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	United Kingdom VAT & Duties Tribunals Decisions
You are here: BAILII >> Databases >> United Kingdom VAT & Duties Tribunals Decisions >> Burns (t/a AGB Engineering) v Customs and Excise [2004] UKVAT V18837 (05 November 2004) URL: http://www.bailii.org/uk/cases/UKVAT/2004/V18837.html Cite as: [2004] UKVAT V18837

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18837

Requirement for Security: Schedule 11 Para 4(a)(2) VATA 1994. Risk to Revenue. Appeal Dismissed.

EDINBURGH TRIBUNAL CENTRE

ALEXANDER BURNS

T/A AGB ENGINEERING Appellant

- and -

THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents

Tribunal: (Chairman): Mrs G Pritchard, BL., MBA., WS

(Member): Ian M P Condie, CA

Sitting in Edinburgh on Wednesday 27 October 2004

for the Appellant HEARD ON PAPERS ONLY

for the Respondents Mr R MacLeod, Shepherd & Wedderburn, WS

© CROWN COPYRIGHT 2004.


 
DECISION

This is an appeal against a decision of the Commissioners dated 15 July 2004 being a notice of requirement to give security under Schedule 11 Para 4(2)(a) of the Value Added Tax Act 1994 (VATA 1994).

The Appellant intimated that he did not intend to appear at this Tribunal. He had submitted a letter stating his grounds of appeal in addition to his Trib 1 appeal form. The Tribunal proceeded in his absence. The Commissioners were represented by Mr Roddy McLeod, Shepherd & Wedderburn, WS. The Commissioners also submitted written evidence consisting of documents 1-9. Where reference is made to any document, it shall be treated as repeated here. Oral evidence was given by two of the Commissioners' Officers Michael Casey and Ian McNab. Both were credible.

The appeal is competent under S83(e) VATA 1994. The Tribunal's jurisdiction in this matter is to consider the reasonableness of the exercise of the Commissioners' Officer's discretion when making the decision of 15 July 2004.

The Appellant had asked the Tribunal to allow his appeal as he believed he was trying hard to keep his business going, employing a number of staff, and pursuing his trade as a mechanical engineer, against a background of financial stress, and a large amount of government paperwork.

Findings in Fact

1. The Appellant first registered for VAT on 02/08/93 trading as a sole trader as Duncan Engineering which he ran until 26/07/96 owing the Commissioners over £58,000. After payment of a dividend from his sequestration, the outstanding unpaid VAT was £51,795.53.
2. On 20/05/96 Mrs Karen Burns, the Appellant's wife, acquired the business, as a transfer of a going concern and commenced trading as a sole trader, trading as AGB Engineering Services. She ran the business until her insolvency on 12/11/03.
3. On 26/11/03 the Appellant acquired the business as a transfer of a going concern and commenced trading as a sole trader as AGB Engineering from the same premises. He is still running the business today.
4. Following information received in the Insolvency Section of the Commissioners' Office an investigation was conducted and enquiry made of Mr Burns as to whether he was trading. A visit was made to his premises where he indicated he was trading. He had been trading for about 4 months at this time in March 2004. As a result of the enquiries he was compulsorily registered by the officers who attended.
5. The officers investigated the Appellant's history and that of his wife Mrs Karen Burns as there was evidence of previous VAT debt. There is always a parallel investigation with any trader who has a link to the Appellant in relation to the same business and the trader was his wife. It was found Mrs Karen Burns had also had a VAT debt. The research was carried out by Mr McNab. He also found both parties had a very poor compliance record whilst trading.
6. The Appellant's record in his first period of trading from 1993-99 is shown at Tab 4 of the Commissioners documents and is referred to for its terms. The abbreviations in Column 2 show the liability as TDR: Tax Due Return and out of 9, only 2 were timeous and the others subject to Surcharges (SURCH), and Further Interest (FI).

In addition an Officer's Assessment had been raised in the sum of £13,174 with penalty and interest also due.

It also shows payment was not once on time.

This shows non-compliance throughout the trading period.

7. The record of Mrs Karen Burns is shown at Tab 7 (2 pages). She maintained an irregularly compliant record from the period 08/96-11/00 as she failed to meet time demands for the TDR: Tax Due Return on a single occasion or for payment of the sums due. She paid all the surcharges consequently applied. Late in 2000 the compliance stopped so that the 02/01 quarter shows a sum outstanding. Two quarters follow with late payment. Then for a year there is failure again. Until the insolvency in 11/03, there are only two returns paid. The compliance was very poor from 01/03.
8. The reporting officer, Mr Ian McNab having established the trading pattern showing a debt to the revenue incurred by both these associated persons recommended that security be sought from the trader in respect of his current business.
9. That recommendation went for approval to Mr Michael Casey who looked again at all the history and paperwork. He was also made aware that the trader had been compulsorily registered.
10. Mr Casey considered his obligation. He required to be satisfied that there is risk to the revenue. He required to satisfy himself that he had taken all relevant matters into consideration. He required to exercise his discretion reasonably. He was satisfied security was required for the protection of the revenue. He looked at the figures produced by the officers who determined the compulsory registration which showed the likely liability based on the trading, up to that point. He determined a sum of £14,150 was requested if the Appellant rendered quarterly returns or £9,435 if the Appellant wished to take advantage of doing monthly returns (£14,150 represents 6 months liability and £9,435 represents 4 months).
11. The Tribunal is satisfied the decision of the Commissioners' Officers is reasonable in all the circumstances.

Decision

The appeal is therefore dismissed. No expenses are found due to or by either party.

Reasons

The Tribunal was satisfied that the Commissioners Officers exercised their discretion in this matter reasonably. They are empowered by Schedule 11 Para 4(2)(a) to require Security for the protection of the revenue.

The amount of the requirement is calculated in accordance with a formula set out in Customs Notice 700/52 which the officers had followed based on 4 months trading. We are satisfied that the reasoning in Ivy Construction v Commissioners of Customs & Excise VATRIB 18223 LON that the protection of the revenue is the Commissioners responsibility so that to enable this 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 this connection the Tribunal can only consider facts and matters in existence when the decision was made. No irrelevant matter was taken into consideration and no relevant matter left out. The Appellant's letter for this appeal does not address these issues at all. It is every registerable trader's responsibility to account for VAT collected from its customers. The Appellant has not dislodged the test of reasonableness in any way and therefore the Commissioner's decision stands.

MRS G PRITCHARD, BL., MBA., WS CHAIRMAN
RELEASE: 5 NOVEMBER 2004

EDN/04/85