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	United Kingdom VAT & Duties Tribunals Decisions
You are here: BAILII >> Databases >> United Kingdom VAT & Duties Tribunals Decisions >> Warnock Ltd v Revenue & Customs [2006] UKVAT V19684 (28 July 2006) URL: http://www.bailii.org/uk/cases/UKVAT/2006/V19684.html Cite as: [2006] UKVAT V19684

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19684

VAT – REQUIREMENT FOR SECURITY UNDER SCHEDULE 11 PARAGRAPH 4(2)(A) VATA – APPEAL AGAINST NOTICE OF REQUIREMENT – APPEAL DISMISSED.

LON/2005/453

LONDON TRIBUNAL CENTRE

WARNOCK LIMITED

Appellant

-and- THE COMMISSIONERS OF HM REVENUE AND CUSTOMS

Respondents

Tribunal: I W Huddleston (Chairman) Mrs. J. Whiteside

Sitting in Belfast on 19^th July 2006

Mr. McKinney for the Appellant

Mr. Bernard Haley of the Solicitor's Office

of Her Majesty's Revenue and Customs for the Respondents

DECISION
1. This is an Appeal by Warnock Limited trading as David Chesney ("the Appellant") against a requirement by her Majesty's Revenue and Customs that the Appellant should give security under Schedule 11 paragraph 4(2)(a) of the Value Added Tax Act 1994.
2. The original Notice of Requirement ("the First Notice") was issued on the 2^nd November 2004 and required payment by the Appellant of £13,712 (if returns were made quarterly) or £9,141 (if returns were made monthly). The Appellant had lodged a Notice of Appeal and an interlocatory hearing in the matter was heard in October 2005 after which, by a Notice dated the 12^th December 2005 ("the Second Notice"), her Majesty's Revenue and Customs reduced the requirement of security to £1,561 in the case of quarterly returns, or £1,040 in the case of monthly returns. The Appellant continued his appeal against the Second Notice.
3. David Chesney, a director of the Appellant, traded as a sole trader, being registered for VAT from the 6^th April 1998 to 1^st April 2004. He entered into an individual voluntary arrangement on the 7^th December 1998 and de-registered with effect from the 1^st April 2004 leaving a debt in excess of £8,890 owing to the Commissioners. On the same date, ie. 1^st April 2004, the Appellant was incorporated and registered for VAT.
4. Mr. E. McMahon, a higher officer, employed in the Belfast Office of HMRC was called by the Respondent to give evidence of the factors which he had taken into account in relation to the issue of the first Notice, namely:

(a) the history of Mr. Chesney's previous trade;

(b) his personal assessment that the incorporation of the limited company seemed to create a greater risk to the recovery of tax;

(c) his conclusions as regards the requirement for the security originally sought.

5. Evidence was then given about the factors pertaining at the date of issue of the Second Notice, ie. 12^th December 2005. At that point Mr. McMahon indicated that the September 05 VAT return was outstanding and, in addition, there was a debt in respect of unpaid tax owed to Revenue of £2,433.40 by the Appellant.
6. Mr. Chesney, on behalf of the Appellant, gave evidence as to the circumstances surrounding the demise of the earlier business and the personal difficulties encountered by Mr. Chesney through the relevant period. No dispute, however, was raised in relation to the HMRC's records at the relevant time, ie. when the First and the Second Notices were issued.
7. Both HMRC and the Tribunal acknowledged that Mr. Chesney had made considerable efforts to discharge the outstanding debt owed to the Revenue from the previous trading entity, and further acknowledged that considerable efforts had been made by him to make timely VAT returns on behalf of the Appellant and discharge tax when it fell due. Nonetheless, in the circumstances the Tribunal were of the view that the decision taken by Customs at the relevant time, ie. at the issue of the First and Second Notices, was reasonable in all the circumstances and should be upheld and, accordingly, the Appeal would be dismissed.
8. There was no order made as to costs.
9. It was agreed by HMRC that the Appellant should be given time to pay the security in the sum sought by the Second Notice and that the case would be reviewed at the end of a six month period from the date of the hearing.
Chairman : Ian W. Huddleston Release Date: 28^th July 2006