Case No: C3/03/2551
Neutral Citation Number: [2004] EWCA Civ 1527
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM HIGH COURT (CHANCERY DIVISION)
The Hon Mr Justice Blackburne
Neutral Citation Number [2003] EWHC 2541
Royal Courts of Justice
Strand, London, WC2A 2LL
Date: Wednesday, 17th November 2004

Before :

LORD JUSTICE PILL
LORD JUSTICE JONATHAN PARKER
and
LORD JUSTICE HOOPER
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Between :

	Courts Plc	Appellant	
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	Commissioners of Customs and Excise	Respondents	

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(Transcript of the Handed Down Judgment of
Smith Bernal WordWave Limited, 190 Fleet Street
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R Cordara QC and D Scorey (instructed by Messrs Landwell) for the Appellant
K Parker QC and P Mantle (instructed by the Solicitor for H M Customs & Excise) for the Respondents

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Judgment
Lord Justice Jonathan Parker: 
INTRODUCTION
1.	This case illustrates the risks the revenue authorities may run when attempting to deal fairly and straightforwardly with a taxpayer.   
2.	Courts plc (“Courts”) appeals against an order made by Blackburne J on 4 November 2003 dismissing its appeal against a decision of the Value Added Tax and Duties Tribunal (Dr John F. Avery Jones CBE, Chairman, and Mr Michael Sharp FCA FHCIMA) promulgated on 3 December 2002 ((2002) VAT Decision 17915) (“the Decision”).    
3.	The appeal raises a general question as to what constitutes an ‘assessment’ for the purposes of the Value Added Tax Act 1994 (“the 1994 Act”).    The particular issue is as to the validity of a purported assessment made by Her Majesty’s Commissioners of Customs and Excise (“the Commissioners”) as a ‘protective assessment’ following the decision of the Court of Appeal in Primback v. Customs and Excise Commissioners [1996] STC 757.    The sum involved exceeds £5m.
4.	Permission for a second appeal was granted by Sir Martin Nourse on the papers on 16 December 2003.
THE PRIMBACK LITIGATION
5.	In Primback the Court of Appeal held that where a retailer enters into an arrangement with a finance company whereby the finance company, in consideration of a finance charge payable by the retailer, provides “interest free credit” to the retailer’s customers, the taxable amount for the purposes of calculating the VAT for which the retailer is accountable on the sale of the goods is the net amount received by the retailer after bringing into account the finance charge.   The decision of the Court of Appeal was handed down on 25 April 1996.   
6.	The Commissioners appealed to the House of Lords, and on 1 February 1999 the House of Lords referred the case to the European Court of Justice (“the ECJ”) for a preliminary ruling on the question whether, in the circumstances of the case, the taxable amount was as decided by the Court of Appeal or whether it was the full price paid by the customer, with no deduction in respect of the finance charge.   In a ruling published on 15 May 2001, the ECJ ruled that the taxable amount was the full price paid by the customer.   The House of Lords duly gave effect to that ruling by allowing the Commissioners’ appeal.
THE FACTS OF THE INSTANT CASE
7.	For a detailed account of the facts I respectfully refer to the judge’s judgment, which is now reported at [2004] STC 690.   The following summary may, however, be of assistance in rendering this judgment more readily comprehensible.
8.	Courts has at all material times carried on business as a retailer supplying, among other things, furniture and electrical goods.   During eight consecutive three-monthly VAT periods from 1 October 1997 to 30 September 1999, it offered its customers “interest free credit”.    As in Primback, the credit was provided by a finance company, to which the customer paid the price of the goods by instalments.   In return, the finance company deducted a finance charge when accounting to Courts for the sales proceeds.   In accordance with the Court of Appeal’s decision in Primback, Courts accounted to the Commissioners for VAT on the sale price of the goods less the finance charge.  
9.	The Commissioners were naturally concerned to protect their position pending the final determination of their (eventually successful) appeal to the House of Lords in Primback, and on 16 December 1999 they purported to make an assessment designed to provide such protection.   Before I describe how they did that, it is first necessary to explain the normal internal procedure adopted by the Commissioners for making an assessment in relation to a particular taxpayer and notifying the taxpayer of the assessment.   
10.	The normal procedure is (and was at the material time) as follows.   The starting-point, in terms of the documentation, is the completion by an assessing officer of a standard form called a ‘VAT641’, which is headed ‘Officer’s Assessment’.   Below the heading, spaces are provided for the insertion of the taxpayer’s name, address and reference number, and the assessing officer’s name.   Beneath are a number of columns.   To the left is a column in which the periods to which the assessment relates (up to a maximum of twelve) are identified.   To the right of that column, under the heading ‘Assessment of tax (whole pounds only)’ are two columns in which are inserted the amount of any VAT ‘Due to Customs & Excise’ or, as the case may be, ‘Due from Customs & Excise’, in respect of each of the identified periods.   A space is provided at the foot of each of these two columns for the insertion of the total sum due to, or (as the case may be) from, the Commissioners.  Further to the right are columns enabling the assessing officer to indicate (among other things) whether or not, in respect of any identified period, interest should be charged and/or a ‘misdeclaration penalty’ imposed.   At the foot of the VAT641 is a space for the signature of the ‘Assessing officer’ (so described).   The form also provides spaces for the signature of a ‘Check officer’ and for a counter-signature.   A counter-signature is required in cases where, for example, there has been an overdeclaration resulting in a sum being owed by the Commissioners to the taxpayer, or where the assessing officer has ‘inhibited’ liability for interest and/or penalty – that is to say where he has indicated in the appropriate column that interest is not to be charged, and/or that a penalty is not to be imposed.
11.	The internal guidance for completing a VAT641 is (and was at the material time) contained in a document entitled ‘Table 34’.  Section 3 of Table 34 provides that once the VAT641 has been completed and signed by the assessing officer (and counter-signed where appropriate) the top copy is to be sent for ‘batching and eventual keying’.    This involves the carrying out of various checks by the computer, which may result in the VAT641 being rejected.   Subject to that, the computer automatically calculates interest and penalties (if not ‘inhibited’), and generates a further standard form document known as a ‘VAT655’.   The VAT655 is, as the Tribunal described it (in paragraph 5 of the Decision) “the familiar notice of assessment …, which is technically notification of the assessment”.   It contains a summary of what is due to or (as the case may be) from the Commissioners, and it states that the amount shown has been posted to the taxpayer’s account.   Attached to the VAT655 is a further form (form VAT 667A) showing the current state of account between the Commissioners and the taxpayer.   The VAT655 and the attached VAT667A are sent to the taxpayer.   Finally, the taxpayer’s ledger account is updated to show the current balance, bringing into account the assessment.
12.	The process differs in the case of an amended assessment, in that a form VAT643 is substituted for the VAT641, and a form VAT656 for the VAT655.   For present purposes, nothing turns on any differences between these forms.
13.	A ‘temporary amendment’ to the internal guidance issued in October 1997 (and which continues to have effect) contains the following passage:
“When is an assessment ‘made’?
An assessment is ‘made’ when you have finished calculating the amount upon which the assessment is to be based and a final decision to assess that amount has been taken.   This will be when the amount has been quantified, documented, checked, signed and dated.   As a general rule then, the ‘made’ date is when the VAT641 computer input document has been completed, following the above action.   However, there may be occasions when the ‘made’ date may precede or follow this date (see the examples below).
Example 1 (‘Made’ date precedes completion of VAT641): There may be occasions where an amount has been quantified, documented, checked, signed and dated on a separate schedule, ready for transfer onto a VAT641.   The officer has completed his action calculating the assessed amount and made a final decision to assess that amount.   In such cases the assessment was made at the time the action was completed with respect to the schedule and not the VAT641.

Example 2 (‘Made’ date follows completion of VAT641): You may have issued a ‘pre-assessment’ letter …., giving a business time to respond to the preliminary calculations on which your assessment is to be based.   If you completed a VAT641 before the response time had elapsed, then the ‘made’ date will not be the date the VAT641 was completed, but some later date following any response to the pre-assessment letter.”
14.	Finally, so far as the internal guidance is concerned, it is relevant to note the following paragraph (in paragraph 1.82 in Vol. S8) under the general heading ‘‘Protective’ assessments’: 
“The making of such an assessment will protect our position in [the event of a subsequent appeal being decided in favour of the Commissioners].   These assessments should be made and notified in the normal manner with an explanatory letter to the trader.   In correspondence with the trader, you should not refer to these assessments as ‘holding’, ‘potential’ or ‘protective’ assessments.”
15.	I can now return to the facts of the instant case.
16.	In October 1999 Mr Peter Gurd, the assessing officer, was advised through his line manager concerning the raising of protective assessments in cases such as the instant case, pending the ruling of the ECJ in the Primback litigation.   The advice was to complete a VAT641 but not to process it (that is to say, not to generate a VAT655); and to send a letter to the taxpayer based on a draft which was supplied.    
