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ENFORCEMENT COMMENTARY: CONCESSIONARY RATE PITFALLS

El Many hauliers who tax two-axled tractive units at the special concessionary rate for vehicles with a maximum permitted train weight of 32,520kg provided the tractor is used with a trailer of three or more axles, may well end up in court accused of excise licence offences of which they have no knowledge.

The danger was well illustrated by the recent prosecution of a Lancashire haulier for using a vehicle when the wrong rate of excess duty had been paid, before the Brigg, Lincolnshire, magistrates.

John Robinson, of Garstang, admitted using a vehicle taxed at the concessionary rate when the tractor was coupled to a two-aided trailer. The vehicle concerned was on a regular contract with Conway Containerways, of Carston, and was under that company's control.

Conway C,ontainerways was aware of the fact that the tractive unit concerned should be used only with a three-axled trailer. When the operators instructed the driver to collect the trailer on the day in question they had believed that it was a three-axled trailer, their Belfast office having neglected to inform them that it was in fact a two -axled trailer. The driver had been employed by Robinson only for a matter of three or four weeks and probably he did not realise the significance of the number of axles on the trailer.

Fortunately for Robinson, Conway Containerways was prepared to write to the court and explain the circumstances, and his solicitor was able to persuade the magistrates that no blame attached itself to him. The magistrates very fairly gave Robinson an absolute discharge, and ordered him to pay the difference in excise duty for one month, a sum amounting to £64.16.

Robinson was indeed fortunate, as many benches of magistrates would be less than sympathetic to claims by hauliers that they were unaware they were committing excise licence offences. Such offences are regarded as serious offences, both by the courts and by Licensing Authorities.

Unfortunately, some hauliers appear before the courts with monotonous frequency, charged with avoiding vehicle excise duty, often by taxing vehicles at the private light goods rate, and magistrates often take the view that professional hauliers know, or ought to know, very well what the regulations are and what usage the various taxation classifications permit.

If fines are imposed, LAs are unlikely to look behind the fact of the conviction, when considering whether or not to take disciplinary action against the operator's licence. When the North Western Deputy LA, Keith Waterworth, recently revoked the licence held by Viking Transport, of Longton, he said that the only matter at issue was that of good repute. He was not there to rehear offences for which Viking had already been found guilty. They were a matter of record and fact.

On the face of it, taxing vehicles at the wrong rate of duty smacks of dishonesty. It not only calls into question the repute of the operator concerned, but raises doubts whether there is sufficient finance available to run the business properly. Tough action is often tqken by LAs in such cases, and in so doing they have the backing of the Transport Tribunal, That was illustrated by a 1985 appeal in which it upheld the decision of the South Wales Deputy LA, Ivor Pugh, to revoke the 18 vehicle licence of Herbert Morrison on both grounds of repute and finance in the light of 11 convictions, nine of which involved the use of vehicles without excise licences.

It was argued that the decision was too harsh in the light of Morrison's previous good record and the fact that acceptable arrangements had been made for the payment of the outstanding fines by weekly instalments. The Tribunal said that it was mandatory on an LA to revoke a licence if he was satisfied that the operator was no longer of good repute.

Morrison's explanation for running vehicles without excise licences was that owing to the coal strike he had been regularly using, and kept licensed, only one of his 12 vehicles, but if someone phoned and offered work which required the use of an unlicensed vehicle he would send it out rather than lose the contract.

In their judgment, said members of the Transport Tribunal, the number of convictions and the fact that they had been committed deliberately made it inevitable that the DLA would conclude that he was no longer satisfied that Morrison was of good repute. He could not have arrived properly at any other decision.

This is an extreme case, but it illustrates the seriousness with which excise licence offences are regarded, and not only by the criminal courts.

The difficulty facing hauliers who have taxed two-aided tractors at the concessionary rate is that they may well inadvertently commit such offences, particularly when pulling other people's trailers, if the driver is unaware of the significance of the number of trailer axles. Indeed, there may well be many drivers who, even if they do appreciate the significance, will regard it as the boss's problem rather than theirs.

There is an added complication in that the danger may go further, in that if the prosecution was right in a case before Knutsford magistrates in September 1985, they may commit an offence if the vehicle is overloaded. GOB International Ltd was prosecuted for using a vehicle when a higher rate of duty was payable.

The facts were that when stopped in a weight check the vehicle concerned was displaying an excise licence disc showing it had been taxed at the private light goods rate of duty. It subsequently emerged that on that very day the vehicle had been taxed at the concessionary rate for a two-aided tractor used with a trailer with three or more axles.

