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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 >> Spencer v Customs and Excise [2004] UKVAT(Excise) E00777 (16 August 2004) URL: http://www.bailii.org/uk/cases/UKVAT/Excise/2004/E00777.html Cite as: [2004] UKVAT(Excise) E00777, [2004] UKVAT(Excise) E777

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E00777

RESTORATION — worked in Paris installing electronic tills for Marks & Spencer's — on returning home decided to buy gifts for workforce — purchased 30 kg hand rolling tobacco; 3,456 cigarettes; 69.76 litres of beer; 46.75 litres of wine and 12 litres of cider — refusal to restore the excise goods and vehicle unreasonable — appeal allowed

MANCHESTER TRIBUNAL CENTRE

MICHAEL SPENCER Appellant

- and -

THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents

Tribunal: Mr D S Porter (Chairman)

Mrs R Dean (Member)

Sitting in public in Manchester on 23 June 2004

Mr R Moffat, of counsel, for the Appellant

Mr J Gray, of counsel, instructed by the Solicitor's Office of HM Customs and Excise, for the Respondents

© CROWN COPYRIGHT 2004


 


DECISION
1. This is an appeal by Mr Michael Spencer (the Appellant) against a decision on review of the Commissioners of Customs and Excise by letter of 5^th March 2002, refusing to restore certain excise goods consisting of 30kg hand rolling tobacco; 3,456 cigarettes; 69.76 litres of beer; 46.75 litres of wine and 12 litres of cider and a Volvo S70 motor car reg. S 5 LFC seized on 25^th September 2001. The Appellant says that the excise goods were purchased for his employees as a Christmas bonus by way of thanks for the work done in installing electronic tills in Marks & Spencers' Paris store. The Respondents allege that the excise goods were purchased for commercial purposes.

The parties

2. Mr Moffat of counsel appeared for the Appellant and produced a bundle of documents and called the Appellant as a witness. Mr Gray of counsel appeared for the Respondents and produced a bundle of documents for the Tribunal.

The Facts

3. Mr Moffat called the Appellant who gave evidence on oath. The Appellant owns a computer networking company and was returning from Paris where he had been installing electronic tills for Marks & Spencer's in their store in Paris. He has a work force of six engineers and had, as a result of the work for Marks & Spencer's had a good year. He has an income of £74,000 a year.
4. On the trip over he had asked at the desk what he could buy by way of excise goods. He was referred to the Hoverspeed's leaflet (see page 16 of the bundle) this indicated that he could buy as much as he liked for his personal use, which included personal gifts. The leaflet also has details of the UK Customs guidelines, and warns that a passenger might be asked to satisfy Customs that the excise goods were for his own use if he brought in more than the guidelines.
5. He had wanted to give a bonus of £300 to each employee by way of thanks for their help with the project. He decided that if he bought excise goods he would get better value for his money. He purchased the excise goods in three different shops in Belgium and paid £244.80 per box. 18 boxes of cigarettes were for his wife and 2 office staff. He believed that if he gave his employees cash they would have to pay tax on it. He had in any event paid for the goods out of his personal money.
6. When he returned in his car he showed the Customs Officer what he purchased, he did he attempt to hide the goods. He repeated the same facts at the tribunal and confirmed, as he had at the interview, that he did not smoke.
7. We find as fact the matters set out in paragraphs 3 to 6 above.

Summing up

8. Mr Gray submitted that if the excise goods were personal gifts then they should be restored. He considered that they were a commercial gift as they had been provided as a bonus for his employees. If they had been bought in the United Kingdom the gift would have been taxed as a benefit in kind in the hands of the employee. Similarly if cash had been given of the same value a similar tax liability would have arisen. A payment in kind was not a gift to a friend but a bonus for an employee. His employees had worked for 16 hours a day whilst in Paris and he wanted to reward them.
9. Further, the quantity of the goods was such that even if they were given to the employees they would have been twice the guideline limits. The issue of the seizure could not now be contested as a result of the passage of time and the goods stood forfeit.
10. Proportionality could not apply as the values of the car (£10000 to £12000 and the personal number plate at £3000) were similar to the duty lost. In all the circumstances the respondents had acted reasonably in not restoring the excise goods and the car and the appeal should be dismissed.
11. Mr Moffatt submitted that the starting point was the leaflet on Hoverspeed. Having read the letter the Appellant decided, on the spur of the moment, to make gifts to his employees as friends. His is a small company with only six employees and the wording on the leaflet was quite clear. He had already paid his employees both their wages and overtime. There had been no direct benefit to the Appellant as he had spent the same amount of money on his employees, as he would have done if he had given the cash in the United Kingdom.
12. The Appellant had bought the goods with his own money and had at all times given an honest account of what he had done. This was the first time he had been away. Further as this was a purchase for his own use proportionality applied. The car was worth £15,000 and the goods purchased £3500.

Decision

13. My colleague and I have considered the facts and have decided that the Respondents have not acted reasonably in refusing to restore both the goods and the vehicle. The Respondents are of the opinion that the goods were not for personal use as they represented a payment for work done and as a result the Appellant had received the equivalent of money's worth (namely the work done by the employees) for the goods. That cannot be right. The employees had been paid and received overtime for the work done. They had not expected anything more, nor were they entitled to anything more. As a result, the gift of the goods was a gratuity and therefore a gift, which is included in the definition of "Own Use" in The Excise Duties (Personal Reliefs) Order 1992 as amended. We were impressed by the Appellants honesty and have no doubt that he intended to buy the goods as a gift for his employees. He had properly relied on the leaflet from Hoverspeed.
14. THIS TRIBUNAL HEREBY DIRECTS under section 16(4)(b) of the Finance Act 1994
15. that the Commissioners do conduct a further review of the decision to refuse restoration of the goods and the vehicle and serve the same on both the Appellant and the Tribunal within 30days of the release of this direction
16. that the Review be conducted by an officer not previously involved, shall be on the basis of the finding by the Tribunal that the goods were held for the Appellant's own use and shall consider whether restoration should be made in the form of compensation and if so shall specify the amount of compensation and the basis of the calculation.
17. that the Review officer shall take account of any further material or representations made by the Appellant within 14 days to H M Customs and Excise Review Team Clarkson House Rhodaus Town Canterbury Kent CT1 2RR
18. that the Appeal is determined on the above basis and the Appellant is entitled to apply within 60 days of the release of the direction for costs if the same cannot be agreed between the parties.
19. that if dissatisfied with the Review the Appellant will have a further right of appeal to this Tribunal

MR D S PORTER

CHAIRMAN

Release Date: 16 August 2004

MAN/02/8067