18669

22/05/2004 03 0740 GILLS CASTINGS & COMPONENTS LTD Lady Mitting Mr J Lapthorne Birmingham 18 May The Appellant did not appear and was not represented Mr B Haley, of the Solicitor's Office for HM Customs and Excise  
	SECURITY  — Directors’ involvement with previous company — reasonableness of Commissioners’ decision — appeal dismissed

MANCHESTER TRIBUNAL CENTRE

 
 	
	GILLS CASTINGS & COMPONENTS LTD	Appellant

	- and -

	THE COMMISSIONERS OF CUSTOMS AND EXCISE	Respondents

				Tribunal:	 Lady Mitting (Chairman)
						 Mr J Lapthorne (Member)	

Sitting in public in Birmingham on 18 May 2004

The Appellant did not appear and was not represented

Mr B Haley, of the Solicitor's Office for HM Customs and Excise , for the Respondents

	© CROWN COPYRIGHT 2004

DECISION

1.	The decision under appeal is that of the Commissioners contained in a letter dated 30 September 2003 to require the Appellant company to give security in the sum of £10,900 under Schedule 11 paragraph 4(2) Value Added Tax Act 1994.
2.	 No one appeared either from or on behalf of the Appellant company and we proceeded to hear the case under Rule 26(2) Value Added Tax Tribunals Rules 1986.  We heard oral evidence on behalf of the Commissioners from Mr M Houghton.
3.	The Appellant company carries on the business of the manufacture and finishing of zinc and aluminium castings.  It was registered for Value Added Tax with effect from 1 December 2002.  Two of the named directors are Mr Jeffrey Philip Jarvis and his wife, Mrs Beryl Anne Jarvis.  Mrs Jarvis is also named as the company secretary.
4.	Mr and Mrs Jarvis had both been involved in an earlier company, Gills Pressure Castings Ltd, which had been placed into voluntary administration in December 2000 and into liquidation on 10 September 2003.  Mr Jarvis was a director and both of them were named at different times as company secretary.  No returns had ever been filed by this company and as at 21 November 2003, the certified debt owing to the Commissioners was £430,664.54.
5.	Given this previous history, the Commissioners served a Notice of Requirement of Security on the Appellant company on 8 May 2003.  The company lodged an appeal and a local reconsideration of the Requirement was undertaken.  On this reconsideration, the Commissioners withdrew the Notice as the company had been placed on monthly returns and the first return had already been submitted and paid.  The company was advised that their future compliance would be closely monitored.  The company then, however, fell into arrears and immediately after the creditors’ meeting for Gills Pressure Castings Ltd on 10 September 2003, Mr Houghton met with Mr Jarvis and advised him that the Appellant company’s returns and payments had to be brought up to date by 12 September 2003 or a further Notice of Requirement would be served.
6.	As at 30 September 2003, the debt owed by the Appellant company to the Commissioners stood at £15,750.19.  This was made up of the company’s liability for the periods 05/03, 06/03 and 07/03.
7.	Mr Houghton formed the view that given the involvement of Mr and Mrs Jarvis in Gills Pressure Castings Ltd and the failure of the Appellant company to render and pay its returns on time, there was a risk to the Revenue and he raised the Notice of Requirement.  The level of security required was based on the returns submitted for periods 03/03 to 07/03 and given that the company was on monthly returns, was based on a four month period.
8.	The Appellant’s stated grounds of appeal were “That this is a new company trying to get established in very difficult times.  Any payment of this magnitude would severely jeopardise its chance of becoming established and employing approximately 80 people”.
9.	The Tribunal considers the position as it was at the time the Notice was required.  At that time, in addition to the previous history of Mr and Mrs Jarvis the Appellant company had a poor compliance record and, in our view, security was quite properly and reasonably required.  The factors taken into account by Mr Houghton were clearly highly relevant and we were told of no factors which he ought to have taken into account but failed to do so.  The effect on the business of the payment of the security is not a matter which we the Tribunal can take into account. 
10.	The appeal is dismissed.  Mr Haley made an application for costs in the sum of £100 which we grant.

LADY MITTING
CHAIRMAN
RELEASED: 17/06/2004
MAN/03/0740