20076

Assessment, validity, prescribed accounting periods; certificate of registration; late registration; partnership; Value Added Tax Act sections 73, 76, 77, Schedule 1; Value Added Tax Regulations 1995 SI 1995/2518, regulation 25.

THE RAJ RESTAURANT 
                                                                         Appellant

- and –

THE COMMISSIONERS FOR HER MAJESTY’S
REVENUE & CUSTOMS
	                                                                     Respondents

                        Tribunal Chairman:   J Gordon Reid, QC., FCIArb
                        Tribunal Members:    J D Crerar, WS., NP
                                                             R L H Crawford, BA.,CA., ATII

Sitting in Edinburgh on the 12th, 13th and 14th February 2007.

For the Appellant		Taher Nawaz, FCA

For the Respondents        Iain Artis, Advocate

© CROWN COPYRIGHT 2007.

DECISION

Introduction
1.	This is the Tribunal’s unanimous decision on a preliminary point taken at the outset of the Hearing set down for the week commencing 12th February 2007.  The Appellants were represented by Taher Nawaz, FCA, MBA.  The Respondents (“Customs”) were represented by Iain Artis, Advocate.

2.	The Respondents have assessed the Appellants as a partnership trading as the “Raj Restaurant” with effect from 18th September 1995. They have been assessed to VAT and related penalties from that date until 31st July 2002.

3.	A Hearing before a differently constituted tribunal, to determine whether the Appellants truly carried on business in partnership, took place over fifteen days between March and October 2005.  The Tribunal, in its decision released on 21st February 2006, concluded that each of the Appellants was a member of a partnership running the Raj Restaurant and related business interests during the period between 18th September 1995 and 31st July 2002 (Decision page 35).

The Preliminary Issue before this Tribunal
4.	At the outset of the Hearing, a variety of practical matters concerning mainly witnesses and productions were discussed.  Mr Artis indicated inter alia that the statutory certificate of registration had been required by the Appellants.  Mr Artis had produced a copy and indicated that the original print was available.  There was no dispute about the provenance or authenticity of the certificate produced.  Mr Nawaz, for the Appellants, submitted that the assessments were invalid.  We consider below the detail of the competing submissions which we heard on Monday 12th February and Tuesday 13th February.  After Mr Nawaz had addressed us on the first day, we adjourned until the following day to enable Mr Artis to consider Mr Nawaz’s submissions.  We heard further submissions from both parties on 13th February.  After the conclusion of submissions, we adjourned until noon on Wednesday 14th February when we gave our decision together with a summary of our reasons.  We indicated that we would provide a fully detailed and reasoned decision in due course and this we now do.  

Factual Background
5.	The findings of fact made by the Tribunal in relation to the partnership issue disclose broadly that between 1995 and 2002, a number of entities and persons were involved in the Raj Restaurant.  Several limited companies feature, namely Bengal Tiger Limited, Spice Aroma Limited, Goa 1510 Limited, Pick ‘n Mix Limited and On the Shore Limited among others.

6.	Following various investigations, Customs decided to deregister On the Shore Ltd for the purposes of VAT with effect from 18/9/95.  By letter dated 28/6/02 [R3/107] Customs intimated to the present appellants (being essentially those whom they considered to be the partners of the Raj Restaurant) that they had commenced action to register them for VAT with effect from 18/9/95.  A few days later a notice of compulsory registration was issued (1/7/02-R3/132] but nothing was said to turn on that document; we do not need to give it further consideration.

7.	By letter dated 22/7/02 [R3/118] Customs wrote stating that several individuals had been registered for VAT purposes as partners in the Raj Restaurant.  The letter stated that You will already have received formal notification of the registration from the VAT Registration Unit in Grimsby.  Before us it was denied that any such notification was ever given.  Mr Artis indicated that he was unable point to any document vouching such formal notification.  Nor would he lead any evidence about it.  Moreover, there was no evidence establishing the issuing of any certificate of registration other than the certificate dated 30/1/07 and tendered on Monday 12/2/07 when the Hearing before us began.

8.	The letter of 22/7/02 referred to schedules and notes.  However, they did not form part of production R3/118.  It was not suggested that these schedules and notes were to be found elsewhere in the bundles of productions.  Page 2 of the letter contained inter alia the following:-
“Please refer to the enclosed schedules and notes in relation to the amounts deemed due by the new registration.  Your account at the VAT Central Unit will be adjusted accordingly when the first VAT period is on file.

Please note that the Commissioners, in exercise of their powers, require that VAT returns be rendered on a monthly basis.

