3.1 Mr. Caprani's Entitlement to Temporary Exemption (TE)
Residency for TE Purposes
Mr Caprani told my Office that he was informed verbally by Revenue staff in both the Tallaght VRO and Dublin Castle that he would qualify for temporary exemption by virtue of his fixed term contract with an Irish company. There are no formalities required in bringing a TE vehicle into the State - a person need only satisfy the temporary exemption conditions and does not need the actual certificate to claim temporary exemption.
It appears that, notwithstanding his engagement to Ms Greene, Mr Caprani would have qualified for a Temporary Exemption under the residency terms of the Temporary Exemption from Registration of Vehicles Regulations 1993. He was an Italian citizen who had lived and worked in Ireland from November 2001 to 30 January 2004. He was in Ireland during this period on a purely temporary basis as he was working as an engineer for an Italian company which was carrying out work on an Irish infrastructural project. The Italian company paid for his accommodation, company car and regular flights home to Italy and he returned to Italy on completion of this contract. In July 2004, while living in Italy, Mr Caprani made a down payment of €10,000 with an Italian leasing company and proceeded with a lease on the vehicle in question.
Mr Caprani returned to Ireland in February 2005 (one year after leaving) and while in Ireland he obtained work with an Irish company on a contract of definite duration (two years with six months probation). Under the contract, he was given a start date of 5 May 2005 and a termination date of 4 May 2007. He supplied my Office with a copy of that contract (a copy of which was also supplied to Tallaght VRO). Revenue has asserted that Mr Caprani did not come to Ireland on a temporary basis as he went on to marry and settle in Ireland, however, at the time of the seizure his personal ties were in Italy as he was not married to Ms Greene. An email on one of Revenue's files which was dated 3 February 2009 and issued by a member of staff in the VRT Seizures & Prosecutions Unit, IPD Bridgend confirmed that -"His fiancée is not considered as immediate family ties (personal ties) prior to marriage."
Ownership of Vehicle for TE purposes
Revenue said that Mr Caprani was not entitled to Temporary Exemption as the vehicle was leased and therefore not the personal property of Mr Caprani. They also said that the question of Mr. Caprani's entitlement to "permanent relief from VRT" under the transfer of residence provisions was not considered appropriate at the time of detention/seizure as the vehicle was a leased vehicle and not the personal property of either Mr Caprani or Ms Greene. An initial deposit of €10,000 had been paid by Mr Caprani and he had the option to buy out the car in three years. The car was taxed and insured in Italy.
The TE Regulations allow for the vehicle to be "owned by or registered in the name of a person established outside the State". Section 130 of the Finance Act 1992 defines the "owner" of a vehicle as meaning:
(a) in relation to a vehicle (other than a vehicle specified in paragraph (b)), the person by whom the vehicle is kept,
(b) in relation to a vehicle which is the subject of a hire-purchase agreement or a lease, the person in possession of the vehicle under the agreement or lease (my emphasis)
Therefore the "leased" status of the vehicle should not have affected Mr Caprani's eligibility for either a temporary or permanent exemption from VRT.
Validity of TE which was granted
In November 2005, following the seizure, Mr Caprani made a formal application for TE to Tallaght VRO to prove that he was entitled to temporary exemption. He made this application despite the fact that one is not required to apply to Revenue - one must merely be able to show that he/she would be entitled to TE.
Revenue queried the basis on which Mr Caprani received this temporary exemption from a particular official in Tallaght VRO as Tallaght VRO was unable to locate records and could not comment on the basis on which this TE was granted. A file note of 3 February 2009 from a member of staff in Revenue's VRT Seizures and Prosecutions Unit said that "Mr. Caprani's entitlement to TE would be impossible to disprove at this stage as his application papers have been mislaid and the authorising officer is no longer in meaningful employment with Revenue." Mr Caprani supplied my Office with a copy of his application, the contract which he submitted to the VRO and the TE which was issued by (and subsequently renewed by) the VRO and there did not appear to be any irregularities in any of these documents.
3.2 The level of penalty imposed for the offence - (€3,699)
The penalty imposed on the complainants
The Temporary Exemption From Registration of Vehicles Regulations 1993 set out the circumstances in which a foreign registered vehicle may be brought into the State on a temporary basis. (These are summarised in Revenue's Leaflet VRT2). One of the conditions which must be complied with in order to avail of the TE is that the vehicle must not be driven by a State resident - this condition was breached by Ms Greene.
