Omolade Netufo v The Commissioners for HMRC

With the consent of the parties, the form of the hearing was V (video), using the Tribunal’s Video Hearing System. Both the advocates, the Appellant and the two HMRC officers attended by remote video link, though Mr Avient experienced some connection problems, as a result of which he attended by telephone link for part of the time, confirming that this was satisfactory from his point of view. A face to face hearing was not held because at the time the appeal was listed for hearing it was not possible to conduct an “in person” hearing safely due to the public health emergency and it was not possible to re-arrange the hearing as “face to face” without a potentially lengthy postponement.

The documents to which we were referred were in electronic form and comprised a main hearing bundle of 1,199 pages and an authorities bundle of 234 pages. In addition, a further eight pages comprising copies of bills of lading, were admitted late as further evidence.

Prior notice of the hearing had been published on the gov.uk website, with information about how representatives of the media or members of the public could apply to join the hearing remotely in order to observe the proceedings. As such, the hearing was held in public.

These appeals are against a refusal by HMRC, confirmed upon review, to restore to the Appellant large quantities of beer seized from her in two separate seizures, one in September 2018 and one in March 2019.

The September seizure involved over 8,000 litres of beer and 261 litres of Alomo Bitters (40% ABV). There has been no claim for restoration of the bitters, which we do not therefore consider any further.

In relation to the beer seized, there is some discrepancy between the “Seizure Information Notice” issued by HMRC on 20 September 2018, the tally sheets recording the goods uplifted on 21 September and HMRC’s letter dated 25 August 2021 refusing restoration, as follows:

It would appear that the discrepancy between the tally sheets and HMRC’s letter is attributable to the simple accidental omission from the letter of one line in the tally sheets (19 cases of Star beer, totalling 136.8 litres). What is less clear however is the explanation for the discrepancy between the seizure information notice and the tally sheets in relation to the Guinness. Even if one simply adds the volumes of Guinness together in both cases, the volume of Guinness shown on the seizure information sheet is still 93.6 litres more than is reflected in the tally sheets. There is mention on the visit report that 3 cases of Guinness 600 ml (12 per case) were broken whilst loading, but that would only account for 21.6 litres of the difference. The remaining 72 litres (which would be equivalent to 10 cases of the Guinness 600 ml bottles) remains unexplained. In any event, around 1,100 cases of beer were seized.

The grounds for the seizure of the beer were that the duty due on its import had been underpaid because it had been declared as having been produced in a micro brewery, whereas in fact it had been produced by large scale commercial breweries. This fact is not disputed by the Appellant, however she claims to have had no knowledge of the error in the import declaration, which (like numerous previous declarations containing similar errors) was made on her behalf by her freight forwarder, Canmi Limited, trading as Canmi Freight (“Canmi”).

By letter dated 1 April 2019, the Appellant’s solicitors requested payment of an amount equal to the value of the goods seized (said to be £25,793) in lieu of their restoration (having been informed that the goods themselves had been destroyed).

The March 2019 seizure involved 4,375.625 litres of beer/lager and 16.05 litres of bitters (a mixture of Orijin, Agbara and Alomo with alcohol content ranging from 30% to 40% ABV). There has been no claim for restoration of the bitters, which we do not therefore consider any further. The beer/lager was made up as follows:

The grounds for the seizure of the beer were that it was in the possession of the Appellant for the purposes of carrying on a controlled activity, namely selling controlled liquor wholesale, for which the Appellant did not hold the requisite approval from HMRC.

The Appellant did not contest the validity of either seizure by requiring HMRC to commence condemnation proceedings.

By letter dated 3 April 2019, HMRC refused the Appellant’s request dated 26 March 2019 for restoration of the goods seized in March 2019. The Appellant’s solicitors requested a review of this decision by letter dated 30 April 2019, and by letter dated 13 June 2019, officer David Noble of HMRC confirmed the refusal. This is one of the two decisions under appeal in these proceedings.

There was some confusion about an appeal against HMRC’s refusal to restore the goods seized in September 2018. The Appellant considered that she had submitted a valid appeal, which ought to be dealt with, alongside her appeal in relation to the goods seized in March 2019, at the hearing of her appeal. This was only finally resolved at a hearing before the Tribunal on 4 August 2021, following which the Tribunal issued a decision dated 31 August 2021 (“the First FTT Decision”). The First FTT Decision noted that the Tribunal had no jurisdiction to consider the appeal against HMRC’s refusal to restore the goods which were the subject of the September 2018 seizure, as no statutory review of that refusal had taken place (a right of appeal to the Tribunal only arising once such a review had been carried out).

Following the First FTT Decision, HMRC issued a letter dated 25 August 2021, in which they rejected the Appellant’s request for restoration in relation to the September 2018 seizure, and formally notified her of the right to obtain a review of that decision. By letter dated 22 September 2021 from her solicitors, the Appellant requested such a review, and by letter dated 5 November 2021, officer Linda Gordon of HMRC confirmed, following her statutory review, HMRC’s refusal to restore the goods (or pay compensation for their destruction). This is the second of the two decisions under appeal in these proceedings (though of course it relates to the first in time of the two seizures).

