20361

VAT – application to dismiss appeal – appeal against Commissioners’ decision dismissed for failure to comply with Directions – whether appeal against assessment to give effect to the decision ought also to be struck out – Rules 18 and 19 – whether inordinate and inexcusable delay – application allowed and appeal struck out

LONDON TRIBUNAL CENTRE

	WHISTON HALL GOLF CLUB LIMITED	
		Appellant

	- and -

	THE COMMISSIONERS FOR 
	HER MAJESTY’S REVENUE AND CUSTOMS	
			Respondents

		Tribunal:	Malcolm Gammie CBE QC (Chairman)

Sitting in private in London on 21st June 2007

Mr Leslie Allen, Solicitor, of Dorsey & Whitney for the Appellant

Mr David Manknell, Counsel, instructed by the Solicitor for HM Revenue and Customs, for the Commissioners

© CROWN COPYRIGHT 2007

DECISION

Introduction

1. This is an application by the Commissioners that the Appellant’s appeal against an assessment should be dismissed.  To understand why this application arises I need to set out the history of the matter.

2. On 30 July 2004 Mrs D Roxborough, an officer of HM Customs & Excise, wrote to Whiston Hall Golf Club Limited (“the Appellant”) with her ‘preferred’ decision to the effect that despite the creation of two separate entities to provide supplies of sporting facilities to members and visitors, the supplies in reality continued to be made by Mrs L C Cliff trading as Whiston Hall Golf Club and were not exempt.  The business and VAT registration number of L C Cliff had been transferred to the Appellant on 1 July 2004 and Mrs Roxborough’s decision related to the period up to and including 30 June 2004.  

3. Mrs Roxborough’s letter set out two alternative decisions to her ‘preferred’ decision, asserting that the supplies were made by two guarantee companies set up by Mrs Cliff as part of the arrangements subsisting before 1 July 2004.  Mrs Roxborough also indicated that she would be raising an assessment under separate cover to reflect her preferred decision.  That was duly done on 24 September 2004 in an amount of £92,769.24. 

The Appeal against the Decision (LON/2004/1255)

4. The Appellant appealed against the Mrs Roxborough’s decision in 19 August 2004.  That appeal was recorded as LON/2004/1255.  In the extensive exposition of its grounds of appeal the Appellant contended that the decision was not one that the Commissioners were entitled to make because it involved the assertion, as alternatives, that the same supplies were made by different persons and would lead to multiple assessments.  The grounds of appeal stated that the decision to issue an assessment was part of the disputed decision.

5. After three applications for extension of time, the Commissioners eventually produced their statement of case and list of documents on 24 January 2005.  Paragraphs 23 and 24 of the Statement of Case indicate that the Commissioners had served a formal notice date 13 October 2003 demanding the production of various documents from the Appellant.  The documents had not been produced and the Commissioners indicated that if they were not provided within 28 days of the date of service of the Statement of Case, the Commissioners would apply to the Tribunal for an order requiring disclosure and seeking costs of the application.  In due course the Commissioners were forced by the Appellant’s continuing failure to make a disclosure application.  

6. Eventually on 30 November 2005 the appeal (LON/2004/1255) was stood over pending the decision in South Herefordshire Golf Club.  The disclosure, however, was still incomplete and by directions issued on 20 April 2006, the Appellant was directed to make further disclosure by 31 May 2006 and the parties were required to provide their dates to avoid after 1 September 2006.  The Tribunal released its decision in South Herefordshire Golf Club (VAT Decision No. 19653) on 13 July 2006.  

7. On 16 November 2006 the Appellant was directed by 8 December 2006 either to inform the Tribunal that it was withdrawing its appeal or to serve (a) amended grounds of appeal, (b) the information previously requested, (c) the dates to avoid after 1 February 2007 and (d) confirmation of its time estimate for the appeal.  The Appellant, not having complied with these directions, was directed on 2 February 2007 that unless it complied by 16 February 2007, its appeal would stand dismissed without further hearing.

8. On 14 March 2007 the Appellant gave notice that it intended to proceed with the appeal but by then it was too late and its appeal was accordingly confirmed as dismissed on 4 April 2007.

