Corneill v Her Majesty's Revenue and Customs

An assessment for excise duty under section 13 of the Hydrocarbon, Oil and Duties Act 1979 is not confined to fuel found in an identified vehicle. The provision requires sufficient evidence linking rebated oil with use in a road vehicle, but it does not prescribe a particular degree of evidential particularity. HMRC may draw inferences from primary facts and may use estimation where necessary. The absence of the words “best judgment” from section 13 does not prevent an assessment involving judgment or estimation. Where the evidence supports the inference that disputed fuel was rebated oil used in road vehicles, the assessment may be upheld.

Thomas Corneill appealed against a VAT and Duties Tribunal decision upholding an assessment of £67,479.85 in unpaid excise duty. HMRC alleged that the appellant had used rebated diesel fuel in its lorries, contrary to section 12(2) of the Hydrocarbon, Oil and Duties Act 1979. The assessment letter identified section 13 as its statutory basis.

The Tribunal held that section 13 required a specific link between the fuel and particular vehicles, but upheld the assessment on the alternative basis of section 12A of the Finance Act 1994. On appeal, HMRC abandoned reliance on section 12A. The issues were whether section 13 could support the assessment and whether the evidence justified the finding that the disputed fuel was rebated diesel.

1. Appeal dismissed. The Tribunal had erred in holding that section 13 of the Hydrocarbon, Oil and Duties Act 1979 required a close identification of rebated fuel with a particular lorry.
2. Section 13 applies where it is proved that oil has been used, or taken into a road vehicle, in contravention of section 12(2). The section contains no prescribed evidential requirement that the particular vehicle, quantity or time of use must always be identified. The necessary degree of particularity depends on the evidence.
3. Section 13 does not exclude assessment based on estimation or judgment merely because it does not use the expression “best judgment”. Inferences may be drawn from primary facts. Estimation in this context is a description of an inferential process, provided there is appropriate evidence of the underlying facts.
4. The availability of section 12A of the Finance Act 1994 did not justify restricting section 13. HMRC accepted that section 12A was unavailable in the absence of the relevant statutory default. That did not create a legislative lacuna because section 13 was capable of supporting an assessment of the kind made.
5. The Tribunal was entitled to infer that all the disputed fuel was rebated diesel. It relied on false invoices, payments connected with suppliers of red diesel, the absence of reliable supplier details, the positive test in one lorry and the appellant’s unsatisfactory explanations and missing evidence. The assessment was therefore supported by sufficient evidence.
6. The approach in Ramon v Customs & Excise Commissioners [2003] STC 150, that the tribunal should determine the amount properly due on the evidence as a whole and by applying its own judgment, was accepted as consistent with the assessment.

• High Court (Chancery Division): The appeal from the VAT and Duties Tribunal was dismissed. The Tribunal’s conclusion upholding the assessment was maintained, although its construction of section 13 was rejected.
• VAT and Duties Tribunal: The Tribunal upheld HMRC’s assessment, treating section 12A of the Finance Act 1994 as an available alternative statutory basis.