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You are here: BAILII >> Databases >> United Kingdom VAT & Duties Tribunals Decisions >> Omar v Customs and Excise [2004] UKVAT V18888 (29 December 2004) URL: https://www.bailii.org/uk/cases/UKVAT/2004/V18888.html Cite as: [2004] UKVAT V18888 |
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18888
VALUE ADDED TAX - assessment – transfer of an existing business manufacturing wholesale and retail three piece suites–– under declaration – commissioners method of calculating assessment changed from number of frames purchased to number of foam sets purchased - assessment to best judgment – no co-operation from Appellant –100% penalty under section 60 (1) value Added Tax Act 1994 – no reduction - appeal dismissed
MANCHESTER TRIBUNAL CENTRE
FIROZ OMAR Appellant
- and -
THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents
Tribunal: David Porter (Chairman)
J T Brian Strangward
Marjorie Kostick BA FCA CTA
Sitting in public in Manchester on 5 November 2004
Philip Rayner for the Appellant
Nicholas Mason of counsel, instructed by the Solicitor's office of HM Customs and Excise, for the Respondents
© CROWN COPYRIGHT 2004
(i) There had been an application by the Commissioners on the day prior to the hearing that Peter Sharrock, the officer who made the decision to raise the penalty, should attend and for the appeal to be adjourned to a convenient date for that purpose. That application had been refused but a further application for the adjournment was withdrawn at this hearing and both parties agreed that the matter could proceed without Peter Sharrock giving evidence.
(ii) Nicholas Mason produced to the tribunal an amended assessment in the sum of £26,538, which had not been notified to the Appellant nor to his representative. In a letter dated 8 May 2003 the Commissioners wrote to Portcullis VAT Consultants Limited explaining that output tax of £1,255 had been over declared for the period 02/01. They considered the output tax should be reduced to nil for that period and deducted from the assessment for the previous period 11/00. The letter did not identify the amount of the new assessment but merely explained the mathematical error and that an amended assessment would be sent in the near future. The amended assessment was never sent out. As a result the amended assessment although valid is unenforceable because it has not been notified to the Appellant nor his representative (see s73(9) and (10) value Added Tax Act 1994). The statement of claim and the entire appeal has been based on the earlier assessment of 17 April 2002 and as that assessment has not been withdrawn nor cancelled this appeal will be heard on the basis of that assessment.
- Kristine Partington was dishonest when she said that she did not have her trader's notes to produce to the tribunal. It is clear from her notes that the previous owner had been under investigation and that she believed the previous owner was running the business. The visit had not been routine as she claimed
- Her provisional assessment based on the number of frames purchased was to best judgment. When she changed the methodology to that based on foam sets she was using an unreliable source. It was unclear whether the foam sets had additional foam in them. Nor had she taken into account any wastage
- There was a serious mathematical error in her additions from the Invoices, where £2,507 had been omitted.
- It was also conceded that £1,255 had been added to the period 02.01 instead of being deducted. This had given rise to a proposed amended assessment, which reduced her figures by a further £2,510. That assessment had never been notified to the Appellant
"We are unable to accept that the test of best judgment is wholly subjective. Of course bad faith or vindictiveness are subjective being depended on the state of mind of the assessing officer. However the question whether an assessment is capricious or a spurious estimate or guess or wholly unreasonable does not depend on the officer's state of mind although it may result from it…. Although the Commissioners are required to 'fairly consider all the material placed before them and, on that material, come to a decision which is reasonable'."
- The primary task for the Tribunal is to find the correct amount of tax - the burden of proof resting on the taxpayer.
- Any challenge to the assessment as a whole on "best judgment" must be clearly and fully stated.
- Any allegation of dishonesty or other wrong doing against those acting for the commissioners should be stated unequivocally; fully particularised; and responded to in writing by the commissioners. The Tribunal should not in any circumstances allow cross-examination of the Customs Officer concerned, until that is done.
- The hearing should be heard as to the amount of the assessment and where necessary any challenge to the "best of their judgment" and its consequences should be left to be dealt with at the end of the hearing
DAVID PORTER
CHAIRMAN
Release Date: 29 December 2004