It is also important to record that in the First FTT Decision, the Tribunal addressed as a preliminary issue an argument raised by Mr Avient on behalf of the Appellant in relation to the March 2019 seizure. His argument, as summarised by the Tribunal, was that “whilst the Appellant could not now challenge the legality of the seizure, the Tribunal could consider the facts relating to whether or not the Appellant was or was not wholesaling alcohol in determining whether HMRC’s decision was reasonable”.

This argument was addressed by the Tribunal at [59] to [92] under the heading “Can the Tribunal reconsider questions of fact surrounding the seizure/forfeiture?” In this section of the First FTT Decision, the Tribunal rejected the argument made by Mr Avient.

The Tribunal said this, at [88]:

However, it also went on to say this, at [91] to [92]:

The First FTT Decision contained certain findings of fact by the Tribunal, as follows:

Whilst it appears that the hearing bundle before us was largely the same as the documents before the Tribunal for the purposes of the First FTT Decision, it was not necessary for the Tribunal on that occasion to examine the material before it to the level of detail required for this decision; on its face, the First FTT Decision was limited to the “preliminary issues” which were considered by it.

We therefore make the following additional findings of fact.

The Appellant started her retail grocery business in January 2003 under the trading name “Yokees Foods”. She began to import consignments of beer from Nigeria in October 2016 after obtaining a retail off licence in March 2016.

From 28 October 2016 up to 10 May 2017, HMRC records (the accuracy of which we accept) show five import entries of beer where the consignee was declared as “Omolade Netufo Foods Limited”, on 28 October and 19 December 2016, and on 1 March, 11 April and 10 May 2017. No company of that name existed (the Appellant only incorporated a company called “Netufo Drinks Limited” on 19 April 2017, through which her application for registration under the Alcohol Wholesaler Registration Scheme was made on 4 May 2017). In each case, the shipping agent making the declaration was Eagle Cargo Services Limited (“Eagle”). The code 473 was used on each declaration, appropriate for beer brewed in a large commercial brewery. The descriptions of goods given in these five declarations referred to various types of bottled beer. In passing, we observe that the quoted sale prices appear rather incredible, given that the imports were all of a similar product: the declared total invoice prices and weights of the five consignments were £685.28/7.805 tonnes (£87.80 per tonne), £1,215.23/9.9 tonnes (£122.75 per tonne), £459.25/4.98 tonnes (£92.21 per tonne), £301.84/21.22 tonnes (£14.22 per tonne) and £265.86/19.55 tonnes (£13.60 per tonne).

After the Appellant’s application for registration under the Alcohol Wholesaler Registration Scheme was refused by HMRC on 14 June 2017 following her abandonment of it, she changed shipping agent, from Eagle to Canmi. She gave evidence that she had made the change not because Canmi had offered her a lower overall cost, but because she had been dissatisfied with the service provided to her by Eagle when the individual she had been dealing with had fallen ill and his role had been taken over by his son. We do not feel there is enough evidence before us to decide how the change of shipping agent came about and we do not consider it significant to our decision, therefore we do not take any reason for the change into account in our decision.

All subsequent import entries were declared in the Appellant’s name as consignee. Her next consignment was entered on 2 August 2017, and for that consignment and the following 13 consignments leading up to the seizure in September 2018, a “tax type” code of 443 was inserted by Canmi on the import declaration, denoting “imported beer, production of no more than 5,000 hectolitres per year”; this is the method of providing what is generally called “micro brewery” relief for imported beers produced on a very small scale. The relief is effectively 50% of the duty that would otherwise be charged. Consignments were declared for entry on 2 August, 6 September, 19 October, 21 November and 29 November 2017 and 13 February, 10 March, 9 April, 8 May, 29 May, 10 July, 1 August, 20 August and 10 September 2018.

Canmi made import declarations on behalf of the Appellant, spread over the 14 consignments, in respect of approximately 15,353 cases of beer (each case generally comprising either 12 bottles of 600ml or 24 bottles of 330ml).

We note that the invoices in our bundle from Canmi for these 14 consignments (which included freight costs, various other charges relating to the incidental costs of importation but also the VAT and duty charges on the import) were all for a total of around £8,000, of which just over half was accounted for by the duty; she cannot have failed to notice the change from her previous two invoices from Eagle (for her imports in April and May 2017), where the duty alone amounted to over £15,000 and over £10,000 respectively. As the invoices were itemised, she could easily see that the reduction was due to the drop in duty, which should at the very least have put her on enquiry as to the reason for the reduction.

A further consignment was declared for entry by Canmi on 8 October 2018 (shortly after the September seizure referred to below), this time using the correct code 473.

The Appellant’s evidence (which we accept) was that her usual order was around 1,000 cases of beer. There were in our bundle 11 commercial invoices for her purchases from Answer Nigeria Limited (her supplier in Nigeria) up to October 2018, which bear out this claim as the stated number of cases on each invoice was between 950 and 1,050. In addition, the eight copy bills of lading supplied by the Appellant all referred to quantities of between 964 and 1,050 cases. It appears that at one stage HMRC held invoices in respect of all 14 of the imports referred to above, but for whatever reason the other three did not appear in our bundle.