The enclosed schedule covers the period 18th September 1995 - 31st May 2002.  You will be required to account for the amount due for June and July 2002 on your first VAT return.  The Commissioners reserve the right to raise further assessments where the declared liability for these periods is deemed to be incorrect .…………….”(underlining added)

9.	Notification of an assessment was intimated by letter dated 10/9/02 [R1/1].  The letter begins by intimating that four individuals as partners in the Raj Restaurant have been registered for VAT with effect from 18/9/95.  The registration number is noted and it is stated that the individuals will already have received formal notification of the registration from the VAT Registration Unit Grimsby.  As noted above, such formal notification above is denied and there is no documentation to vouch any such formal notification. 

10.	The letter of 10/9/02 [R1/1] continues as follows:-
“Since you have failed to render a VAT return for period 07/02 (18th September 1995 to 31st July 2002) an assessment to VAT has been made under S73 VAT Act 1994 …………..

The assessment, which covers the period 18th September 1995 to 31st July 2002, in the sum of £400,217.16 is enclosed. ………………..

Please refer to Schedules 1 and 2 (enclosed) which detail the method of calculation. ……………..

Please note that the Commissioners, in the exercise of their powers, require that VAT Returns be rendered on a monthly basis.”
(underlining added)

11.	The copy schedules attached to the letter in the productions are not easy to read but appear to contain calculations by reference to a mixture of periods, some monthly, some three monthly, the first period mentioned being “Period 12/95” (presumably the quarter consisting of the months October November and December 1995, or possibly the period 18/9/95 to 31/12/95- although we cannot identify where any such accounting period may have been prescribed); the last period mentioned is for the month of May 2002.

12.	The letters of 28/6/02, 22/7/02 and 10/9/02 were the only letters to which we were addressed in any detail in the course of submissions.

13.	The only other document of importance is the Certificate of Registration dated 30/1/07 [Appellants’ bundle, un-numbered].  The Certificate states that the Certificate was issued on 30 January 2007 (although on the second sheet it records that copy of the certificate was issued on 31 January 2007); it contains a registration number; it refers to the effective date as being 18 September 1995.  There is endorsed on the first and second sheet the following:-
“RETURNS TO BE MADE IN RESPECT OF PERIOD ENDING 28 FEBRUARY 2007 AND MONTHLY THEREAFTER

LEGAL ENTITY PARTNERSHIP”

14.	On the second sheet there are the words:-
“DATE LAST AMENDED 15/12/06”
That entry remains unexplained and was not discussed before us.

Legislative Framework
15.	The following statutory provisions have or may have some relevance to the preliminary issue we have to determine:-
Value Added Tax Act 1994;-

3.— Taxable persons and registration.
(1) A person is a taxable person for the purposes of this Act while he is. or is required to be. registered under this Act.
(2) [Schedules 1 to 3A) shall have effect with respect to registration.
(3) Persons registered under any of those Schedules shall be registered in a single register kept by the Commissioners for the purposes of this Act: and. accordingly, references in this Act to being registered under tins Act are references to being registered under any of those Schedules.
(4) The Commissioners may by regulations make provision as to the inclusion and correction of information in that register with respect to the Schedule under which any person is registered.

25.— Payment by reference to accounting periods and credit for input tax against output tax.
(1) A taxable person shall—
(a) in respect of supplies made by him. and
(b) in respect of the acquisition by him from other member States of any goods.
account for and pay VAT by reference to such periods (in this Act referred to as "prescribed accounting periods") at such time and in such manner as may be determined by or under regulations and regulations may make different provision for different circumstances.
(2) Subject to the provisions of tins section, he is entitled at the end of each prescribed accounting period to credit for so much of his input tax as is allowable under section 26. and then to deduct that amount from any output tax that is due from him.

73.— Failure to make returns etc.
(1) Where a person has failed to make any returns required under this Act (or under any provision repealed by tills Act) or to keep any documents and afford the facilities necessary to verify such returns or where it appears to the Commissioners that such returns are incomplete or incorrect, they may assess the amount of VAT due from him to the best of their judgment and notify it to him.
(2) In any case where, for any prescribed accounting period, there has been paid or credited to any person—
(a) as being a repayment or refund of VAT. or
(b) as being due to him as a VAT credit.
an amount which ought not to have been so paid or credited, or which would not have been so paid or credited had the facts been known or been as they later turn out to be. the Commissioners may assess that amount as being VAT due from him for that period and notify it to him accordingly.
......
(6) An assessment under subsection (1). (2) or (3) above of an amount of VAT due for any prescribed accounting period must be made witliin the time limits provided for in section 77 and shall not be made after the later of the following—
(a) 2 years after the end of the prescribed accounting period; or
(b) one year after evidence of facts, sufficient in the opinion of the Commissioners to justify the making of the assessment, comes to their knowledge.
but (subject to that section) where further such evidence comes to the Commissioners' knowledge after the making of an assessment under subsection (1). (2) or (3) above, another assessment may be made under that subsection, in addition to any earlier assessment.