17.	Mr Gurd’s evidence was that he thought that advice unusual, and that he would not have acted as he did, or at all, but for that advice.   Notwithstanding his reservations about the advice, however, he duly followed it.   Thus on 16 December 1999 he completed and signed a VAT641 for the eight periods in question, showing the total amount of VAT owing by Courts to the Commissioners as £5,347,275.    (For some reason, he did not ‘inhibit’ interest or penalties, notwithstanding that at that date Courts had a decision of the Court of Appeal in its favour.)    On the same day the VAT641 was initialled by a ‘Check officer’.   No counter-signature was, in the circumstances, required.    

18.	In accordance with the advice he had received, Mr Gurd did not send the VAT641 for processing, but retained it on his file.   In consequence no VAT655 was generated; nor was the sum shown as due in the VAT641 posted to Courts’ ledger account.    Instead, Mr Gurd wrote on the same day to Courts, as follows:
“Vat registration No 215-9291-59
NOTICE OF ASSESSMENT
I refer you to your VAT returns for pds 12/97 to 9/99.
The Commissioners have made assessments under section 73 of the [1994 Act] for the following amounts of output tax omitted from returns:
[The amounts are then set out, as entered on the VAT641, totalling £5,347,275]
The Commissioners are appealing the Court of Appeal’s decision in [Primback] to the House of Lords and the above assessment will be enforced if the Court of Appeal’s decision is not upheld.   Default interest will also be charged from the date the amounts were credited to your VAT account until the date of repayment.
If you disagree with any of the amounts quoted above you may request a reconsideration by this office.   You also have the right of appeal against these assessments to an independent VAT and Duties Tribunal within 30 days from the date of this letter.
Should you decide to appeal to a Tribunal, the Commissioners will apply to have the case stood over until such time as the House of Lords decision is known.
Do not hesitate to contact me if you require further clarification of this letter.”
19.	On 7 January 2000 Courts lodged an appeal.
20.	On 25 May 2000 assessments were made for the eight periods in question, together with two preceding and two subsequent periods.    On this occasion the normal internal procedure was followed, involving the completion and processing of a VAT641 and the generation of a VAT655.  The May 2000 assessments were made because the Commissioners had become aware that in making its VAT returns Courts had wrongly assumed that all its financed retail sales were standard-rated, when in fact it was including in its returns both standard-rated and exempt supplies, with the result that part of the VAT shown as due on the VAT641 dated 16 December 1999 was due in any event, regardless of Primback. 
21.	However, a subsequent revision of the figures in the May 2000 assessments produced a reduction in the VAT due in respect of six of the eight periods in question, and an increase in the VAT due in respect of the remaining two periods.    Accordingly, on 29 June 2000 amended assessments were made in relation to the six periods where the revised figures were lower than those in the May 2000 assessments; and new assessments were made in relation to the remaining two periods where the revised figures were higher.   In each case, the normal internal procedure was followed, involving the generation of a VAT656 in respect of the amended assessments and of a VAT655 in respect of the new assessments, and the updating of Courts’ ledger account.
22.	On 6 July 2000 Mr Gurd wrote again to Courts.   The letter, which is headed ‘Amendment to Notice of Assessment’, set out the revised figures for each of the eight periods in question; that is to say the amounts entered on the VAT641 dated 16 December 1999 as varied by the assessments made in May and June 2000.    The remainder of the letter was in the same terms as his letter dated 16 December 1999 (quoted in paragraph 18 above).
23.	The sums assessed by the May/June 2000 assessments were duly paid by Courts.
24.	As noted earlier, on 15 May 2001 the ECJ announced its ruling in Primback.
25.	On 23 November 2001 Mr Gurd completed a VAT641 showing a total sum of £5,426,396 as being due.    This figure included the figures for the eight periods in question as set out in his letter dated 6 July 2000, together with the figures for five subsequent periods.   The VAT641 was signed by a ‘Check officer’ on 27 November 2001 and counter-signed by a further officer on the same date.   A counter-signature was necessary because (unlike the VAT641 dated 16 December 1999) this VAT641 ‘inhibited’ the misdeclaration penalty.
26.	Also on 27 November 2001 Mr Gurd wrote once again to Courts as follows (so far as material):
“Notice of request for payment where protective assessments have been made to recover amounts undeclared on returns.
….
I refer to the Notice of Assessment sent to you on 16th December 1999 and the amended Notice of assessment sent to you on 6 July 2000 …. [and] the Notice of Assessment sent to you on 6 July 2000 ….
At the time of those assessments we informed you that if the Commissioners were successful in their appeal to the House of Lords against the decision in [Primback] they would expect payment of the amounts assessed.   
The House of Lords referred the matter to the [ECJ] and on 15 May 2001 the Court ruled in the Commissioners’ favour.   This means that VAT is due on the full amount paid by your customers for goods purchased, not on the lower amount received by the company.
We now request immediate payment of the VAT amounts previously assessed together with default interest.   ….
If you disagree with any of the amounts shown you may request a reconsideration by this office.   You also have the right of appeal to an independent VAT and Duties Tribunal.   ….”
27.	Having completed the VAT641 on 23 November 2001, Mr Gurd sent it for processing.  On 19 December 2001 the resulting VAT655 was sent to Courts, together with a VAT667A showing the balance currently due as £7,568,469; and Courts’ ledger account was duly updated.    
28.	Mr Gurd’s evidence was that one of the purposes of processing the November 2001 VAT641 was to cause Courts’ ledger account to be updated; that in the light of his earlier letters to Courts he did not believe that a further VAT655 was required; and that had he realised that a further VAT655 would be generated and sent to Courts, he would have intercepted it.
29.	On 11 June 2002 Ms Joad of the Commissioners’ Solicitor’s Office wrote to PriceWaterhouseCoopers (representing Courts) stating that the VAT655 dated 19 December 2001 was withdrawn.   The letter continued (so far as material):
“The form 655 mistakenly duplicated the notifications already sent to [Courts] in relation to assessments for periods 12/97 to 12/00 (those notifications having previously been provided by letters dated 16/12/99, 6/7/00 and 23/3/01).   The Commissioners’ letter of 27 November 2001 notified [Courts] that these assessments were due to be paid.
We do not withdraw the assessments themselves …. or the previous notifications.
I appreciate that the issuing of the form 655 might reasonably lead to a misunderstanding that new assessments had been raised on 19 December 2001 but this was not the case.”
THE ISSUES
30.	Courts challenges the purported assessments made in December 1999.   It contends:
1.	  that the VAT641 completed on 16 December 1999 did not constitute an ‘assessment’ for the purposes of section 73 of the 1994 Act (a) because Mr Gurd never made a decision to assess but merely followed the advice he had received, and/or (b) because the VAT641 was never processed; and 
2.	  that even if (contrary to Courts’ primary contention) the VAT641 completed in December 1999 constituted a valid and effective assessment, it was subsequently withdrawn or superseded by new assessments in May/June 2000 and/or on 19 December 2001.
31.	I will call issue 1 above “the Assessment Issue” and issue 2 above “the Subsequent Events Issue”.
32.	Underlying Courts’ contentions is the important consideration that if either of those contentions succeeds the Commissioners will be unable to put matters right since they are now out of time to make assessments for some at least of the eight periods in question. 
THE 1994 ACT
33.	For present purposes I need refer only to section 73, which is to be found in Part IV of the 1994 Act, under the general heading ‘Assessments of VAT and other payments due’.   Section 73 provides as follows (so far as material):
“73  Failure to make returns etc.
(1)  Where a person has failed to make any returns required under this Act …. 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.
(2)  In any case where, for any prescribed accounting period, there has been paid or credited to any person – 
(a) as being a repayment of refund of VAT, or
(b) as being due to him as a VAT credit, 
an amount which ought not to have been so paid or credited, …. the Commissioners may assess that amount as being VAT due from him for that period and notify it to him accordingly.
[(3), (4), (5)]
(6)  An assessment under subsection (1) [or] (2) …. above of an amount of VAT due for any prescribed accounting period must be made within the time limits provided in section 77 [which provides that no assessment shall be made under section 73 more than 3 years after the end of the prescribed accounting period] and shall not be made after the later of the following – 

(a) 2 years after the end of the prescribed accounting period; or 
(b) one year after evidence of facts, sufficient in the opinion of the Commissioners to justify the assessment, comes to their knowledge,
but (subject to that section) where further such evidence comes to the Commissioners’ knowledge after the making of an assessment under subsection (1), (2) or (3) above, another assessment may be made under that subsection, in addition to any earlier assessment.
