20819

	

MANCHESTER TRIBUNAL CENTRE					MAN/07/778

 
 	
					ADRIAN McKERNAN	Appellant

- and -

THE COMMISSIONERS FOR
				HER MAJESTY’S REVENUE AND CUSTOMS	Respondents

Tribunal: Ian Huddleston, Chairman
      Mr. Tony Hennessey

Sitting in public in Belfast on 6th March 2008

Mr. Ronan Lavery BL instructed by Tiernan Solicitors for the Appellant
Mr. James Puzey BL instructed by the the Solicitors’ office of 
HM Revenue & Customs for the Respondents  

© CROWN COPYRIGHT 2008

DECISION

The Appeal
1.	This Appeal is against an assessment raised by the Commissioners pursuant to Section 73 of the Value Added Tax Act 1994 (“the Act”) in the sum of £93,097 (together with interest) representing assessed duty for the period 25th July 2003 to the 29th February 2004.  The assessment was modified downwards on the 7th July 2005 to the sum of £69,689, and it is that amount which remains in dispute.
Factual Background
2.	The Appellant, Adrian Oliver McKernan, at the relevant time carried on a business of a petrol pump station and convenience store from premises at 38/40 Clifton Street, Belfast, BT13 1AA.   The premises were not owned by him, but rented from a third party.  The Appellant registered for VAT as a sole trader with effect from the 25th July 2003 (registration number 820951538).
3.	Officers of Customs & Excise visited the petrol station on the 22nd April 2004, and again on the 26th April 2004.  On both occasions the officers found evidence to support the detention and uplifting of fuel from the petrol station.  
4.	Pump readings were taken from the fuel pumps on four separate occasions:
(a)	on the 7th October 2003 (as part of a routine compliance check following initial registration);
(b)	5th January 2004; and
(c)	22nd April 2004; and
(d)	26th April 2004.
5.	Following the two inspections in April 2004, the detection team passed the Appellant’s records for VAT assurance action.  An officer inspected and considered the Appellant’s records and accounts for the period from the 25th July 2003 (ie. the date of initial registration) to the 26th April 2004 (ie. the date of the last inspection) and the various pump readings which had been taken throughout that period and found large differences between the estimated fuel sales and the fuel sales actually declared on the VAT returns submitted.
6.	At this juncture it is probably sensible to describe something of the nature and mechanical operation of the fuel pumps.  Essentially there were eleven nozzles dispensing petrol (ten unleaded and one leaded) and two nozzles dispensing diesel at the Appellant’s petrol station.  These were divided between four shells –with each shell (with the exception of the single shell used for the dispensing of leaded fuel) having two pumps and four nozzles for the dispensing of fuel.  I make this distinction because it will be shown to have relevance later.  Each individual nozzle has two meters.  The first is an electronic one which is effectively what the customer sees when they fill a vehicle with fuel.  The second is at the base of the shell and is what is described as a totaliser.  The totaliser is mechanical in nature and consists of a number of dials which are intended to record the total amount of fuel passing through the pump.  Clearly the customer display at the top of each pump reduces to zero after each sale, whereas the totaliser is intended to record the cumulative throughput of a pump.  All material readings taken and recorded, therefore, tend to be totaliser readings because they provide the composite total of fuel dispensed.
7.	Based on the readings the Respondents took, they calculated a total fuel throughput for the petrol station of 372,145 litres of unleaded petrol during the period from the 7th October 2003 to the 26th April 2004 (a total of 202 days (allowing for Christmas etc.)).  That, the Respondents suggested, constituted an average throughput per pump of 62,064 litres for each of the individual pumps.  In making this calculation, the readings for two of the pumps (ie, numbers 3 and 4) were disregarded as being unreliable.  
8.	Based on the average throughput thus calculated, the Respondent, grossed up the throughput for all eleven unleaded pumps – calculating it to be a total throughput of 682,264 litres, equating to an average of 3,377.51 litres per day.  This they then applied to the full trading period from the 25th July 2003 (ie. the date the Appellant started trading) to the 26th April 2004 (ie the second of the two April inspections) (equalling 276 days, allowing for holidays etc.) and thus provided an estimated total litreage of unleaded petrol sold of 932,190 litres(276 days x 3377.51 litres).  The number of declared litres purchased for resale in the same period equated to 159,700 litres.  To complete the calculation the Respondents deducted 1,100 litres which was uplifted on the 22nd April 2004, and 6,100 litres uplifted on the 26th April 2004.  When these factors were taken into account, the total difference between the estimated unleaded petrol sales and purchases of unleaded petrol equalled 779,490 litres.  