74.— Interest on VAT recovered or recoverable by assessment.
(1) Subject to section 76(S). where an assessment is made under any provision of section 73 and. in the case of an assessment under section 73( i) at least one of the following conditions is fulfilled, namely—
(a) the assessment relates to a prescribed accounting period in respect of which either—
(i) a return has previously been made, or
(ii) an earlier assessment has already been notified to the person concerned.
(b) the assessment relates to a prescribed accounting period which exceeds 3 months and begins on the date with effect from which the person concerned was. or was required to be. registered.
(c) the assessment relates to a prescribed accounting period at the beginning of which the person concerned was. but should no longer have been, exempted from registration under paragraph 14(1) of Schedule 1 or [, under paragraph S of Schedule 3 or under paragraph 7 of Schedule 3A1" ,
the whole of the amount assessed shall, subject to subsection (3) below, carry interest at the rate applicable under* section 197 of the Finance Act 1996 from the reckonable date until payment.
(2) hi any case where—
(a) the circumstances are such that an assessment falling within subsection (1) above could have been made, but
(b) before such an assessment was made the VAT due or other amount concerned was paid (so that no such assessment was necessary).
the whole of the amount paid shall, subject to subsection (3) below, cany interest at the rate applicable under section 197 of the Finance Act 1996 from the reckonable date until the date on which it was paid.
(3) Where (apart from this subsection)—
(a) the period before the assessment in question for which any amount would carry interest under subsection (1) above: or
(b) the period for which any amount would carry interest under subsection (2) above, 
would exceed 3 years, the part of that period for which dial amount shall carry interest under that subsection shall be confined to the last 3 years of that period

77.— Assessment: time limits and supplementary assessments.
(1) Subject to the following provisions of this section, an assessment under section 73. 75 or 76. shall not be made—
(a) more than 3 years after the end of the prescribed accounting period or importation or acquisition concerned, or
(b) in the case of an assessment under section 76 of an amount due by way of a penalty which is not among those referred to in subsection (3) of that section. 3 years after the event giving rise to the penalty.
[ (2) Subject to subsection (5) below, an assessment under section 76 of an amount due by way of any penalty, interest or surcharge referred to in subsection (3) of that section may be made at any time before the expiry of the period of 2 years beginning with the time when the amount of VAT due for the prescribed accounting period concerned has been finally determined.
(2A) Subject to subsection (5) below, an assessment under section 76 of a penalty under section 65 or 66 may be made at any time before the expiry of the period of 2 years beginning with the time when facts sufficient in the opinion of the Commissioners to indicate, as the case may be—
(a) that the statement in question contained a material inaccuracy, or
(b) that there had been a default within the meaning of section 66(1). came to the Commissioners' knowledge.]
(3) hi relation to an assessment under section 76. any reference in subsection (1) or (2) above to the prescribed accounting period concerned is a reference to that period which, in the case of the penalty, interest or surcharge concerned, is the relevant period referred to in subsection (3) of that section.
(4) Subject to subsection (5) below, if VAT has been lost—
(a) as a result of conduct falling within section 60(1) or for which a person has been convicted of fraud, or
(b) in circumstances giving rise to liability to a penalty under section 67.
an assessment may be made as if. in subsection (1) above, each reference to 3 years were a reference to 20 years.
(5) Where, after a person's death, the Commissioners propose to assess a sum as due by reason of some conduct (howsoever described) of the deceased- including a sum due by way of penalty, interest or surcharge—
(a) the assessment shall not be made more than 3 years after the death: and
(b) if the circumstances are as set out in subsection (4) above, the modification of subsection (1) above contained in that subsection shall not apply but any assessment which (from the point of view of time limits) could have been made immediately after the death may be made at any time within 3 years after it.
(6) If. otherwise than in circumstances falling within section 73(6)(b) or 75(2)(b). it appears to the Commissioners that the amount winch ought to have been assessed in an assessment under that section or under section 76 exceeds the amount which was so assessed, then—
(a) under the like provision as that assessment was made, and
(b) on or before the last day on which that assessment could liave been made,
the Commissioners may make a supplementary assessment of the amount of the excess and shall notify the person concerned accordingly.