Elsewhere in our bundle was a further invoice for a consignment declared for entry on 6 February 2019, again for 974 cases of Guinness, Star and Trophy beer/lager, comprising 400 cases of large bottles of Guinness, 300 cases of small bottles of Guinness, 200 cases of Trophy and 74 cases of Star. The goods in question arrived on 11 February 2019 and were cleared for entry on 18 February 2019 at 10.30 am. The goods declared in this entry clearly made up the bulk of the goods subsequently seized from the Appellant’s premises in March 2019.

It is not possible to match any of the other 11 supplier invoices in our bundle definitively to specific import entries, as they were not dated. However, the “invoice number” in each case appeared to give an indication of chronology (the number used on the first document supplied was “ANS/19/09/2017”, which tends to suggest the order date, taking account of shipping time from Lagos, for the consignment entered on 19 October 2017; all the other 10 invoices appeared to predate an import entry by approximately one month). The invoice values gave no help in linking them to any particular import entry, as the invoice values were in the range 3.67 million Nigerian Niras (“NGN”) to over 4.5 million NGN and the import entry values on all the Appellant’s declarations up to 8 October 2018 ranged from 104,030 NGN to 475,000 NGN. It can readily be seen that the invoice values were approximately ten or more times the amounts declared as the commercial value on import. We consider the 19 October 2017 entry, for example, where the declared invoice value was 393,250 NGN, converted to £806.43 (an exchange rate of 487.64 NGN/£). This would work out to under 85p per case of beer. Applying the same exchange rate, we consider the invoice value of invoice ANS/19/09/2017 (3,670,000 NGN) gives a much more realistic value of £7,526 (or £7.92 per case). Even if we are wrong in considering this invoice to relate to this import declaration, it is clear that it is but a small fraction of the true value disclosed by any of the invoices in the bundle before us (and given the Appellant’s statement that her typical order was around 1,000 cases of beer in order to make up a container, we infer that the values of the “missing” three invoices would not have been significantly different from the 11 in our bundle).

In short, it is clear that the import declarations systematically understated, by very large amounts, the true commercial value of the beer actually imported by the Appellant. We note also that the significant fluctuations in the declared net mass of the goods imported is inconsistent with both the available evidence (in terms of both the 11 invoices and the 8 bills of lading before us) and the Appellant’s statement that her typical order was around 1,000 cases of beer. We therefore conclude that the content of the import declarations is unreliable, except to show that loads of beer were indeed declared for entry on the stated dates, roughly corresponding to the arrival of those loads at the UK port of entry (typically Tilbury). We emphasise that the duty with which this appeal is chiefly concerned is payable by reference to volume in litres, not commercial value, accordingly the inaccuracies in the commercial value declared are not significant, at least with regard to the underpaid duty.

All the beer imported by the Appellant from the import entry on 2 August 2017 onwards was declared as either Guinness (in big or small bottles, often referred to as “Big Stout” and “Small Stout”), Trophy or Star. The available invoices show the same.

HMRC appear to have formed suspicions about the accuracy of the import declarations being made on behalf of the Appellant, as a result of which they visited her shop premises at Amhurst Road London N15 on 19 September 2018. They had clearly by that time already formed the view that there had been under-declarations of duty on the imports of beer she had made since August 2017.

The note of the 19 September visit in our bundle was very sketchy, it was unsigned and it did not clearly specify who was present on behalf of HMRC, referring only to “Officer Parr” (who we infer to be the officer Matt Parr referred to in a note of a further visit the following day) and “AE”. It was not signed or dated, nor was there any indication of when it was prepared or by whom, or whether it was based on manuscript notes which were not included in our bundle. Nonetheless, its content is not particularly contentious and we accept it at face value.

“AE” was, we infer, André Esponda (we infer this because officer Esponda took the lead in the actual seizure and subsequent correspondence). He asked the Appellant how she gave instructions to Canmi, and she replied that she ordered the beer from her suppliers in Nigeria, who then instructed Canmi. She was asked whether she had any storage apart from the shop, and she identified a lock-up “out the back”. She said she had left the key at home, so she locked up the shop (leaving the officers outside) while she went to get it. On her return, she opened the lock-up and showed its contents to the officers, who estimated there were approximately 1200-1500 cases of beer there (in fact, as can be seen from the table at [6] above, there were around 1,100 cases). It was agreed that “AE” would return the following day (after checking the status of the AWRS application the Appellant had referred to) and bring the import documents with him to discuss. The Appellant apparently volunteered that she “sells alcohol to people who have private parties”.

On the following day, 20 September 2018, it appears that officers Esponda and Parr returned as promised. Included in our bundle was a note of a visit taking place on that day, suffering from the same inadequacies as the note referred to above. On the basis of that note, however, we find as follows.

The Appellant once again informed the officers that she ordered the beer but Canmi arranged the duty declaration; she simply paid Canmi whatever they asked. She stated that she had over 1,000 cases of beer in her store, and she produced a notebook (referred to in the note as an “invoice book”) which seemed to be the only record of any of her sales, and included reference to a sale of 405 cases to someone simply called “Michael” (in fact, it appears the name may be “Machel” – discussed further below). The note records that when asked about this, the Appellant said she only had a name and phone number and he picked up the goods in his van. She did not know anything more about him. We comment further below on the Appellant’s dealings with this individual.

