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	United Kingdom VAT & Duties Tribunals (Excise) Decisions
You are here: BAILII >> Databases >> United Kingdom VAT & Duties Tribunals Decisions >> United Kingdom VAT & Duties Tribunals (Excise) Decisions >> Evitt v Revenue & Customs [2008] UKVAT(Excise) E01103 (01 April 2008) URL: http://www.bailii.org/uk/cases/UKVAT/Excise/2008/E01103.html Cite as: [2008] UKVAT(Excise) E1103, [2008] UKVAT(Excise) E01103

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E01103

EXCISE DUTY – BETTING AND GAMING DUTY – Amusement machine licence – Appellant provided a gaming machine for play without a licence – civil penalty – no reasonable excuse – assessment for arrears of duty confirmed – Appeal dismissed.

MANCHESTER TRIBUNAL CENTRE

JOHN EVITT Appellant

- and -

HER MAJESTY'S REVENUE and CUSTOMS Respondents

Tribunal: MICHAEL TILDESLEY OBE (Chairman)

MOHAMMED FAROOQ (Member)

Sitting in public in Birmingham on 11 February 2008

Hardeep Sodhi appeared for the Appellant

Kim Tiling of the Solicitor's Office for HM Revenue & Customs, for the Respondents

© CROWN COPYRIGHT 2008


 


DECISION

The Appeal

1. The Appellant was appealing against the Respondents' decision on review to uphold an assessment dated 21 February 2007 in the sum of £630 for not having an amusement machine licence for a gaming machine. The £630 comprised £380 arrears of excise duty and a £250 civil penalty.

The Dispute

2. The Appellant contended that he was not liable to pay the assessment because the two gaming machines found on his premises were not working. The Respondents, on the other hand, maintained that one of the machines on the Appellant's premises was in operation for which the Appellant held no amusement machine licence. In those circumstances the Appellant was liable to pay the arrears of back duty and a civil penalty.
3. The dispute was essentially one of fact, focussing on whether the Appellant had discharged the burden of proof on balance of probabilities that he was not required to hold an amusement machine licence for the gaming machines discovered on his premises.

The Law

4. Section 21(1) of the Betting and Gaming Duties Act 1981(the 1981 Act) provides that no amusement machine other than an excepted machine shall be provided for play on any premises situated in the United Kingdom unless there is for the time being in force an amusement machine licence.
5. Section 21(3) of the 1981 Act specifies that an amusement machine licence may be granted for a period of a month or of any number of months not exceeding twelve.
6. Section 21(5) of the 1981 Act defines excepted machines which include a gaming machine in respect of which the maximum value of the prize for winning a single game does not exceed £8.
7. Section 22 of the 1981 Act provides that excise duty shall be charged on amusement machine licences and the duty on a licence shall be determined in accordance with section 23.
8. Section 23 of the 1981 Act specifies the appropriate amount of duty for specific categories of machine. Category C covers a gaming machine in respect of which the cost of a single game does not exceed 50 pence and the maximum value of the prize for winning a single game does not exceed £25.
9. Section 24(5) of the 1981 Act enables a civil penalty to be imposed under section 9 of the Finance Act 1994 (the 1994 Act) against the owner, lessee or occupier for the management of the premises on which an amusement machine is provided for play without a licence.
10. Section 24 A of the 1981 Act brings into effect schedule 4A which enables the recovery of unpaid excise duty in relation to unlicensed machines. Under schedule 4A the Commissioners issue first a default notice requesting production of an amusement machine licence. Failure to comply with a default notice enables the Commissioners to grant a default licence and make an assessment to the best of their judgement for the unpaid excise duty, which is calculated in accordance with the rates specified in section 23 of the 1981 Act. Where the period of unlicensed use is less than a month the amount of unpaid excise duty due shall be the equivalent for a complete month.
11. Section 9(2) of the 1994 Act specifies a civil penalty of whichever is the greater of five per cent of the unpaid excise duty and £250 for providing an amusement machine for play without a licence. Section 10 of the 1994 Act provides a defence of reasonable excuse against a civil penalty imposed under section 9.

The Evidence

12. We heard evidence from Mr Hardeep Sodhi, the accounts manager, for the Appellant. Mr Nari Barn, the Officer who visited the Appellant's premises and issued the assessment, gave evidence for the Respondents. A bundle of documents was supplied by the Respondents.

