Spc00691

PROFITS – estimated from drink to food ratio – taxpayer believed to have returned to Thailand – direction to dispense with service of documents – appeal dismissed

THE SPECIAL COMMISSIONERS

	S  AUMCHAREON T/A BANGKOK THAI RESTAURANT	Appellant

	- and -

	THE COMMISSIONERS FOR HER MAJESTY’S
	REVENUE AND CUSTOMS	Respondents

		Special Commissioner: 	DR JOHN F. AVERY JONES CBE 

Sitting in public in London on 13 June 2008

The Appellant did not appear and was not represented

Mrs CD Cumming, HMRC Local Compliance South, for the Respondents

© CROWN COPYRIGHT 2008

DECISION

1.	This is an appeal by Mr S Aumchareon trading as Bangkok Thai Restaurant against jeopardy amendments to his self-assessments for 2002-03 and 2003-04 and issued closure notices for the two years.  The Appellant did not appear for the reasons given in the next paragraph, and the Respondent (“the Revenue”) were represented by Mrs Cumming.
2.	Recent communications to the Appellant have been returned in the post.  His previous adviser does not know where he is.  An officer has visited the restaurant and been told by the new owner that the Appellant returned to Thailand in June 2007 and that he does not have an address for him.  In the circumstances I make a direction under rule 28 of the Special Commissioners (Jurisdiction and Procedure) Regulations 1994 dispensing with the requirement to serve documents relating to the appeal on him.
3.	The Appellant was a sole trader owning a Thai restaurant between 1 May 2002 and 30 September 2003.  Before and after those dates he was an employee of Mr Somboongedd at the same restaurant.  The Revenue started an enquiry into his 2002-03 and 2003-04 returns.
4.	The Revenue carried out observations on the restaurant on 11 October 2002 and made test purchases.  On a subsequent examination of the records none of the test purchases were in the records.
5.	An officer, Mrs Uttley, made an analysis of the records and using a business economics model calculated the expected takings.  She calculated from the records the food to drink ratio for three months (June 2002, September 2002 and March 2003) to show that drinks (excluding tea and coffee) amounted to 24.59% of the takings.  From the drinks purchases she calculated the sales price of the drinks.  From this the expected sales were calculated at £151,952.26, compared to the declared sales of £131,936.  She met with the Appellant and his advisers on 30 September 2005 and gave them the calculations.  They did not make any comment on them but asked for an appeal hearing.  On 22 December 2005 Mrs Uttley made two jeopardy amendments to the self-assessments for 2002-03 and 2003-04 and closed her enquiries on 4 April 2006 in the same figures.  The Appellant appealed and the proceedings were transferred from the General Commissioners.  Mrs Uttley revised the figures as a result of checking and informed the Appellant of the revised figures.  She also discovered that the takings for September 2002 (£14,566 excluding VAT) had not been included in the declared figures.  The addition to profits for 2002-03 comprises additional cash takings of £20,016 excluding VAT, disallowed personal expenses of £492 and the addition of £723 own consumption goods, total £35,514.  In addition PAYE income for the period 6 to 30 April 2002 of £880 was included.  The tax on these for the year is £8,905.20.
6.	For 2003-04 the same additions to profits were made increased by the retail price index, and adjusted for the different length accounting period.  The revised profit was £23,112.  PAYE income of £2,340 was added.  The tax for the year is £5,828.70.
7.	The figures seem to me to have been carefully calculated and were put to the Appellant.  They have been revised twice by the Revenue as a result of checking.  The burden of proof is on the Appellant to displace them and he has done nothing to do so.  Accordingly I determine the appeals in the following figures:
2002-03 appeals against jeopardy amendment and closure notice: tax £8,905.20
2003-04 appeals against jeopardy amendment and closure notice: tax £5,828.70

JOHN F. AVERY JONES

SPECIAL COMMISSIONER
RELEASE DATE: 17 June 2008

SC 3084/08

Authorities referred to in skeletons and not referred to in the decision:
Jonas v Bamford (1973) 51 TC 1