58. General provisions relating to the administration and collection of VAT.
Schedule 11 shall have effect, subject to section 92(6). with respect to the administration, collection and enforcement of VAT.

96.— Other interpretative provisions.
(1) In tins Act—
(2) ....................
"prescribed" means prescribed by regulations:
"prescribed accounting period" has the meaning given by section 25(1);
"quarter" means a period of 3 months ending at the end of March. June. September or December;
"regulations" means regulations made by die Commissioners under this Act;
Schedule 1 
1.—
(1) Subject to sub*paragraphs (3) to (7) below, a person who makes taxable supplies but is not registered under this Act becomes liable to be registered under this Schedule—
(a) at the end of any month, if the value of his taxable supplies in the period of one year then ending has exceeded £61.000: or
(b) at any time, if there are reasonable grounds for believing that the value of his taxable supplies in the period of 30 days (hen beginning will exceed £61.000.
5.—
(1) A person who becomes liable to be registered by virtue of paragraph l(l)(a) above shall notify the Commissioners of the liability within 30 days of the end of the relevant month.
(2) The Commissioners shall register any such person (whether or not he so notifies them) with effect from the end of the month following the relevant month or from such earlier date as may be agreed between them and him.
(3) In this paragraph "(lie relevant month", in relation to a person who becomes liable to be registered by virtue of paragraph 1 (1)(a) above, means the month at the end of which he becomes liable to be so registered.

18.
In this Schedule "registrable" means liable or entitled to be reeistered under this Schedule.
Schedule 11
14.—
(1) A certificate of (he Commissioners—
(a) that a person was or was not. at any date, registered under tins Act: or
(b) that any return required by or under this Act has not been made or liad not been made at any date: or
(c) that any statement or notification required (o be submitted or given to the Commissioners in accordance with any regulations under paragraph 2(3) or (4) above has not been submitted or given or had not been submitted or given at any date; or
(d) that any VAT shown as due in any return or assessment made in pursuance of this Act has not been paid;
shall be sufficient evidence of that fact until the contrary is proved.
The Value Added Tax Regulations 1995 S11995/2518 (as amended)

Interpretation- -general
2.—
(1).....
"prescribed accounting period", subject to regulation 99(1). means a period such as is referred to in regulation 25;
"registered person" means a person registered by the Commissioners under Schedule 1. 2.3 or 3A to the Act;
"registration number" means the number allocated by the Commissioners to a taxable person in the certificate of registration issued to him:
"return" means a return which is required to be made in accordance with regulation 25:
13.—
(1) Save as otherwise provided in these Regulations, where a registered person—
(a) makes a taxable supply in the United Kingdom to a taxable person, or
(b) makes a supply of goods or services other tliau an exempt supply to a person in another member State, or
(c) receives a payment on account in respect of a supply lie has made or intends to make from a peison in another member State.
he sliall provide such persons as are mentioned above with a VAT invoice(unless. in the case of that supply, he is entitled to issue and issues a VAT invoice pursuant to section 18C(l)(e) of the Act and regulation 145D(1) below in relation to the supply by him of specified services performed on or in relation to goods while those goods are subject to a fiscal or other warehousing regime).
14.—
(1) Subject to paragraph (2) below and regulation 16 save as the Commissioners may otherwise allow, a registered person providing a VAT invoice in accordance with regulation 13 sliall slate thereon the following particulars—
(a) an identifying number,
(b) the time of the supply.
(c) the date of the issue of the document.
(d) the name, address and registration number of the supplier.
(e) the name and address of the peison to whom (he goods or services ate supplied, 
(g) a description sufficient to identify the goods or services supplied,
h) for each description, the quantity of the goods or the extent of the services, and the rate of VAT and the amount payable, excluding VAT. expressed in any currency.
(i) the gross total amount payable, excluding VAT, expressed in any currency,
(j) the rate of any cash discount offered.
(l) the total amount of VAT cliargeable. expressed in sterling.
(m) the unit price.
25.—
(1) Every person who is registered or was or is required io be registered shall, in respect of every period of a quarter or in the case of a person who is registered, every period of 3 months ending on the dates notified either in the certificate of registration issued to liim or otherwise, not later than the last day of the month next following the end of (he period to which it relates, make to lhe Controller a return on the form numbered 4 in Schedule 1 to these Regulations ("Form 4") showing the amount of VAT payable by or to him and containing lull information in respect ol lire other matters specified in the form and a declaration, signed by him. that the letiuir is true and complete:
provided that—
(a) the Commissioners may allow or direct a person to make returns in respect of periods of one month and to make those returns within one month of the periods to which they relate:
(b) the first return shall be for the peiiod which includes the effective date determined in accordance with Schedules 1, 2. 3 and 3.4 to the Act upon which the person was or should have been registered, and the said period shall begin on that date;
(c) where the Commissioners consider it necessary in any particular case to vary the length of any period or the date on which any period begins or ends or by which any return shall be made, they may allow or direct any person to make returns accordingly, whether or not the period so varied has ended;
(d) where the Commissioners consider it necessary in am particular case, they may allow or direct a person to make returns to a specified address.
(2) Any person to whom the Commissioners give any direction in pursuance of the proviso to paragraph (1) above shall comply therewith.

