Judgment summary
Adrian Filimon, a Romanian lorry driver, appealed against a Customs Civil Evasion Penalty of £17,868 issued under s 25(1) Finance Act 2003 and an Excise Civil Evasion Penalty of £41,957 issued under ss 8 and 13 Finance Act 1994, both dated 8 February 2024 (1).
The penalties arose after Border Force stopped his vehicle at Dover Eastern Docks on 2 July 2023 and found 102,200 concealed mixed brand cigarettes in the trailer, despite Mr Filimon having declared only 2½ cartons (4, 6).
The Tribunal concluded that HMRC had not established dishonesty on the part of Mr Filimon and allowed the appeal, setting aside both penalties (2, 26).
Background
Officer Robin Harper of Border Force stopped a Romanian registered Volvo HGV and trailer driven by Mr Filimon at Dover Eastern Docks at 02:20 on 2 July 2023 (4). Mr Filimon presented a CMR and Romanian passport and told the officer his load was 'packaging' from Joyson Safety Systems Sibiu destined for Invista Textiles UK in Gloucester, carried by SC Camsion SRL (4, 5).
Mr Filimon told the officer he had 2 and a half cartons of cigarettes and no alcohol (4). A scan identified an anomaly, and a search of the trailer found 102,200 mixed brand cigarettes concealed in cut-out cardboard squares (6).
Officer Harper's notebook recorded that when told of the concealed cigarettes, Mr Filimon 'accepted ownership' (7). At the hearing, Officer Harper explained this was not a verbal statement but that Mr Filimon 'just nodded his head' (7). Mr Filimon said the nod was recognition that cigarettes had been found, not an acknowledgment of ownership, and that the discovery was a 'complete shock' as he did not know they were there (8).
The goods, vehicle and trailer were seized and Mr Filimon was escorted from Border Force controls (9). After contacting his employer and being told 'not to worry', he became suspicious of his employer's possible involvement, particularly after learning other drivers had experienced similar incidents; he later left the company (9).
HMRC officer Lee Crozier wrote to Mr Filimon on 21 December 2023 and again on 11 January 2024 without response, before issuing the penalty notice on 8 February 2024 (10, 11, 12). Mr Filimon said he had not received the first two letters due to them being sent to the wrong address, and only received the penalty notice in March 2024 (17, 28). A review was requested by his Romanian attorney on 18 March 2024 and, although out of time, was accepted; Officer Hayley Baxter upheld the penalties on review by letter dated 20 May 2024 (15, 16). Mr Filimon appealed to the Tribunal on 19 June 2024 (17).
Core dispute
The dispute was whether HMRC had established, on the balance of probabilities, that Mr Filimon engaged in dishonest conduct for the purpose of evading customs duty and excise duty, applying the test in Ivey v Genting Casinos (UK) Limited t/a Crockfords [2017] UKSC 67 at [74] (19, 21).
The dishonest conduct relied upon by HMRC was Mr Filimon's alleged 'acceptance of ownership' of the concealed cigarettes when told of their discovery, despite having earlier declared only 2½ cartons (22).
Court findings
The Tribunal found Border Force Officer Harper, HMRC Officer Crozier and Mr Filimon to be straightforward and credible witnesses (3).
Unlike the verbatim question and answer record of the initial stop, Officer Harper's notebook contained only the bare statement that Mr Filimon 'accepted ownership' when told of the concealed cigarettes, with no verbatim record (23). At the hearing, Officer Harper confirmed that Mr Filimon had said nothing but had merely nodded his head (24).
The Tribunal held that this nod, especially given Mr Filimon's limited English, could not be regarded as synonymous with a spoken confirmation of ownership and did not amount to sufficient evidence to establish, on the balance of probabilities, that Mr Filimon engaged in dishonest conduct for the purpose of evading any duty (25).
The Tribunal noted, however, that had it found sufficient evidence of dishonesty, it would have upheld the penalties in full for lack of co-operation, given Mr Filimon's failure to respond to HMRC's correspondence prior to the penalties being issued, despite having received two of the three letters (27, 28, 29).
Outcome
The appeal was allowed and the Customs Civil Evasion Penalty of £17,868 and the Excise Civil Evasion Penalty of £41,957 were set aside (2, 26).
Major issues / areas of contention
- Whether HMRC established, on the balance of probabilities, that Mr Filimon engaged in dishonest conduct for the purpose of evading customs duty under s 25(1) Finance Act 2003 (21, 22).
- Whether HMRC established dishonest conduct for the purpose of evading excise duty under ss 8 and 13 Finance Act 1994 (21, 22).
- Whether a nod of the head, as opposed to a verbal statement, could constitute acceptance of ownership of concealed cigarettes sufficient to prove dishonesty (24, 25).
- The evidential weight to be given to a notebook entry recording 'accepted ownership' where the officer later confirmed no words were spoken (23, 24).
- Whether, had dishonesty been established, Mr Filimon's lack of co-operation with HMRC correspondence would have justified upholding the penalties in full (27, 28, 29).