In accordance with Section 139(1) (f) of the Finance Act 1992, it is an offence for a person to contravene or fail to comply, whether by act or omission, with regulations made under Section 141 of the Finance Act 1992. The Temporary Exemption From Registration of Vehicles Regulations 1993 were made under Section 141, therefore the failure to comply with the conditions of these regulations (e.g. by the driving of the vehicle by a State resident) is an offence. As Ms Greene was driving the vehicle contrary to the conditions set down in the temporary exemption, this was an offence and the car was initially detained in accordance with Section 140(3) of the Finance Act 2001 and subsequently seized in accordance with Sections 140(4) and 141(1) of the Finance Act 2001. A vehicle in respect of which such an offence has been committed is liable to forfeiture.
However, Section 4.3 of Revenue's "Customs and Excise Enforcement Procedures Manual" provides for the issuing of warnings in the case of first or minor offences.
Was detention/seizure of the vehicle a proportionate penalty for the offence or would a formal "warning" have been more appropriate for a first offence?
Revenue policy in relation to the enforcement of VRT legislation is set down in the "Section 5 Vehicle Registration Tax Manual (Enforcement)" and the "Customs and Excise Enforcement Procedures Manual".
The Section 5 Vehicle Registration Tax Manual (Enforcement) indicates that Revenue operates a system of proportionality in dealing with VRT offences and that there is discretion to issue a warning where a first and minor offence has been committed and that it is only cases involving aggravated circumstances or second offences which should be dealt with by way of seizure / legal proceedings.
Revenue is aware that it has this discretion and it refers to it in an internal email dated 26 January 2009 which states:
"In relation to the circumstances surrounding the seizure and the imposition of the fine, it seems clear that at the time very extensive efforts were made to advise the parties and to explore every possible avenue in terms of their best options in the circumstances. It appears that, in fact, they withdrew from this process until the current correspondence was received. Nonetheless, a question has arisen again in relation to any possible discretion that the Port District may have had, and if this was used to the fullest extent. This aspect will be examined very closely by the Ombudsman, and I think that we need to be absolutely clear on our position and any alternatives."
Section 5.4 of this Manual states that the "policy here is to deal with each vehicle in a manner proportionate to the degree of evasion." Section 5.3.2. of the same Manual outlines the enforcement approach and says that "detections which establish minor delays in registration are to be dealt with, for a first offence, by issuing a demand/notice. Where this is ignored the vehicle should be seized when next detected in irregular use by a State resident, or proceedings instituted if the vehicle is not so detected, or a satisfactory explanation of its disposal is not forthcoming. Cases involving aggravated circumstances, including serious delays in registration or second offences, should be dealt with by way of seizure and/or legal proceedings."
Customs and Excise Enforcement Procedures Manual
There is provision in the Customs and Excise Enforcement Procedures Manual for the issuing of warnings for first and minor offences in cases where a State resident is found with a TE vehicle on loan. Section 4.3 of the Manual contains a list of Offences in relation to VRT, and Section 5.1 of the same Manual describes the "Typical Proofs Required to Support a Case". Two of these offences (i.e. Offences Nos. 1 and 4) appear to be relevant to this complaint. Offence No.  deals with situations where a State resident is found in possession of an unregistered vehicle or where a vehicle is brought in on Temporary Exemption but subsequently found in the possession of a State resident. Offence No.  relates to breaches of the Temporary Exemption Regulations by the holder of the exemption. The descriptions of these two offences suggest that Offence No.  would be applicable to Ms Greene as the State resident who was found in possession of the car and Offence No.  would be applicable to Mr Caprani as the holder of the temporary exemption. A reading of the "notes" in relation to Offence No.  suggests that because Ms Greene (a State resident) was in possession of the vehicle Mr Caprani and Ms Greene should be dealt with under Offence No.  rather than Offence No. . This is borne out by Revenue's focus at the time of detention and seizure on Ms Greene as being the person who committed an offence. In any event, both of these offences provide for warnings in the case of first/minor offences or simple breaches of the Temporary Exemption Regulations.
The description of Offence No.  says that a "vehicle which was brought in on Temporary Exemption but is subsequently found in the possession of a State resident should also be dealt with under this heading. A first and minor offence in such situations (e.g. where a State resident is found with a TE vehicle on loan) should be dealt with by way of warning." (my emphasis)
Mr Caprani was the passenger in his own car which was being driven by Ms Greene, a State resident, therefore I formed the view that this would seem to be a case of a simple breach of the TE regulations or a "first and minor offence" and that Revenue could have used their discretion to issue a warning rather than proceeding directly to detention and seizure of the vehicle in question.