Submissions
16.	Mr Nawaz submitted that the Certificate of Registration was an important document.  None was to be found in the voluminous productions (three arch lever files) lodged by Customs.  The document now tendered came too late and should not be allowed. 

17.	If it is allowed, then its terms rendered the Notice of Assessment to which this appeal relates invalid.  The Certificate of Registration produced bears the date 30 January 2007.  It directs “Returns to be made in respect of the period ending 28 February 2007 and monthly thereafter”.  That is a different period from the Assessment which is from 18/9/95 to 31/7/02.  he referred us to Manzoor Hussein & Anr Decision No 17526, Manchester 15/1/02 Chairman D Demack and to HK Sneller Lon/87/124, Chairman The Rt Hon Lord Grantchester CBE, QC

18.	Mr Nawaz also referred to Plummer v CC&E 1/12/00 MAN/99/589, Chairman JD Demack, a case relied on by Mr Artis, and submitted that it was similar to Central Taxis to the effect that Customs could only assess the Appellants in the absence of a return for a period in respect of which a requirement had been validly made.  He also drew our attention to the terms of various letters namely Customs’ letter dated 28/6/02 [R3/107], Customs’ letter dated 22/7/02 [R3/118], and Customs’ letter dated  10/9/02 [R1/1] by which the assessment was notified.  He submitted that the terms of that letter indicated that the assessment related to a long period.  The long period had, however, never been set up.  The only first period specified was the period June and July 2002 in the letter dated 28/6/02.  Reference was made to regulation 25(1)(b) of the 1995 Regulations. 

19.	Mr Nawaz also made it clear that his arguments had nothing to do with the law and practice relating to global assessments.  He did not dispute the authorities on that topic cited by Mr Artis.  His essential argument related to accounting periods.  Mr Nawaz also pointed out that he raised the question of validity and referred to Central Taxis at the earlier hearing before the differently constituted Tribunal.  We note from that Tribunal’s Decision dated 21/2/06 that Central Taxis was indeed cited (see page 4); the context is unclear as the case is not referred to again in the Tribunal’s decision.

20.	Mr Artis produced written submissions which he amplified.  Unfortunately, some of these submissions proceed upon the view that the Appellants were arguing that the absence of a certificate of registration was fatal.  However, Mr Nawaz’s argument did not proceed, at least ultimately, on that basis.  He expressly accepted that the absence of a certificate of registration was not fatal.  In the course of his submissions, Mr Artis tendered, without objection, a Notice of Compulsory Registration dated 1/7/02 [R3/132]

21.	Mr Artis submitted that (i) the issue of a certificate of registration is not a prerequisite of liability; he referred to sections 3 and 4 of and paragraph 14 of Schedule 11 to VATA; he also referred to regulations 5 and 7 of the 1995 Regulations, noting that there were very few statutory references to a certificate of registration, (ii) a certificate of registration was no more than a means of notification of registration and the allotment of the registered number, (iii) the notification of directions as to returns on the face of the certificate was a mere matter of administrative convenience (Punchwell ltd v CC&E 1981 VATTR 93), (iv) the certificate of registration, when issued, was accompanied by an email [also tendered without objection [R3/133] which qualified the terms of the certificate, (v) a certificate of registration could not invalidate an otherwise valid assessment, and (vi) the certificate was therefore irrelevant to the determination of the preliminary issue.  That being so, the preliminary point raised by the appellants should be rejected.

22.	Mr Artis then proceeded to consider the validity of an assessment.  He referred us to sections 25(1), 58, 73, 76 of and paragraph 2 of Schedule 11 to VATA, and to regulation 25 of the 1995 Regulations.  He submitted that (i) notification of periods to the Appellants was otherwise than by a certificate of registration, (ii) section 73 made no direct requirement to assess by reference to accounting periods, and (iii) the Commissioners have a general power to make global assessments (SJ Grange Ltd [1979 STC 183, and House t/a P&J Autos [1996] STC 154).

