mr Griffiths would necessarily have received the reply sent to
Mr Henderson by HMRC. On the two previous occasions, when the C18’s were
brought to his attention, he immediately went to see Mr Henderson. Had he
received HMRC’s letter from Mr Henderson it is likely that he would have
followed his previous response to the similar occasions and visited Mr
Henderson immediately. It would appear that Mr Griffiths quite reasonably
understood that the C18s were not served on him personally. He had been told
that fact by Mr Gibbon and in the bundle there is confirmation to that effect
from Mrs Pond. As a result, he had not been able to ask for a review. If he had
been able to do so then matters would have turned out quite differently. I
have had no satisfactory answer as to why the first demand was withdrawn. I
have, however, been told that the second demands were a continuation of the
first demands, which I have been told were not personal to Mr Griffiths. In the
light of Mrs Pond’s letter and the way in which Mr Henderson has dealt with the
matter I suggest that Mr Griffiths cannot be blamed for his inactivity. It may
still be the case that there is no personal liability, as indicated by Mrs
Pond. She must have considered the matter before coming to that conclusion.
There have undoubtedly been delays, but I do not think that Mr Griffiths has
acted unreasonably given his understanding of the facts..
19. I have concerns
with regard to the anomalies and contradictions in the case. I have been told
that the Company went into liquidation in October 2008. and as a result it lost its licence. The letter of 17 September
2009 indicated that in December 2008 Michelle Brierley and Graham Kirk ‘identified
a number of imported vehicles which were still in stock’. HMRC have been unable
to say when all the vehicles were removed from stock. The vehicles must have
been removed as the licence was withdrawn, namely on the liquidation, and in
those circumstances Mr Griffiths could not be personally liable as he no longer
had any interest in the Company, which was controlled by the liquidator. He
could only have removed vehicles if he had the written authority of the
liquidator to do so. He would also have needed to know whether the liquidator
had taken account of the liability to the customs duty. Without evidence as to
why HMRC have altered the liability now making it personal to Mr Griffiths and
evidence as to the time that the vehicles were removed, I consider it would be
neither just nor equitable to refuse Mr Griffiths’ application.
20. Mr Cannan has
produced details of the action against Mr Griffiths leading to his disqualification
as a director. This occurred in 2011, it cannot necessarily mean that Mr
Griffiths acted dishonestly in October 2008 or before that date without
evidence to substantiate his dishonesty.
21. As a result of
the above observations I have decided that although the application for relief
has not been handled promptly, I consider that Mr Griffiths reasonably believed
that the liability was not personal to him. His case has not been helped by the
delay of his representatives, but I consider that that occurred as a result of
the changes in Mr Henderson’s business. I do not consider that HMRC have been
prejudiced. The liability is joint and several and its remedy lies against both
parties. If the relief is not granted there is a real danger that Mr Griffiths
will be required to pay the demands in circumstances in which he may have no
liability. I therefore permit Mr Griffiths to appeal the case out of time. I reserve
any liability as to costs to be decided in the principal appeal.
22. 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: 29/09/2011