9.	Pump readings were also taken from the diesel pumps.  These readings showed a total fuel throughput of 203,875 litres during the period from the 7th October 2003 to the 26th April 2004 (202 days) giving an average throughput of diesel per day of 1,009.2 litres.
10.	Applying this to the full trading period (ie. the 276 days) that gave an estimated litreage of 278,539 (ie. 276 days x an average 1,009.2 litres).  This compared with the declared litreage of diesel purchased for resale in the same period of 61,100 litres.  When the Respondents likewise excluded the 7,000 litres of diesel uplifted on the 22nd April 2004 and the 4,400 litres uplifted on the 26th April 2004, this came to a net figure of 49,700 litres.  The difference, therefore, between the estimated diesel sales and purchases of diesel equated to 228,839 litres.  
11.	Based on these calculations, the Respondents felt that an under declaration for the full trading period had occurred and, therefore, assessed to best judgment in accordance with Section 73 of the Act.  That assessment was calculated as follows:
12.	 		Unleaded fuel - 779,490 litres x 77.9p per litre 
			= £607,222 x  7  = £90,437 of duty
				          47
13.			Diesel of 228,839 x 78.9p per litre
			= £180,553 x  7  = £26,891 of duty
			     	          47
14.		This gave a total estimated underdeclaration in the amount of £117,328
15.	The assessment by reference to the relevant VAT periods was as follows:
16.			11/03 (129 days)	=	£54,839
			02/04 (90 days)	=	£38,259
			05/04 (57 days)	=	£24,230 (to be separately assessed)
17.	The assessments then for the periods 11/03 and 02/04 equated to the original assessment of £93,097, and notification of this assessment was sent to the Appellant on the 17th June 2004 and, although subsequently reduced, it forms the basis of this appeal.  The assessment for 05/04 was to be separately assessed.  It does not form part of this appeal.
18.	The Appellant wrote to the Respondents on the 29th June 2004 seeking reconsideration of the assessment.  The Appellant contended in that correspondence that some of the pumps were faulty, and indicated that he had employed a third party, Forecourt Equipment Sales, to fix the pumps shortly after the assessment was raised. 
19.	The Respondents contacted Mr. Patrick O’Neill of Forecourt Equipment Sales by telephone on the 23rd May 2005 and obtained a copy invoice for the work that was carried out.  In that document Mr. O’Neill detailed the extent of the work carried out to repair the Appellant’s fuel pumps.  Based on that information, the reviewing officer accepted that some of the fuel pumps were faulty and subsequently amended the assessment by removing the estimated fuel throughput for three of the unleaded nozzles.  As a result the assessment was reduced by £23,408 to £69,689.  The Appellant was notified of the amendment to the assessment on the 7th July 2005.
20.	The Appellant appealed, stating in his notice of appeal that:
“(a)	The assessment is incorrect – there was no under declaration.
(b)	The decision is based upon meter readings on pumps.  The meters were defective and immediate action was taken by the Appellant to have them replaced.  The basis of the calculation is defective.”
Inspections and Meter Readings
21.	It is worthwhile looking at the chronology in which the meter readings were taken.
	The October 2003 Inspection
22.	The inspection which was undertaken on the 7th October 2003 was a normal compliance inspection and took place as a result of the Appellant’s registration.  It was conducted by a Mr. R.P.J. Hazard who appeared to give evidence to the Tribunal.  His visit was made in direct response to the Appellant’s initial application for registration as a VAT trader.  On that occasion Mr. Hazard completed a questionnaire based on information given to him by both the manageress, Mrs. Rosemary Armstrong, and the Appellant.  As part of his visit Mr. Hazard:
(a)	inspected a number of invoices for fuel purchases for the period from the 25th July 2003 to the 26th September 2003;
(b)	inspected some of the stock in the shop and retained some till rolls relating to the shop and fuel sales operations;
(c)	took fuel readings from pumps 1 and 2, 3 and 4, 5 and 6 and 7 (the single pump selling leaded fuel).  Each pump (except number 7) had two nozzles.  
The schedule which the Respondents subsequently used for their assessment was compiled on the basis of the information from the four individual inspections, and is attached.  Column 4 of that schedule is based on the meter readings taken by Mr. Hazard and, therefore, provides the base line readings for the Respondents’ later calculations.
The January 2004 Inspection
23.	The January inspection was a routine compliance check and again readings were taken on that occasion.  Those readings were subsequently also input into the schedule (Column 5) for the purposes of undertaking the assessment.
The April 2004 Inspections
