18889
	
	VALUE ADDED TAX — assessment based on discrepancy between VAT returns and Appellant’s turnover recorded in its annual accounts — discrepancy conceded but reasons for it never identified by Appellant — no challenge to assessment ever advanced — appeal dismissed. 

MANCHESTER TRIBUNAL CENTRE

 
 	
	ANIMAL HOUSE (UK) LIMITED	Appellant

	- and -

	THE COMMISSIONERS OF CUSTOMS AND EXCISE	Respondents

				Tribunal:	 Colin Bishopp (Chairman)
						 Rayna Dean FCA	

Sitting in public in Manchester on 19 November 2004

The Appellant was not represented

Joanne Vicary, counsel, instructed by the Solicitor’s office of the HM Customs and Excise for the Respondents

	© CROWN COPYRIGHT 2004

DECISION

1.	This is an appeal against an assessment made on 6 September 1999 of underdeclared value added tax of £27,550.  The Appellant is in the business (as it is described in its annual accounts) of mail order distribution and counter sales of pets and aquatic supplies.  The assessment is based upon the difference between the company’s turnover, as it is stated in its annual accounts, and the amount declared for the value of its sales in its periodic VAT return.
2.	The Appellant was not present, by one of its officers, nor represented when the appeal was called on for hearing.  On 15 November 2004, four days before the date set down for the hearing, counsel instructed by the firm of tax consultants who had been representing the Appellant from the outset of the appeal applied to the present chairman for a postponement of the hearing.  The application was refused.  It was said that the principal director of the company was recovering from a heart attack, and that he was in France.  
3.	The grounds of appeal state merely that “the discrepancy identified does not constitute an under declaration of tax”.  Those grounds were served five years ago.  It is apparent from the tribunal’s file and from the correspondence included in the bundle produced for this hearing by Joanne Vicary of counsel, instructed for the Respondents, that the Commissioners had been asking the Appellant continually for an explanation of the discrepancy.  None has ever been forthcoming.  Indeed, the tribunal itself made an “unless” direction that the Appellant should provide appropriate information and documents to support its case.  For reasons which are not apparent, that direction were not enforced but the omission does not in any way excuse the Appellant’s failure to comply with it, nor indeed to prosecute its appeal with any reasonable measure of diligence; it is now over five years since this appeal was brought, and even that was done out of time.  It was apparent too, from the tribunal’s file that the director’s heart attack occurred well over a year ago.  The hearing itself has been fixed for some time and the director’s decision to absent himself in France, or his failure to make appropriate arrangements to return to this country, could not amount to a reason for the postponement of the hearing.  For these reasons, we decided to accede to Miss Vicary’s request that we should hear the appeal in the Appellant’s absence.  
4.	As we have said, the assessment is based upon the discrepancy between the Appellant’s turnover as declared in its VAT returns and its annual accounts.  The calculation of the underdeclared VAT takes account of the Appellant’s zero-rated sales and its arithmetic has not been challenged.  Nor has it been suggested that the Appellant should receive any allowance for understated input tax incurred on purchases.  
5.	In the absence of any cogent challenge to the assessment, the appeal must be dismissed.   Miss Vicary sought a direction for costs in the Respondents’ favour.  In our view that was an entirely proper application; we are quite satisfied that this was a frivolous appeal, designed only to defer the payment of the tax.  We direct that the Appellant shall pay the Respondents’ costs, to be assessed by a tribunal chairman sitting alone if the parties are unable to agree upon an amount.

COLIN BISHOPP
CHAIRMAN
Release Date: 29 December 2004

MAN/1999/1016