Mills (t/a Steve Mills Advertising) v Customs & Excise [2003] UKVAT V18292 (19 August 2003)

Registration:  Application for backdating form completed personally by applicant.  Schedule I VATA 1994 Para 9 applies; Appeal dismissed.

EDINBURGH TRIBUNAL CENTRE

	STEVE MILLS
	T/A STEVE MILLS ADVERTISING	Appellant

	- and -

	THE COMMISSIONERS OF CUSTOMS AND EXCISE	       Respondents

			Tribunal:	 (Chairman)   Mrs G Pritchard, BL., MBA., WS
					 (Member)      Ian M P Condie, CA

Sitting in Edinburgh on Monday 28 July 2003

for the Appellants		Mr Steve Mills

for the Respondents	Mr Andrew Scott, Shepherd & Wedderburn, WS

© CROWN COPYRIGHT 2003.

DECISION

This is an appeal under Section 83 of the Value Added Tax Act 1994 (VATA 1994) against a decision of the Commissioners dated 12/12/02 refusing retrospective amendment of the date of registration applied for by the Appellant.

The Appellant was not represented.  He appeared and gave evidence and was credible.  The Commissioners were represented by Mr A Scott.  Evidence was given for the Commissioners by Ms Michelle Lloyd, the officer who made the decision who was credible.  Written evidence was produced by the Commissioners in a bundle paginated 1-15 and where reference is made to any page it shall be treated as repeated here.  There was no dispute on the facts which we found as follows:-

1.	The Appellant applied for Registration on a VAT 1 form dated 26/08/02 and received by the Commissioners on 04/09/02.
2.	The Appellant had started his business on 1/10/01 but had intended trading at a low level.  By July 2002 he had generated some £30,000 of business.  He was instructed in a large contract which would increase his turnover in a single payment of £30,000 thereby exceeding the VAT threshold.
He consulted his Accountant in July 2002 who advised that he apply for Voluntary Registration.  She also advised that he would be entitled to input tax recovery on his capital costs.
3.	The Appellant decided to apply for his own registration himself.  He completed form VAT1 on 26/08/02.
4.	In completing Q.13 of the VAT1 application form he correctly advised that he was making taxable supplies.
5.	In completing Q.18 of the VAT1 application form he also correctly advised that his taxable supplies in the previous 12 months had not exceeded the registration limit.  (In completing Q.19 he wrongly advised he would make taxable supplies in the following 30 days in excess of the registration limit and this has been ignored for the purposes of this decision as irrelevant).
6.	His application was therefore a voluntary application.
7.	In completing Q.20 of the VAT1 application form he advised that he wished to be registered on a date earlier than the date on which he was obliged to be registered.  In addition he specified the date of 01/04/02.
8.	The Appellant’s tax invoices from 01/04/02-26/08/02 (the date of the application) had already been issued and most had been paid.
9.	The Appellant did not appreciate the consequences of entering the date 01/04/02.  He did not wish to pursue his previous customers for VAT after registration was granted on 13/09/02.
10.	He first realised that it was going to cause him difficulty when the paperwork for his first quarterly return came.  He submitted his books and records and the return to his Accountant who advised him of the consequences of his application.
11.	The Appellant had not sought advice from the National Helpline nor from his Accountant for the purposes of completing the form.  He was confused by the form.
12.	The Appellant requested an amendment of the date of Registration in a letter received by the Commissioners on 04/12/02, when he explained he had made a mistake.
13.	His request was refused on 11/12/02.  The decision was reviewed but not revised on 23/01/03.

The Law
The law is clear, voluntary registration is covered by Schedule I VATA 1994 at paragraph 9 which states:

“Where a person who is not liable to be registered under this Act and is not already so registered satisfies the Commissioners that he-
(a)	makes taxable supplies; or
(b)	is carrying on a business and intends to make such supplies in the course of furtherance of that business,
they shall, if he so requests, register him with effect from the day on which the request is made or from such earlier date as may be agreed between them and him”.

This makes it mandatory for the Commissioners to carry out the request of the taxpayer, from the date of the request “or from such earlier date as may be agreed”.  This in effect permits backdating of the date of registration usually for the purposes of an input tax recovery claim which the Appellant had envisaged from his conversation with his Accountant at the outset.  The date of registration is therefore a matter of choice on the part of the taxpayer.

The only method for having the registration itself cancelled is to apply for cancellation which can only be carried out from the date of application.  This is provided in Schedule I VATA 1994 at para 13.  In particular sub para (3) deals with the particular day of registration which is the issue here.  The definition of “registrable” is important.

The definition is found at Schedule I VATA 1994 para 18 which states:

“Registrable” means liable or entitled to be registered under this Schedule.

This provision therefore includes the Appellant who was therefore registrable on the date of registration.

It therefore is not possible to cancel the registration as at 01/04/02.

Decision
The appeal is therefore refused.

Reasons
The law is wholly against the Appellant.  The Tribunal was understanding of the Appellant’s sense of injustice but believed that a simple call to the National Helpline or to his Accountant was not too much to expect when he was confused by the form.  He clearly had thought he needed to backdate the registration to allow a claim for input tax recovery but omitted to take account of the necessity to also collect output tax for the same period.  His thinking was wrong.  Since this was a new area for him we believe he ought to have taken some account of that.

In addition the cases of M & P Stosic v Customs & Excise 10728 and Paul Euan MacDonald v Customs & Excise 17326 clearly show that the responsibility for completing the VAT1 falls squarely on the Appellant.  M & P Stosic v Customs & Excise 10728 and Paul Euan MacDonald followed.

Note
There was a clear error in the letter sent by the Commissioners to the Appellant on 12/12/02, it does not affect the validity of the terms of the letter.

Expenses
No expenses are awarded to or by either party.

MRS G PRITCHARD, BL., MBA., WS

CHAIRMAN

RELEASE:  19 AUGUST 2003

EDN/03/16