24.	The first inspection in April 2004 was carried out on the 22nd April 2004 (“the First April Inspection”), by officers Mark Francis Colhoun and Connor Magennis.  Mr. Colhoun gave evidence to the Tribunal, and Mr. Magennis provided a written witness statement.  Mr. Colhoun’s evidence was that around 10am on the 22nd April 2004 he went to the Clifton Street Service Station and met with one of the Appellant’s employees who then contacted the manageress, Mrs. Rosemary Armstrong.  Mr. Colhoun then, with Mrs. Armstrong’s assistance, completed a retail site questionnaire.  He gave evidence that he took totaliser readings for each nozzle (ie. four readings per shell).  Mr. Colhoun also gave evidence that on a sporadic basis as customers bought fuel he checked the customer displays (ie. the read out at the top of each pump) against the totaliser at the bottom of each pump.  He did not, however, systematically record any direct correlation between the two readings.  In cross examination Mr. Colhoun gave evidence that he considered that all pumps, except for number 7, were working satisfactorily and were dispensing fuel.
25.	Having taken the readings and compared them with the invoices which were available, Mr. Colhoun then had another interview with Mrs. Armstrong.  In that interview he established that the opening hours of the premises were 0700 to 2300, Monday to Saturday, and 0800 to 2300 on Sunday.  He asked Mrs. Armstrong what the average fuel sale would be, to which she responded “ten litres”.  She was unable to say how many cars would normally fill up in an hour.  Mr. Colhoun then gave evidence that, based on his comparison of the meter readings as against the invoices for fuel purchased, he put it to Mrs. Armstrong that the meter readings suggested that 374,668 litres of fuel had been sold since the 5th January 2004, equating to approximately 3,257 litres per day, or 203 litres per hour.  Mrs. Armstrong indicated that she felt that that “sound[ed] wrong”.  Mr. Colhoun was not satisfied and decided to detain the fuel and all relevant records and advised his decision to the Appellant by telephone.  On that occasion a total of 1,100 litres of unleaded petrol, and 7,000 litres of DERV were uplifted.
26.	Having returned to his office, Mr. Colhoun felt that he was not satisfied with the meter readings which he had taken, so at 17.08 on the same day he returned to the petrol station and it is those later meter readings which appear in Column 8 on the schedule attached.
27.	On the 26th April 2004 (“the Second April Inspection”), Mr. Colhoun and other officers returned to the Clifton Street Service Station at approximately 13.20.  Again, he spoke to Mrs. Armstrong who produced an invoice from Braeview Fuels (number 1008) dated 22nd April 2004 (ie. the date of the First April Inspection) for 6,000 litres of unleaded petrol and 5,500 litres of DERV.  That delivery had been made shortly after the Respondents had uplifted the fuel after the First April Inspection.  Coincidentally, a further delivery had been made just before the inspection on the 26th April 2004 – this time of 3,200 litres of DERV and 8,300 of unleaded fuel.  On that occasion Mr. Colhoun took the invoice 1008. Mr. Colhoun queried its provenance and it turned out that the supplier was Braeview Fuels.  It transpired that Braeview was a supplier which was also owned or controlled by the Appellant.  Mr. Colhoun again decided to uplift and detain the fuel – this time uplifting 6,100 of unleaded petrol and 4,400 litres of DERV.  Mr. Colhoun, both in his evidence in chief and under cross examination indicated that, based on the same sporadic testing (ie. comprising fuel readings for customer sales against totaliser readings), it was his opinion that pumps 2, 5 and 6 were recording accurately (ie. a total of six nozzles) and that  he had verified that the last digit on the readings was recording accurately to a tenth of a litre.  He found that pump number 4 (side 2) was not functioning properly and appeared to be under-reading the litreage dispensed.  No other pumps were used whilst the officers were on the site. 
28.	Based on his investigations, Mr.Colhoun then prepared a report which completed the schedule attached.  Specifically, under cross examination, Mr. Colhoun confirmed that in his opinion pumps 3 and 4 were dispensing fuel, but he had not included the totaliser readings, because the totalisers on those pumps were not working. 
29.	It was based on that report and the schedule of readings over the entire period on which the calculation for the alleged under declaration (and therefore the assessment) was raised – the calculations being those which are highlighted in paragraphs 11 to 16 above.  The assessment itself was undertaken by Mr. Damian McCloskey who also appeared and gave evidence to the Tribunal.  Mr. McCloskey’s evidence was that based on the initial figures which had been presented to him, the turnover of the petrol station seemed small – the business grossing turnover of approximately £750 per day of which fuel accounted for £500 and  the shop £250.  Based on an average profit margin for fuel, that effectively gave a gross profit of £20 per day for fuel sales, which Mr. McCloskey felt for a petrol filling station in a busy location and trading through the number of hours through which the Respondents had been told it traded seemed low.  In raising his assessment, Mr. McCloskey relied on the readings for pumps 1 and 2 and 5 and 6 – the information for pumps 3 and 4 being unavailable.  In relation to pumps 3 and 4, Mr. McCloskey assumed that they were working satisfactorily and thus dispensing fuel, but just simply that the totaliser readings were incorrect.
