McCowan & Anor (t/a Crystal Windows) v Revenue & Customs [2009] UKFTT 128 (TC)

FTT-Tax
McCowan & Anor (t/a Crystal Windows) v Revenue & Customs
[2009] UKFTT 128 (TC) · 2009-06-10
[1][2009] UKFTT 128 (TC) TC00096 Appeal number: EDN/07/108 Value Added Tax – Under-declarations – calculation of assessments "to best of judgement" – Section 73 VATA 1994 – Appeal Refused. FIRST-TIER TRIBUNAL TAX DAVID McCOWAN & FRANK WILLIAMS T/A CRYSTAL WINDOWS Appellant - and - THE COMMISSIONERS FOR HER MAJESTY'S REVENUE AND CUSTOMS (VAT) Respondents TRIBUNAL JUDGE: MR KENNETH MURE, QC (MEMBER): MR K PRITCHARD, OBE., BL., WS Sitting in public in Edinburgh on Tuesday 26 May 2009. No appearance for the Appellant Mr Andrew Scott, Shepherd + Wedderburn LLP, instructed by the General Counsel and Solicitor to HM Revenue and Customs for the Respondents © CROWN COPYRIGHT 2009 DECISION Preliminary The Appellant was not present or represented at the Hearing. Mr Williams sent a fax to the Tribunal office bearing to have been sent shortly after midnight on the morning of the Hearing. This seeks a further adjournment on the basis that a new accountant instructed by him has not produced necessary information. There was no forewarning of this application either to the Tribunal or the Respondents although this Hearing date was set on 25 February 2009. An earlier Hearing set for 25 February 2009 was adjourned at the Appellant's request as its accountant, Mrs Agnes McClymont could not attend as she had a hospital appointment. No medical certificate or other such evidence was produced.[2]Mr Scott for the Respondents objected strenuously to any further adjournment. In addition to the matters noted in the preceding paragraph the attitude of Mr Williams throughout the enquiry and in the course of the appeal had been far from co-operative and had led to delays earlier, he said. The taxpayer's agents had withdrawn from acting too. Relative correspondence in the Respondents' Documents was referred to.[3]We considered the Respondents' stance well-founded in all of the circumstances. Accordingly and having regard to the interests of justice we proceeded to hear the appeal in the absence of the Appellant all in terms of Rule 26. In arriving at this decision the Tribunal took account of the following delays and lack of co-operation on the part of the Appellant. Following assurance visits to the Appellant by the Respondents' officer, William Dixon, on 16 December 2002 and 7 January 2003, the Officer issued verbal followed by written Rulings as to the keeping of proper records. On a duly intimated visit by Mr Dixon on 7 February 2007 Mr Williams said that he was too busy to attend. A further meeting was arranged for 8 February. At that meeting it became apparent that the Appellant had failed to comply with the Respondents' earlier issued guidance Rulings. On 12 February 2007 the Appellant was notified in writing to produce missing bank statements and copies of annual accounts. On 6 March 2007 a reminder letter was issued and in the absence of any reply a further reminder was issued on 3 April 2007. On 27 April 2007 the Respondents received from the Appellant bank statements and annual accounts. Surprisingly on 18 May the Respondents received a letter dated 4 May from A N Ferrington, a Senior VAT Consultant who intimated he was now representing the Appellant, seeking until 8 June 2007 to produce a full response to the Respondents' requests. The Respondents agreed to this but on 21 May Mr Ferrington intimated that he would be unable to meet the time limits. On 1 August 2007 the Respondents intimated that they were unable to allow any further delay and proceeded to issue assessments. Mr Ferrington appealed these assessments to the Tribunal on 10 August 2007. On 24 October 2007 the Respondents wrote to the Appellant and Mr Ferrington requesting evidence to support the assertion that assessments were excessive. On 30 October Mr Ferrington faxed the Respondents indicating that a full response would be received by 7 November. On 8 November 2007 Mr Ferrington wrote to say that a major problem had been encountered. The Appellant had been robbed and the safes containing the bank statements, cheque books and cash books had been stolen, he indicated. On 7 January 2008 the Respondents wrote to Mr Ferrington to ascertain whether the Appellant was in a position to provide further information to prepare revised returns. Mr Ferrington requested a delay until 28 February 2008 to provide this information. On 18 March 2008 the Respondents sought an update of the position. On 29 May 2008 Mr Ferrington stated (somewhat surprisingly) that he did not have the Appellant's permission to submit revised returns and sought an extension of 2 months to do so. The Respondents wrote to the Appellant and Mr Ferrington on 2 June, 17 October and 21 November 2008 seeking the returns which had been promised, but no further correspondence from the Appellant or Mr Ferrington has been received. The Law[4]Section 73 VATA 1994 provides: "(1) where a person has failed to make any returns required under this Act … or to keep any documents and afford the facilities necessary to verify such returns or where it appears to the Commissioners that such returns are incomplete or incorrect, they may assess the amount of VAT due from him to the best of their judgement and notify it to him".[5]Reference was made by Mr Scott to the decision in Rahman (no 2) [2003] STC150. The Tribunal noted also Pegasus Birds [2004] EWCA Civ 1015 . The Facts[6]The Witness Statements of 2 of the Respondents' officers, William Dixon and Fiona Marshall, were not objected to. In the event Mr Scott also led oral evidence from William Dixon, which helpfully set out the course of the Respondents' enquiries and the basis on which the assessments were issued. There are two disputed assessments on the Appellant for VAT viz Doc 18 (from July 2004 to December 2006) and Doc 19 (April to June 2004) for respectively £38,448 and £3,622 plus interest.[7]Mr Dixon explained that throughout his enquiries Mr Williams (who effectively ran the firm's business throughout the relevant period) was less than helpful. There were difficulties in reconciling the various business records and computations produced. Ultimately Mr Dixon followed a cash reconciliation procedure taking account of sums deposited in the bank and also cash received. This method was explained to Mr Williams. No alternative figures (other than those in the Returns) or manner of calculation were put forward by Mr Williams. He had acknowledged that in addition to sums deposited in the bank, further cash had been received and wages had been funded out of cash. (Suppl Doc 1). Mr Dixon made his calculations as shown in Doc 17. The supplies made were all liable to the standard rate of VAT. We considered Mr Dixon to be a credible witness who had made conscientious efforts to calculate a fair estimate of turnover, and on the basis of his testimony (including his recollection of discussions with Mr Williams) and the documentary evidence available we made the following – Findings-in-Fact Decision Costs MR KENNETH MURE, QC TRIBUNAL JUDGE RELEASE DATE: 10 JUNE 2009