The officers took away with them the “invoice book” and it seems they attempted to compile some kind of record of the Appellant’s trading from it. Included in our bundle were some 279 pages of muddled handwritten material which were uplifted from (or provided by) the Appellant on one or more occasions, together with 19 pages of various spreadsheet printouts which appear to represent HMRC’s attempts to collate the handwritten material into some kind of intelligible record of sales. It was impossible to derive any clear overall picture from any of this material, none of which was explored or explained either in the other documentation or in the hearing. All we can do with it is pick out some individually telling pieces of information from it (see below).

It was explained to the Appellant at the visit on 20 September 2018 that there was underpaid duty on all her imports using Canmi, amounting to approximately £100,000, and that the beer on her premises was being seized as liable to forfeiture because of the underpaid duty on it. She was told that a formal assessment for the underpaid duty would be issued, addressed jointly to her and Canmi. The Appellant held a telephone call with Canmi in a foreign language, and told the officers Canmi wanted the pre-assessment letter (which they had already given to her) forwarded to them.

The officers then proceeded to seize the goods in the lock-up. The goods were left secured overnight (using padlocks provided by HMRC), and the following day (21 September 2018) officers Esponda and Allen returned, along with two other HMRC officers, A Yasin and A Smyth, to remove the goods from the lock-up. The Appellant was not there. They removed all the beer from the lock-up. The Appellant’s daughter arrived to ask what they were doing at one point, and was told they would be happy to discuss it further with the Appellant, if she arrived. The officers replaced the Appellant’s padlocks and left. The note of this visit in our bundle (again unsigned, without any indication who had prepared it or when) records that various paperwork relating to the seizure was left in the lock-up, including HMRC notice 12A (notifying the Appellant of her rights in relation to the seizure). The Appellant denies seeing the notice 12A, affirming that the only documents she found in the lock-up after the seizure were three pages listing some of the goods seized. Whilst we do not consider a great deal turns on this point, on a balance of probabilities and in light of the somewhat slapdash attention to detail displayed by the HMRC officers in their approach to record keeping, and not having heard any further evidence from them on the point, we find Notice 12A was not in fact left by the officers as the note records, or at least not in a way which would ensure that it would come to the attention of the Appellant.

On 24 September 2018, Mr Shokunbi of the Appellant’s accountants Paul Victoria emailed officer Esponda concerning the document which had been left with the Appellant during the seizure, notifying her of the duty assessment. He confirmed he had been instructed in relation to the matter, attached a form 64-8 and asked for confirmation of receipt, as he had not been able to get hold of officer Esponda by telephone.

Officer Esponda replied by email on 18 October 2018 (nearly a month later), informing Mr Shokunbi that “I will be posting the formal assessment out next week now”, and confirming a copy would be sent to Mr Shokunbi. On 31 October 2018, Mr Shokunbi chased by email, to which officer Esponda replied on the same day saying he had still not sent out the assessment letter. Mr Shokunbi chased again by email on 9 November, to which officer Esponda replied on the same day, saying he had still not posted it out as he was “waiting for another department to get back to me”. In reply (still on 9 November) Mr Shokunbi explained that “the client is anxious about the goods that was removed and to know if any decision has been made with regards to that since the duty issue is being dealt with.” Officer Esponda replied on the same day, saying that the goods had all been destroyed. Mr Shukunbi asked by email on 11 November whether this was all of the goods or only part, and on 14 November officer Esponda confirmed that all the seized goods had been destroyed.

It was not until 1 April 2019 (shortly after the March 2019 seizure, when they appear to have been first instructed) that the Appellant’s solicitors wrote to HMRC’s Excise Appeals and Reviews section in Glasgow, formally requesting payment in lieu of restoration of the goods seized in September 2018 (which they acknowledged had already been destroyed).

Receiving no response, they sent a follow up letter by fax on 4 June 2019. This was forwarded to officer Esponda by the Appeals and Reviews section, and he emailed Mr Shokunbi on the same day. After setting out clarification on a few points of fact in Mr Shokunbi’s letter that he disagreed with, he stated that “the seized goods will not be restored and Mrs Netufo will not receive compensation for the destruction of the goods as she had not paid the full duty on this import or the previous thirteen.” He went on to say that “If you wish to go to request tribunal [sic] you must write directly to the Tribunal Service within 30 days of this letter. However, even if you request a review or apply directly to the Tribunal Service the assessment must be paid, secured or an application made for hardship.”

It is therefore apparent that officer Esponda was himself mixing up the question of the duty assessment and the restoration application, and did not advise Mr Shokunbi of the correct procedure for pursuing the restoration issue, possibly not understanding it himself.

