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You are here: BAILII >> Databases >> United Kingdom VAT & Duties Tribunals Decisions >> United Kingdom VAT & Duties Tribunals (Excise) Decisions >> Keyes Transport Ltd v Revenue and Customs [2005] UKVAT(Excise) E00878 (18 May 2005) URL: http://www.bailii.org/uk/cases/UKVAT/Excise/2005/E00878.html Cite as: [2005] UKVAT(Excise) E878, [2005] UKVAT(Excise) E00878 |
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E00878
Excise Duty – Assessment – s.12 Finance Act 1994 – Fuel imported from European Community – Travellers' Release (Fuel and Lubricants) Order 1995 – Whether earlier assessment possible – Appeal allowed.
LONDON TRIBUNAL CENTRE
KEYES TRANSPORT LIMITED Appellant
- and –
THE COMMISSIONERS OF HM REVENUE & CUSTOMS Respondents
Tribunal: DR KAMEEL KHAN (Chairman)
MRS L M SALISBURY
Sitting in public in London on 18 and 19 November 2004
Mr Jolyon Maugham for the Appellant
Ms Caroline Neenan for the Respondents
This is an Appeal by Keyes Transport Limited ("the Appellant") against the H M Customs & Excise ("HMCE") confirmation of their decision under Section 12(1) Finance Act, 1994 ("FA 1994") that the Appellant is liable to excise duty of £107,431.00 in relation to fuel imported into the United Kingdom by Mr Peter Keyes (sole director of the Appellant and one of its drivers) and others, in one of their fleet of lorries. The importation of fuel took place on various dates between May 2002 and August 2003. An Officer's Assessment/Civil Penalty Excise Form, No. EX601 ("EX 601 Form") dated the 3 October was issued by Ms S L Saunders, who at that time, was an officer of the HMCE, Tilbury, Excise Oil Team.
Facts and Background
"I calculated the amount of duty payable on these two amounts, by multiplying the total of the Schedules (i.e. 9 May 2002-31 December 2002 totalling 98,809.54 litres purchased and 1 January 2003-31 August 2003 totalling 143,519 litres purchased) by 4582, the appropriate duty rate at the time, which totalled £111,034.99. I calculated an allowance for the journey made from Dover to Great Totham, which Mr Keyes said was 103 miles at 7.5 miles to the gallon. The total gallons used per trip, was 13.73, which amounts to 62.42 litres. I multiplied this by the number of trips made (126). The total being 7,664.92 litres used. I multiplied this by the UK duty rate, which totalled £3,603.71. I then deducted the allowance from the total amount." (words in brackets added).
The Law
The assessment to excise duty and penalties is covered by Section 12 FA 1994 which
provides, so far as is relevant:
"(1) Subject to subsection (4) below, where it appears to the Commissioners –
(a) that any person is a person from whom any amount has become due in respect of any duty of excise; and
(b) that there has been a default falling within subsection (2) below,
the Commissioners may assess the amount of duty due from that person to the best of their judgement and notify that amount to that person or his representative.
[(1A) Subject to subsection (4) below, where it appears to the Commissioners –
(a) that any person is a person from whom any amount has become due in respect of any duty of excise; and
(b) at the amount due can be ascertained by the Commissioners,
the Commissioners may assess the amount of duty due from that person and notify that amount to that person or his representative.]
(4) An assessment of the amount of any duty of excise due from any person shall not be made under this section at any time after whichever is the earlier of the following times, that is to say –
(a) subject to subsection (5) below, the end of the period of [three years] beginning with the time when his liability to the duty arose; and
(b) the end of the period of one year beginning with the day on which evidence of facts, sufficient in the opinion of the Commissioners to justify the making of the assessment, comes to their knowledge;
but this subsection shall be without prejudice, where further evidence comes to the knowledge of the Commissioners at any time after the making of an assessment under this section, to the making of a further assessment within the period applicable by virtue of this subsection in relation to that further assessment.
(6) The reference in subsection (4) above to the time when a person's
Liability to a duty of excise arose are references -
(a) in the case of a duty of excise on goods, to the excise duty point; and
(b) in any other case, to the time when the duty was charged.
"The excise duty point in relation to any Community Excise Goods shall be the time when the goods are charged with duty at importation"
The expression "Community Excise Goods" is defined by Regulation 2(1) as:
"Excise goods imported into the United Kingdom from another Member State and which have been produced or are in free circulation in the European Community at that importation…"
"2 Interpretation
In this Order –
"commercial vehicle" means any road vehicle that –
(a) by its type of construction and equipment, is designed for and capable of transporting goods or more than 9 persons, including the driver; or
(b) is being used or is intended for use to carry passengers for reward; or
(c) is being used or is intended for use for a purpose other than transport;
"standard tanks" has the meaning given in Article 8a of Council Directive 92/81/EEC.
