Commissioners of Customs and Excise v Peachtree Enterprises Ltd
| Jurisdiction | England & Wales |
| Judgment Date | 13 July 1994 |
| Date | 13 July 1994 |
| Court | Queen's Bench Division |
Queen's Bench Division (Crown Office List).
Dyson J.
Kenneth Parker QC (instructed by the Solicitor for Customs and Excise) for the Crown.
John Tallon (instructed by Dalby Jackson Hesketh, Newcastle, Staffordshire) for the taxpayer.
The following cases were referred to in the judgment:
Associated Provincial Picture Houses Ltd v Wednesbury CorpELR[1948] 1 KB 223
C & E Commrs v J H Corbitt (Numismatists) LtdELRVAT[1981] AC 22; (1980) 1 BVC 330
Harland Tyres International plc (LON/93/788) No. 12,133
Mr Wishmore Ltd v C & E Commrs VAT(1988) 3 BVC 311
R v Secretary of State for the Environment, ex parte PowisWLR[1981] 1 WLR 584
Secretary of State for the Education and Science v Tameside Metropolitan Borough Council ELR[1977] AC 1014
Value added tax - Requirement of security to protect the revenue - Director of taxpayer previously involved in business with unsatisfactory VAT record - Appeal to VAT tribunal - Change of circumstances between date of decision to require security and hearing of appeal - Whether tribunal should have regard to change of circumstances - schedule 7 subsec-or-para 5Value Added Tax Act 1983, Sch. 7, para. 5(2).
This was an appeal by Customs against a decision of the VAT tribunal ([1992] BVC 926) that, in considering an appeal against a decision by Customs to require a taxpayer to provide a sum by way of security for VAT to protect the revenue, the tribunal might have regard to facts and matters occuring after the date when the decision was made and up to the time of the hearing of the appeal.
The taxpayer company carried on business as a restaurant. One of its two directors, Mrs R, had previously been involved similar businesses, in particular in association with her father. The business had a poor record of compliance with their obligations to make VAT returns and payments. One of the restaurants had become insolvent owing unpaid VAT but the business was sold and the name retained, the taxpayer company's new business being financed out of the proceeds of sale.
Customs formed the opinion that as a result of Mrs R's previous associations the revenue should be protected, and by a letter of 30 April 1991 they notified the company that, pursuant to the schedule 7 subsec-or-para 5Value Added Tax Act 1983, Sch. 7, para. 5(2), they would require security in the sum of £10,500 on a quarterly return basis or £7,000 on a monthly return basis. These figures were later reduced to £7,350 or £4,000.
By the time of the hearing the circumstances had changed. Mrs R had broken her business connections with her father and had improved the financial and fiscal standing of the business. However, Customs still thought there was a need to protect the revenue and asked for smaller sums, £4,000 for quarterly returns and £2,000 for monthly returns, as security.
The VAT tribunal allowed the taxpayer's appeal. Having first concluded that the commissioners' decision to require security was justified in the circumstances prevailing at the time of the decision, the tribunal considered the current position and examined the circumstances as they existed at the time of the hearing. They found that the risk to the revenue had disappeared and there was no need for the revenue to be protected.
Held, allowing Customs' appeal.
The jurisdiction of the tribunal was supervisory: it had no power to substitute its own decision for the decision made by Customs but only to review the decision which could be quashed if it was unreasonable. To look at the position in the light of subsequent events when reviewing a decision made by Customs would be to abandon the tribunal's supervisory role and assume the mantle of decision maker.
Customs appealed against a decision of the VAT tribunal (chairman Mr R T Rowland QC) given on 30 June 1992. The grounds of the appeal were that in considering an appeal by Peachtree Enterprises Ltd against a requirement under the schedule 7 subsec-or-para 5Value Added Tax Act 1983, Sch. 7, para. 5(2) that security be given, the tribunal had erred in law by taking into account events and matters occurring after the decision to require security had been made.
Dyson J: This is an appeal by the Commissioners of Customs and Excise from a decision of a VAT tribunal (chairman Mr R T Rowland QC) given on 30 June 1992 in which an appeal by the taxpayer company against a requirement under schedule 7 subsec-or-para 5para. 5(2) of Sch. 7 to the Value Added Tax Act 1983, that security be provided in the amount stated in a letter dated 30 April 1991 as modified by letter dated 20 June 1991, was allowed. The point that arises for my determination is one of some general importance, since it seems that there has been a divergence of approach by VAT tribunals as to the scope of their jurisdiction when they deal with appeals against the exercise of the commissioners' discretion under schedule 7 subsec-or-para 5para. 5(2) of Sch. 7 to the Act. The question raised is whether, in exercising such jurisdiction, the tribunal may have regard only to facts and matters existing at the time when the commissioners took the relevant decision, or whether the tribunal may also have regard to events which occurred after the date of the decision and at any time up to the date of hearing of the appeal. There is apparently no authority on the point. In Mr...
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