[(7), (8)]
(9)  Where an amount has been assessed and notified to any person under subsection (1) …. above it shall …. be deemed to be an amount of VAT due from him and may be recovered accordingly, unless, or except to the extent that, the assessment has subsequently been withdrawn or reduced.
[(10)]”

THE AUTHORITIES
34.	There is no authority directly in point, on either the Assessment Issue or the Subsequent Events Issue, but by way of setting the legal context for his detailed submissions on the facts Mr Roderick Cordara QC (for Courts) cites the following authorities (among others):
Don Pasquale v. Commrs. for Customs & Excise [1990] STC 556 CA (“Don Pasquale”)
Burford v. Durkin [1991] STC 7 (“Burford”)	
Cheesman v. Commrs. for Customs & Excise [2000] STC 1119 (“Cheesman”)
University Court of the University of Glasgow v. Customs & Excise Commrs. [2003] STC 495 (“Glasgow”) and
Pegasus Birds v. Commrs. for Customs & Excise [2004] EWCA 1015 (“Pegasus Birds”).
Don Pasquale
35.	The issue in Don Pasquale was whether (as the Commissioners contended) a single notice of assessment covering 25 chargeable accounting periods constituted a global assessment for the total sum due, or whether (as the taxpayer contended) it constituted a separate assessment for each of the periods in question.  The VAT Tribunal found in favour of the taxpayer.   The judge at first instance allowed the Commissioners’ appeal, and his decision was upheld by the Court of Appeal.   In the course of his judgment, with which Parker and Stocker LJJ agreed, Dillon LJ said this (at p.562b-d):
“The question therefore is whether there were 25 assessments or only one total assessment of the sum on the three pages taken together as a running statement of what is due.   It appears that on a strict analysis there is a distinction between the decision of the commissioners to make an assessment, the making of the assessment, and the notification of the assessment ….”
Burford 
36.	In Burford the issue was whether an assessment had been validly ‘made’, for the purposes of regulation 12(1) of the Income Tax (Sub-Contractors in the Construction Industry) Regulations 1982, in circumstances where the inspector of taxes on whom the relevant statutory discretion had been conferred had duly completed the assessment form but another inspector of taxes had signed the certificate that the assessments had been entered in the assessment book; or whether the signing of the certificate by another inspector of taxes was an unlawful delegation of discretion.   
37.	Slade LJ, who gave the leading judgment, recorded that it was common ground in that case that an assessment was finally ‘made’, for the purposes of regulation 12(1), when a certificate recording the entry of the relevant assessment in the assessment book was signed.   He went on (at p.12c-d) to reject the submission (which the judge at first instance had accepted) that the mere decision to assess, followed by the calculation of the figures, constituted the assessment.     At p.12f, he recorded a submission made on behalf of the Crown, as follows:
“Counsel for the Crown advanced a general proposition of law to the following effect.   Where a statute confers a power on an official to exercise his discretion, only that official can exercise it.   But once he has exercised that discretion he may delegate purely ministerial tasks which flow from the exercise of that discretion to another.   If he does so, he has still properly exercised his statutory power; the carrying out of the ministerial task is treated in law as being his.”
38.	At p.15h, Slade LJ accepted that general proposition of law, saying:
“To sum up, the general proposition of law advanced by counsel for the Crown is in my judgment a correct one.   I can see no reason why it should not apply on the facts of the present case, stressing, as I do, that the function performed by Mr McEnhill [the second inspector] on the instructions of Mr Martin [the first inspector] was purely ministerial and that, on the facts as found by the Special Commissioner, Mr McEnhill exercised no independent judgment of his own.   As the judge thought, the relevant assessment was, for the purpose of applying regulation 12, in law made by Mr Martin and no one else but Mr Martin.   I agree and think that this suffices to dispose of the appeal.”
39.	Nicholls LJ referred, in the course of his judgment, to counsel for the Crown’s account of the Revenue’s normal practice in making an assessment under regulation 12(1), in which step (a) was the decision to make an assessment in a particular amount and step (b) was the making of an appropriate documentary record of that decision, with the intention that it should take effect as an assessment.  Nicholls LJ continued (at pp.16e-17b):
“He told us that step (b) involves the preparation of a document, either in typed or manuscript form, which records the prescribed essential ingredients of the assessment to which step (a) relates: the taxpayer, the amount of the assessment and so forth.  That document, with similar documents relating to other proposed assessments, is then inserted and bound into a folder known as the assessment book.   These sheets, or cards, form another volume of that book.   However, the completion of the physical process of inserting these sheets or cards into the binder, so as thereby to form the book, does not of itself complete the assessing procedure.   That procedure is complete, and an assessment is regarded by the Revenue as having been made when, and only when, an accompanying certificate in the assessment book is signed.   ….   The signature and dating of the certificate are intended to make operative as assessments the details recorded in the assessment book to which the certificate relates.”
40.	However, Nicholls LJ went on to agree with Slade LJ that since in signing the certificate the second inspector was not exercising any discretion, but was simply carrying out the instruction or request of the first inspector, the assessment had been ‘made’ by the first inspector “just as much as it would be in a case where that inspector had signed the relevant certificate himself” (p.17a-b).
41.	Farquharson LJ agreed with both judgments.
Cheesman
42.	In Cheesman the issue was whether (as the taxpayer contended) a VAT655 issued in September 1996 related to an assessment made at that time or whether (as the Commissioners contended) it related to an earlier assessment which had not been processed.   The VAT Tribunal found in favour of the Commissioners.   The taxpayer appealed, submitting that the assessment procedure is not complete until the VAT655 is generated, and that the VAT655 has the dual function of the assessment and notification of the assessment.  Lawrence Collins J allowed the taxpayer’s appeal.   In paragraphs 17 and 18 of his judgment, he summarised the arguments as follows:
“17.   At the risk of oversimplifying the very elaborate arguments that were presented, the principal arguments were these.   For Mr Cheesman, Miss Marion Lonsdale recognised that the legislation distinguishes between assessment and notification, but argued that (a) an assessment is made only when the complete process of assessing and notifying in section 73(1) has been completed; (b) consequently the concept of assessment requires a complete procedure involving the officer’s decision, the completion of Form 641 and its processing, and the production and despatch of Form 655; (c) the Form 655 of 11 September 1996 is the assessment (although it also has the dual purpose of being the notification of the assessment), and it is not permissible to consider the Form 641; (d) alternatively, if it is permissible to look at the Form 641 procedure, the only Form 641 which was checked and acted upon was the September 1996 Form 641; (e) the effect of the agreed facts is that the assessment was made in September 1996; (f) the notice of assessment on Form 655 should be construed as a notification of the September assessment and the interest calculation at September 1996 confirms that the VAT assessment was in September 1996.   ….
18.   For the commissioners, Mr Kenneth Parker QC argued that Miss Lonsdale, while in theory accepting the distinction between assessment and notification, was eliding the two distinct stages of the process; it is the exercise of best judgment by the officer which constitutes the assessment, and Form 641 merely records the figures reached by the exercise of judgment; the assessment is complete once checked and, if required, countersigned; the March Form 641 was stamped as having been checked by a surveyor, a senior supervising officer, and no countersignature was required; input into the computer is not a necessary part of the assessment process; the interest calculation attached to the September notification is a separate assessment and does not throw any light on whether the assessments were made in March or September; the March assessments …. were maintained and made the subject of the September 1996 notice of assessment.”
43.	In Part IV of his judgment, under the heading “Assessment and notification”, Lawrence Collins J said this (in paragraphs 19 to 21):
“19.   The 1994 Act, like its predecessors, gives the commissioners powers to assess the amount of VAT (or surcharge, penalty, and interest) and notify it to the taxpayer (see ss. 73(1), (2), 76(1) and (3)).   Once the amount is assessed and notified, it is due and recoverable from the taxpayer (see ss. 73(9) and 76(9)).   But the time limits apply in relation to the assessment, and not to the notification, and there are no time limits for notification (see ss. 73(6) and 77(1)).    Consequently, it has been recognised that if the distinction between assessment and notification is maintained for the purposes of time limits, it may be that – 
‘…. the commissioners could make a secret assessment and put it in a drawer for five years and then notify it with the contention that the relevant time was when they put it in a drawer and not when they notified.’
(See House (t/a P & J Autos) v. Customs & Excise Commrs. [1994] STC 211 at 222 per May J, who described it as an ‘astonishing contention’.)   ….
20.   It is, however, settled that ‘there is a distinction between the decision of the commissioners to make an assessment, the making of the assessment and the notification of the assessment …. (see [Don Pasquale]).   In Customs & Excise Commrs. v. Le Rififi Ltd [1995] STC 103 [“Rififi”] at 106 Balcombe LJ re-confirmed that the ‘assessment of the amount of tax considered to be due, and the notification to the taxpayer, are separate operations’, but he agreed with what Dillon LJ had said in [Don Pasquale], that from the point of view of the taxpayer it is only from the notification that he can discern what it is that he is required to do and what assessment has been made ….