30.	The other information which Mr. McCloskey had at the time when he made the assessment consisted of thirteen pages of daily records of total fuel sales which had been uplifted in one of the April visits.  Based on his assessment of that information, he issued the assessment for the £93,097.
The Review Decision
31.	Subsequent to the Appellant’s request for a review, the case passed to Mr. Colin Stockman, who also appeared and gave evidence to the Tribunal.  After requesting the review the Appellant, through his solicitors, sent a copy of an invoice for work carried out to the pumps by Forecourt Equipment Sales in support of the Appellant’s assertion that “the readings on the petrol pumping equipment at that location [were] entirely unreliable.”  The invoice from Forecourt Equipment Sales (“FES”) did disclose that remedial work had been carried out to the pumping units and that they had fitted three new shells, or “quad pump units”.  Mr. Stockman made a number of attempts to speak to Mr. P. O’Neill, the owner of FES.  He eventually received a telephone call from Mr. O’Neill on the 23rd May 2005.  From that conversation it appeared that the equipment on the forecourt was in a very unsafe condition.  Mr. O’Neill confirmed the work which had been invoiced (ie. the replacement of the three shells).  Mr. Stockman gave evidence both in chief and in cross examination that he understood the “pumps” which were replaced to be distinct from his understanding of “nozzles”.
32.	Based on the conversation with Forecourt Equipment Sales, Mr. Stockman then wrote to the Appellant’s representatives on the 26th May 2005 informing them of his decision to reduce the assessment by £23,408.  What Mr. Stockman had decided to do was to give an allowance for three of the nozzles dispensing unleaded fuel.  No allowance was given on the diesel pumps.  The previous average (for the eleven unleaded pumps) was 62,024 litres per pump.  He therefore multiplied this figure by the eight pumps (ie. deducting the three for which he was now giving an allowance) to give an estimated total throughput of 496,192 litres of unleaded fuel.  Over the period of 202 days this equated to 2,456.3 litres per day, and when this figure was extrapolated over the full trading period of 276 days (ie. from the 25th July 2003 to the 26th April 2004) and allowing for the deductions of declared purchases and uplifted fuel this produced an excess of 525,238 litres in pumped sales over the total declared purchases.  In short, therefore, applying that rationale he reduced the assessment to £69,689.
33.	Subsequent to that, and upon Mr. Stockman’s request, Mr. O’Neill then wrote to the Respondents further clarifying the work which he had undertaken.  This letter had been served as a witness statement by the Respondents and the Appellant had made no objection to it.  The letter indicated that Mr. O’Neill had supplied and fitted three shells, completely replacing therefore, pumps 1 and 2, 3 and 4 and 5 and 6.  In that letter Mr. O’Neill stated that he had not supplied the electronic heads, the twelve hoses or the twelve nozzles in an effort to reduce costs.  As for the three old units, his letter indicated that these were removed because they were “death traps” on the basis that the delivery arms and pipes on the old units were heavily corroded and porous with petrol seeping through them.  Both the internal pipe-work and “metering units were leaking fuel onto the electric motors” and drive belts, making, in Mr. O’Neill’s view, the forecourt operation a hazard to health and safety.  After refitting, the pumps were calibrated and new sealing units fitted where required.  Mr. O’Neill also indicated that he later (ie. on a separate occasion) returned to the filling station to meet with representatives from Weights and Measures so that the pumps could be certified.  The Appellant had assumed that the Respondent would be available at the Tribunal to give evidence (and therefore available to be cross examined on his evidence).  The Respondents, having served Mr. O’Neill’s letter as a witness statement and it not having been objected to, simply produced the witness statement in evidence.  The Tribunal accepted this evidence, although it was difficult to put too much weight upon Mr. O’Neill’s letter, because what he did not specifically indicate, either in the invoice or in his letter, was whether or not the totaliser units had been working satisfactorily or not when the work was undertaken – in spite of the other inadequacies in the units themselves.  The Tribunal did not, therefore, take either the invoice or his statement as providing any assistance on that specific point.

