20953

REQUIREMENT FOR SECURITY – appeal dismissed. 

MANCHESTER TRIBUNAL CENTRE

VANQUIP LIMITED
		Appellant

-and-

             HER MAJESTY’S COMMISSIONERS OF
             REVENUE AND CUSTOMS
			Respondents

Tribunal: Richard Barlow (Chairman)
      Warren Snowden (Member)						

Sitting in public in North Shields on 7 January 2009.

No appearance by the Appellant

Nigel Bird counsel, instructed by the Solicitor for HM Revenue and Customs for the Respondents 

© CROWN COPYRIGHT 2009

DECISION

1.	The appellant appeals against a Notice of Requirement to Give Security dated 27 March 2008 issued by the respondents under paragraph 4(2)(a) of Schedule 11 to the Value Added Tax Act 1994.  The sum required as security was £23,303.57 or, if the appellant chose to move to monthly VAT returns, £15,535.71.

2.	Such security can be required where the Commissioners “think it necessary for the protection of the revenue” and where security is required the taxpayer commits a criminal offence if he makes supplies without having provided it.

3.	On appeal the Tribunal must consider whether the Commissioners’ decision was one they could reasonably have arrived.

4.	The appellant’s notice of appeal did not seek to challenge the requirement as such but alleged it was disproportionate to the level of turnover the appellant was achieving.  As no return had been made by the appellant which the appellant claimed was because of a delay in registration for which the appellant blamed the respondents, the respondents only had the statement in the application for registration on which to base their decision about the amount of security.  In fact the appellant had failed to make a return that had been required after registration was effected.  In the registration application the appellant had stated that its turnover was expected to be £450,000 per annum and, as the business appears to be a successor to a previous business of a similar type trading at the same premises and under the same or similar management, the Commissioners were in our opinion entitled to form the view that the appellant was in a good position to predict its turnover and so they were fully entitled to act on the appellant’s own statement without further enquiry in absence of any other evidence including the return that should have been made.

5.	The Commissioners’ decision was based on the previous involvement of the directors of Vanquip Limited in businesses that had failed to pay amounts due by way of VAT.

6.	Mr Brian Rostron had been a director of Finetop Engineering Ltd which went into compulsorily liquidation in October 2001 owing £4,276.71 VAT; Topgrove Properties Limited which went into creditors voluntary liquidation in July 2006 owing £25,278 VAT plus penalties and interest (total £33,018.05); Brown Sugar Durham Limited which went into creditors voluntary liquidation in June 2006 owing £160,064 VAT plus penalties, default surcharge and interest (total £195,399.17); and 20 Collingwood Street Limited which went into creditors voluntary liquidation owing £28,347 plus default surcharge (total £30,026.10).  Brown Sugar Limited had traded from the same premises as the appellant.  That company and the appellant were both licensed restaurant businesses and 20 Collingwood Street Limited had been a bar.  Topgrove Properties Limited was a building development and projects company and Finetop Engineering Limited was involved in maintenance work.

7.	Mr Rostron had therefore been involved in the management of four previous businesses which failed within a period of less than six years owing £262,720.03 of which £217,966.03 was VAT.

8.	Mr Andrew Maher had been a director of the same companies with the exception of Finetop Engineering Limited.

9.	The two directors therefore had, within the six year period, attempted to operate in three different types of business and had failed in each case.  They had what can only be described as a shocking record of failure to comply with their responsibilities so far as VAT was concerned.  Whether that was from lack of capital, incompetence, recklessness or deliberate acts, the fact is that the Commissioners were rightly concerned that the same would happen again and we hold that they acted entirely reasonably in requiring the security.

10.	The appeal is dismissed accordingly.  

Richard Barlow
CHAIRMAN

Release date: 12 February 2009

MAN/