Poulter v Revenue & Customs [2012] UKFTT 670 (TC)
[43]It was added in that case at [43] that “ mere suspicion, something short of a conclusion that it is probable that there is an insufficiency is not enough ”. It was further added at [44] that “ a ‘discovery’ is something newly arising, not something stale and old” and that “The conclusion that it is probable that there is an insufficiency must be one which newly arises (from fresh facts or a new view of the law or otherwise) ”. 22. The circumstances of the present case are:(a) all of the invoices (except three) from the scrap metal dealers evidencing the sale of the scrap metal were found at the Appellant’s premises;(b) details of the three transactions where invoices were not found at the Appellant’s premises were supplied by the scrap metal dealer pursuant to the authorisation signed by the Appellant;(c) the invoices bear the Appellant’s name, or the initials “gmp” which are the Appellant’s initials (and the name of two of the companies of which he has been director), and/or registration number of a vehicle associated with the Appellant’s business;(d) most importantly, however, the Appellant admits that each of the invoices relates to the sale of a load of scrap metal that was transported to the scrap metal dealer in a truck belonging to the Appellant’s business, driven by a driver from the Appellant’s business;(e) while the Appellant claims that the scrap belonged to a third party, there is no evidence of this other than the Appellant’s own oral evidence;(f) the Appellant has not provided the name, nor indeed any other details, of the person who is said to be the owner of the scrap. 23. The scrap was sold for a significant sum: the total value of all of the loads was £72,375. The Appellant’s evidence was that his vehicle and driver were merely transporting the scrap for a fee of £200 per load, and that one of the owner’s employees travelled in the vehicle to the scrap metal dealer when each load was delivered. However, the Appellant says that it was the Appellant’s driver and not the owner’s employee who took the invoice. The Appellant said in his oral evidence that no receipt or invoice was given by the scrap metal dealer to the owner’s employee, and that the Appellant kept the invoices in case the owner subsequently queried how much was paid for the load by the scrap metal dealer. The Tribunal finds this to be implausible. Given the amounts involved, it would have been expected that the owner of the scrap would have wanted appropriate paperwork for its own accounts and records, and would have wanted the paperwork to have been made out in the owner’s name. If an employee of the owner accompanied each load to the scrap metal dealer and received the payment, it would be expected that the owner’s employee would at the same time have attended to completing the paperwork in the owner’s name, and would have kept the paperwork. The Appellant has suggested that the scrap metal dealer, in completing the paperwork, just took the initials “GMP” from the side of the vehicle, or used the vehicle registration number. Given the value of the scrap involved, the Tribunal does not find it plausible that the owner would have been content for paperwork to be completed in this way. The Appellant’s explanation for keeping the invoices is not plausible. Clearly the owner would have been concerned to have the actual invoice, to check how much was paid for each load. The suggestion that the owner would have been content to receive payment in cash from its own employee, and to call the Appellant in the event of any query as to how much the scrap metal dealer actually paid, makes no sense, especially in view of the relative significance of the amounts of money involved. The Tribunal also notes that the Appellant had no documentary evidence to show that he had been paid £200 for transporting each load. 24. There was conflicting evidence as to whether the Appellant did at the October 2010 meeting with HMRC explain that he had transported scrap from the Woods factory. The Appellant says that he did. Ms Turner was clear in her evidence that he did not. The Tribunal prefers Ms Turner’s evidence in this respect. There is no record in the notes of this meeting that the Appellant mentioned transporting scrap metal from the Woods factory. According to the notes, he only mentioned the scrap metal from the glasshouses at his property, and mentioned taking scrap to a dealer on behalf of Fitzpatricks. The Tribunal prefers the evidence of Ms Turner in this respect. First, the papers indicate that the notes of the October 2010 meeting with HMRC were sent to the Appellant’s accountants under cover of a letter dated 18 October 2010, with an invitation to send back any corrections to them. There is no record of the Appellant seeking to amend the notes to mention scrap from the Woods factory. Furthermore, subsequent letters from the Appellant’s accountants dated 16 March 2011 and 19 April 2011 do not mention transporting scrap from the Woods factory. The Tribunal considers that even at the time of the October 2010 meeting with HMRC, it must have been abundantly clear to the Appellant that HMRC was interested in any connection that he or his business had with the sale of scrap metal. The Appellant mentioned the sale of scrap from his greenhouses that occurred much earlier in 2004. At the meeting he mentioned transporting scrap for Fitzpatricks, while maintaining that he was never the owner of that scrap. He mentioned that other people used his vehicles and may have used them to transport scrap. The Tribunal finds that there is no reason why, if it were the case, the Appellant would not also at the October 2010 meeting have mentioned that his vehicles transported some £72,375 of scrap over several weeks from the Woods factory in May-June 2006. The Tribunal finds that the Appellant’s failure to mention this earlier goes to the credibility of his claim about transporting scrap from the Woods factory. 25. The Tribunal therefore finds that the HMRC inspector was entitled to come to the conclusion, on the information available to her and the law as she understands it, that it is more likely than not that there is an insufficiency. On the basis of the material before it, the Tribunal would come to the same conclusion. 26. Despite this conclusion, by virtue of s.29(3) of the TMA, there being no suggestion that the Appellant did not file his return on time for the year in question, he cannot be assessed under s.29 unless two conditions are satisfied. 27. The first condition is that the reason for the officer’s “discovery” of non-assessed income must be attributable to fraudulent or negligent conduct on the part of the Appellant or a person acting on his behalf (s.29(4)). The Tribunal finds that this condition is satisfied. The Appellant admits that even on his own account, he failed to include in his tax return the fact that he earned £200 for each load of scrap that was transported. The Appellant’s failure to include these details relating to the sale of the scrap in his tax return must have been at the least negligent. 28. The second condition is that the officer could not have been reasonably expected, on the basis of the information made available to her before that time, to be aware that income which ought to have been assessed to income tax had not been assessed (s.29(5)). The Tribunal finds that there is nothing to suggest that, on the basis of the information provided by the Appellant to HMRC, the latter should have been aware any earlier of any earnings of the Appellant in connection the scrap metal taken from Woods. 29. The amount of additional tax to which the Appellant has been assessed is based solely on the amount of the actual transactions of which HMRC now have details. This is not a case where HMRC has sought to extrapolate from newly discovered evidence that the Appellant also had other undeclared income. Once it is concluded on a balance of probabilities that the Appellant was the owner of the scrap, nothing presented as part of the Appellant’s case suggests that the amount of the further assessment was wrong. For instance, the Appellant did not seek to produce evidence of the amount that he paid for the scrap, which could have been deducted from the amount for which it was sold. In the absence of any further evidence of argument of the Appellant directed to establishing that the amount of the assessment was wrong, under s.50(6) of the TMA the assessment stands good. Conclusion 30. For the reasons above, the Tribunal finds that the appeal must be dismissed. 31. 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. DR CHRISTOPHER STAKER TRIBUNAL JUDGE RELEASE DATE: 27 October 2012