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United Kingdom VAT & Duties Tribunals Decisions
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Cite as:  UKVAT V20707
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VAT – assessment following single day's invigilation – whether to best judgment – yes – whether assessment to be amended to allow for some increase in turnover – yes – subject to this, appeal dismissed
LONDON TRIBUNAL CENTRE
MR J AND MRS N BUTTIGIEG T/A THE COTTAGE CAFE Appellants
- and -
THE COMMISSIONERS FOR HER MAJESTY'S
REVENUE AND CUSTOMS Respondents
Tribunal: JOHN CLARK (Chairman)
JO NEILL ACA
Sitting in public in London on 13 and 14 March 2008
Carol Fraser of counsel, instructed by Cymans Chartered Certified Accountants, for the Appellants
Pauline Crinnion of the Solicitor's Office of Her Majesty's Revenue and Customs, for the Respondents
© CROWN COPYRIGHT 2008
"(1) Where a person has failed to make any returns required under this Act (or under any provision repealed by this Act) or to keep any documents and afford the facilities necessary to verify such returns or where it appears to the Commissioners that such returns are incomplete or incorrect, they may assess the amount of VAT due from him to the best of their judgment and notify it to him."
Arguments for the Appellants
(1) The invigilation day was an unusually cold day, resulting in increased numbers of customers coming into the cafe to warm up by purchasing hot items;
(2) The daily gross takings had by then started to increase following the change in marketing strategy, the advertising and the refurbishment (paid for privately out of money given by Mr Buttigieg's father for refurbishing the Appellants' home);
(3) The building work being undertaken locally, resulting in workers coming in for hot meals: Miss Fraser noted that although Mr Davis had been prepared to accept that this might make a difference of £50 per day, he had made no allowance for this in computing his uplift multiplier for the daily gross takings;
(4) The increases in prices of items in the Appellants' menu by between 20 and 50 pence for each item.
Arguments for HMRC
Discussion and conclusions
(1) Have the Appellants established that their VAT returns for the relevant periods were substantially correct?
(2) Have they established that the assessment was not made to the best of HMRC's judgment?
(3) If the Appellants have not satisfied the test in question (2), have they established that the assessment was excessive and should be reduced?
(1) their co-operation and their long previous compliance record ;
(2) the change in the nature of their business shortly before the initial visit, including the work on the premises;
(3) the exceptional nature of the trade at the time of the invigilation, with custom being increased as a result of a number of building projects being undertaken locally, and the exceptionally cold weather on that day leading to greater consumption of hot items.
". . . there are dangers in taking Woolf J's analysis of the concept of 'best judgment' out of context. . . . the tribunal should not treat an assessment as invalid merely because it disagrees as to how the judgment should have been exercised. A much stronger finding is required; for example, that the assessment has been reached 'dishonestly or vindictively or capriciously'; or is a 'spurious estimate or guess in which all elements of judgment are missing'; or is 'wholly unreasonable'. In substance those tests are indistinguishable from the familiar Wednesbury principles (see Associated Provincial Picture Houses Ltd v Wednesbury Corp  1 KB 223). Short of such a finding, there is no justification for setting aside the assessment."
RELEASE DATE: 6 June 2008