The train weight recorded in the weight Ili. check was 35,480kg and the prosecution argued that even if it could be shown that the second excise licence had been obtained before the vehicle was stopped, the company could not avail itself of the concessionary rate if it overloaded the vehicle beyond the weight limit of the concession The message is clear for operators who tax their two-axled tractor units at the concession III The Transport Tribunal has delivered a written judgment on the appeal of Expo Removals Ltd, a long established general haulage company operating from Stroud Wharf, Rochester, Kent, Its standard international operator's licence was due to expire in 1988, and authorised 20 vehicles and 14 trailers.

In November 1986 the managing director, transport manager and principal shareholder, D F B Cox, appeared at Maidstone Crown Court and was convicted on his own plea of an offence of being knowingly concerned in a fraudulent evasion of the provisions of Regulation 28 of the Hydrocarbon Oil Regulations and of two offences of cheating the public revenue.

Cox was sentenced to two years jail upon each count concurrently but suspended for two years and fined the sum of £25,000 upon each of the three counts to which he pleaded guilty. In consequence the clerk to the South Eastern LA notified the appellant that the LA had decided to hold a public inquiry to consider both whether to curtail the licence and whether to revoke the licence on the basis that the appellant no longer satisfied the requirement to be of good repute.

At the public inquiry, at which the appellant company was not legally represented, the LA revoked the licence, but directed that the revocation should not take effect pending any appeal, The appellant duly appealed against revocation.

At the appeal, Mr Fortune, for the appellant, sought leave to adduce fresh evidence, namely the indictment to which Cox and his codefendants pleaded guilty and the transcript of the observations made by H H Judge Rooke QC in passing sentence. "Both are matters of public record; and we therefore took the view that we were entitled to take them into account notwithstanding that they were not before the Licensing Authority," says the Tribunal.

Mr Fortune submitted that in revoking the licence the LA frustrated the intention of the Crown Court Judge in passing a non-custodial sentence and that if and in so far as the LA purported to rely upon Section 59 in revoking the licence, he erred in law.

"His second argument was well founded in the sense that neither of the offences to which Mr Cox pleaded guilty are specified in Section 69 of the Act, and in any event it was not the holder of the licence, the appellant company, that was convicted," says the Tribunal. "But it is perfectly clear from the transcript of the proceedings before the Licensing Authority that he arrived at his decision to revoke the licence in the exercise of his powers under Regulation 9 of the Goods Vehicles (Operators' Licences Qualifications and Fees) Regulations 1984 and not under Section 69 of the Act. Accordingly Mr Fortune's argument, 'though ary rate. Great care must be taken to ensure that such tractor units are used only in the correct axle configuration if they are to avoid any suggestion that they may be deliberately trying to avoid paying the full vehicle excise duty. Both drivers and customers must be made aware of the significance of the number of trailer axles.

sound in law, does not assist the appellants."

Mr Fortune submitted the LA failed to pay any or any proper regard to the sentence imposed or rather to the reasons for its imposition. He argued that the effect of the revocation would be to frustrate the judge's intention that the appellant should continue to operate his fleet. The offences to which Cox pleaded guilty involved the extraction of dye from duty free diesel fuel on a large scale.

"As the judge put it in passing sentence, Mr Cox was the prime mover in 'a substantial and persistent fraud upon the revenue'. The sums involved were considerable. By his plea Mr Cox accepted responsibility for cheating the Commissioners of Customs and Excise of excise duty of not less than £302,721.65 and of VAT of not less than £118,186.47.

"In those circumstances, and as Mr Fortune readily acknowledged, the sentence passed upor, Mr Cox was on its face remarkably lenient. It is explicable upon the basis that he pleaded guilty and furthermore made a witness statement implicating his co-defendants, which resulted in their pleading guilty to the indictment thereby avoiding both the publicity and cost of a lengthy trial, a point which was of some importance as the Customs and Excise were concerned that the technique that Mr C,ox had evolved for extracting the marker dye from diesel fuel should not become public knowledge."

The judge was satisfied that Cox had the financial resources to meet the fines and prosecution costs of £14,000, says the Tribunal. Mr Fortune argued that the judge plainly intended to permit Cox to continue to run his business as he neither had made a criminal bankruptcy order nor disqualified him from being the director of a company under section 295 of the Companies Act 1985.

The judge had explained his decision in these words: "I only refrain from disqualification in your case, Cox, under the Companies Act, or an order for Criminal Bankruptcy because I am persuaded by the Crown's concession that your business was not wholly fraudulent. I do not see that a Criminal Bankruptcy Order would, in any event, serve any useful purpose. I also withhold my hand from making specific compensation orders in the sums enumerated in Counts 3 and 4 because I am satisfied that the Customs and Excise have the machinery available to them, and will use it either against you personally . . . . or against the company (which again effectively you are)."