The Section 5 Vehicle Registration Tax Manual (Enforcement)
Revenue referred to Section 5.4.2. of the Section 5 Manual as meaning that a verbal warning should only be given where a TE vehicle is being driven by a State resident for the "first time only". In reports to my Office, Revenue said that "The provision in the Enforcement Manual which provides for an Irish resident getting a "warning" for driving a foreign registered vehicle refers to instances where Irish residents claim that they don't know the rules relating to foreign registered vehicles and the relevant Customs Officers are satisfied that the Irish resident is genuine e.g. visitors from abroad get Irish resident to drive them somewhere." This qualification refers to foreign registered vehicles owned by visitors from abroad rather than foreign registered vehicles which are subject to a temporary exemption and such a qualification is not contained in either of the Manuals.
Indeed, a file note of 3 February 2009 from a member of staff in Revenue's VRT Seizures and Prosecutions Unit, referred to paragraph 5.4.2 of the VRT Instruction Manual and said that "a verbal warning should be issued in circumstances where the vehicle is legally imported on a temporary basis by a qualified person but is being driven by a State resident for the first time only." However, Section 5.4.2 of this Manual deals with the issuing of VRT Demand Notices (Form VRT31) in cases where an "officer has reason to believe that the driver/owner of an unregistered vehicle, who claims entitlement to temporary exemption, may in fact be a State resident." Ms Greene (the driver) did not claim entitlement to temporary exemption and Mr Caprani (the owner) was not considered to be a State resident for the purposes of the TE regulations as his personal ties were in Italy, therefore it was my view that the Section of this Manual dealing with Form VRT31 could not be deemed relevant to this complaint. In fact, this Section goes on to say that the VRT31 is "not to be used where the officer is satisfied that the vehicle in question was legally imported on a temporary basis by a qualified person but is being driven by a State resident for the first time only. In that event, a verbal warning should be issued."
Did Revenue have evidence that Ms Greene had driven the vehicle on more than one occasion?
The Section 5 Vehicle Registration Tax Manual (Enforcement) is supposed to be read in conjunction with the Customs and Excise Enforcement Procedures Manual, however the Section 5 Manual appears to be more restrictive in that it mentions the issuing of a warning where the State resident is driving the car for the "first time only". It is unclear if Ms Greene was driving the car for the first time only and there is no evidence or proof in any documents in Revenue's files that any attempt was ever made to establish if this was the case.
A file note dated 3 February 2009 from a member of staff in Revenue's VRT Seizures and Prosecutions Unit refers to paragraph 5.4.2 of the VRT Instruction Manual and says that "a verbal warning should be issued in circumstances where the vehicle is legally imported on a temporary basis by a qualified person but is being driven by a State resident for the first time only. The vehicle was in the State for approximately 3 months at this stage. Mr Caprani's entitlement to TE would be impossible to disprove at this stage as his application papers have been mislaid and the authorising officer is no longer in meaningful employment with Revenue. We don't know if this was the first time that Ms Greene had possession of the vehicle in the State. All reports are silent on this information." (my emphasis)
This file note also examines two possibilities:
- "If this was her first use of the vehicle in the State then a verbal warning should have been issued. The vehicle should not have been seized.
- If there was evidence that Ms Greene was using the vehicle on more than one occasion in the State then it was correctly seized. If such a case came before this office on appeal then we would uphold the seizure but would look favourably on a reduction of the 10% penalty. It would be seen as a breach of the TE Regulations as opposed to the normal VRT seizure, where a State resident had both ownership and possession of the vehicle. In the former it is most likely that the vehicle would be removed from the State when the legal owner left the State. In the latter there would be intent to retain the vehicle in the State. The latter holds the greater risk to VRT." (my emphasis)
Several days after the detention of the car, Mr Caprani attended an interview with Customs. The car was formally seized following this interview. There is no reference to any "evidence" in the minutes of this interview which were drawn up by Customs that it was not Ms Greene's first time to drive the car. I have established from Mr Caprani that Revenue did not mention during the interview that they had any evidence that it was not Ms Greene's first time to drive the car in the State.
Section 5.4.1. of the Vehicle Registration Tax Manual (Enforcement) says that "enforcement staff should not engage in random challenges of lone, unregistered vehicles. Instead such vehicles should be targeted primarily on the basis of profiling, local observation, information/complaints received etc. but should also take account of the time of year, the location, the activity in which the driver is engaged etc. before they are challenged." A file note (dated 9 September 2005) written by the Customs Officer who detained the vehicle refers to the vehicle having been detained by the Customs Officer "while on patrol in Baggot Street". This suggested to me that it was a random challenge with no prior profiling, observation, complaints etc. therefore it appeared to me that, at the time of detention, Revenue had no evidence that Ms Greene had driven the vehicle on more than that one occasion and that this issue was not raised at any point during the detention or at the subsequent interview prior to seizure.
3.3 Procedural Issues relating to the detention and seizure
Did Revenue follow the correct detention procedure?