The Grounds of Appeal
34.	The Appellant’s Notice of Appeal has already been cited above.  In essence his case is that the totaliser units were defective and therefore could not safely be relied upon by the Respondents in their calculation.  In terms of Mr. O’Neill’s evidence, and its interpretation by Mr. Stockman, the Appellant argued that Mr. Stockman had misunderstood the effect of the work which had been carried out at the Petrol Station.  The case that the Appellant advanced was, in effect, that the replacement of the three shells ought to have been interpreted as a sufficient basis to reduce the assessment to nil (ie. on the basis of a total replacement of the 3 shells, ie. 12 nozzles), whereas the Appellant argued that Mr. Stockman had clearly misunderstood that and had simply refined the assessment by the deduction of the throughput for only three nozzles.  When this point was put to Mr. Stockman, he gave evidence that even if all twelve nozzles had been replaced, he still would have maintained the assessment (albeit at the reduced level) because he would not have accepted that there was a total failure of the service station or other totalisers.  His view was that, on the basis of the inspections that had been carried out throughout the period of the inspections (ie. October to April), there clearly had been fuel transactions being carried out.
35.	In support of that view, the final witness which the Respondents called was Mark Turner, who had also been present at the inspection on the 22nd April 2004.  Mr. Turner gave evidence that he had, on that occasion, although again only on a sporadic basis as cars had arrived at the service station, undertaken a cross check between the totalisers and the customer display.  He gave evidence that for pump number 4 as petrol was being dispensed the totaliser was clearly not working – this confirmed earlier assumptions.  For pumps 2, 5 and 6, however, he gave evidence that his notebook and contemporaneous recordings did confirm a correlation between the petrol sold and changes in the totaliser readings.  There was no reading for pump number 7.
The Appellant’s Evidence
36.	Mr. McKernan gave evidence.  He asserted that in relation to pumps 3 and 4 (which had been excluded from the Respondent’s calculation) that 3 out of the total of 4 nozzles were in fact not working and had never worked.  He indicated that his practice was that if pumps were not working he would erect signage to make that fact clear to customers.  He further gave evidence that he had neither checked the totaliser readings when he bought the site, nor subsequently.  In terms of monitoring fuel usage, he simply relied on the daily sales records 
37.	In his evidence in chief he said that it was only after he had received the first assessment that he brought in a specialist (ie. Mr. O’Neill of Forecourt Equipment Sales) and that it was on his advice that the three shells were replaced.  Mr. McKernan also gave evidence that this work involved a replacement of each of the totalisers.  He indicated that it was only as a result of those works that, pumps 3 and 4 were brought into full operational use.  
38.	Part of the cross examination of the Appellant focused on the April 2004 period.  It was put to the Appellant that in the four days between the 22nd April and 26th April 2004, 14,300 litres of unleaded fuel had been delivered.  This was based on the information available from the invoice from Braeview for the delivery on 22nd April (invoice number 1008) and the delivery note for the delivery on the 26th April (and subsequent detection inspection).  Of this amount 6,100 was uplifted, leaving a balance of 8,200 litres unaccounted for and, therefore, presumably sold.  That equated, approximately, to 2,050 litres per day. 
39.	For the same period in the case of diesel, 8,700 litres had been delivered, of which 4,140 litres was uplifted and subsequently condemned, leaving a shortfall of 4,300 litres, or approximately 1,075 litres per day – again presumably sold in the course of trading.  It was put to the Appellant that this was consistent with Mr. McCloskey’s original assessment, which the Appellant denied.