The Appeal against the Assessment (LON/2005/0356)

9. As noted in paragraph 3 above, Mrs Roxborough issued an assessment pursuant to her ‘preferred’ decision on 24 September 2004 covering the periods 09/01 to 06/04 (i.e. from 1 July 2001 until 30 June 2004) in the amount of £92,769.24.  The Appellant appealed against the assessment on 24 March 2005, applying for leave to do so out of time on the grounds that the Appellant believed that as an appeal had already been lodged, that appeal also covered the assessment and that no prejudice had been caused by the delay in appealing.  These grounds were accepted and the appeal against the assessment was given its current reference LON/05/0356.  The grounds of appeal were stated to be as set out in appeal LON/2004/1255.

10. The Appellant also made an application that the appeal be entertained without payment of the tax on grounds of hardship, which the Commissioners opposed.  On 31 May 2005 the Appellant applied for a standover until 3 July 2005 in order to submit the documents that it relied on for its hardship application to the Commissioners.  A further extension was sought until 31 July 2005 but was never complied with and on 11 August 2005 the Commissioners sought to oppose the hardship application on the grounds that the Appellant had failed to produce the documents as promised.  On 19 August 2005 the Appellant was directed to produce a list of documents by 31 August 2005.  No list was produced and, following an enquiry by this Tribunal, the Commissioners informed the Tribunal that the Appellant was non-compliant with the Direction and on 29 September 2005 sought to have the hardship application re-listed.

11. At that point the Appellant’s failings in this and its parallel appeal against Mrs Roxborough’s decision proved infectious.  Within the Tribunal the file was sent for listing but for some reason was never listed.  The failure to list was not picked up by the Commissioners until 23 March 2007, when they wrote to the Tribunal requesting that it be listed.  Unsurprisingly the Appellant had done nothing in the intervening period other than to remain non-compliant with the Tribunal’s direction of 19 August 2005.  

12. Finally in this chronology, the Commissioners wrote to the Tribunal on 12 April 2007 requesting that the appeal against the assessment should be dismissed given that the appeal against Mrs Roxborough’s decision upon which the assessment depended had by then been dismissed.

The Parties’ Submissions

13. Mr Manknell’s principal submission for the Commissioners was straightforward.  The appeal was against the assessment that was simply consequent upon the decision giving rise to the appeal in LON/2004/1255.  The Appellant’s notice of appeal raised no different grounds to those that had been put forward previously and which had recognised the decision to issue the assessment as part of the disputed decision.  As that appeal had been disposed of and could not be revived, the appeal against the assessment should be struck out. 

14. Mr Allen for the Appellant drew my attention to the Tribunal’s powers in this regard.  The power of a tribunal to strike out or dismiss an appeal is found in Rule 18 of the Value Added Tax Tribunals Rules 1986.  Under Rule 18(1)(a) a tribunal shall strike out an appeal where no appeal against the disputed decision lies to a tribunal and under Rule 18(1)(b) it shall strike out an appeal where the appeal cannot be entertained by a tribunal.  Mr Allen said that neither applied in this case.  In particular, although the tax charged under the assessment had not been paid the hardship application was still outstanding.  

15. Rule 18(2) allows the Tribunal discretion to dismiss an appeal for want of prosecution where the appellant is guilty of inordinate and inexcusable delay.  Mr Allen said, however, that this was not the situation here because the case had been stood over pending the outcome in the South Herefordshire Golf Club case.  

16. Mr Allen noted that Rule 19(3) conferred power on the Tribunal to give or make directions.  He referred me to Customs and Excise Commissioners v Gil Insurance Limited and others [2000] STC 204.  The headnote in that case indicates that—

	“Rule 19(3) conferred a broad discretionary power as to the conduct of proceedings before the tribunal and did not therefore have the same limitations as r 18.  Although it did not provide on its face for disposal of a matter by way of strike out, the rule was most probably wide enough to confer a power to direct that a ground of appeal which disclosed no reasonable grounds for bringing the appeal should be struck out.  Accordingly, the tribunal’s conclusion that any power it might have to strike out a ground of appeal arose under r 19(3) and its approach in considering whether to exercise the power to strike out the state aid issue by asking itself whether there were reasonable grounds for the raising of the state aid issue had been correct.”

17. Mr Allen made the point that the Appellant was a small golf club with no large resources to deal with these matters.  It remained in business and was still making supplies and further assessments may follow.  The substantive issues that arose in this appeal had never been decided given what had happened to the appeal against the decision.  He suggested that the Commissioners would not be prejudiced if the current appeal remained alive because the assessment was still be in place and they would be able to cover under it if they were successful in showing that the tax assessed was properly due.  

