[2009] UKFTT 206 (TC)

TC00159

Appeal Number: MAN/1999/0124 

FIRST TIER TRIBUNAL TAX

VAT – ASSESSMENT & COMPULSORY REGISTRATION – HMRC’s decisions based on available evidence, rational not arbitrary – Appellant did not appear and offered no evidence to dispute HMRC’s decisions – Appeal dismissed

DECISION NOTICE (Full Reasons)
Rule 35(2) The Tribunal Procedure (First Tier Tribunal) (Tax Chamber) Rules 2009 

	JAVED AHMED T/A STAR PRIVATE HIRE	Appellant

	- and -

         THE COMMISSIONERS FOR
	HER MAJESTY’S REVENUE and CUSTOMS	Respondents

			Tribunal: MICHAEL TILDESLEY OBE	 (Chairman)
				      JON DENNY

Sitting in public at Manchester on 17 July 2009

Appellant did not appear

David Mohyuddin counsel instructed by the Solicitor’s office of HM Revenue & Customs, for HMRC

© CROWN COPYRIGHT 2009

DECISION
The Appeal
1.	The Appellant appealed against the following decisions taken by HMRC:
(1)	Compulsorily registration of the Appellant for VAT with effect from 1 December 1996 dated 14 September 1998. 
(2)	Assessment for unpaid VAT in the sum of £28,962 for the period 1 December 1996 to 31 October 1998 dated 22 February 1999.
(3)	Late notification penalty in the sum of £7,015 dated 7 April 1999.
2.	The Appellant did not attend the hearing. The Tribunal proceeded with the Appeal in the Appellant’s absence pursuant to rule 33 of the Tribunal Rules 2009. The Tribunal was satisfied that reasonable steps had been taken to notify the Appellant of the hearing and that it was in the interests of justice to continue with the hearing. 
3.	The Appeal related to matters dating back to 1996. The Appellant was responsible for the delay in the hearing of the Appeal. HMRC advised the Tribunal that the Appellant pursued a course of protracted negotiations with HMRC and at the last moment the Appellant retracted his agreement to a negotiated settlement. 
4.	The Appeal was originally set down for a three day hearing on 1 – 3 April 2009. On 10 March 2009 the Appellant’s representative informed the Tribunal that he was no longer acting for the Appellant, and that the Appellant would not be attending the hearing. On 1 April 2009 the Tribunal adjourned the hearing, the notice of which was sent to the representative. The Tribunal decided that the former representative would have forwarded the notice to the Appellant. The Tribunal was aware that HMRC had served witness statements on the Appellant at his last known address after the aborted hearing in April. The Appellant had not been in contact with the Tribunal to provide new address details or to enquire about the hearing. 
The Evidence
5.	HMRC called Sylvia Anne Ford, Trevor John Graham, and Sandy Suzanne Illingworth as witnesses. Mrs Ford was the officer who made the assessment for unpaid VAT. Mr Graham and Mrs Illingworth carried out on unannounced visit of the Appellant’s business. A bundle of documents was submitted in evidence.
Facts Found
6.	The Appellant carried on business as a private taxi service.
7.	The Appellant took over the business as a going concern on 1 December 1996. The Tribunal accepted Mrs Ford’s evidence which she adduced in support of a changeover date of 1 December 1996, and set out in her witness statement dated 7 April 2009. The statement referred to a range of documents in the Appellant’s name, a bank paying book, a cheque book, and agreements for telephone equipment which all pointed to a changeover date of 1 December 1996.
8.	The taxi business had been in operation from 9 June 1991 under a number of owners. The previous owner to the Appellant did not register for VAT.  
9.	Mrs Ford analysed the information gained by the Officers from the visit of the Appellant’s business premises on 28 September 1997. Mrs Ford’s analysis produced a figure of £124,078 for the annual turnover of the Appellant’s business, which was significantly above the threshold of £49,000 for VAT registration. The analysis also showed that the business was yielding this level of turnover at the time it was transferred to the Appellant. Mrs Ford applied her analysis to arrive at an assessment of £28,962 for the period 1 December 1996 to 31 October 1998.