By this time, the appeals process in relation to the two seizures had become entangled. The formal review letter confirming refusal of restoration of the goods seized in March 2019 was issued on 13 June 2019 (see below) and when the Appellant’s solicitors lodged her appeal with the Tribunal on 9 July 2019 (received at the Tribunal on 10 July), the notice of appeal form was clearly intended to address both seizures, giving as the Appellant’s desired outcome “Payment of money equivalent of goods seized on 20 September 2018 and restoration of goods seized on 08 March 2019”.

It was only after the First FTT Decision was issued that a proper statutory review was carried out (see [15] above).

There were two further imports after the seizure in September 2018. One was a consignment which arrived at the entry port on 8 October 2018 (cleared on 9 October); this comprised 974 cases of beer, at a declared price of 249,800 Nigerian Naira (converted to £523.92), and it was imported using the correct code 473 by Canmi. There was then a delay until the second import, which arrived on 11 February 2019 (cleared on 18 February); this also comprised 974 cases, but this time at a declared price of 4,301,200 Nigerian Naira (converted to £9,096.52), imported using the correct code 473 by a company called Thunderbird Freight Limited.

HMRC had clearly been concerned, from what they had discovered on their first visit, that the Appellant was wholesaling alcohol. They had taken away with them the Appellant’s “invoice book” to examine it, and on 5 February 2019, officer Jane Matthews of HMRC telephoned the Appellant, informed her of their suspicions, and arranged a visit at the Appellant’s premises for 18 February 2019 to discuss the matter. This was confirmed by letter dated 5 February, in which it was said that the Appellant would be given an opportunity to explain.

A note entitled “Visit Plan” was included in our bundle. It was clearly prepared in advance of the 18 February meeting by one of the officers attending. It includes the following items:

The visit took place as planned on 18 February 2019. Officers Jane Matthews and Farah Aslam attended, and as well as the Appellant, her accountant Larry Akande from Paul Victoria Accountants and her solicitor Shola Oyedirah of Chris Solicitors were present.

Two notes of this visit appeared in our bundle. Neither was signed, but we infer that the two notes were prepared separately by the two HMRC officers who attended on the visit. We accept them as broadly accurate accounts of the visit. Both notes record that the Appellant informed the officers she no longer sold any alcohol, having stopped after the seizure in September 2018. We accept that the Appellant said this to the officers, notwithstanding her subsequent denial that she had done so. She said she had previously imported from Nigeria and sold to the public and “approx. 10” organisers of “events”. She had taken orders 2-3 months in advance, making up a consignment from several orders. Her accountant said that her sales were “mainly to end users”. When asked about sales to an apparent business called “Walay’s Bar” which arose from the records previously uplifted, the Appellant did not reply. The arrangements for payment for the beer imported were discussed, involving the Appellant’s sister in Nigeria who placed the orders and paid the suppliers and was then paid by the Appellant using money transfer. Some further disorganised manuscript business records were uplifted (covering the period since the September 2018 seizure). The Appellant confirmed she did not keep any record of her takings, and had no till. The lock-up was inspected and found to be empty. When officer Matthews asked to see the current purchase and sales invoices, the accountant said that all the invoices relating to the alcohol had been sent to his office, accordingly the HMRC officers said they would visit his office to view the records there.

When the Appellant was challenged to identify the 10 event organisers that she had referred to earlier in her sales records, she did not do so. When it was pointed out to her that such activity would amount to acting as a wholesaler, she stated that all her supplies were made to end users.

Upon returning to their office, one of the officers carried out a search and established that a further import of beer by the Appellant had been cleared through customs that same day (see above).

Officers Matthews and Aslam visited the accountants’ office on 21 February 2019 and met Mr Ola Shokunbi. He was essentially unable to provide any further records, beyond 14 invoices from Canmi for the period 7 September 2017 to 11 September 2018 (which were uplifted, copied and returned the following day). He understood from the Appellant that she had been selling alcohol to people for parties. He also understood the Appellant had stopped trading in alcohol since the September 2018 seizure.

Having become aware on 18 February that a further consignment of alcohol had been imported by the Appellant, officers Jane Matthews and Farah Aslam made a further unannounced visit to the Appellant’s shop on 7 March 2019, arriving at 11.30 am. There were two unsigned notes of this visit in our bundle, again we infer one was prepared by each officer. We accept them as broadly accurate.

There was nobody present at the premises (either the shop or the lock-up at the rear) when they arrived, though the lights were on in the shop. Officer Matthews telephoned the Appellant and got through on the third attempt at 11.50, to be told the Appellant was at her GP nearby; she confirmed she would be back at the shop later after seeing her solicitor. The officers waited. At 12.40 officer Matthews phoned her again, to be told she would be arriving shortly. At 12.50 she arrived and spoke to the officers by their car. They asked to enter the premises and she said she did not have the keys as her daughter had them. She said she was feeling very stressed, and her blood pressure was up. She left to get the keys. 25 minutes later officer Matthews telephoned her again, to be told that she would be back around 1.40 after taking her medication. She arrived at 1.49 with the keys, accompanied by an unidentified male “family friend” and opened the shop. Officer Matthews returned to her the documents which had been taken away at the previous visit. She told the Appellant HMRC were considering a possible penalty for wholesaling alcohol without the requisite approval, and that any penalty could be reduced by co-operation from the Appellant.