21.   The conclusion that there is a distinction between assessment and notification does not answer the question of what an assessment is and when it is made.   The point has been considered directly or indirectly in a number of tribunal decisions, but has not been the subject of a direct decision on appeal, either in the High Court or in the Court of Appeal….”
44.	 After referring to various other authorities, including Burford, and after making further reference to Rififi, Lawrence Collins J said this (in paragraph 31):
“31.   Assessment of VAT is an important step, and it is unsatisfactory that the process is not transparent, and not defined by legislation or even by clear administrative practice.   But I do not, on the unusual facts of this case, have to decide on the mechanism by which an assessment becomes complete, as it might be necessary to decide in a case where a time limit falls in the course of completion of the Form 641 process and the generation of the notice of assessment.”

45.	Lawrence Collins LJ went on conclude that the notice of assessment in that case was plainly based on the Form 641 which had been completed (and processed) in September 1996.
Glasgow
46.	In Glasgow, the Scottish Court of Session held that where two assessments in different amounts, made and notified contemporaneously, were so made and notified expressly as being in the alternative, they were not independent but interrelated; and as such they were mutually exclusive and not exigible in the aggregate.   The facts of Glasgow were, in summary, as follows.   The Commissioners considered that the taxpayer had made an underdeclaration of tax for a particular period, and they accordingly wrote to the taxpayer assessing it to tax for that period.   The letter referred to two assessments in differing amounts.   The first assessment was based on the disallowance of input tax on the ground that it was attributable to exempt supplies.   The second, which was for a lesser amount, was based on a disallowance of input tax on the ground that there had been an abuse of law.   The letter stated that the assessments were mutually exclusive, and that the taxpayer need only pay one of them.  It went on to direct the taxpayer to pay the first assessment, but with the qualification that if the first assessment turned out to be wrong and the second assessment correct, appropriate adjustments would be made.   The letter further stated that the two assessments had been issued to protect the Commissioners’ position in view of impending time limits for assessment.   The taxpayer contended that the making of alternative assessments was outside the Commissioners’ powers and gave rise to a multiple liability to tax.   The VAT Tribunal concluded that the Commissioners were acting within their powers in making separate and alternative assessments in respect of the same transaction or series of transactions.   The court dismissed the taxpayer’s appeal.   Delivering the opinion of the court, Lord Hamilton said this in paragraphs 13 and 14 (a passage quoted by the judge in paragraph 66 of his judgment: see paragraph 62 below):
“13.	… The concept of alternative assessments is not, any more than that of a ‘global’ assessment, to be found in the statutory language, which accordingly does not expressly sanction such procedure; nor does that language expressly exclude it.   The issue in this case is whether it is implicitly within the powers of the commissioners, in circumstances such as the present, to make under s.73(1) alternative assessments in the sense of distinct assessments in respect of the same transaction or series of transactions but expressed to be in the alternative. … The only issue is the competency of the assessment procedure in fact adopted.
14.	The burden of [counsel for the taxpayer’s] submission was that other provisions of the statute (in particular ss. 73(9) and 84(3)) were inconsistent with the existence of a power under s.73(1) to make alternative assessments.   S.73(1) involves an assessment of ‘the amount’ (that is, a particular, specified amount) of VAT considered to be due by the taxable person.   It is clear that, if distinct, albeit alternative, assessments are made and notified, each of them involves an assessment of a particular, specified amount considered to be due.   The effect of s73(9) is that, subject to the statutory provisions for appeal, each of these amounts, if looked at in isolation, is deemed to be an amount of VAT due from the assessed person.   But it does not, in our view, follow that the aggregate of these amounts is so due.  Where two assessments in different amounts made and notified contemporaneously, are so made and notified expressly as being in the alternative, they are, in our view, not independent but interrelated.   As such, they are mutually exclusive and not exigible in the aggregate.   It is quite clear that no court would knowingly grant decree in such circumstances for the aggregate amount.   Nor would it be proper for the commissioners to institute legal proceedings for the aggregate….”
Pegasus Birds
47.	In Pegasus Birds the taxpayer contended that VAT assessments had not been made by the Commissioners ‘to the best of their judgment’, for the purposes of section 73(1) of the 1994 Act.   The leading judgment was given by Carnwath LJ.   At paragraph 10 he said this about the statutory requirement of ‘best judgment’:
“It should be noted that the shorthand ‘best judgment’, as used in some of the cases, may be misleading, if it is taken to imply a higher standard than usual.   The statutory words ‘to the best of their judgment’ are used in a context where the taxpayer’s records may be incomplete, so that a fully informed assessment is unlikely to be possible.   Thus the word ‘best’, rather than implying a higher than normal standard, is a recognition that the result may necessarily involve an element of guesswork.   It means simply “to the best of [their] judgment on the information available” (Argosy Co v. IRC [1971] 1 WLR 514, 517 per Lord Donovan).”   
48.	Agreeing with Carnwath LJ, Chadwick LJ said this (at paragraphs 75 and 76):
“75.   For my part, I would accept that an assessment made on behalf of the Commissioners by an officer who had, consciously or unconsciously, ‘closed his mind’ to any material which did not fit his case, would not be an assessment of an amount due to the best of their judgment.   The exercise of judgment, based on the evaluation of material, requires that the task be approached with an open mind.   That does not, of course, mean that the officer is required to accept all that the taxpayer tells him; or to accept that all of the material that the taxpayer produces is genuine.   ….
76.   There was no direct evidence, in the present case, that [the assessing officer] had ‘closed his mind’ to material which did not fit his case.   The Tribunal reached the conclusion which they did on the basis of their finding that ‘the assessments were wholly unreasonable, being outside the parameters of the reasonable’.   Unless implicit in that finding, there was nothing to support a conclusion that [the assessing officer] did not approach his task, as he was required to do, with an open mind; or that he did not make an honest and genuine attempt to assess the amount of VAT properly due from the taxpayer.”

THE DECISION
The Assessment Issue
49.	The Tribunal began by noting (in paragraph 10 of the Decision) that although the process of assessment is not defined in the 1994 Act itself, a distinction falls to be drawn between the making of an assessment and the notification of the assessment to the taxpayer.   
50.	In paragraph 11 of the Decision the Tribunal said this:
“Protective assessments, which are not a different type of assessment but a normal assessment made in particular circumstances, are required to keep time limits open where decisions in other cases are under appeal where eventually the court will declare what has always been the law.   This is particularly necessary now that there is a three-year time limit for assessing.   The Tribunal has also held in DFS Furniture Company plc v. Customs & Excise Commrs. (2002) VAT Decision no. 17,818 [a decision subsequently upheld by the Court of Appeal: see [2004] 1 WLR 2159] that the [ECJ] decision in Primback was not ‘evidence of facts’ enabling time limits to be extended.   The only way in which the Commissioners can keep time limits open is accordingly to make a protective assessment.”
51.	In paragraph 12 of the Decision the Tribunal turned to the issue as to Mr Gurd’s state of mind when he completed the VAT641 in December 1999 and retained it in his file.   With reference to the fact that in so doing Mr Gurd was following the guidance he had been given, the Tribunal said this:
“We can see no reason for saying that this did not constitute a decision by the Commissioners, although split between two persons [i.e. Mr Gurd and the colleague who gave the guidance], to make an assessment.”
52.	The Tribunal went on to conclude that the fact that the December 1999 VAT641 was never processed, with the consequence that no amendment was made to Courts’ ledger account in respect of it, did not lead to the conclusion that the completion of the VAT641 was ineffective to create a debt due to the Commissioners.    The Tribunal concluded (in paragraph 15 of the Decision) that the VAT641 coupled with the letter dated 16 December 1999 were effective to create a debt due to the Commissioners (albeit a debt which was not immediately enforceable).   Accordingly, the Tribunal found (in paragraph 17 of the Decision) that a valid assessment was made on 16 December 1999.
The Subsequent Events Issue
53.	The Tribunal found (in paragraph 21 of the Decision) that the assessment made in May 2000 was valid and was rightly made in order to reflect the fact that part of the VAT shown as due in the December 1999 VAT641 was due in any event, regardless of the outcome of the Primback litigation.  The Tribunal described the May 2000 assessment as an “alternative assessment, the effect of which was to reduce the amount that had been assessed on 16 December 1999”.   Although the Tribunal did not specifically refer to the June 2000 assessment in this connection, it is implicit in its reasoning that in referring to the May 2000 assessment it was referring to the May 2000 assessment as subsequently varied by the June 2000 assessment.