Section 140 of the Finance Act 2001 provides that where a Customs Officer reasonably suspects that an excisable vehicle may be liable to forfeiture, the vehicle may be detained by the officer for the purposes of carrying out such examination, enquiries or investigations as are deemed necessary to determine the status of the vehicle. Mr Caprani said that the two Customs Officers were not wearing uniforms, he was given only a business card when the car was taken and he was not given a "Notice of Detention" until he went to the New Custom House three days later and asked for one. He said that his work colleague was in attendance and can verify this. Revenue disputed this and said that the "Notice of Detention" was given to Ms Greene on the evening that the car was detained. I was unable to verify when the "Notice of Detention" was actually issued as it was undated and unstamped.
While there is no indication in the legislation or guidance that the notice of detention/seizure should be date stamped, it is my opinion that it would be good administrative practice to do so. If the notice had been dated or date stamped I would have been able to establish if the notice was given at the time of detention (according to Revenue) or three days later (according to the complainants).
Alleged Behaviour of Customs Officer
Section 5.4.1. of the Vehicle Registration Tax Manual (Enforcement) says that "enforcement staff should not engage in random challenges of lone, unregistered vehicles. Instead such vehicles should be targeted primarily on the basis of profiling, local observation, information/complaints received etc. but should also take account of the time of year, the location, the activity in which the driver is engaged etc. before they are challenged."
The complainants were detained after they had pulled up outside a shop on Baggot Street in August 2005 which would generally be expected to be holiday season and a time when Italian tourists might reasonably be on holidays in Ireland. The complainants appear to have been challenged randomly on a Friday evening by two men, without uniforms, who held up ID cards to identify themselves as Customs Officers. The complainants said that they were not given the opportunity to examine these ID cards to see if they were genuine. Ms Greene was allegedly ordered out of the car by the Customs Officers, one of whom allegedly shouted at Ms Greene. The car was detained and driven off by the two men, and the complainants said that they were given only a business card as proof that the car had actually been taken by Customs. The complainants alleged that the notice of detention was only given to Mr Caprani three days later (Monday 22 August) with no stamp and date and he received it only because Mr Caprani went to the office to ask for this document.
The complainants also said that the staff in the New Custom House had dealt with their calls in a courteous manner. However, they did complain about what they perceived to be inappropriate and aggressive behaviour on the part of one of the Customs Officers during the seizure of the car and at a follow up meeting. I note that, for its part, Revenue has indicated that this aspect of the matter was examined in 2005 by Revenue (see Section 3 above) and it was concluded at the time that the Customs Officers had acted properly. Unfortunately, in the absence of independent witnesses, I was not in a position to independently assess these allegations and as such I was unable to reconcile the conflicting accounts of what had happened.
Quality of Records held by Revenue
In carrying out my preliminary examination, I requested all of Revenue's files and documentation on the matter. I noted that the Revenue files contained very limited information. It was also apparent from emails on file that, in many cases, the "attachments" to the emails were not printed and filed. There also seemed to be documents missing (e.g. correspondence from Revenue to Mr Caprani).
I also examined Revenue's Customs and Excise Enforcement Procedures Manual to see if Customs staff is provided with guidance in relation to record keeping. Section 2.4 of this Manual specifically requires that each Customs Officer keeps details of their actions and interviews in "Revenue Notebook C & E 1110" and also that contemporaneous notes should be taken during interviews and these must be signed by the complainants or, if the complainants decline to sign them, a note to that effect should be recorded on them - "An interviewee should at all times be asked to sign the notes taken during an interview. If s/he declines to sign the notes, the officer should also record the fact." Mr Caprani confirmed to my Office that he was never asked to countersign any interview notes.
Section 2.4 of this Manual says that it is "essential to good practice that a professional, consistent standard is established in relation to note taking, particularly where notes or written observations may be required to be used later in legal proceedings....... The following details, together with the points required to prove an offence, should always be noted:
Date and Time
Names of all those present & times of arrival/departure
Identity and address of alleged offender or other interviewee
Details of cautions, arrest and charge
Details of questions asked and responses
Time interview begins and ends, including timing of breaks
Specific details and description of goods connected with the offence
Details of the laws under which the officer operated
Details of evidence produced/uncovered
I examined the Revenue documentation but there were no minutes of the detention of 19 August 2005. The minutes of the interview/meeting of 29 August 2005 (re seizure) between Customs and the complainants consisted of just one small page of a notebook with fairly limited information which did not address the required details listed above. The records did not contain any evidence in relation to Ms Greene's usage of the car. More detailed accounts of the detention and seizure were only drawn up several weeks after they occurred and only when it was apparent that the complainants were taking the matter further.