40.	In the Tribunal’s view, however, this was certainly factual information which did not rely on the totaliser readings and was, the Tribunal found, entirely consistent with the fuel throughput used by Mr. Stockman in his revised (and reduced) assessment.
Decision
41.	The factual matrix behind this case is complex, but essentially the issue before this Tribunal is if the Respondent’s assessment should stand on the grounds that it has been calculated to best judgement.  The burden of proof in saying that it should not stand rests squarely on the Appellant.  On the facts of this case, we do not feel that the Appellant has discharged that burden of proof and, therefore, we dismiss the Appeal.
42.	The grounds upon which we come to this conclusion are as follows:
(a)	for the Appellant to succeed, he would have to establish to our satisfaction that either:
(i)	none of the pumps or totalisers attributed to them were working, and that the assessment ought, therefore, to be reduced to nil; or
(ii)	that sufficient of the pumps were not working such as to render the assessment questionable – in support of which he advanced the argument that all of the nozzles on pumps 3 and 4 were not working throughout the relevant period. 
Frankly, however, we were not convinced on either front.  Taking those points in turn:
•	as to (i), and the question of the accuracy or otherwise of the totaliser readings, we certainly agree that it would have made the determination of this Appeal much easier had the Respondents kept a more accurate account of the correlation between the totaliser readings at the foot of each of the pumps which they inspected, and the customer displays at the top.  Had they done so, there would have been less of an issue over the accuracy of the totaliser readings. We nonetheless find that, on balance, and taking the evidence provided by all of the witnesses who appeared before us that it is appropriate for us, in the absence of cogent evidence to the contrary, to conclude that the readings which Customs relied upon provided sufficiently accurate information upon which the assessment could be based.  The Respondents visited the petrol filling station on at least four occasions.  Throughout that period, the totaliser readings which are contained in the Schedule appended to this Judgment show an upwards trading pattern.  For the Appellant, therefore, to say that all of the totaliser units were defective is unconvincing and, to be frank, he has not produced to this Tribunal any cogent evidence suggesting that to have been the case – a point which we will revert to below;
•	as to point (ii), equally we did not find the Appellant’s suggestion that pumps 3 and 4 were not working throughout the assessment period particularly convincing.  Again, we say this on the basis of there having been four inspections by Customs Officers throughout the period.  Had the Appellant adopted the practice, which he suggested in evidence that he did, of putting notices on defective pumps, then we are of the view that Customs Officers would have noticed that fact and that the records of the site inspections would have confirmed the position.  Indeed, quite the contrary is true.  A number of the witnesses called by the Respondents gave evidence that they were of the view that all of the pumps (except those which everyone accepts were not working) were dispensing fuel.  Indeed, I refer to Mr. Colhoun’s evidence in particular.  He was asked as to this point both in his examination in chief, and in cross examination and confirmed that from his inspection and the work which he did at the petrol filling station, that he was of the view that only pump number 7 was actually not working.  That pump, in any event, did not form part of the basis of assessment which Customs adopted;