Officer Matthews asked to check the lock-up storage at the rear of the shop. The Appellant said the landlord had taken it back and she did not have the keys; in any event she had no goods in it. Officer Matthews asked when the Appellant had last imported alcohol and she said she had not imported any since the September seizure. Officer Matthews challenged her, referring to the February 2019 import declaration. The Appellant then accepted that she had imported a consignment in February 2019, but asked why that mattered, as she was not wholesaling. Finally, she admitted that what was left of the imported alcohol (she thought about half) was indeed in the lock-up. She was challenged about the names of some of the customers to whom she had supplied alcohol which appeared on the documents uplifted previously, and maintained she did not supply any goods, the customers came and bought them.

Attempts were made to contact the landlord to obtain access to the lock-up keys. Ultimately the lock-up was opened by HMRC using bolt cutters (with police assistance). It was found to be approximately half full of beer. The Appellant and her daughter (who had now arrived) started questioning the legality of HMRC’s proposed seizure of the goods, and it was explained to them that the seizure was to be made because she was considered to be carrying on wholesaling without the correct approval. The Appellant’s friend asked if their emails would be ignored as had previously happened in relation to officer Esponda; it was confirmed that officer Matthews would acknowledge any correspondence received. Notice 12A was handed over, explaining that it currently contained estimated quantities (which would be updated the following day after a full count had been taken). In view of the time of day, it was too late to arrange for the goods to be removed and therefore the officers secured the lock-up with their own padlock and placed a seal on it. The Appellant was warned not to tamper with the padlock. She was told the officers would return the next day to remove the goods, about noon. Asked if she could be present, the Appellant said she could come in about 11.30. The last officers left around 6.35.

The following day (8 March 2019), at around 10.35 am officer Matthews rang the Appellant to ask for the current sales book to be made available to the officers who were attending. Her daughter answered the phone and said the Appellant was at the doctor’s that day, but intended to go to the shop at some point. If she did not go, she said she would get the documents scanned and sent by email. In fact an email was sent to officer Matthews by the Appellant’s daughter at 1.05 pm, saying that the Appellant had been referred to the hospital, so she would not be coming to the shop.

In the meantime, a number of other HMRC officers had arrived at the lock-up in the middle of the day to remove the goods. The Appellant obviously did not appear, though her daughter arrived shortly after 2pm, explaining that the Appellant was not around that day. Officer Mary Keen took a note of the events of the day, a copy of which was included in our bundle, stating that she had prepared the notes on the same day from her notebook and from memory. All the goods in the lock-up were removed, and the Appellant’s daughter was given a revised Notice 12A with full details of the goods removed.

Officer Matthews was not in the office when the Appellant’s daughter’s email arrived on 8 March, so did not see the email until the following Monday (11 March). She replied wishing the Appellant a quick recovery, and confirmed that she wanted to see the Appellant’s current sales records, which were said to be kept at the Appellant’s home. The Appellant’s daughter replied the same morning, saying that the Appellant had another appointment that day, but should be back in the shop the following day (12 March), so officer Matthews could pick up the documents she wanted then.

On 12 March officer Matthews telephoned the Appellant around 12.30 to see when she would be available. The Appellant said she would be in the shop very shortly, and the officers could attend whenever they liked. Shortly before that time, officer Matthews had sent to the Appellant’s daughter by email a letter setting out a large amount of information that HMRC wanted from the Appellant in relation to her activities. Officers Matthews and Aslam arrived at the shop around 1.50pm and met the Appellant. She gave them a book which purported to show her alcohol sales from 21 February 2019 to 6 March 2019. She called it her “alcohol book”. It listed 20 sales, but gave just an abbreviated name of the purchaser and a list of the goods sold. Some entries were marked “paid”, but with no indication how or when. Details are set out in Appendix 1 to this decision. These sales totalled 60 cases of “Big Stout”, 172 cases of “Small Stout”, 84 cases of “Trophy” and 70 cases of “Star”, an overall total of 386 cases.

Broadly, therefore, the goods recorded by the Appellant as sold, together with the goods seized on 8 March 2019 (listed at [10] above), together made up the vast bulk of the goods shown on the invoice for the delivery to the Appellant which was cleared on 18 February 2019 (see [31] abvove). Just 4 cases of Small Stout and 4 cases of Star from the original delivery were unaccounted for, and the Appellant also had 10 unexplained cases of Orijin beer, 5 unexplained cases of 33 Export Beer and 2 cases and 11 bottles of “Guinness FES” beer, none of which she had imported herself.

Officer Matthews noted that 70 cases of Star Beer were included in the sales listed by the Appellant, but there had been no Star Beer seized, none having been found on the premises. She also noted that some of the customer names were the same as those on previous sales “lists” which had been uplifted (she quoted “Wumi”, “Toyin”, “Mr Gbenga” and “Denzil”).

The only other records available were a copy of a “quotation” dated 15 February 2019 from Thunderbird Freight (whom the Appellant said she had found online). The details on this quotation match the entries on the import declaration made for the 19 February 2019 entry. Officer Matthews told the Appellant that she had emailed a detailed request for information to her daughter, and she should provide all that had been requested, or explain why any of it was not available.