23.	Mr Artis sought to distinguish the Central Taxis case by submitting that it turned on its own facts and that the assessment which remained extant in that case had been for the wrong period.  He submitted that the invalidity of the assessment in that case did not flow from the lack of a certificate of registration.  He submitted that the letter dated 22/7/02 contained only one statutory direction and that related to the requirement that VAT returns were required to be on a monthly basis.  No statutory direction was required under regulation 25(1)(b).

24.	Mr Artis submitted that the period referred to in the Certificate of Registration issued on 30/1/07 was the period between 1/2/07 and 28/2/07, and contained a direction for the future.  He indicated that he was not tendering the Certificate but had no objection to it being produced.

25.	We record at this point there was some confusion between the parties as to who was tendering the certificate of registration.  Although Mr Nawaz submitted initially that it came too late, it was he who tendered it to the Tribunal along with (in fact it was stapled to) a copy of the decision in Central Taxis.  We therefore consider that the first step is to allow the document to be received.  Its authenticity was not in dispute.  It emanated from Customs following several requests throughout the various appeal proceedings in this appeal for its disclosure.

Discussion and Decision
26.	In our opinion it is an inevitable and necessary implication from the various statutory provisions referred to above that an assessment must correspond to one or more prescribed accounting periods.  A taxable person is required to be registered under VATA (section 3(1), Schedule 1 paragraphs 1 and 5).  He must account for and pay VAT by reference to prescribed accounting periods (section 25(1)).  He must make returns in prescribed form in respect of prescribed periods (1995 Regulations, paragraph 25).  The prescribed periods are a quarter as defined (Regulation 2(1)), three months by reference to the certificate of registration or otherwise; a first return may be for a particular period (Regulation 25(1)(b)); a specific period may be prescribed by direction (Regulation 25(1)(c)).  The power to asses is linked to the failure to make returns, which are themselves linked to prescribed periods.  Liability for interest and penalties are linked to prescribed accounting periods (VATA section 74, and 76).  Statutory time limits for making assessments are linked to prescribed accounting periods (section 77).  The importance of the certificate of registration as an administrative document can be seen from the provisions relating to (i) the issue of a registered number and (ii) the contents of a VAT invoice (1995 Regulations paragraphs 2(1), 13 and 14). As a statutory certificate, it, in effect, is self proving (VATA Section 58, Schedule 11 paragraph 14).

27.	In our view, therefore, as a matter of statutory construction, an assessment must be linked to and correspond with one or more prescribed accounting periods.  The authorities cited proceed on that basis.  None proceeds on any other basis.

28.	We consider that the reliance placed by counsel for Customs on SJ Grange Ltd and House was misplaced.  The issue in Grange was whether a taxpayer could be validly assessed in a single assessment for tax due in respect of several accounting periods.  The Tribunal, and subsequently the Court of Appeal held that such an assessment was valid.  The assessment covered several prescribed accounting periods but was stated as a single sum (1979 STC at 186C).  The court held that the assessment was valid.  The significant point decided was that an assessment need not be confined to a single prescribed accounting period but could cover several such periods  (see 193e, 195b-c, 195j).  Such an assessment has come to be known as a global assessment.  The qualification placed on the use of such assessments by Lord Denning MR in that case (where it is impossible for the commissioners to split the assessment up into three-monthly periods -193e) was not endorsed by the other members of the court.  
29.	In House, schedules were attached to the notice of assessment; the schedules specified how the tax was calculated, but there were no individual figure in relation to each of the prescribed accounting periods covered by the assessment.  This was thus a global assessment (1996 STC at 157e) The Court of Appeal followed the broader approach of the majority of the court in Grange (160b).  One of the arguments before the court was that the assessment was invalid in the absence of such a figure for each individual prescribed accounting period.  It held that a global assessment was competent in respect of many prescribed accounting periods (1996 STC 156h-157a); the assessment in question was sufficiently clear in its terms and therefore valid; in fact, the sum alleged to be due in respect of each individual prescribed accounting period was capable of calculation from the detailed information provided in the schedules (157b).  It is implicit in the court’s decision that it proceeded on the assumption that an assessment must correspond with one or more prescribed accounting periods applicable to the taxpayer (160g).