54.	As to the events of November and December 2001, the Tribunal concluded (in paragraph 23 of the Decision) that it was clear from the contents of Mr Gurd’s letter dated 27 November 2001 that he cannot have intended “both to ask for payment of sums previously assessed and to make a new assessment in the same total sum by completing and processing the Form VAT 641”.   The Decision continues:
“He intended, and it is objectively clear that what he was doing was, to prepare a document for inputting on the computer that would result in the debt being shown on the ledger.   No doubt it is much simpler to have one document processed than the previous four documents.   The computer automatically generated a form 655 of 19 December 2001 which Mr Gurd accepts he should have intercepted, and which was later withdrawn.   But [Courts], having been asked to pay the earlier listed assessments by Mr Gurd’s letter dated 27 November 2001, must have realised that the form VAT 655 sent to them on [19] December 2001 for the same total figure was an error and was not a new assessment.   Accordingly we decide that, although Mr Gurd went through all the procedures for making and processing an assessment culminating in the Form VAT 655 of 19 December 2001, in the light of all the circumstances he did not make another assessment on that date.”
55.	The Tribunal accordingly found (in paragraph 24 of the Decision) that nothing that happened after 16 December 1999 affected the validity of the assessment made on that date, save only that the figures were varied as set out in Mr Gurd’s letter dated 6 July 2000 by reason of the May/June 2000 assessments, which were made on an alternative basis.
THE JUDGE’S JUDGMENT
56.	I am well aware that the summary of the judge’s judgment which follows does not do justice to the care and thoroughness with which the judge addressed the issues before him.    However, since his judgment is now reported, a summary is all that is required for present purposes. 
The Assessment Issue
57.	As a preface to his consideration of this issue, the judge formulated a series of general propositions which he considered to be justified on the authorities, as follows (paragraph 53 of the judgment):
i)	“There is a distinction between the decision of the Commissioners to make an assessment, the making of the assessment and the notification of the assessment.  See [Don Pasquale] at 562 (Dillon LJ).
ii)	The decision to make an assessment under section 73(1) must be to assess the taxpayer in a particular sum, must be made by a person (or persons) authorised on behalf of the Commissioners to make the assessment, and must be to the best of the judgment of the person (or persons) making the assessment.   This follows from the wording of section 73(1) and the obvious and inescapable fact that, ordinarily, the Commissioners will not themselves make assessments but will act through others.
iii)	Whether or not, by analogy with the position in the field of direct taxes, the assessment itself must be in a document (as to which and the reason for which, see Nicholls LJ in [Burford] at 16) the assessment must, as a practical matter, be evidenced in writing if only to enable notification of it to be given to the taxpayer.   In the absence of notification the taxpayer has no liability: see section 73(9).
iv)	The making of an assessment being a matter internal to Customs and Excise, the practice of Customs and Excise is relevant to how and at what point an assessment is made and how it is recorded.    See, by analogy, the review of internal Revenue practice in [Burford].   See also the observations of Lawrence Collins J in [Cheesman] at 1127 (paragraph 26).
v)	It matters not that the Commissioners may have no intention of enforcing immediate payment of the amount assessed (and so inform the taxpayer) provided that (a) they intend, when making the assessment, that it is to give rise to an immediate liability to pay the sum assessed and (b) notification to the taxpayer of the assessment (without which in any event there is no liability to pay) does not, when fairly read, suggest to the taxpayer that his liability to pay the amount is other than a present liability.   This would seem to follow from two considerations.   The first is that there is nothing in the legislation, at any rate nothing was drawn to my attention, to enable the Commissioners to make conditional assessments to tax: an assessment is of an amount claimed to be presently due.   If therefore the assessment is conditional it would not be a valid assessment.   The second is that, as it has been put, “from the point of view of the taxpayer it is only from the notification that he can discern what it is that he is required to do and what assessment has been made” (see [Don Pasquale] at 562 per Dillon LJ)).   It must therefore follow that if, on a proper reading, the notification is of a conditional assessment (even though the assessment itself may have been unconditional) the taxpayer has not been given notice of a present liability and therefore his liability under section 73(9) cannot have been triggered.”
58.	Addressing the issue as to Mr Gurd’s state of mind on 16 December 1999, the judge said this (in paragraphs 54 and 55 of the judgment):
“54. On the face of it, Mr Gurd’s action in completing the VAT 641 on 16 December 1999, coupled with his action in sending out the December 1999 letter stating that the Commissioners had made assessments under section 73 for the eight relevant periods, points strongly to a decision having been made to make the assessments.   Why go through these steps if, in truth, no decision to assess had been made?   Essentially, two matters are urged against this conclusion.   First, the Tribunal’s finding that, but for the advice contained in Mr Excell’s e-mail coupled with the draft TA 2/99, Mr Gurd would not have acted at all.   Second, the Tribunal’s finding that the decision was split between Mr Gurd and another coupled with (a) the absence of any clear indication as to who precisely that other was and (b) the absence of any evidence, even if that other was Mr Excell, as to what involvement that the other person had in the decision, let alone what his intentions were with regard to the making of any assessments for the eight relevant periods.
55. The first of those matters does not seem to me to lead to the conclusion that, having received the e-mail advice, Mr Gurd’s action in filling out the VAT 641 did not presuppose a decision to make an assessment for the eight relevant periods in the amounts set out on that form.   The fact that, left to his own devices, Mr Gurd would not have proceeded to make any assessments at all is neither here nor there.   A decision to make an assessment, in the sense referred to in [Don Pasquale], implies no more than that the assessment made was intended by the maker of it to be an assessment in the amount assessed.    There is no reason for thinking that that was not the case when Mr Gurd filled out and signed the form.   As to the second matter, the finding that there was a split decision must be understood in the context in which it was made.   The decision was only split in the sense that it was because, and only because, Mr Excell or some other person took the view that assessments should be made of amounts of tax recoverable if the Primback litigation should be resolved in the Commissioners’ favour that Mr Gurd acted at all in the matter.   There is nothing else in what the Tribunal said to indicate in what way the other person was involved in the decision to assess.   In reality, on the Tribunal’s own findings, the decision-maker was Mr Gurd.   In my judgment the Tribunal’s conclusion, contained in paragraph 12 of its decision, that there was a decision to assess is correct.”
59.	The judge then turned to the issue as to whether the VAT641 which was completed on 16 December 1999 constituted an assessment, for the purposes of section 73 of the 1994 Act; or whether, as contended by Courts, the assessment process must include the generation of a VAT655.    The judge concluded (in paragraph 57 of his judgment) that an assessment is ‘made’ when the VAT641 has been completed and signed off.   He continued as follows (in paragraphs 58 and 59 of the judgment): 
“58. What follows after the form has been completed and signed off is the processing of the assessment and is not a part of the assessment itself.   The processing is essentially clerical in nature: the inputting of the information from the VAT 641 into a computerised system which (a) updates the taxpayer’s ledger and (b) generates the production of a VAT 655 and a VAT 667A (or their equivalents) which are the means devised for notifying the taxpayer of the assessment and of the balance due from him on his account with the Commissioners in consequence of the assessment.   The mention in table 34 of the fact that, before the taxpayer’s file is updated following the completion of the VAT 641, a number of checks are carried out and, if any errors as detailed in appendix G are found, the completed VAT 641 may be rejected, does not mean that the assessment is not yet complete.   I heard nothing to indicate that the subsequent processes, including the check by reference to appendix G, involves the application to the contents of the completed form of any kind of independent judgment on the amount to be assessed.   Indeed, it was not apparent to me what appendix G even contained.
59. I am not persuaded that considerations of convenience and certainty point to the creation of the VAT 655 as marking the completion of the process of assessment.   The question is not what convenience and certainty would suggest but what the point is at which, having regard to the procedures laid down by the Commissioners, the judgment has been made as to the amount to be assessed.   The evidence of internal practice indicates that this point is reached when the VAT 641 has been completed and signed off.”
60.	In paragraph 61 of his judgment the judge said this, with reference to the December 1999 assessment:
“The assessments, although not notified by a VAT 655, were not conditional.   They were notified to Courts by the December1999 letter in terms which made it clear (a) that assessments for the eight relevant periods had been made and (b) that the assessments were intended to give rise to a present liability although enforcement was to await the outcome of the Primback litigation.”
61.	The judge accordingly agreed with the Tribunal on the Assessment Issue.

The Subsequent Events Issue
62.	In paragraph 65 of the judgment the judge concluded that the Tribunal was correct to describe the May and June 2000 assessments as having been made on an alternative basis, “in the sense that, whatever the outcome of the Primback litigation, those later assessments were payable”.   In support of his conclusion, the judge cited [Glasgow], quoting from the opinion of the court, delivered by Lord Hamilton (see paragraph 46 above).   
