19507
ASSESSMENT – mark-up assessments and misdeclaration penalty based on observations and test purchases – Appellant did not appear – appeal dismissed

LONDON TRIBUNAL CENTRE

	WEN XUAN LIN	Appellant

	- and -

	THE COMMISSIONERS FOR HER MAJESTY’S 
	REVENUE AND CUSTOMS	Respondents

			Tribunal:	DR JOHN F AVERY JONES CBE (Chairman)

Sitting in public in London on 20 March 2006

The Appellant did not appear and was not represented

Caroline Neenan, counsel, instructed by the Acting Solicitor for HM Revenue and Customs, for the Respondents

© CROWN COPYRIGHT 2006

DECISION

1.	Wen Xuan Lin appeals against two assessments to VAT, the first made on 11 June 2004 of £29,059 for the periods 07/01 to 01/04 and the second made on 16 November 2004 for £1,449 for the periods 02/04 to 03/04, and a misdeclaration penalty issued on 16 November 2004.  The Appellant did not appear and was not represented; Customs were represented by Miss Caroline Neenan.
2.	I heard the appeal in the Appellant’s absence under Rule 26(2) of the VAT Tribunals Rules 1986.
3.	I find the following facts:
(1)	The Appellant was sole proprietor of a Chinese takeaway, Canton Kitchen in Whitstable, Kent.  The business was sold on 31 March 2004.
(2)	Customs made covert observations and test purchases on Friday 9 May 2003 (64 transactions observed, 30 declared; 2 out of 7 test purchases declared), Wednesday 25 June 2003 (31 transactions observed, 15 declared; none of 3 test purchases declared) and Saturday 21 February 2004 (65 transactions observed, 34 declared; 3 out of 9 test purchases declared).
(3)	The assessment of 11 June 2004 was issued on the basis that the observations and test purchases showed that there was a suppression rate of 50 per cent.  The detailed calculations show a 55 per cent suppression rate using an average declared order of £11.49.  The second assessment was made on the same basis following the Appellant’s former adviser pointing out that the 21 February 2004 observation being outside the period assessed.
(4)	The Appellant’s former advisers wrote suggesting an alternative method of quantifying the under-declaration based on the use of containers resulting in under-declared tax of £2,238.  Customs replied pointing out that not all food was sold in containers; the average price per container assumed that equal amounts of each dish are sold; there was no figure for opening stock of containers; evidence was requested why 20 per cent of containers were not used for sale comprising 10 per cent wastage and 10 per cent complimentary meals; there was a possibility that not all the containers purchased were declared.  A second exercise was prepared showing an under-declaration of £4,446.  Customs replied with the same objections (including in the third that there was no opening or closing stock of containers)
4.	I have looked at the observation evidence, which seems to me to have been carefully prepared, and the calculations, which seem correct to me, and in favour of the Appellant in using 50, rather than 55, per cent suppression rate.  I have considered the alternative method put forward on behalf of the Appellant based on the number of containers and I agree with Customs’ objections to them.  I asked Miss Neenan if there was anything that she could say on behalf of the Appellant and she replied that there was not.
5.	The burden of proof is on the Appellant to displace the assessments and penalty and there is no evidence on which I could reduce them.  Accordingly I dismiss the appeal.

JOHN F. AVERY JONES

CHAIRMAN
RELEASE DATE: 24 March 2006

LON/05/515