18. In the Notice that the Appellant had served on 14 March 2007 giving notice that it intended to proceed with its appeal LON/2004/1255, the Appellant contended that there were differences between the South Herefordshire Golf Club case (in which the taxpayer’s appeal had been dismissed) and Mr Allen also referred to the decision in Lumar Developments Limited (VAT Decision 19729).  The Notice, which was served in relation to LON/2004/1255, had come to late to save that appeal but it did indicate that there were substantive issues that should be considered.

19. In reply, Mr Manknell pointed out that the current appeal was an appeal against the assessment.  The appeal against the decision had been dismissed and consequently there could be nothing wrong with an assessment that was in accord with what was a final decision.  There was no substantive ground of appeal remaining.

My decision

20. It seems to me that in principle I should only strike out an appeal if I am satisfied that I am bound to do so or, on the basis that I have discretion in the matter, if I am satisfied that the circumstances are such as to point to that as the only appropriate course.  In the present case I am mindful that if I strike out the appeal the Appellant will be faced with having to pay a significant assessment even though there has been no substantive examination of the issues leading to that assessment.  

21. The making of the assessment reflects a decision by the Commissioners but in this case it seems to me that it was the same decision that Mrs Roxborough made in her letter of 30 July 2004 and against which the Appellant had already appealed.  The Appellant recognised this in its grounds of appeal and it is difficult to believe that an appeal against an assessment is substantively different from the appeal against the decision upon which the assessment is based.  Nevertheless, an assessment is recognised as one of the matters against which an appeal lies (section 83(p) VATA 1994) and the appeal against the assessment in this case was accepted as validly made, albeit late.

22. Nevertheless, there is no reason why a taxpayer should have two bites of the cherry just because there is a decision and an assessment on the same matter.  Once the appeal against the decision had been dismissed it seems to me that the grounds underpinning the appeal against the assessment disappeared with it.  The fact that the appeal against the decision was dismissed because the Appellant failed to comply with an “unless order” does not seems to me to alter the position.  This may not be covered by Rule 18(1) but there remains the power in Rule 19(3) to make such directions as I think necessary or expedient to ensure the speedy and just determination of the appeal.  The fact that the appeal against the assessment now rests on a decision that has been determined finally against the Appellant for whatever reason seems sufficient for these purposes.

23. Should that not be thought enough, however, to dismiss the appeal against the assessment, I should note that in my view, having considered the history of the conduct of these appeals, it is apparent that there is little merit in the Appellant’s position.  I understand that the disclosure sought by the Commissioners as long ago as 2003 may recently have been made, but too late to preserve the appeal against Mrs Roxborough’s original decision.  As regards the appeal against the assessment, the Appellant has still failed to comply with the Tribunal’s direction of 19 August 2005 to produce the documents to support its hardship application.  

24. The Appellant produced some documents (in the form of accounts to 30 June 2006 and some bank statements) the day before this application to dismiss its appeal was heard but, as Mr Manknell pointed out, the information produced is not enough to deal with the hardship application.  Mr Manknell did suggest that if I was unable to grant his application I should make an “unless order” requiring the production of the documents within 14 days, and Mr Allen on behalf of the Appellant was prepared to agree to that.  It is nearly two years, however, since the Appellant was directed by this Tribunal to produce the documents and even at this late stage the Appellant has not thought fit to remedy the situation.  This is notwithstanding the fact that it faces an application to dismiss its appeal and following the dismissal of its earlier appeal for failure to comply with the Tribunal’s direction.

25. Rule 19(4) provides that if any party to an appeal fails to comply with any direction of a tribunal, a tribunal may dismiss the appeal.  Although the Tribunal has not made a specific “unless order”, as it did in the case of the appeal against the decision, I think that I am more than justified in dismissing the appeal on that basis.  I also think it is open to me to strike out the appeal under Rule 18(2) on the basis that the Appellant has been guilty of inordinate and inexcusable delay.  As I have noted, Mr Allen submitted that this was not the case because the appeal against the decision was stood over for part of the time pending the decision in South Herefordshire.  Nevertheless, I do not consider that this excuses the Appellant’s conduct, which seems to me to have shown wholesale disregard of whatever directions the Tribunal has made with a view to progressing the Appellant’s appeal.

26. Accordingly, for these reasons I allow the Commissioners’ application and direct that, as LON/2004/1255 before it, appeal LON/2005/0356 be dismissed.

MALCOLM GAMMIE QC
CHAIRMAN
RELEASED: 2 October 2007

LON/05/0356