63.	The judge then turned to the events of November and December 2001 and addressed the question whether the VAT641 which was completed on 23 November 2001, coupled with Mr Gurd’s letter dated 27 November 2001 and the processing of the VAT641 on 19 December 2001 (involving the generation of a VAT655), constituted an assessment; and if so, whether in the light of that assessment the December 1999 assessment is to be regarded as having been superseded.
64.	In paragraph 73 of his judgment the judge concluded that it was difficult to escape the conclusion that the November 2001 VAT641 “was intended to and did operate as assessments of the five accounting periods subsequent to the eight periods in question”.   That being so, he concluded (in disagreement with the Tribunal) that it must also have been intended to operate, and did operate, as an assessment in relation to each of the eight periods in question.
65.	However, in paragraph 75 of his judgment, the judge said this:
“But it does not follow from a conclusion that new assessments were made that the December 1999 assessments were thereby withdrawn.   Nor that Mr Gurd’s actions at that time (including his letter of 27 November) should lead to the conclusion either that there never was any intention in December 1999 to make any assessments.   On the contrary, fairly read that letter, sent four days after Mr Gurd had completed the VAT 641 for the thirteen periods, assumes that the earlier assessments were and remained valid assessments which, having regard to the ECJ ruling in Primback, the Commissioners now intended to enforce.”
66.	The judge accordingly agreed with the Tribunal’s conclusion on the Subsequent Events Issue (albeit for different reasons), and he dismissed Courts’ appeal.
THE GROUNDS OF APPEAL
67.	Grounds 1 to 7 inclusive of Courts’ 10 grounds of appeal relate to the Assessment issue.   They raise once again Courts’ primary contention that no assessment was made, for the purposes of section 73 of the 1994 Act, on 16 December 1999.    Grounds 1 to 4 and ground 6 summarise arguments presented to the Tribunal and to the judge in support of that primary contention.   By ground 5 it is contended that the judge was right to reject the Tribunal’s finding that the purported assessment on 16 December 1999 was a decision split between Mr Gurd and a colleague, but that the judge should have gone on to conclude that, given the absence of any evidence that Mr Gurd’s colleague had participated in the assessment itself, there had been no proper decision by the Commissioners to make an assessment.    By ground 7 it is contended that the judge was wrong to conclude that the ‘assessment’ on 16 December 1999 was the subject of an appropriate documentary record in circumstances where the normal internal process was deliberately not followed.    
68.	Grounds 8 to 10 inclusive raise once again the Subsequent Events Issue.   Courts’ contend that even if a valid assessment was made on 16 December 1999, in the light of subsequent events it no longer has effect.   
THE COMMISSIONERS’ RESPONDENT’S NOTICE
69.	By a Respondent’s Notice dated 6 January 2004 the Commissioners invite this court to uphold the judge’s decision on the additional grounds that no decision was taken to make an assessment in November/December 2001 and that the judge was in error in interfering with the Tribunal’s conclusion that no assessment was made at that time.
THE ARGUMENTS ON THE APPEAL
The arguments on behalf of Courts
70.	In this court Mr Cordara (leading Mr David Scorey) essentially rehearsed the arguments which he presented to the judge.   
71.	Addressing the Assessment Issue, he submits that there is no power under section 73 of the 1994 Act to make so-called ‘protective assessments’, and that any such attempts at assessment fail to meet the requirements of a valid and binding assessment in so far as they do not create, and are not intended to create, an immediate and enforceable debt; rather, they are by their nature both speculative and conditional.
72.	He submits that as at 16 December 1999 it could not be said that any VAT was ‘due’ from Courts, since Mr Gurd’s letter of that date did not contain any stipulation to that effect; rather, it simply stated that the VAT in question would be due, and/or claimed, if the Commissioners appeal to the House of Lords in Primback were successful.   Mr Cordara goes so far as to submit that it is unacceptable that the State should be able to create a debt and then seek to hold it in abeyance, unenforced, pending the outcome of some future contingency.   He submits that the effect of the so-called ‘protective assessment’ in December 1999 was to leave Courts in a state of limbo, not knowing whether or not it was subject to an assessment to tax.   A purported assessment of tax which is not actually due is, he submits, a contradiction in terms, given the terms of section 73(9).
73.	Mr Cordara further submits that, for broadly the same reasons, the purported assessment in December 1999 was simply too uncertain in its terms to constitute a valid assessment for the purposes of section 73.   
74.	Turning to the evidence as to the Commissioners’ internal procedures for the making of an assessment, Mr Cordara submits that the purported assessment in December 1999 failed to comply with those procedures (a) because no decision was taken to make an assessment, and (b) because the process of assessment includes the processing of the VAT641, resulting in the generation of the VAT655.   
75.	As to (a), he submits that Mr Gurd did no more than follow the advice of his colleague in generating a document (the VAT641) which did not itself constitute a full assessment.   On the evidence, he submits, Mr Gurd did not intend, still less did he decide, to make an assessment of VAT which was due: he was doing no more than calculating the amount of VAT which would become due if the Commissioners’ appeal in Primback were successful.     
76.	He further submits that, in such circumstances, it cannot be said that Mr Gurd exercised his ‘best judgment’, as required by section 73(1).   The exercise of ‘best judgment’ requires, he submits, positive and independent cognitive input; whereas in the instant case Mr Gurd simply followed an instruction which was not specifically aimed at Courts and which did not take into account Courts’ circumstances.
77.	Accordingly, he submits, in December 1999 no one on behalf of the Commissioners applied his mind properly or at all to the issue of the assessment: Mr Gurd signed off the VAT641 because he thought he had been instructed to do so, and his colleague who gave such instructions was not concerned with, and did not consider, the facts of the particular case.   He submits that the Tribunal’s finding that the decision was ‘split’ between the two of them was not a finding reasonably open to the Tribunal on the evidence, and that the judge was accordingly right to conclude (in paragraph 55 of his judgment, quoted in paragraph 58 above) that “the decision maker [that is, the sole decision-maker] was Mr Gurd”; but that the judge should have gone on to hold that the only decision which Mr Gurd took was not a decision to assess – it was no more than a decision to adopt an unorthodox procedure with a view to preventing time running.   
78.	Finally, as to (a) above, Mr Cordara relies on the assessments made in May and June 2000 as evidence tending to confirm that no decision to assess was made in December 1999, submitting that the May/June 2000 assessments were not in truth ‘alternative’ assessments, as the judge found.  (I return to Mr Cordara’s submissions about ‘alternative assessments’ in paragraph 83 below, in the context of the Subsequent Events Issue.)
79.	As to (b) above, Mr Cordara relies on the observations of Lawrence Collins J in Cheesman (quoted in paragraph 43 above) as providing support, albeit indirectly, for the proposition that under the Commissioners’ own internal procedures an assessment is not ‘made’ until a VAT641 has been processed, and a VAT655 generated (notwithstanding that the VAT655 may not be sent to the taxpayer).   The checks carried out by the computer at the processing stage, and its automatic calculation of interest and penalties, are, he submits, equally part and parcel of the assessment process.    
80.	He submits that the judge’s conclusion (in paragraph 61 of his judgment, quoted in paragraph 60 above) that the December 1999 assessment was not conditional ignores that fact that it could not have been enforced so long as the Commissioners’ appeal in Primback was pending, and that if that appeal had failed it could not have been enforced at all.
81.	Mr Cordara also seeks to rely on the fact that the purported assessment in December 1999 was not posted to Courts’ ledger account.   He points out that this account is the sole account between the Commissioners and Courts, and that it is designed to cover both sums claimed and sums in dispute.
82.	Turning to the Subsequent Events Issue, Mr Cordara submits (as he submitted below) that if, contrary to Courts’ primary contention, a valid assessment was made in December 1999, that assessment was later withdrawn or superseded by reason of valid notices of assessment issued by the Commissioners in May/June 2000 and/or in December 2001 covering the same subject-matter.
83.	As to the May/June 2000 assessments, Mr Cordara submits that in concluding that they were alternative assessments to the December 1999 assessment the judge gave an impermissibly wide interpretation to Lord Hamilton’s observations in Glasgow (quoted in paragraph 46 above).   He accepts, as he must, that in Glasgow the Court of Session held that the Commissioners had power to issue alternative assessments, but he submits that the court also laid down very careful rules as to when this might occur.   He submits that those rules do not justify the conduct of the Commissioners in the instant case, and that the May/June 2000 assessments were not ‘alternative’ assessments within the meaning of that expression as explained by Lord Hamilton in Glasgow.
84.	As to the events of November/December 2001, Mr Cordara submits that the judge was right (in a paragraphs 73 and 74 of his judgment) to reject the Tribunal’s conclusion that Mr Gurd did not intend the VAT641 completed on 23 November 2001 (coupled with the resulting VAT655) to operate as an assessment, but that he was wrong to conclude (in paragraph 75 of his judgment: quoted in paragraph 65 above) that these later assessments did not supersede the December 1999 assessment.   Mr Cordara submits that the terms of Mr Gurd’s letter dated 27 November 2001 are inconsistent with an intention on Mr Gurd’s part that the December 1999 assessment should remain on foot.