30.	The same point, namely that any assessment must be for a prescribed accounting period, is made in Central Taxis at paragraph 16.  That decision stressed the importance of the production of the or at least a certificate of registration and its link with the period covered by the first return (paragraph 4).  The Tribunal also pointed out, under reference to regulations 2 and 25 of The Value Added Tax Regulations 1995 (SI 1995/2518) that the power to assess must be for a “prescribed accounting period” (paragraph 16).  In that case, the assessment was held to be invalid because it did not correspond with the accounting period directed in a letter issued following upon an amendment to the appellants’ certificate of registration (paragraphs 5. 17 and 18).  

31.	The certificate is evidence of what the statutory register contains (see VATA Schedule 11 paragraph 14).  It is also important because it is the statutory means by which the taxpayer’s registered number is allocated and identified, which in turn has significance for the contents of certain VAT invoices (see the definition of registered number and the provisions relating to VAT invoices in regulations 2(1), 13 and 14 of the 1995 Regulations).

32.	We were also referred to Plummer.  There, an amended certificate of registration was issued, backdating the effective date of registration by about two years.  The amended certificate also contained a statutory direction creating a long prescribed accounting period (paragraph 4).  The wording of the direction specified in that certificate (paragraph 3) is in substantially the same form as the direction contained in the Certificate dated 30/1/07.  The problem that led to the assessment in that case being declared invalid was that the period covered by the assessment did not correspond to the long period direction in the amended certificate of registration (see paragraphs 1, 3, & 10).  The practice of specifying a prescribed accounting period direction, which may include a long period direction, in a certificate of registration is noted in Punchwell at page 97.  The practice appears to have subsisted since at least the early eighties.  Plummer, decided in 2000, and the Certificate dated 30/1/07 are more recent examples.

33.	Sneller was called to our attention essentially for the proposition that Customs cannot move the goalposts by issuing an amended assessment in the course of an appeal.  The facts were largely concerned with whether the taxpayer acted as agent or principal in relation to certain transactions.  However, the assessment was held to be invalid because the period covered by the assessment did not correspond with the correct prescribed accounting periods to which the tax claimed related (see pages 3-4).  The Tribunal in reaching this view, followed SJ Grange Ltd.

34.	All these authorities either expressly or by necessary implication support the proposition that an assessment must correspond with one or more prescribed accounting periods, however such periods are prescribed.

35.	In our view, the guiding principle is that an assessment must be for a prescribed accounting period or periods.  Bearing that principle in mind, we have considered the validity of the assessment contained in the letter dated 10/9/02 [R1/1] first of all by disregarding the Certificate of Registration and its contents, and secondly, by taking the Certificate of Registration into account.

36.	Disregarding the Certificate of Registration, we conclude:-

37.	The letter dated 22/7/02 [R3/118], properly construed, appears to direct a first return in terms of Regulation 25(1)(b) of the Value Added Tax Regulations 1995 for the monthly periods of June and July 2002.  If that is a valid direction, then any assessment relating to an earlier period must be invalid.  However, that direction must itself be invalid because a regulation 25(1)(b) direction must specify a first period which starts on the effective date of registration.  Apart from a direction to submit monthly returns after July 2002, in response to questions from the Tribunal, it was not argued by counsel for the Respondents that the letter contained any other statutory direction prescribing an accounting period.  We observe that the reference to the period 18/9/95 to 31/5/02 and to related schedules, which are not before us, does not correspond with the period of assessment contained in the letter dated 10/9/02, namely 18/9/95 to 31/7/02 (see paragraphs 7, 8 & 10 above).

38.	Had the letter dated 22/7/02 stated next instead of first, which was how Mr Artis invited us to construe it, different considerations might have arisen.

39.	There thus appears to be no direction in terms of Regulation 25(1)(b) prescribing the period of the first return.  Even if no such direction is required, and reliance can be placed on the requirement in Regulation 25(1), the quarterly period would end on 30/6/02 and not on 31/5/02 or 31/7/02.  The schedules attached to the letter dated10/9/02 are not confined to quarterly periods ending March, June, September and December.  In these circumstances, the global assessment made does not correspond with the quarterly periods prescribed by regulation 25(1).

40.	In any event, we have been unable to identify a prescribed accounting period corresponding to the period 18/5/95 to 31/7/02 referred to in the letter dated 10/9/02.  That letter refers specifically to an alleged failure to render a VAT return for that period.  It appears to assume the existence of a long period direction of the type contemplated in paragraph 15 of the Central Taxis case (17526 Manchester 15/1/02, Chairman D Demack).  There was and is no such direction.