3 Relief for fuel and lubricants contained in a commercial vehicle
(1) Subject to the provisions of this Order, a person who has travelled from another member State shall on entering the United Kingdom be relieved from payment of excise duty on the fuel and lubricants contained in a commercial vehicle that he has with him.
(2) The reliefs afforded by this Order apply only to fuel that –
(a) is contained in the vehicle's standard tanks; and
(b) Is being used or is intended for use by that vehicle.
(3) The reliefs afforded by this Order apply only to fuel on which –
(a) excise duty has been paid in the member State in which the fuel was acquired at a rate that is appropriate to the use to which that fuel is being or is intended to be put; and
(b) the excise duty paid on that fuel has not been remitted, repaid or drawn back."
4.1 "1. Mineral oil released for consumption in a Member State contained in the standard tanks of commercial motor vehicles and intended to be used as fuel by those same vehicles as well as in special containers and intended to be used for the operation during the course of transport, of the systems equipping those containers shall not be subject to excise duty in any other Member State. "
and
4.2 2. For the purposes of this Article –
"Standard tanks" shall mean –
The tanks permanently fixed by the manufacturer to all motor vehicles of the same type as the vehicle in question and whose permanent fitting enables fuel to be used directly, both for the purposes of the propulsion and, where appropriate, for the operation during transport, of the refrigeration systems and other systems…".
4.3 In the case of Whitehead Machinery v Customs and Excise Commissioners (2003) Decision No. E473, HMCE have given an opinion on the definition of a standard tank which stated (quoting a letter dated 25 July 2003 from Tracey Miller, Oils Tax Practice, Commissioners' Environmental Taxes Regimes Division):
"Under this definition, a standard tank can be considered to be restricted to one fitted solely by the manufacturer. However, in the case of a secondhand vehicle the purchaser shall not necessarily know if the tank was fitted at the time of manufacture… The Commissioners agreed that tanks fitted by the manufacturer, at the time of manufacture, are considered standard tanks. This extends to systems fitted as "operational extras" not necessarily by the manufacturer, but only where it can be demonstrated that the manufacturer would supply the type of tank in question. Replacement or upgraded tanks may also be considered as standard but only when replaced by reasons such as damage or routine maintenance and the replacement tanks are the same specification as the original."
The Parties' Contentions
Appellant's Arguments
The Appellant contends that the assessment made on 7 October 2003 is a single global assessment which is void for having been out of time and therefore not within the terms of Section 12(1) FA 1994. They also contend that from July 2002 the Commissioners had sufficient information to justify the making of an assessment. Further, they say that the Commissioners misdirected themselves in law in their approach to s.12 FA 1994 and the Traveller's Order.
The Respondents' Arguments
The Respondents argument is that until the fuel invoices were provided on 16 September 2003 by the Appellant, there was insufficient information to raise the various assessments in question. The assessments raised on 7 October 2003 were therefore within the one year period for raising an assessment under Section 12 FA 1994. They explained that the assessments can be divided into two periods; the first period from October 2002 to October 2003 is definitely within the time as contemplated by s.12 FA 1994; the second from May 2002 to September 2002 where the assessments could not have been made without invoices provided on 16 September 2003, although HMCE were aware of trips made by the Appellant on 22 July, 17 August and 31 August 2002.
They further contend that while one global form, EX 601 Form, was completed and used to notify the Appellant, there were approximately 126 different assessments contained in that notification. They say that this is confirmed by the letter from HMCE to the Appellant dated 7 October 2003 which provides Schedules identifying the total number of litres of diesel purchased and the calculation of the total duty due on that diesel. The assessments were made for practical purposes on the EX 601 Form rather than raising 126 different assessments on different forms. They say that the Form was not however one global assessment.
Decision
The main issue in this appeal is whether the assessment issued on 7 October 2003 is one global assessment or a series of individual assessments and in either case whether the assessment is or assessments are out of time. It is the decision of this Tribunal that the EX 601 Form contained one global assessment to excise duty and this assessment is time barred since sufficient evidence had come into possession of the Commissioners to justify the making of an assessment on or before 22 July 2002 as required to be made under s.12 Finance Act 1994.
