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	United Kingdom VAT & Duties Tribunals Decisions
You are here: BAILII >> Databases >> United Kingdom VAT & Duties Tribunals Decisions >> RS & M Engineers Ltd v Revenue and Customs [2005] UKVAT V19394 (16 December 2005) URL: http://www.bailii.org/uk/cases/UKVAT/2005/V19394.html Cite as: [2005] UKVAT V19394

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19394

VALUE ADDED TAX — security — VATA Sch 11 para 4 — factors taken into account at time of imposition of requirement — whether reasonably leading to conclusion that security required — yes — appeal dismissed

MANCHESTER TRIBUNAL CENTRE

R S & M ENGINEERS LIMITED Appellant

- and -

THE COMMISSIONERS FOR

HER MAJESTY'S REVENUE AND CUSTOMS Respondents

Tribunal: Colin Bishopp (Chairman)

Sitting in public in Birmingham on 5 December 2005

The Appellant did not appear and was not represented

Bernard Haley, of the Solicitor's office of HM Revenue and Customs, for the Respondents

© CROWN COPYRIGHT 2005


 


DECISION

1. In this appeal, the Appellant, R S & M Engineers Limited, challenges the requirement, imposed on it by the Respondents using the powers conferred on them by paragraph 4(2)(a) of Schedule 11 to the Value Added Tax Act 1994, that it give security as a condition of its continuing to make taxable supplies. The requirement was imposed as long ago as 23 June 2004.
2. The Appellant was not represented when its appeal was called on for hearing. Notice of the hearing appeared to have been properly served, and I observed that the Appellant had likewise not been represented at a pre-hearing review which took place on 7 November 2005. The tribunal's file showed that there have been prolonged negotiations between the Appellant and the Respondents, but they have not been successful. Bernard Haley, of their Solicitor's office, who appeared for the Commissioners asked me to hear the appeal in the Appellant's absence, in accordance with rule 26(2) of the Value Added Tax Tribunals Rules 1986 (SI 1986/590) as amended, and I agreed that it was appropriate to do so. If it is dissatisfied with my decision, the Appellant may apply, within 14 days of its release, to have it set aside.
3. The tribunal's jurisdiction in appeals of this kind is very limited. I may allow the appeal only if I am satisfied that, at the time the requirement was imposed, the Commissioners could not reasonably have decided to impose it. I cannot allow the appeal merely because I might have come to a different conclusion, nor may I take into account events which have occurred since the requirement was imposed.
4. The requirement was based on the Commissioners' perception that the involvement of the Appellant's directors in other companies, of which they had also been officers and which had entered into liquidation owing the Commissioners significant sums, presented a risk that the Appellant, too, might become insolvent while owing a substantial sum. I was provided with details showing that all or some of the Appellant's directors had been officers of such companies, that together those companies had a substantial debt to the Commissioners, that some had a poor compliance record and that, on 23 June 2004, the Appellant itself was indebted to the Commissioners to the extent of over £76,000 in respect of tax shown due on its returns and by some central assessments. The correspondence between the Appellant and the Commissioners and the notice of appeal indicate that the principal reason for the Appellant's challenge is that the amount demanded is high; the notice of appeal, lodged some two months after the requirement was imposed, also contends that the outstanding tax had been paid. There is no suggestion that the history of the other companies, as the Commissioners perceived it, was incorrect.
5. It was apparent that the amount of security demanded was calculated in accordance with the Commissioners' usual practice, that is six months' estimated tax liability (or four months' net liability if monthly returns were to be submitted) being one period's tax plus an additional three months' liability to allow for the period of grace in submitting the return, and a safety margin. The Commissioners have reduced the amount demanded in the light of representations about its turnover made by the Appellant, but the reduced amount is still said to be too high. Mr Haley told me that the Appellant's recent compliance record was now good. He also told me that, if the Appellant maintained a good compliance record for a year, the Commissioners would reconsider and probably withdraw the security requirement. That year has not, however, yet elapsed and the requirement remains in place.
6. However, as I have indicated, I must leave such factors out of account. It is my view quite impossible to say that the Commissioners' decision to impose the requirement was unreasonable at the time it was made. The Appellant's directors had managed other companies which, in the recent past, had failed owing the Commissioners substantial sums, and its own compliance record was then poor. There clearly was a risk to the revenue and I am satisfied that the decision was not only reasonable but right. I must therefore dismiss the appeal.

COLIN BISHOPP

CHAIRMAN
Release Date: 16 December 2005

MAN/04/0462