41.	While an assessment may be global it must still correspond with one or more prescribed accounting periods.  As the assessment set forth in the letter dated 10/9/02 does not do so, the Notice of Assessment and the underlying assessment which is being notified must be invalid.

42.	We turn now to consider the position on the basis that the Certificate of Registration dated 30/1/07 is taken into account in assessing the validity of assessment contained in the letter dated 10/9/02.  We think it must be taken into account as it appears to be the only certificate of registration issued in relation to the partnership.  The Respondents accept that they cannot prove that any other certificate of registration has been issued.  On that basis we conclude as follows:-

43.	It is a matter of agreement between the parties that the existence of a certificate of registration is not a necessary prerequisite to the issue of a valid notice of assessment.  While this may be so, it seems to us that it is a necessary implication from the definition of registration number in regulation 2(1) of the 1995 Regulations and the requirement as to the issue and contents of VAT invoices under regulation 13 and 14(1)(d) of the 1995 Regulations that a certificate of registration must be issued promptly upon registration by the Commissioners under paragraph 5 of Schedule1 to the 1994 Act.  We need not dwell upon this point meantime.

44.	Properly construed, the Certificate of Registration contains inter alia a statutory direction specifying a prescribed accounting period.  The period so prescribed is 18/9/95 to 28/2/07.  It is not unusual for a certificate of registration to contain such a direction as can be seen from Punchwell Ltd v CC&E 1981 VATTR 93 at 97.  However, the terms of the direction contained in this Certificate are, to say the least, unfortunate.  We must reject, as untenable in the circumstances, the Respondents’ submission that the period is from 1/2/07 to 28/2/07.  The document will simply not bear that construction.  We note that the wording is similar to the direction in the Certificate in Plummer 16976 MAN/99/589 Chairman D Demack paragraphs 3 and 4.

45.	It is not suggested that the contents of any part of the certificate is invalid.  It seems to us that its terms must be taken to supersede any previous inconsistent direction.  The very nature of a long period direction in the case of late registration is that it is retrospective in effect.  Normally, the effect is to pave the way for the issue of a valid assessment covering the prescribed long period.  Here, it has had the opposite effect.

46.	The terms of the certificate render invalid the assessment notified in the letter dated 10/9/02 because no period in the assessment corresponds with the period specified in the certificate which period, in spite of the length of the appeal proceedings, had not yet come to an end when this appeal began in February 2007.  The importance of making an assessment for the correct prescribed accounting period or periods is highlighted in a number of cases to which we were referred including Sneller LON/87/124 Lord Grantchester, pp7-8, CC&E v Grange Ltd 1979 STC 183 and Central Taxis.  This reflects the guiding principle referred to above.  The assessment to which the present appeal relates does not satisfy the requirements of that principle.  We must therefore hold the assessment to be invalid.

47.	Whichever way we consider the preliminary issue of the validity of the assessment, we reach the same conclusion.  The assessment is invalid and no further substantive steps can be taken in this appeal which must now be allowed.

48.	There was no separate, detailed argument about the validity of the Penalty assessment dated 20/12/02 [R1/2].  However, the discussion on the preliminary issue appeared to proceed on the footing that both assessments stood or fell together.  We therefore allow the appeal against that assessment too.

Result
49.	The appeal against (i) the assessment notified by letter dated 10 September 2002 and (ii) the Penalty assessment notified by letter dated 20 December 2002 is allowed.

50.	Since giving our decision on Wednesday 14th February 2007, we have noted that the appeal against Customs’ decision to deregister On the Shore Limited appears still to be outstanding.  We were not addressed on this issue at all.  The previously constituted Tribunal do not formally refuse the appeal against Customs’ decision to deregister.  However, the findings that (i) the Appellants were in business as a partnership throughout the period from 18 September 1995 to 31 July 2002 (page 28) (ii) the companies, involved, including On the Shore Ltd, were a mere sham (pages 31, & 33), (iii) the corporate veil should be lifted (page 32), (iii) the companies were a device to disguise the true ownership of the business by the Miah family, and (iv) the Respondents’ decision to register the Appellants for the purposes of VAT (page 37) should be upheld have not been appealed.  It would seem therefore to be difficult, to say the least, to maintain an appeal against the decision to deregister On the Shore Ltd.

51.	As parties will require some time to consider the ramifications of our decision, we shall reserve all questions of expenses meantime.  We hope that parties will be able to indicate within a period of six months how the question of expenses and any other residual matters should be dealt with but will make no formal order meantime.

J GORDON REID, QC., FCIArb
CHAIRMAN
RELEASE:  22 MARCH 2007
EDN/03/03