Ahmed (t/a Lister Fisheries) v Commissioners of Customs and Excise
| Jurisdiction | UK Non-devolved |
| Judgment Date | 19 March 1999 |
| Date | 19 March 1999 |
| Court | Value Added Tax Tribunal |
Queen's Bench Division.
Burton J.
Conrad McDonnell (instructed by Bassra, Bradford) for the taxpayer.
Peter Mantle (instructed by the Solicitor for Customs and Excise) for the Crown.
The following cases were referred to in the judgment:
Edwards (HMIT) v Bairstow ELR[1956] AC 14
House (t/a P & J Autos) v C & E Commrs VAT[1996] BVC 116
International Institute for Strategic Studies VAT[1992] BVC 555; (1992) VATTR 245
R v Bow Street Metropolitan Stipendiary Magistrate, ex parte Pinochet Ugarte (No. 2) WLR[1999] 2 WLR 272
R v Gough ELR[1993] AC 646
Sneller VAT(1987) 3 BVC 662
Value added tax - Underdeclaration of output tax - Proprietor of fish and chip shop assessed for VAT - Some sales included in assessment occurred after the period of assessment - Whether assessment to Customs' best judgment -Value Added Tax Act 1994 section 73 subsec-or-para (1)Value Added Tax Act 1994, s. 73(1).Value added tax - Appeal to tribunal - Whether admission of evidence of Customs' witness without issue of a witness summons grounds for appeal - Evidence not taken into account by tribunal - Whether chairman biased - SI 1986/590 section 22 subsec-or-para (1)Value Added Tax Tribunals Rules 1986 (SI 1986/590), r. 22(1).
This was an appeal by the taxpayer against a decision of the VAT and duties tribunal ((MAN/96/262) No. 15,118; [1998] BVC 4004) that an assessment was made to Customs' best judgment. The taxpayer also alleged bias on the part of the tribunal chairman.
From 1 December 1993 to 31 August 1995 the taxpayer operated a fish and chip shop. In 1995 Customs investigated the business and concluded that sales and purchases had been suppressed, which was admitted by the taxpayer and an assessment was made on him under the Value Added Tax Act 1994 section 73 subsec-or-para (1)Value Added Tax Act 1994, s. 73(1).
At the hearing of the appeal to the tribunal, the assessment was reduced because the assessment included sales attributable to 11 days after the end of the assessment period.
On appeal to the High Court the taxpayer contended that the assessment was not made to the best of Customs' judgment because of the sales attributable to 11 days outside the period being included, notwithstanding that the error had been corrected by the tribunal and the assessment consequently reduced.
The taxpayer also contended that the tribunal chairman had been biased against the accountant representing him before the tribunal: that the chairman had treated him unfairly at the hearing of another case and had refused his request that another chairman should hear this case. The chairman had responded to that request in such an objectionable way that the accountant believed the chairman would be hostile and would not give him a fair hearing.
He further raised a point regarding evidence introduced by Customs. When the taxpayer objected to hearsay evidence being admitted, they had produced a witness without issuing a witness summons as required by theSI 1986/590 section 22 subsec-or-para (1)Value Added Tribunals Rules 1986 (SI 1986/590), r. 22(1).
Held, dismissing the taxpayer's appeal:
1. The tribunal was right to correct the error as to the additional 11 days. Their inclusion was inadvertent and did not invalidate the assessment.
2. While the chairman might have responded more appropriately, that did not show that he was biased or that he was hostile to the accountant.
3. The taxpayer's representative was not seeking to call the witness in question himself, for which a witness summons would have been necessary. He was asking the chairman to exclude hearsay evidence or call the witness in question. It was within the discretion of the chairman to admit the evidence and there was no breach of SI 1986/590 section 22r. 22 of the Value Added Tax Tribunals Rules 1986.
Burton J: This is an appeal from a VAT tribunal (Mr I E Vellins (chairman) and Mr J Denny) held over three days, namely 1 October 1996, 28 January 1997 and 8 April 1997.
The appellant operated a retail fish and chip shop and had admittedly undeclared output tax during the period he carried on business, which was between December 1993 and September 1995. An assessment was issued on 24 January 1996 and amended on 24 June 1996 in respect of seven prescribed accounting periods, namely from 1 December 1993 to 31 August 1995.
The assessments were calculated on the basis of three main sets of figures. The purchases declared (which I shall call figure A), potato purchases undeclared (figure B) and fish purchases undeclared (figure C).
To the total so arrived at for purchases, a mark-up percentage was applied of initially 120 per cent, but by the amended assessment 117 per cent, to arrive at the assessed sale price of the end product fish and chips, and VAT was then assessed on the total marked up figure.
The figure A declared purchases were originally assessed at £52,663 taken from figures supplied to Customs by the appellant's then accountants Messrs Revell Ward. This remained the assessed figure for figure A in the amended assessment, but it became clear at the tribunal that it, in fact, included amounts for purchases after the end of the seventh and last specified period 31 August 1995, in that the figures went up to 11 September 1995.
After making allowance for various other minor errors, the declared purchases were reduced by the tribunal (that is figure A) to £48,921 of which a reduction of £3,171.89 was in respect of the 11 days, being the period 1 to 11 September 1995.
Figure B, the undeclared potato purchases, was assessed at £22,995 and figure C, undeclared fish purchases was assessed at £37,204. The total was thus £112,162 reduced by the tribunal, in the circumstances I have above described, as a result almost entirely of their reduction of figure A, to £108,420.
The figure thus to be paid by way of VAT was assessed by the tribunal at £108,420 times 117 per cent mark up, times seven over 47.
At the tribunal the appellant, Mr Ahmed, gave evidence translated by a friend of his, Mr Parvaiz, who acted as interpreter, and he was represented by his accountant, Mr Nawaz, who had replaced Revell Ward. At Mr Nawaz's own initiative he too gave evidence at the hearing. There was also another witness called for the appellant, a Mr Hussain, a proprietor of a competitor fish and chip shop, Mr Chippie.
Customs' representative who cross-examined the appellant's witnesses was Mr Hanman, a solicitor from Dibb Lupton Alsop. As I understand it, the appellant's evidence and that of his witnesses was completed on the first day (the tribunal sitting somewhat late) leaving the second and third day for the evidence both in chief and cross-examination of Mr Simmons, the officer representing the Customs, and cross-examination was carried out at some length by Mr Nawaz.
As little time if any was left for submissions, they were made in written form, and I have seen and been directed to some of the obviously detailed submissions put before the tribunal by Mr Nawaz on behalf of the appellant.
A substantial number of points were put forward by the appellant and on his behalf to challenge the assessment but, in the event, the only material reduction made by the tribunal was in respect of the post-31 August 1995 elements of figure A as set out above, reducing the VAT assessment from £24,994 to £22,851.
The tribunal, in its decision, did not accept the evidence of either the appellant or Mr Hussain and, indeed, disbelieved them in the respects to which I shall return.
There has now been an appeal heard before me over three days. After hearing submissions, I decided to deal with the issues raised in the following order: first, the appellant's submission that, because of the inclusion of the post-31 August...
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... ... the Appellant's Purchases Journal and customs entries for December, 1996. revealed a vast ... "precludes any change of mind by the Commissioners to the detriment of the taxpayer until evidence ... In Jeudwine v Customs and Excise Commissioners [1977] V.A.T.T.R. 113 ... a ... This principle was applied in the case of Ahmed (trading as Lister Fisheries) v Customs & Excise ... ...