We outline below the reasons for this decision.
"I was asked whether we were selling the diesel. I replied why would he (Peter Keyes) sell it when he had eight lorries to put it in?". When asked about the date of this statement, she replied
"In early summer 2002 around June or July".
While this may be a remark made in an informal chat, it did fasten HMCE with knowledge of the decanting of fuel by the Appellant. The HMCE officer could and should have followed up on this information. It is very likely that this conversation took place at or before 22 July 2002.
HMCE knew there was a significant cost saving if diesel was purchased in Belgium and brought to the UK. They knew there were fuel cruises, cheap channel crossings to Calais and Zebrugge, offered by fuel operators such as P & O Stena Line Service and Eurotunnel which, while not against the law, provided hauliers with an opportunity to purchase fuel in Belgium and France for importation into the UK. These "fuel cruises" were advertised in the trade press, the Motor Transport, which was available publicly. It was also reported in the press that various hauliers had fitted larger fuel tanks to carry larger quantities of petrol. The standard tank capacity was increased from approximately 800-1,300 litres to between 1,500 to 2,000 litres or more. It was known that the vehicles making the diesel run did not carry a load nor a trailer compartment at the back of the vehicle. From the photograph presented to the Tribunal, it was clear to the naked eye that the tanks on the Seddon Atkinson was significantly larger than the standard manufactured fitted tanks and the vehicle was carrying no load when stopped.
"The end of the period of one year beginning with the day on which evidence of facts, sufficient in the opinion of the Commissioners to justify the making of the assessment, comes to their knowledge."
This means that HMCE must exercise a subjective judgment, an opinion as to what evidence justifies making of an assessment. The opinion must be arrived at from the facts, the evidence and the date when the "last piece of the puzzle fell into place" (Aldous L. J. Pegasus Birds v HMCE (2000) STC 91 at 97b-c)).
7.1 It is common ground that it was the Appellant's intention to use the diesel otherwise than in the vehicle and the Commissioners had evidence of such from May 2002 or July 2002.
7.2 It is also common ground that the tank attached to the vehicle, Seddon Atkinson, was not a standard tank i.e. a tank fitted by the manufacturer.
7.3 That the fuel imported must be of a quantity to enable the vehicle to travel from its point of departure to its destination.
7.4 The Tribunal does not agree with point 3 but would consider point 1 and 2 in its reasoning. As regards point 3, there is nothing in the legislation to indicate that the quantity of fuel purchase is restricted in this way.
"Although the Commissioners knew of Mr Keyes's activities since May 2002, there was nothing to confirm that he was committing an offence. It was only when he confirmed his actions to Customs officers during their visits in September 2004, that an offence could be established."
In the same letter, the Reviewing Officer states:
"A tank that contains in excess of 1,500 litres is unlikely to be considered as standard."
The officer stated that "there was nothing to confirm that he was committing an offence." However, the Freight Rummage Details View of 22 July 2003 confirmed that the Seddon Atkinson had a tank capacity of 2,015 litres or more, which is clearly a non-standard tank. They also contend that it was not "perverse or wholly unreasonable" not to take further action (i.e. issue an assessment) earlier than the date it was done. (Pegasus Birds v HMCE 2000 SCT 91 at 98d-e).
"is to protect the taxpayer from a tardy assessment, not to penalise the Commissioners for failing to spot some facts which, for example, may have become available to them in a document obtained during a raid".
There was a tardy assessment in this case. We cannot substitute our view for that of the HMCE but can decide that an assessment is perverse. In this case, HMCE had sufficient information to make an assessment earlier than September 2004 and this information ie: the size of the tank and the decanting of fuel, should have been taken into account in making the assessment and we therefore conclude that the assessment is perverse.
The next issue concerns whether there was a global assessment or series of individual assessments. The law in this area is clear. Whether the Commissioners have made a global assessment or a series of individual assessments is a question of fact, which is resolved by looking at the relevant documentation (C&E Commissioners v. Le Rififi [1995] STC 103 at 107). A global assessment is a single assessment for several excise points or, in the case of value added tax, for more than one accounting period. The Commissioners can choose whether to make a global assessment or a series of separate assessments (House (t/a P&J Autos) v. C&E Commissioners [1994] STC 211 at 233). In assessing the facts to decide if a global assessment was made one has to be objective and the state of mind of the person making the assessment is not relevant. It is important to look at what was done by the assessing officer, not what he intended to do (Courts v. Commissioners of Customs & Excise [2005] STC 227, per Jonathan Parker L.J. at para. 99). In our case, we shall need to look at the EX 601 Form, the Schedules attaching to that form and the Guidance Letter provided by HMCE on 25 January 2005 ("Guidance Letter") explaining the completion of the form. The Tribunal's role is to look at the facts and not to assist the Commissioners with any deficiencies in their work.