Officer Matthews had also prepared a list of over 30 names which appeared as cash credits on the Appellant’s bank statements that had been provided to HMRC, or to whom the Appellant appeared, from her rough manuscript notes previously supplied, to have provided larger amounts of alcohol. The Appellant provided some sketchy details about some of the names, but was unable to provide any information at all about approximately half of them.

In relation to “Brother Amead”, she said he had “told her that he organises parties”. When asked about “Wumi”, she said “she lives in Hackney and organised a baby christening”.

On 18 March 2019, Chris Solicitors wrote to officer Matthews at HMRC, notifying her they had been instructed by the Appellant in relation to the March seizure, and expected to be writing further after taking instructions.

They followed this up with a letter dated 26 March 2019, in which they requested restoration of the goods seized on 7/8 March.

On 3 April 2019, HMRC (officer Nutting) replied to the restoration request. After recounting HMRC’s version of events (including the September seizure), officer Nutting refused the restoration request on the basis that he did not believe that the purchases of beer were solely for retail purposes. He enclosed a copy of HMRC’s restoration policy, and informed the solicitors of the right to request a review of his decision.

On 30 April 2019, Chris Solicitors responded in some detail, disagreeing with the reasons given for HMRC’s decision and restating the Appellant’s assertions as to the nature of her customers. They requested a formal review of the decision not to restore the goods.

Officer Matthews acknowledged the request by letter dated 10 May 2019, confirming that as no challenge to the legality of the seizure had been raised within the relevant timescale, the goods were now “deemed to have been duly condemned as forfeited.”

A formal review letter was issued to the Appellant on 13 June 2019 by officer Noble, confirming that the decision not to restore was upheld.

The Appellant then notified her appeal to the Tribunal through her solicitors on 9 July 2019 (received on 10 July).

The Appellant’s records showed some dealings with “Wale” and “Walay’s Bar” and she had received payments into her bank account from a company called Walay Enterprise Limited. A flyer for Walay’s Bar (in Stratford, East London) was included with the documents uplifted from her shop by HMRC. In her witness statement, the Appellant referred to “Wale (Walay’s bar)” as her “friend” and said she had sold him 11 cases of beer (in two transactions) in March and May 2016 for the purposes of social events he was holding. Payments received into her bank account from his company in August and September 2017 totalling £886 were, she said, loans which she repaid in cash. Included in our bundle was a witness statement of just over one page made by Mr Wale Olaojo, referring to these transactions and supporting (almost word for word) what the Appellant had said in her witness statement. Mr Olaojo did not attend the hearing to give evidence, and whilst we admitted his witness statement, we give it very little weight.

In addition, the records showed significant dealings with an individual variously described as “Michael”, “Brother Michael”, “Marchel” and “Brother Marchel”. We are satisfied that these various entries relate to a single individual, not least because the Appellant herself, in her witness statement, specifically referred to a sale of 405 cases which was referred to in her own notes as being to “Brother Marchel,” as relating to “a person named Michael”. The note of the visit on 20 September 2018 records a statement (which we accept as broadly accurate) that when asked about the sale of 405 cases to “Michael”, she said that she “only has phone and name and he picks goods up in his van.” Dealings with this individual were shown on 2 May 2016 (30 cases), 17 May 2016 (15 cases), 19 May 2016 (10 cases), 14 February 2018 (80 cases), 10 May 2018 (“Marckel” – 80 cases), 3 August 2018 (405 cases) and 28 February 2019 (“Micheal” - 21 cases). We reject the Appellant’s claim that she only dealt with this customer on one occasion.

Another name appearing frequently in the Appellant’s manuscript records was “Gbenga” (sometimes spelt “Gbega”) or “Mr Gbenga”. Sales to this individual are shown of 13 cases (no date, but apparently some time in 2016), 20 cases (16 March 2016), 20 cases (24 March 2016), 19 cases (8 April 2016), 10 cases (20 April 2016), 10 cases (17 May 2016), 20 cases (25 May 2016), 10 cases (13 June 2016), 100 cases (14 February 2018) and 33 cases (1 March 2019).

“Amead” or “Brother Amead” also featured. Sales to him were recorded on 14 February 2018 (260 cases), 10 May 2018 (430 cases), 1 June 2018 (470 cases) and 3 August 2018 (50 cases). Another three orders (of 100 cases, 250 cases and 300 cases) are recorded, with no dates attached. This was the individual who had been described to HMRC at the meeting on 12 March 2019 as an organiser of parties.

Sales to “Wumi” were recorded on 10 May 2018 (20 cases), 3 August 2018 (25 cases) and 23 February 2019 (12 cases). This does not appear to be consistent with the Appellant’s statement at [70] above about Wumi having organised “a christening”.

A sale to “Denzil” of 550 cases was recorded on 1 June 2018 and a sale to “Denzil Bankole” of 75 cases was recorded on 3 August 2018. Even if the second sale was to a different Denzil, the first order (comprising over half a container load of beer, sold for £11,550) appears an unreasonable quantity for a private party, even a large one. This order comprised 150 cases of “big stout” and 400 cases of “small stout”, amounting to some 1,800 large (600ml) bottles and some 10,800 small (325 ml) bottles of beer – rather too much even for a party of 500 revellers to consume at one event.

