The Distinctive Pub Company (Stratford) Ltd v Revenue & Customs [2012] UKFTT 306 (TC)

FTT-Tax
The Distinctive Pub Company (Stratford) Ltd v Revenue & Customs
[2012] UKFTT 306 (TC) · 2012-05-04
[17]Under paragraph 4(2) of schedule 11 VATA HMRC may “require a taxable person, as a condition of his supplying or being supplied with goods or services under a taxable supply, to give security, or further security, for the payment of any VAT that is or may become due from” him “if they think it necessary for the protection of the revenue”. 18. The jurisdiction of the Tribunal in an appeal against a requirement to provide security was described by Dyson J (as he then was) in Customs and Excise Commissioners v Peachtree Enterprises Ltd [1994] STC 747 where he said, at 751:
“It is important to start by stating that it is common ground that the jurisdiction of the tribunal is only supervisory. The appeal before the tribunal is not by way of a rehearing (see, for example Customs and Excise Comrs vJH Corbitt ( Numismatists ) Ltd [1980] STC 231 at 239, [1981] AC 22 at 60 per Lord Lane). This was accepted in the present case by the chairman himself. He put the matter clearly and, in my view, accurately in his decision in these terms: 'The jurisdiction of the tribunal in cases such as this where the Commissioners are exercising discretionary powers has been clearly established in previous cases. It is, for instance, clear that the tribunal cannot substitute its own discretion for that of the Commissioners for the tribunal has no discretion in these matters. If it is alleged that the Commissioners have reached a wrong decision then there can be a question of law but only of a limited character. The question would be whether their decision was unreasonable in the sense that no reasonable panel of Commissioners properly directing themselves could reasonably reach that decision. To enable the tribunal to interfere with the Commissioners' decision it would have to be shown that they took into account some irrelevant matter or had disregarded something to which they should have given weight.' In my judgment, in exercising its supervisory jurisdiction the tribunal must limit itself to considering facts and matters which existed at the time the challenged decision of the commissioners was taken. Facts and matters which arise after that time cannot in law vitiate an exercise of discretion which was reasonable and lawful at the time that it was effected.”
Discussion and Conclusion[19]The documents submitted on behalf of the Company by Mr Harvey refer to the current “gloomy” economic climate and suggests that the request for security is “not only unreasonable but would create unnecessary hardship” for the Company.20. He points out, and we accept, that being a public house with a “well known name ‘the Queens Head’ it is extremely unlikely that the business model for this unit would change.”21. In addition, Mr Harvey explains that the turnover of the Company does not consist solely of cash takings but also includes of credit card transactions. Finally in the “Recommendation Going Forward” Mr Harvey suggests that a “common sense approach” would be to allow the Company to trade whilst making monthly VAT returns without being required to provide security as a small business such as that of the Company “in this current economic environment cannot manage HMRC’s deposit request.[22]Although we do not consider the delay in receiving payment by credit card, as opposed to cash, would have a materially adverse effect on the Company’s cash flow, we do understand and accept that the Company faces genuine difficulties in the current economic climate. However, the effect of the applicable law in an appeal such as this means that the Company’s appeal can only succeed if we consider that, at the time it was made, HMRC did not reasonably arrive at the decision to issue the Notice. It is not sufficient that we might ourselves have reached a different conclusion. 23. In Lindsay v Commissioners of Customs and Excise [2002] STC 508 Lord Phillips of Worth Maltravers MR (as he then was) said, at [40]:
“the Commissioners will not arrive reasonably at a decision if they take into account irrelevant matters, or fail to take into account all relevant matters”
[24]Having carefully considered the evidence and in view of the fact that the requirement for security would cause hardship to an appellant has been held not to be a relevant consideration (see eg Rosebronze v Commissioners of Customs and Excise (1984) VAT Decision No.1668), we find that HMRC did not take irrelevant matters into account or fail take into account all relevant matters at the time the decision to issue the Notice was made. As such we consider that HMRC did arrive reasonably at the decision to issue the Notice and therefore dismiss the appeal Right to apply for Permission to Appeal 25. This document contains full findings of fact and reasons for the decision. Any party dissatisfied with this decision has a right to apply for permission to appeal against it pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009. The application must be received by this Tribunal not later than 56 days after this decision is sent to that party. The parties are referred to “Guidance to accompany a Decision from the First-tier Tribunal (Tax Chamber)” which accompanies and forms part of this decision notice. JOHN BROOKS TRIBUNAL JUDGE RELEASE DATE: 4 April 2012