(b)	we did, however, look for independent corroboration of Custom’s position based on the evidence before us.  To our mind, the circumstances between the 22nd April 2004, when fuel was first uplifted from the Petrol Filling Station, through to the Second April Inspection on the 26th April 2004, provide just such independent corroboration.  If one accepts (as I think one must) that when fuel was lifted by Customs on the 22nd April 2004, that the fuel tanks were empty, then effectively one starts with a clean slate.  Immediately after that detention the Appellant, through his associated supplier, Braeview Fuels, delivered 6,000 litres of unleaded petrol and 5,500 litres of diesel – the invoice which was presented to the Tribunal (invoice number 1008) confirms that delivery.  Immediately before the second April Inspection, a further delivery had been made, this time of 3,200 litres of diesel and 8,300 litres of unleaded fuel.  When one aggregates those figures and then deducts the fuel which was uplifted following the Second April inspection, it does provide one with a clearer trading view of the fuel throughput at the petrol filling station, that equating to approximately 2,050 litres per day of unleaded fuel and 1,100 litres per day for diesel.  This Tribunal finds that it is no coincidence that those figures, broadly speaking, accord with the revised assessment which Mr. Stockman produced based on his calculations.  This Tribunal finds that that evidence is independent corroboration of the basis of assessment (at least in terms of fuel throughput) that Customs had adopted;
(c)	finally, we come to the issue of expert evidence.  There is no doubt that if expert evidence had been adducted by the Appellant to the effect that the totalisers were either inaccurate or did not operate at all, then clearly that would have had a material impact on our decision.  No such evidence, however, was adduced.  The Appellant’s Counsel, Mr. Lavery, made much of the fact that Mr. O’Neill had not been called by the Respondents.  With respect to that contention, the position is that Mr. O’Neill’s letter was served as a witness statement and no objection was made to it.  Had the Appellant considered that having Mr. O’Neill of Forecourt Equipment Services present at the hearing was essential to his case, then steps should have been taken to ensure that attendance.  No such steps were taken and, as he did not actually comment in his letter as to whether or not the totalisers recorded accurately, this Tribunal did not find his witness statement particularly helpful as to that crucial factor.  
43.	As we have said above, the burden of proof in relation to this matter, and the challenge to the assessment generally, rests squarely with the Appellant and it was simply not discharged.  We will say only one more point in relation to this matter.  Clearly the information which Mr. O’Neill did provide to Customs did have some role to play.  On the basis of his conversations with Customs, and his letter, Mr. Stockman, the Reviewing Officer, decided to reduce the Assessment by approximately £23,000.  Mr. Stockman was cross-examined very closely as to what was in his mind at that particular point in time.  Our finding on this is that we feel that Mr. Stockman gave the Appellant the benefit of the doubt.  His evidence to the Tribunal was that he gave that allowance based on a deduction for three nozzles.  Equally, he was quite clear in cross-examination that he did not confuse the information which Mr. O’Neill was conveying, and at no stage would he have considered it appropriate to reduce the assessment to nil (as was the Appellant’s contention) based on the total failure of the mechanical totalisers.  Mr. Stockman made it quite clear that in making his assessment to best judgment, he felt that three of the nozzles, the information for which was previously used in the assessment, could not be relied upon, and that was the basis for his making the appropriate reduction.  We find Mr. Stockman’s evidence perfectly satisfactory on this point and see no reason to challenge it.  To our mind, the reduction was fair in the circumstances and, for the record, we so find.
44.	For all of those reasons and findings of fact, therefore, as we have mentioned above, we find for the Respondents and DISMISS the Appeal.
45.	No application was made in respect of costs, and no order is given.
IAN HUDDLESTON
CHAIRMAN
Release Date: 7 October 2008
MAN/07/778