85.	Mr Cordara also submits that the judge was wrong in so far as it is implicit in his reasoning that the Commissioners may make cumulative assessments in relation to the same period.    Mr Cordara submits that Glasgow does not support such a conclusion, and that where an assessment is made in relation to a particular period and subsequently another assessment is made in relation to that same period, the original (earlier) assessment is to be taken to have been discharged.  
86.	Mr Cordara’s written skeleton argument concludes with a section somewhat optimistically entitled ‘Merits’, the expressed purpose of which is to dispel any idea that the issues raised by Courts might be regarded as ‘mere technicality’.   However, since (unsurprisingly, to my mind) Mr Cordara did not specifically refer to this part of his skeleton argument in the course of his lengthy oral submissions, it is not necessary for me to attempt to summarise it.
The arguments on behalf of the Commissioners
87.	Addressing the Assessment Issue, Mr Kenneth Parker QC (leading Mr Peter Mantle) submits that Mr Gurd’s letter dated 16 December 1999 is the clearest evidence that an assessment was made on that date.   He accepts that the letter does not identify the precise moment on that day at which the process of assessment was completed, but he points out that there is no issue in the instant case as to timing.   Rather, the issue in the instant case is whether what was done on 16 December 1999 constituted an assessment.    
88.	Mr Parker also reminds us that there is no procedure prescribed by statute for making an assessment, for the purposes of section 73.   He submits that, having regard to the internal procedures in operation at the material time, the generation of the VAT655 is more naturally to be regarded as part of the process of notification once an assessment has been made than as part of the process of assessment itself.    He submits that this approach is supported by the terms of the VAT655.  
89.	As to Mr Cordara’s reliance on the computer checks as indicating that the process of assessment extends beyond the completion of a VAT641, Mr Parker points out that in the instant case there was no variation between the figures in the VAT641 and the figures as notified by Mr Gurd in his letter dated 16 December 1999.   He further submits that there is no evidence to suggest that the computer checks are designed in any way to override the assessing officer’s ‘best judgment’ in completing the VAT641.
90.	As to the Commissioners’ internal procedures, Mr Parker accepts that in a normal case the VAT641 is processed, resulting in the generation of a VAT655.   However, he submits, the processing stage only becomes relevant for present purposes if (a) the Commissioners themselves treat the generation of a VAT655 as forming part of the process of making an assessment and (b) they do not depart from the normal procedures.   In the instant case, he submits, neither of those conditions is fulfilled.    The Commissioners plainly did not treat the generation of a VAT655 as forming part of the process of assessment in December 1999, since the VAT641 was never processed; and the procedure adopted on that occasion departed from the normal procedure.
91.	Mr Parker submits that if and to the extent that the judge intended to lay down an absolute rule when he concluded (in paragraph 57 of his judgment) that “an assessment is made when [the VAT641] has been completed and signed off”, he overstated the position, since, as the October 1997 ‘temporary amendment’ demonstrates (see paragraph 13 above), that may not always be the case.   Mr Parker accepts, however, that in any case where the existence, as opposed to the timing, of an assessment is challenged, the Commissioners should be in a position to produce the relevant internal document to establish the existence of the assessment, be that document a VAT641 or some other document.   (Mr Mantle informed us that as a matter of policy the Commissioners are content to treat an assessment as having been ‘made’ on the date on which the assessment is notified to the taxpayer.)
92.	Mr Parker submits that the procedure adopted in the instant case was a sensible procedure; that Mr Gurd’s letter dated 16 December 1999 set out the position clearly; and that the generation of a VAT655 and a VAT667A (statement of account) would in the circumstances have merely caused confusion. 
93.	Turning to the Subsequent Events issue, Mr Parker submits that the Tribunal and the judge were right to regard the May/June 2000 assessments as alternative assessments, for the reasons they gave.   As to the events of November/December 2001, he submits (in accordance with the Commissioners’ Respondent’s Notice) that the Tribunal’s conclusion (in paragraph 23 of the Decision) that Mr Gurd cannot have intended to make a further assessment in relation to the eight periods in question is the only reasonable conclusion on the evidence, and that it represents a finding of fact with which an appellate court cannot interfere (an appeal from a VAT Tribunal being on a point of law only).
94.	In any event, he submits, even if a further assessment were made in November/December 2001, so that there were two assessments on foot in relation to the same periods, it is the validity of the later assessment, not that of the earlier assessment, which would be subject to question.
CONCLUSIONS
The Assessment Issue
(1)  The decision to assess
95.	Mr Cordara fastens on the distinction drawn by Dillon LJ in Don Pasquale (at p.562b-d, in the passage quoted in paragraph 35 above) between the decision to assess and the assessment itself as the basis for his submission that no assessment was made in December 1999 because no decision to assess was made.   He submits (a) that in acting as he did in December 1999 Mr Gurd was merely following the instructions which he had been given by his colleague; and (b) that in so far as any decision was taken in December 1999, it was a decision merely to issue a ‘protective’ assessment pending the ruling of the ECJ in Primback, and such a decision (he submits) does not amount to a decision to assess.
96.	In my judgment, these submissions are misconceived.
97.	In the first place, Mr Cordara’s reliance on Dillon LJ’s reference in Don Pasquale to the decision to assess as being distinct from the assessment itself is in my judgment misplaced.   The distinction between the assessment itself and notification of the assessment to the taxpayer is, of course, clear on the face of section 73.   Thus, under section 73(1) the Commissioners are empowered to “assess the amount of VAT due from [the taxpayer] …. and notify it to him”; under section 73(6) time runs from the making of the assessment; and under section 73(9) no debt arises until the assessment has been notified.   However, the distinction between the decision to assess and the assessment itself is not one which is expressly drawn by section 73; nor, in my judgment, does section 73 require such a distinction to be drawn.    At one extreme, a mere decision to assess which is not reflected in action plainly cannot of itself amount to an assessment.    An assessment, after all, has to be capable of being notified to the taxpayer, and on notification it creates a debt: hence a mere executory decision to assess can have no statutory consequences.   At the other extreme, where the steps taken by the Commissioners, objectively viewed, constitute the making of an assessment, in my judgment section 73 leaves no room for an issue as to whether the Commissioners decided to make – which is another way of saying, intended to make – the assessment which (objectively) they made.   
98.	In my judgment, Mr Cordara is seeking to place more weight on Dillon LJ’s words than they can have been intended to bear.   As already noted (see paragraph 35 above) the issue in Don Pasquale was whether there was a single global assessment, or whether there were 25 separate assessments.   If Mr Cordara were correct in his approach, one would have expected to find some analysis and discussion in Dillon LJ’s judgment as to what the Commissioners had decided (intended), and in particular as to whether they had decided (intended) to make a single global assessment or 25 separate ones.    Yet not only is that aspect not explored at all in Dillon LJ’s judgment, but by his citation from Woolf J’s judgment in International Language Centres Ltd v. Customs & Excise Commrs [1983] STC 394, at 398, Dillon LJ makes it clear that he is approaching the issue as one of construction of the relevant documents.   
99.	In my judgment, therefore, if what Mr Gurd did in December 1999 amounted, on an objective analysis, to the making of an assessment (as to which, see below) then there can be no room for any further inquiry as to whether he had decided to do what he did.   Conversely, if on an objective analysis what Mr Gurd did in December 1999 did not amount to the making of an assessment, his state of mind cannot alter that fact.
100.	I bear in mind that the ‘best judgment’ requirement in section 73(1) may introduce subjective considerations to the extent that (as Chadwick LJ explained in Pegasus Birds, in the paragraphs from his judgment quoted in paragraph 48 above) an issue may arise as to whether in making an assessment in a particular case the assessing officer had “‘closed his mind’ to any material which did not fit his case”.     However, that does not in my judgment affect my conclusion that the question whether an assessment has been made is an objective question, to be resolved by reference to what the Commissioners have in fact done.
101.	In the second place, even if (contrary to the view which I have just expressed) it is appropriate to inquire as to whether a decision to assess was made in December 1999, a consideration of the terms of the VAT641 dated 16 December 1999 leads, in my judgment, to only one conclusion.   The form is headed ‘Officer’s Assessment’, and Mr Gurd is described as the ‘Assessing officer’.   The columns in which the figures are inserted are headed ‘Assessment of tax (whole pounds only)’.   To suggest that, in completing and signing this form, Mr Gurd had not decided to make an assessment (albeit an assessment on a ‘protective’ basis: as to which, see below) seems to me to border on the fanciful.   Nor does the fact that he acted as he did on the advice of a colleague (and that he would not have acted as he did but for such advice) lead to the conclusion that he did not exercise his own best judgment in completing the VAT641: manifestly he did.    Whether the decision to assess is correctly attributable to Mr Gurd alone (as the judge was disposed to regard it) or whether it was a decision which was split between Mr Gurd and his colleague (as the Tribunal regarded it) is neither here nor there: the point is that the only person who exercised ‘best judgment’ in completing the VAT641 was Mr Gurd.   He was the assessing officer: he made the assessment.
