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	United Kingdom VAT & Duties Tribunals Decisions
You are here: BAILII >> Databases >> United Kingdom VAT & Duties Tribunals Decisions >> CFT Services Ltd v Revenue & Customs [2007] UKVAT V19986 (22 January 2007) URL: http://www.bailii.org/uk/cases/UKVAT/2007/V19986.html Cite as: [2007] UKVAT V19986

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CFT Services Ltd v Revenue & Customs [2007] UKVAT V19986 (22 January 2007)

19986

VALUE ADDED TAX — voluntary disclosure claiming that Appellant had overpaid output tax — claim based on adoption of VAT fraction of net-of-tax sales — claim wholly misconceived — claim for relief for additional input tax — no evidence to support claim produced — appeal dismissed

MANCHESTER TRIBUNAL CENTRE

C F T SERVICES LIMITED

Appellant

- and -

THE COMMISSIONERS FOR HER MAJESTY'S

REVENUE AND CUSTOMS

Respondents

Tribunal: Colin Bishopp (Chairman)

John Lapthorne

Sitting in public in Birmingham on 10 January 2007

The Appellant was not represented

Jonathan Cannan, counsel, instructed by the Acting Solicitor for HM Revenue and Customs, for the Respondents

© CROWN COPYRIGHT 2007

DECISION

1. This is an appeal by C F T Services Limited, a haulage company, against the substantial rejection by the Respondents of a voluntary disclosure made on 2 December 2005 and amplified on 2 and 24 January 2006. The disclosure was designed to correct what the Appellant's representative contended were various errors in the manner in which it had treated some of its income, an over-declaration of output tax, and an under-claim of input tax. Some elements of the claim have been agreed, but two issues remain. First, the Appellant's representative has argued, in correspondence, that output tax should be calculated by taking the VAT fraction of the turnover shown in the Appellant's annual accounts, whereas the Respondents maintain that the proper approach is to add the current rate of VAT to that turnover. Second, the Respondents have refused to accept the claim for additional input tax credit since the claim is not supported by documentary (or indeed any) evidence.
2. When the appeal was called on for hearing no-one appeared to represent the Appellant, while the Respondents were represented by Jonathan Cannan of counsel. There was no evident reason why the Appellant was unrepresented; its appeal had been pursued by a consultant well-versed in the tribunal's procedure, the hearing had been properly notified to him and there was no intimation that the hearing date was inconvenient or that representation could not be provided for some other reason. In those circumstances we decided to accede to Mr Cannan's request that we hear the appeal in the Appellant's absence.
3. The Appellant has been a VAT-registered trader since 2000, when it was incorporated, taking over a business previously owned by its principal shareholder. Among the documents made available to us were copies of its annual accounts for the years to 30 November 2003 and 30 November 2004, the periods in respect of which the claim that excessive output tax has been paid relate. The accounts have been prepared by chartered certified accountants, and the notes to them show that they have been prepared on an entirely conventional basis. Specifically, it is recorded that the turnover shown in the profit and loss account is exclusive of VAT. It follows that the Appellant (assuming it was accounting correctly for VAT) should have invoiced its customers, in the aggregate, the amount shown in the accounts as its turnover, plus VAT at the prevailing rate of 17.5 per cent, and that it should account for the VAT so charged to the Respondents. The claim that it should have paid only the lesser amount represented by the VAT fraction (7/47) of the net turnover is nonsensical.
4. We can only agree with the Respondents that they were right to reject the claim for additional input tax relief. Section 26 of the Value Added Tax Act 1994 and regulation 29(3) of the Value Added Tax Regulations 1995 (SI 1995/2518) make it clear that a registered person seeking input tax credit must hold either a VAT invoice or other acceptable evidence to support his claim. This is not a case in which the Respondents have rejected evidence; none has been produced. The claim is based on nothing more than an assertion that the Appellant's drivers, engaged as subcontractors, ought to have been registered for VAT and ought therefore to have charged VAT to the Appellant. It is clear from the correspondence that the claim is based entirely on mere assertion; nothing has been produced to support it. Rejection of the claim was inevitable.
5. The appeal is dismissed. Mr Cannan sought a direction in the Respondents' favour in respect of costs on the grounds that the Appellant had not attended the hearing to pursue what was in any event a hopeless appeal. We concluded that the application was proper and we summarily assessed the costs at £900, which we direct the Appellant to pay to the Respondents.

COLIN BISHOPP

CHAIRMAN

Release date: 22 January 2007

MAN/06/0395