While the effect of the sentences enabled Cox to continue to run the appellant company, it is certainly not apparent that he passed such sentences with that intent, says the Tribunal. 00. 'But in any event the Crown Court Judge's reasons for passing the sentences that he did are beside the point. The Licensing Authority is not in any sense bound by the decision of the Crown Court Judge, who was performing an entirely different function. It was not for him to consider whether the appellants' satisfied the statutory requirement to be of good repute contained in Regulation 5 of the 1984 Regulations; whereas the Licensing Authority was obliged by law to revoke the appellants licence if it appeared to him that that requirement was no longer satisfied.

"We consider that the Licensing Authority directed himself correctly as to the law and was fully justified in arriving at the decision that he did. His reasoning is clearly and succinctly set out in the following passage from the transcript of the proceedings before him: The first question I think I have to ask myself is whether the offence is relevant? Well I have already said that this is an offence which is mentioned in Section 69(4) (E), but in Appeal Eli Keenan or McColl it was said by the Transport Tribunal that the Licensing Authority was not restricted just to convictions under Section 69, but could take any offence into account where he thought that was relevant to repute and I have to say that I must find that this is an offence which is relevant to the repute of a transport operator.

Now the second question I have to ask myself is whether just one offence can be sufficient to affect repute. hi R TB Jackson 1980 the Tribunal said this: Since there is no provision that a person is regarded as of good repute if he has no more than a certain number of convictions it must follow that regard must be had to the gravity of the offences which led to the convictions so that even one conviction of a particular heinous offence could deprive a II Nuneaton haulier Arthur Burden has been successful in a bid to change his operating centre to an ECC Quarry at Plough Hill Road, Nuneaton, despite objections from a resident living adjacent to the quarry.

Burden had applied to change his operating centre from Malborough Road when he sought renewal of his national licence, for two vehicles in possession, with two to be acquired, before West Midland LA John Mervyn Pugh. A representation against the application was made by a Malcolm Porter, on environmental grounds.

Porter said that his home was next to the quarry premises and over the past two years he had suffered from dust and noise from the numerous vehicles entering and leaving the quarry. He had been woken as early as 0545 hours. He agreed that the vehicles concerned had not been Burden's vehicles, but said that 111 The poor maintenance record of Clifford Bell, trading as Openshaw Motors, has led to a company formed to take over the business being granted a licence for one year only by North Western DLA Keith Waterworth.

Openshaw Motors Ltd had applied for a new licence for 16 vehicles and four trailers conditional upon the surrender of Belts existing licence. However, the DLA was prepared only The LA asked himself whether this offence was grave enough, standing alone in a firm with almost no problems in the past 20 years. The whole system of 0-licensing was based on trust. So too, he suggested, was the whole matter of rebated fuel. So in his view this single offence was of such a nature and so serious that it did prima facie give rise to doubt that there were sufficient grounds for finding a loss of repute in the context of Regulation 9.

Asking himself whether there was any other evidence to set against that he had had regard to what was said in two cases in Murat T 1 1982 and in Dyer and Curt T 11 1982 where the Tribunal made it quite clear that an LA should take account of any evidence produced by the operator in mitigation some indication that his repute had been rebuilt in some way. But the LA said he had no such evidence; he did have an assurance from the operator. He had put in as transport manager Mr. Hollingsworth who he accepted was a totally suitable person, but the fact was that this company would be directed in practical terms by Cox.

"Having regard to all those matters I find that Mr. Cox is not of good repute in the terms of regulation 9 and as a result of that I have no option but to order that this licence be revoked," said the LA.

The Tribunal says: 'Although another transport manager was appointed by the appellants following Mr Cox's conviction, he and his wife continue to be the only directors of the company and he remains actively involved in its management. The company is his alter ego. In those circumstances we reject the criticisms made of the Licensing Authority's decision and dismiss this appeal. We direct that the appellants' licences be returned to the Licensing Authority by 6 June 1987."

Burden's four vehicles would increase the noise level and so forth.

After Burden had said his vehicles would start work at 0730 hours and finish between 1730 and 1800 hours, the LA said that he had no control over other vehicles. As the licences of the operators operating those vehicles came up for renewal, Porter would have to make representations about them.

Porter commented that there had been a tremendous increase in volume in recent times.

Burden said that he would be prepared to accept conditions on his licence restricting the hours. ECC had agreed that no vehicle would be allowed to leave the quarry before 0700 hours or after 2100 hours and had been operating that system for two years.

The LA granted the application, attaching the agreed conditions to the licence.

to authorise the 14 vehicles and one trailer in possession.

The DLA said he hoped that the public inquiry had been a salutary lesson to Bell, who was beginning to build up an unenviable record. Before he considered renewing the licence in 12 months' time, there would be a further inspection of the fleet and facilities to see that the system instituted was working.