102.	In the third place, I agree with the judge that a ‘protective’ assessment, in the sense of an assessment which is made in order to protect the Commissioners’ position in the event of a subsequent appeal being decided in their favour (see the internal guidance quoted in paragraph 14 above), is nonetheless an assessment.   As such it will, when notified, create a debt (see s.73(9)).    The fact that no steps will be taken to recover the debt so created pending the occurrence of a future contingency cannot, in my judgment, affect the fact that an assessment has been made.     
103.	Nor, in my judgment, does the ‘protective’ nature of an assessment render it void or unenforceable on grounds of uncertainty.   The epithet ‘protective’ is directed not to the content of the assessment but to the reason for making it.
104.	Lastly on this aspect, I reject Mr Cordara’s submission that the May/June assessments provide some support the suggestion that no assessment was made in December 1999.   As noted earlier, the May/June assessments were made because the Commissioners had realised that part of the VAT referred to in Mr Gurd’s letter dated 16 December 1999 was payable in any event, regardless of Primback; and that is reflected in the terms of his letter dated 6 July 2000.
105.	In my judgment, therefore, there is no substance in Mr Cordara’s submissions as to the absence of a decision to assess.
(2)  The making of the assessment
106.	The statutory requirement for notification of an assessment to the taxpayer demonstrates that in enacting section 73 Parliament regarded the process of making the assessment itself is an internal matter for the Commissioners.    However, given that the time limits in section 73(6) apply to the making of an assessment, as opposed to the notification of the assessment, it is clearly important that the Commissioners’ internal processes and procedures in relation to the making of assessments should, so far as practicable, be standardised; and that in relation to any particular assessment the process which has been followed, and the date or dates on which the various steps comprised in that process were taken, should be readily verifiable by contemporary documentary evidence.  (See, generally, the observations of Lawrence Collins J in Cheesman, quoted in paragraphs 43 and 44 above.)   The absence of any statutory time limit within which an assessment, once made, must be notified to the taxpayer means that, in theory at least, it is open to the Commissioners to delay notification for some considerable time (see Lawrence Collins J’s reference in paragraph 19 of his judgment (quoted in paragraph 43 above) to the observation of May LJ in House (t/a P & J Autos) v. Customs & Excise Commrs.).   However, it is clearly undesirable that that should occur, and the Commissioners’ policy of not relying on any earlier date for the making of an assessment than the date on which the assessment was notified to the taxpayer ensures that no unfairness will be caused to the taxpayer in this respect.
107.	Mr Parker submits that the issue in the instant case is not so much as to the precise point in time at which an assessment is made (i.e. is complete); rather, it is as to the existence or otherwise of an assessment in December 1999.    In one sense, this is a distinction without a difference since an assessment only ‘exists’ when it is made, and the point in time at which an assessment is made is the relevant point in time for the purposes of the section 73(6) time limits.     On the other hand, I agree with Mr Parker that the issue in the instant case falls to be resolved on the basis of the particular facts of the case.   In my judgment, given that the making of an assessment is an internal matter for the Commissioners, in respect of which there is no prescribed statutory procedure, it is simply not possible to arrive at a formula which will determine in every case whether or not an assessment has been made. The Commissioners may, for example, decide to treat certain cases as special or exceptional cases, to which their normal internal processes should not apply.   Indeed, the instant case is an example of that (I return to this below).  Accordingly, I am unable to go as far as the judge when (in paragraph 57 of his judgment) he advanced the seemingly absolute proposition that “an assessment is made when [the VAT641] has been completed and signed off”.   In the majority of cases, that may well be so; but there can in my judgment be no absolute rule to that effect.   In my judgment the position in this respect is correctly reflected in the internal guidance issued in October 1997 (quoted in paragraph 13 above).
108.	I return, therefore, to the facts of the instant case.   In the instant case, it is common ground that there was a departure from the standard internal procedures for making and notifying an assessment, in that the VAT641 was never sent for processing but was retained on Mr Gurd’s file.    However, it does not follow that no assessment was made.  As to that, I accept Mr Parker’s submission that the departure from the standard internal procedures occurred only after the assessment had been made, and I reject Mr Cordara’s submission that the process of assessment in the instant case was not complete until the VAT641 had been processed and a VAT655 generated.  In my judgment the computer checks, and the concomitant possibility of the computer rejecting the VAT641, cannot be said to impact in any way on the statutory requirement of ‘best judgment’ which must lie at the heart of the assessment process.    Nor can I discern any sensible reason why the mere generation of a VAT655 should be regarded as part of the assessment process.   In my judgment, these were purely ministerial functions (cf. Slade LJ in Burford, in the passage from his judgment quoted in paragraph 38 above).  I am accordingly in full agreement with the judge that in the instant case the assessment was complete on the signing off of the VAT641 dated 16 December 1999.
109.	Lastly on this aspect, for reasons already given (see paragraph 103 above) I reject Mr Cordara’s submission that the ‘protective’ nature of the assessment means that it is not an assessment for the purposes of section 73.
110.	I accordingly reject Mr Cordara’s submissions on the Assessment Issue.
The Subsequent Events Issue
(1)  The May/June 2000 assessments
111.	I agree with the judge, and with the Tribunal, that the May/June assessments were alternative to the December 1999 assessment “in the sense that, whatever the outcome of the Primback litigation, those later assessments were payable” (see paragraph 65 of the judge’s judgment).    This conclusion seems to me to be entirely on all fours with the observations of the Court of Session in Glasgow quoted in paragraph 46 above.   Nor is this a case in which the taxpayer could assert, with any degree of credibility, that it was in any doubt as to the true position (an aspect to which I return below).   
(2)  The events of November/December 2001
112.	In paragraph 70 of his judgment the judge rightly defined the issue as being “whether the proper conclusion to be drawn …. is that any assessments made in December 1999 must be regarded as having been withdrawn, and indeed replaced, by new assessments”.
113.	It is common ground that, objectively viewed, the steps taken by Mr Gurd in November and December 2001 amounted to the making of an assessment.    For reasons already given, it must in my judgment follow that an assessment was in fact made, notwithstanding that Mr Gurd may not have realised that the effect of processing the VAT641 was not merely to bring Courts’ ledger account up to date but also to generate, and send out, a VAT655.    But, as the judge rightly concluded, that is not the end of the matter.   The fact that an assessment was made in November/December 2001, with the result that there were two assessments on foot relating to the same periods, does not lead to the conclusion that the later assessment must automatically cancel or supersede the earlier one.       On the contrary, I agree with Mr Parker that, on the face of it, the question-mark will hang over the later assessment rather than the earlier one.     The effect of making a duplicate assessment must, however, depend on the facts of the particular case.   In the instant case, in my judgment, Mr Gurd’s letter dated 27 November 2001 (quoted in paragraph 26 above) makes it absolutely clear that the December 1999 assessment remained operative, and Courts’ can have been under no misapprehension as to that.   
114.	I accordingly reject Mr Cordara’s submissions on the Subsequent Events Issue.
The merits
115.	As noted earlier, Mr Cordara included in his skeleton argument a section headed ‘Merits’.   I shall follow his example.  There are no merits in this appeal.   Courts has attempted to construct a case based purely on technicalities, in circumstances where the Commissioners, through Mr Gurd, were doing their best to deal fairly and straightforwardly with Courts, and where Courts can have been in no doubt as to what the Commissioners were attempting to achieve.    
RESULT 
116.	I would dismiss this appeal.
Lord Justice Hooper:
117.	I agree.
Lord Justice Pill:
118.	I agree with Jonathan Parker LJ on each of the points at issue and that the     appeal should be dismissed.
119.	What this case has highlighted is the importance of officers of the respondents being clear in their own minds what they are doing at each stage; whether they are making an assessment or a decision to assess or some other exercise.  Secondly, when an assessment is made, what is being done should be plain on the face of readily disclosible documents so that a taxpayer who queries whether and when an assessment has been made can be informed of the position.  I expressly agree with Jonathan Parker LJ’s comments as to this at paragraph 106 of his judgment.

Order: Appeal dismissed. Appellant to pay the respondent’s costs, such costs to be subject to detailed assessment if not agreed. Application for permission to appeal refused.
(Order does not form part of approved judgment)