A record (not dated, but included in the material obtained by HMRC in September 2018) shows cross-trading by the Appellant with “Siril”, selling 170 cases of beer for £3,910 and buying various bitters, beers and potentially other products (188 cases) for £4,058.

The above represent some of the more significant facts that have emerged from our examination of the evidence. There are others, but these give a clear picture. As an overarching comment, whilst it is clear that some of the recorded sales could be consistent with ordinary retail activity (including sales to individuals organising parties), there are many elements of the evidence which point more clearly towards a significant and ongoing wholesale operation, chiefly the extraordinary size of some of the sales, the ongoing relationships with established customers and the lack of any material third party evidence to support the Appellant’s assertions about her customers’ non-commercial use of the goods she sold to them.

As Mr Avient agreed, we are required to accept (as a result of the Appellant’s failure to challenge the lawfulness of the March 2019 seizure) that the Appellant was in fact holding the beer seized in March 2019 for the purpose of selling it wholesale without the requisite permission to do so. The finding Mr Avient effectively asks us to make is that the Appellant was doing so “innocently”, without believing that she was doing so, and that this should be taken into account when considering the question of restoration.

The only evidence in support of his case was the Appellant’s own uncorroborated oral testimony, the unsubstantiated and untested witness statement of one of her customers and the extremely poor trading records provided to HMRC and included in the bundle.

Having considered her evidence and examined her trading history, so far as it appears from the evidence before us, we are satisfied the Appellant was well aware of the statutory restriction on wholesaling alcoholic liquor, that the vast majority of her sales of beer were by way of wholesale, and she was well aware that she was operating in breach of the statutory wholesaling regime.

The policy for restoration of seized goods and vehicles

is that alcohol, tobacco, vehicles and other things (such as cover loads) seized as liable to forfeiture must not generally be restored

must be applied firmly but not rigidly

allows for each case to be considered on its merits to determine whether restoration may be offered and under what terms

offers restoration exceptionally but not as a matter of course

does not allow for restoration where fiscal marking and/or duty stamp legal

requirements would be breached

recognises there will be occasions when overriding humanitarian or hardship issues warrant a departure from usual restoration criteria

is aimed at those who are profiting from offences under customs and excise legislation

does not intend to penalise innocent third-parties

aims to address instances where innocent third-parties do not learn from mistakes and omissions that facilitate offences

allows for goods that are found, mixed or packed with goods liable to forfeiture to be restored in certain circumstances. If the goods have been used to deliberately mislead officers or to conceal a fraud, they will only be restored in very exceptional circumstances

allows for things to be restored shortly after they have been seized so it is not necessary to remove them to a Queen’s Warehouse. (If seized things are in the QW, the processes for returning them to their owner are in the QW instructions).

Restoration policy, with its emphasis on non-restoration, is intentionally robust in order to

give a proportionate and graduated response to the risk posed by tobacco and alcohol diversion and smuggling

maximise the deterrent value of seizure

protect the UK revenue by ensuring the correct amount of excise duty is paid

protect legitimate trade from unfair competition created by the sale of cheap alcohol and tobacco goods that have not borne the proper amount of excise duty

prevent illicit trade in excise goods

ensure goods not normally available in the UK from legitimate outlets are not made commercially available in the UK

emphasise the duty of every citizen to comply with the law

demonstrate that offences involving excise goods are treated seriously and cannot become socially acceptable

deter development of a ‘smuggling’ culture

The policy of non-restoration includes these objectives because

fraudsters rely on a market for their goods, which could still be met with restored goods even though seizure of the goods and resulting penalties imposed would impact on the financial viability of their operation

allowing restoration of smuggled goods, even on payment of duty and appropriate penalties, would do little to address the effect of such activities on legitimate UK trade

eliminating the opportunity to deal in illicit goods reduces the potential market for them.

illegally-marketed goods are easier to identify if goods not normally available in the UK from legitimate outlets are not otherwise commercially available in the UK

seizure of vehicles used to transport diverted or smuggled goods has a significant deterrent effect

people not directly involved with illicit goods but otherwise associated with them, such as those financing or profiting from the enterprise, also suffer by losing the goods

the government’s health objectives are supported by ensuring tobacco products without UK health warnings do not reach the UK market.

In addition, the underlying principles of vehicle restoration policy are that

there will be occasions when overriding humanitarian or hardship issues warrant a departure from usual restoration criteria

vehicle restoration terms should provide a graduated response depending on

the degree of blame that can be attributed to an individual • the potential harm caused by the evasion of excise duty

vehicles specifically constructed or adapted for concealing goods must not be restored unless the place for concealing goods is removed before restoration.

In pursuing this policy, officers should

remember their obligation to act in a proportionate and reasonable way consistent with human rights principles

vary usual action where required to deal with humanitarian issues or to meet individual circumstances

be aware it would be highly unusual for seized excise goods to be restored on humanitarian grounds.