19997
ASSESSMENT — public house — substantial discrepancies between till rolls and sales declared — explanation given of overrings — duplication of figures — appeal dismissed — costs awarded to Customs

MANCHESTER TRIBUNAL CENTRE

 
 	
					GERALDINE CURRAN	Appellant

- and -

THE COMMISSIONERS FOR
				HER MAJESTY’S REVENUE AND CUSTOMS	Respondents

Tribunal: Elsie Gilliland (Chairman)
	Elizabeth Pollard

Sitting in public in York on 7 December 2006

No attendance by or on behalf of the Appellant 
 
Lisa Linklater, counsel, instructed by the Acting Solicitor for HM Revenue and Customs for the Respondents 

© CROWN COPYRIGHT 2007

DECISION

1.	This is an appeal by Geraldine Curran (the Appellant) against an assessment issued by Customs on 2 March 2006 pursuant to s.73 of the of the Value Added Tax Act 1994 (the Act) in the sum of £2750 (plus interest) in respect of VAT arrears for the period 13 June 2003 to 31 December 2004.  This was the last of three assessments raised in this matter.
2.	There has been no attendance by or on behalf of the Appellant and the tribunal has determined to proceed under Rule 26(2) of the Value Added Tax Tribunals Rules 1986 as amended.
3.	The Appellant is the sole proprietor of a small public house called The Woolpack at Beverley in North Humberside. The serving of food there fluctuates.
4.	The witness called by Her Majesty’s Revenue & Customs (“Customs”), Pat Clark, although now retired was the assessing officer.  She had visited the Appellant at the premises on 2 August 2005. The Appellant’s accountant Alison Wade was also there and Mrs. Clark subsequently corresponded with her.  Mrs. Clark’s impression from the meeting was that the Appellant left her VAT paperwork to her previous accountant and then Miss Wade.  She felt also that there should have been more output tax as the tax figure seemed low.  On her calculation extracting non-purchases for resale from the input schedule for the 9 months to 31 December 2004 the mark-up was only 53.68%.  The mark-up which should have been achieved on the best selling line was 78.94%.  There was a continuous till roll put in on the first day of trading and left in the till but no daily X or Z readings had been taken.  The Appellant took figures from the till and wrote them into the Simplex books.  Miss Wade attributed discrepancies in the figures recorded and those declared as attributable to errors in amounts rung into the till that is overrings.
5.	The first assessment raised was on 1 November 2005 for the period 13 June 2003 to 31 December 2004 in the sum of £4510.00.  An allowance against overrings of £1921 was given. 
6.	After correspondence with Miss Wade a reduced assessment was issued on 8 December 2005 for the same period in the sum of £2907.00.  This gave effect to a second reduction for overrings this time of  £1604.  The figure for food in the period 01/04 in the sum of £1030.64 had been accepted by the accountant.
7.	There was more correspondence and on 2 March 2006 a further amended notice of assessment the one under appeal in the sum of £2750.00 was issued.  The sum of £156.25 on food sales in the period 10/03 was withdrawn by Customs.   The Appellant still disputes the assessment.
8.	On 10 April 2006 the Appellant served a notice of appeal stating that the approximate amount of money in dispute was £3092.73 and giving as grounds: 
“as further investigation into the amounts assessed and scrutiny  of till rolls we now have evidence that the underdeclared VAT has arisen due to till overrings, of which evidence can be provided.”
9.	The overrings notified to Customs by Miss Wade in her letter of 30 September 2005 was £12899 and notified in her letter of 17 November 2005 was £10768.  This made a total of £23667.48. Mrs. Clark in her evidence at the hearing has confirmed that she had accepted these figures and given allowance for them in the assessment calculations as they had been produced by a professional person who had said that she had calculated these totals after a careful examination of the continuous till roll and the simplex books.  Mrs. Clark did not herself examine the till rolls.
10.	On 20 October 2006 in a further letter Miss Wade produced another list setting out overrings to a total of £22448.  No analysis or breakdown of the figures has been provided. On perusing this list it appears to us that this figure is merely a “fine-tuning” of the overring total of £23667.48 referred to above a figure which had not been challenged by Customs and which had been accepted at face value as to overrings.  There is no new evidence and with the list presented to Customs the Appellant is merely giving retrospectively the evidence which Customs had taken on trust.
11.	If the sums of £22448 and £23667 are added together and then divided by the total takings as at 1 January 2005 of £180266 an overrings error rate of 25% is produced which is not credible particularly as it is clear that using only the figure accepted by Customs of £23667 as against total takings the error rate is 13% and this Customs had found excessive.
12.	Counsel has referred us to the case of Van Boeckel v Customs and Excise Commissioners [1981] 2 All ER 505 as to the exercise of best judgment in matters of assessment.  We are satisfied that Customs have taken properly into account all the material put before them and have acted reasonably and not in an arbitrary manner in the assessment of the tax due.  We do not consider that there is any obligation on the part of Customs to carry out investigations.  It is for the taxpayer to make correct returns on time.  The overrings comprise some 13% of till roll figures with no explanation given for such a high rate.
13.	We should have expected this appeal to have been withdrawn as clearly the Appellant has no new evidence and the allowances against VAT on the figures have already been given.  It would seem that Customs have been generous.
14.	The appeal is dismissed.
15.	Customs have sought costs and are entitled to them. We direct that the costs of  Customs shall be paid by the Appellant and if not agreed the matter of costs shall be referred to a Chairman sitting alone.

ELSIE GILLILAND
CHAIRMAN
Release Date: 31 January 2007
MAN/06/0490