10.	HMRC informed the Appellant by letter dated 29 September 1997 of its concerns enclosing a form VAT 1 for registration.  The Appellant supplied no meaningful response with the result that on 14 September 1998 HMRC registered the Appellant compulsorily for VAT with effect from 1 December 1996. On 17 December 1998 HMRC notified the Appellant of its intention to issue an assessment for unpaid VAT because he had failed to submit a VAT return for the long period ending 30 November 1998. On 22 February 1999 an assessment in the sum of £28,962 was issued. HMRC gave the Appellant various opportunities to comment upon the assessment and provide further information and evidence, which were not taken up by the Appellant.  The Appellant has supplied no alternative figures for the value of its taxable supplies during the relevant period.
11.	 On 7 April 1999 HMRC notified the Appellant of a belated notification penalty in the sum of £7,015 for the period 1 December 1996 to 27 September 1997. HMRC mistakenly used the value of the taxable supplies rather than the VAT incurred in the relevant period for calculating the penalty. The correct amount for the penalty was £1,250. 
Reasons
12.	The Tribunal was satisfied on the facts found that the Appellant took over the taxi business as a going concern on 1 December 1996, and at that time the turnover for the business exceeded the threshold for VAT registration. By virtue of  section 49(1)(a) and paragraph 1(2) schedule 1 of the VAT Act 1994 the Appellant was liable to be registered for VAT from the date of the transfer, which was 1 December 1996.
13.	Section 73 of VAT Act 1994 empowers HMRC to raise an assessment where a taxpayer has failed to make a VAT return. In making an assessment HMRC is required to consider fairly all material placed before them by the taxpayer, and on that material, come to a decision which is reasonable and not arbitrary as to the amount of tax due. HMRC is under no obligation to do the work of the tax payer by carrying out an exhaustive investigation of the tax payer’s business records. 
14.	In this Appeal HMRC formed a view following an investigation of the Appellant’s business that he was liable to be registered for VAT. HMRC gave the Appellant an opportunity to make a VAT return for the long period ending 30 November 1998 which he did not take up. Mrs Ford’s assessment was based upon information given by the Appellant to the visiting Officers. The Appellant has supplied no information to challenge the assessment. The Tribunal is satisfied that Mrs Ford’s assessment was reasonable and derived from available evidence. The Tribunal finds that the assessment in the sum of £28,962 was correct.
15.	Under section 67 of the VAT Act 1994 the Appellant was liable to a penalty for not registering for VAT on time. The penalty was £50 or 10 per cent of the relevant VAT, whichever was the greater. The Appellant can avoid the penalty if he can show a reasonable excuse, or the Tribunal has powers to mitigate the penalty. The Appellant put forward no grounds to support a reasonable excuse. The Tribunal found no circumstances which would mitigate the penalty. The Tribunal upheld the penalty of £1,250.
Decision
16.	The Tribunal finds that:
(1)	The Appellant was liable to be registered for VAT from 1 December 2006.
(2)	The assessment of £28,962 was correct.
(3)	There were no grounds to remove or mitigate the belated notification penalty of £1,250.
17.	The Tribunal dismisses the Appeal and makes no order for costs. 

                                
                                
MICHAEL TILDESLEY OBE
TRIBUNAL JUDGE
RELEASE DATE: 10 August 2009

MAN

18.	The Tribunal directed that the costs regime which operated prior to 1 April 2009 applied to this Appeal. 
19.	A party who was not present at the hearing may apply for the decision to be set aside provided an application is made in writing to the Tribunal not later than 28 days from release of the decision. The decision to set aside will be at the discretion of the Tribunal.
20.	A party wishing to Appeal this decision to the Upper Tribunal must seek permission by making   an application in writing to the Tribunal within 56 days of being provided with full written reasons for the decision. An application for permission must identify the alleged error(s) in the decision and state the result the party making the application is seeking.
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