The Facts

13. On 24 August 2006 Officers Barn and Maskew made an unannounced visit to the Appellant's premises at Coach House Café, Unit 2, Lower Horsley Fields, Wolverhampton. They saw two gaming machines in the public area. One of the machines, a Pyscho Cash Beast, was switched on with lights flashing displaying 25 pence play and £15 jackpot. The other machine, a 25 pence play and £15 jackpot, was not switched on. Two of the Appellant's employees, Sheila and Eriane, were present at the time of the visit. They explained that there were two machines on the premises, one was working whilst the other was not. No amusement machine licence was exhibited in the premises.
14. On 24 August 2006 Officer Barn spoke with Mr Sodhi who initially thought that the Appellant held a licence for the machine. However, it later transpired there was no licence, only a local authority permit for the machines.
15. On 31 August 2006 Officer Maskew spoke on the telephone with a Steve Everitt who confirmed that the gaming machines had been used within the Appellant's business for the last four to five months.
16. On 31 August 2006 the Respondents issued the Appellant with a letter requesting production of all relevant amusement machine licences for any licensable machines provided for play at Coach House Café during the period 24 May 2005 to 24 August 2006 by 14 September 2006
17. On 12 September 2006 Mr Sodhi e-mailed the Respondents pointing out that at the time of the unannounced visit there were two gaming machines on the premises. One of which was a machine not in working order with a maximum £8 pay out. This machine was installed by the previous owner of the premises. The second machine with a maximum payout of £25 was also not working. This machine had only been installed in the premises for a period of four weeks prior to the unannounced visit.
18. On 3 October 2006 the Respondents requested Mr Sodhi to produce a copy of the purchase invoice for the second machine. On 6 October 2006 Mr Sodhi informed the Respondents that the machine was bought on Ebay. On 16 October 2006 the Respondents advised Mr Sodhi that there would be an electronic record of the transaction on Ebay which formed part of the Appellant's business records. The Respondents repeated their request for documentary evidence of the purchase on three more occasions, 14 November 2006, 6 December 2006 and 9 January 2007. Mr Sodhi failed to supply the evidence requested.
19. On 1 February 2007 the Respondents re-issued the Appellant with a letter requesting production of all relevant amusement machine licences for any licensable machines provided for play at Coach House Café by 14 February 2007. The Appellant did not respond. On 21 February 2007 the Respondents issued a default licence for the Pyscho Cash Beast for periods from 24 April 2006 to 31 July 2006; and 1 August 2006 to 24 August 2006, and a notice of assessment in the sum of £630. The assessment comprised excise duty arrears of £315 for the period 24 April 2006 to 31 July 2006; £65 for 1 August 2006 to 24 August 2006 for a category C gaming machine, and a civil penalty of £250.
20. On 6 March 2007 the Appellant requested a review of the notice of assessment on the grounds set out in Mr Sodhi's e-mail of 12 September 2006. On 2 May 2007 the Respondents on review upheld the assessment in full
21. Mr Sodhi in evidence confirmed the contents of his e-mail dated 12 September 2006. Mr Sodhi, however, was not involved with the purchase of the second machine, which was done by the Appellant. Further he was unable to produce any documentation relating to the purchase. According to Mr Sodhi details of the transaction had been deleted from the Appellant's electronic records. Mr Sodhi confirmed that the two gaming machines had been disposed of and replaced by a gaming machine with a maximum pay-out of £5.

Reasons for Decision

22. The dispute was whether the Appellant provided one gaming machine for play on his premises without an amusement machine licence for the period from 24 April 2006 to 24 August 2006. The Respondents accepted that the other gaming machine was not working. The Appellant's evidence was that the disputed gaming machine was not in operation, and had only been purchased some three to four weeks before the unannounced visit. The Appellant did not attend the hearing instead he relied on the evidence of his accounts manager, Mr Sodhi, who had no personal knowledge of the purchase, and was unable to supply documentary evidence of the purchase despite several requests from the Respondents. In contrast the Respondents' evidence comprised the observations of two officers who saw the machine switched on with lights flashing displaying 25 pence play and £15 jackpot, and records of conversations with two Appellant's employees and a Steve Everitt. The latter on behalf of the Appellant stated that the machines were purchased some four to five months before the Officers' unannounced visit.
23. The burden of proof was upon the Appellant who had to persuade us on the balance of probabilities that the Officers' observations and records of conversations were unreliable. We were not persuaded by the Appellant's evidence. He produced no documentation to support his contention that the disputed machine was bought three or four weeks prior to the visit. The Appellant supplied no cogent reasons for questioning the reliability of the Officers' observations and records. The Appellant accepted that he held no amusement machine licence for the gaming machine.
24. We, therefore, find that the Appellant provided an amusement machine for play on his premises, Coach House Café, without a licence for the period from 24 April 2006 to 24 August 2006. Further the said machine was not an excepted machine because its maximum pay out as a prize for a single game was £15.
25. In view of our finding that the Appellant provided an amusement machine for play on his premises without a licence, he was liable for the arrears of excise duty, and a civil penalty of £250 unless he could put forward a reasonable excuse for his conduct. The Appellant's reason for not having a licence was that the machine was not working. We found against the Appellant on that point. He put forward no other reason for not holding a licence. Thus there were no grounds upon which we can find a reasonable excuse for the Appellant's conduct. We uphold the civil penalty of £250.
26. The Respondents assessed the Appellant for arrears of excise duty in the amount of £380 broken down into £315 for the period 24 April 2006 to 31 July 2006, and £65 for the period 1 August 2006 to 24 August 2006. The arrears of excise duty were calculated from a table given in section 23 of the 1981 Act, with each part month in arrears attracting the rate for a whole month. We find that the arrears were correctly calculated.

Decision

27. We dismiss the Appellant's appeal. We confirm the assessment in the sum £630. We make no order for costs.

MICHAEL TILDESLEY OBE

CHAIRMAN

RELEASE DATE: 1 April 2008

MAN/