18763  MARK PHILIP DENNETT Mr R Barlow Mrs M Kostick Manchester 19 July 2004 Mr J Cardwell accountant appeared for the appellant. Mr B McCluggage, of counsel, instructed by the Solicitor of HM Customs and Excise for the respondents 

	VALUE ADDED TAX – application to de-register – commissioners’ powers limited to de-registering from the date of application or later – no power to backdate.  Appeal dismissed. 

MANCHESTER TRIBUNAL CENTRE

 
 	
	MARK PHILIP DENNETT	Appellant

	- and -

	THE COMMISSIONERS OF CUSTOMS AND EXCISE	Respondents

				Tribunal:	 Mr R Barlow (Chairman)
						 Mrs M Kostick (Member)	

Sitting in public in Manchester on 19 July 2004 

Mr J Cardwell accountant appeared for the appellant.

Mr B McCluggage, of counsel, instructed by the Solicitor of HM Customs and Excise for the respondents

	© CROWN COPYRIGHT 2004

DECISION

1.	The appellant traded as a window fitting business and registered for VAT with effect from 1 November 2002.  By a letter dated 17 September 2003 he requested to be de-registered on the grounds that his turnover had decreased and had fallen well below the registration limit.  The Commissioners de-registered the appellant with effect from 18 September 2003 but refused to back date the de-registration to 30 April 2003, which was the date from which the appellant had requested to be de-registered in the letter of 17 September.  It is that decision that is under appeal.

2.	Mr Cardwell representing the appellant told us in evidence, which Mr McCluggage for the Commissioners accepted, that the appellant had visited him at his accountancy practice on about 26 April 2003 and asked him to secure his de-registration as his turnover had considerably reduced when he ceased to supply windows and began only to fit windows bought by his customers from third parties.

3.	Mr Cardwell frankly admitted that he had overlooked the need to write to the commissioners because of pressure of work at the time of the visit by the appellant and that it had only become apparent to the appellant that no action had been taken when he received an assessment for a later period in which he had not rendered a return which he had not done because he thought he had been de-registered.  Mr Cardwell had also told Mr Dennett to stop charging his customers VAT from 1 May 2003 so that if the commissioners decide to pursue the matter of the outstanding tax he might be out of pocket to the tune of seven forty-sevenths of his turnover between 1 May 2003 and 18 September 2003, although that would be mitigated by a small amount of input tax.

4.	Mr McCluggage drew our attention to paragraph 13(1) of Schedule 1 to the VAT Act 1984 which reads:

“Subject to sub-paragraph (4) below, where a registered person satisfies the Commissioners that he is not liable to be registered under this Schedule, they shall, if he so requests, cancel his registration with effect from the day on which the request is made or from such later date as may be agreed between them and him.” 

5.	Mr McCluggage accepted that the Commissioners had been satisfied that Mr Dennett was not liable to be registered more or less as soon as they received the letter of 17 September and, in effect that if a letter had been sent at the end of April, it would have been virtually certain that they would have agreed to de-register Mr Dennett with effect from 30 April.  However, he also pointed out, as he was obliged to do, that paragraph 13(1) provides specifically that the cancellation of the registration must be from the day on which the request is made or from such later date as may be agreed.

6.	Mr Cardwell sought to argue that the de-registration was not being back-dated because Mr Dennett had asked him to de-register the business in April but it is only the Commissioners who can register or de-register a business and so Mr Dennett’s request to Mr Cardwell is not in any sense a request to de-register that can have any legal consequence as far as the VAT registration under the VAT Act 1984 is concerned.

7.	At first sight it may seem strange that the Commissioners do not have at least a discretion to allow a registration to be cancelled from an earlier date.  The legislation does provide for cancellation back to the date of registration where the person was not entitled to be registered in the first place or back to the date when a person ceased to be entitled if that is the case but that is only what might be expected.  It seems likely that the reason for the restriction on back dating, where a person is entitled to be registered, is that third parties can be affected by trading with someone while they are registered and that any back dating could draw in those persons and require them to make adjustments to their affairs which would potentially cause difficulties.  An example might be that a person who wanted to trade with another had legitimately claimed input tax and may even have asked to see his registration certificate or had enquired of Customs and Excise about his status.  Such a person might well feel aggrieved if his trading partner then de-registered retrospectively and the input tax became recoverable.  Further difficulties might then arise if the de-registered trader then refused to reimburse his customer for the tax charged.

8.	Whatever the rationale, if any, the legislation is clear.  The application to de-register was only made on 18 September and the Commissioners were only entitled to de-register from that date or a later date.

9.	Accordingly, the appeal must be dismissed.  There was no application for costs on the part of the Commissioners and we make no award.

R BARLOW
CHAIRMAN

Release Date: 8 September 2004
MAN/04/0125