The Notice of Assessment EX 601 Form is called an "Officer's Assessment/Civil Penalty Excise" Form". Under the sub-heading "Payment of Any Outstanding Amount is Due Immediately" there are various columns for information. There are eight lines crossing the vertical columns. In the first column, there is the heading "Period/Default Dates" which gives the "start" and "end" date for the assessment as 01/05/02 and 29/08/03 respectively. The second column is headed "Assessment/Penalty" and this has a sub-heading called "Duty/Penalty Due" which gives the figure of £107,431. The other columns give code references such as "asset code", "penalty code" and "account code". In the "Net Amount due to/from" Customs and Excise, given at the end of the form, the figure of £107,431 is restated.
There is one reference number on the form, called "Unique Reference Number", which is 466121068. The form is accompanied by a letter dated 7 October 2003 to which Schedules are attached. The Schedules identified the total litres of diesel purchased between 9 May 2002 and 31 December 2002 and 1 January 2003 and 31 August 2003 and another Schedule sets out the calculation of the total duty due on the total number of litres of diesel purchased. There are no columns for the individual duty liability on each excise point and there are 126 exercise points. The reader does not know in looking at the form and schedules what the individual duty is at each excise point.
The Guidance Letter provided by HMCE explains how the form is completed. It states that the horizontal lines, numbered 1-8 are for "easier identification of liabilities". The heading "Period Default Dates" is where "you must record here the dates on which the assessments or liabilities to a penalty started or finished. This may result in single line assessments or penalties covering periods ranging from one day to, possibly, several years …… the lines of liability should be recorded in chronological order, with the oldest liability starting on line 1".
It is clear that the form can be used for several assessments, if the appropriate horizontal lines are completed, with the start/end date, the duty/penalty due and the appropriate codes. These are called the "Lines of Liability".
The Explanatory Notes to the EX 601 Form, which are at the back of the form, does use the singular and refers to "the assessment" and HMCE "hereby assess". The Guidance Letter does contemplate the form being used for more than one assessment and gives individual lines for completion if such assessment are to be made. The reference to "the assessment is therefore confusing to the reader.
Counsel for the Respondents argued, at a second short hearing to hear arguments on the Guidance Letter, that whilst the EX 601 Form in the "Period/Default Dates" column had the dates from 1 May 2002 to 29 August 2003, it was not a global assessment since the form "in isolation is not the assessment but forms part of the notification assessment package. In this case the assessment comprises the EX 601 Form, the letter of notification and the accompanying Schedules". I cannot accept this argument as presented. The Guidance Letter states that "the accompanying documents give all the information the trader needs to be made aware of the details of the debt". The form itself must make the assessment and each line must state an individual assessment, even if this involves using several forms to make the required one hundred and twenty six assessments.
We can infer from the layout of the form that if one line is completed there is one assessment and if several lines are completed there are several assessments. Even if we accept the argument of the Respondent, there is only one global figure for tax due and if there were a series of assessment one would expect to see the individual tax levied at each excise duty point. In the Schedules attached to the form the date fuel is purchased is given in one column and in the next column is given the invoice amount for the fuel purchased e.g. 19/05/02, £1,960.00 but there is no figure given for the duty assessed at that excise duty point. An individual assessment would have to show the excise duty assessed and not aggregate on the individual assessments into one global figure, as was done in this case.
The Schedules attaching to the form are meant to give information to the taxpayer and should be read with the assessment form which should be completed to show the assessment or assessments made. (See International Language Centres Limited v. Customs & Excise [1993] STC. 394 at 396-398).
In conclusion, we believe that the assessment is global since the completion of the form and the way the information was presented would support the making of a global assessment.
The Schedules attached to the form were not meant to be individual assessments but rather information schedules which explained the assessment. There was one reference number for the assessment and one global figure for tax due and the Guidance Letter suggests that the formation of the EX 601 Form allows for individual assessments if the individual lines and amount of tax due is completed. Based on the facts objectively assessed, one can only conclude that the assessment was a global assessment.
It is our conclusion that the assessment, which is to say the entire assessment, is out of time and the appeal should be allowed.
Accordingly the decision of the Tribunal is that the Appeal should be allowed.
LON/04/8011