Commissioners of Customs and Excise v Evans and Ors. (trading as The Grape Escape Wine Bar)
| Jurisdiction | England & Wales |
| Judgment Date | 11 December 1981 |
| Date | 11 December 1981 |
| Court | Queen's Bench Division |
Queen's Bench Division.
Mr. S. Brown (instructed by Mr. G.F. Gloak, Solicitor H.M. Customs and Excise) appeared as Counsel on behalf of the appellants.
Mr. D. Milne (instructed by Messrs. Harris and Cartwright, Maidenhead) appeared as Counsel on behalf of the respondents.
Before: Glidewell J.
Value added tax - Partnership - Partners carrying on business under firm name - One partner replaced by a limited company - New partners carrying on business under same firm name - Commissioners issuing one assessment covering period of both partnerships - Assessments notified only to two partners who were members of both partnerships - Whether assessment valid - Whether necessary for notice of assessment be given to each individual partner - section 22 subsec-or-para (1)Finance Act 1972, sec. 22(1).
This was an appeal by the Crown against a decision of the London Value Added Tax Tribunal which allowed in part an appeal by Mr. G.M. Evans, Mrs. J.M. Evans and Ardbrugh Contractors Ltd. ("the Partners").
In April 1978 Mr. and Mrs. Evans and a Mr. Whitton commenced to carry on the business of restauranteurs in partnership under the name of "The Grape Escape Wine Bar". The Commissioners registered The Grape Escape Wine Bar on 10 March 1978. On 23 September 1978 Mr. Whitton sold his interest in the partnership to Ardbrugh Ltd. and Mr. and Mrs. Evans took that company into partnership with them in the business. Thereafter the partnership continued to carry on the business under the same name of "The Grape Escape Wine Bar" until 7 December 1979 when the partnership was dissolved and the business sold. On 22 April 1980 the C. & E. Commrs. issued an assessment in the sum of £4,872 for the period 10 March 1978 to 7 September 1979 on "The Grape Escape Wine Bar" and sent it to Mr. and Mrs. Evans. The partners appealed to a VAT Tribunal contending, inter alia, that the assessment was invalid since it covered both the period of the first partnership between Mr. and Mrs. Evans and Mr. Whitton and the period of the second partnership between the partners. The Commissioners contended that under the section 22 subsec-or-para (1)Finance Act 1972, sec. 22(1) an assessment could be made on a partnership in respect of the partnership business and that it could properly relate to the whole or any part of the time that there had been a business carried on, whatever the personality of the particular partners carrying on the business at any time, and that accordingly, the one assessment covering the whole period from March 1978 to September 1979 was valid. The Tribunal held that the assessment could not be made against those who were partners after 23 September 1978 in respect of tax due for the period before that date and consequently allowed the appeal in part. The Crown appealed.
Held, dismissing the Crown's appeal:
For the purposes of the Finance Act 1972, a partnership was not a legal persona but only a group of taxable persons trading jointly who were under a joint liability in respect of tax accountable on the partnership business. Accordingly an assessment of tax due could be made under the section 31Finance Act 1972, sec. 31 only against the individual partners and the Commissioners were bound to notify any such assessment to each partner. Since the assessment had not been made against or notified to all those persons who had been partners both before and after 23 September 1978 it was not valid.
Glidewell J.: This is an appeal under section 13sec. 13 of the Tribunals and Enquiries Act 1971, against a decision of a VAT Tribunal given on 24 February 1981, on an appeal to them not by The Grape Escape Wine Bar but by Mr. G.M. and Mrs. J.M. Evans, and Ardbrugh Contractors Ltd., against an assessment made by the Commissioners. The Tribunal allowed the appeal and held that the assessment could only validly be made against the appellants before the Tribunal for part of the period to which the Commissioners' assessment related.
The relevant facts are as follows, and I am reading initially from the judgment of the Tribunal:
In April 1978 Mr. and Mrs. Evans (the first two Appellants) and a Mr. Whitton commenced to carry on the business of restaurateurs together in partnership under the name of "The Grape Escape Wine Bar". They were registered as taxable persons in that name with effect from the 10th March 1978. The day-to-day running of the business was initially entrusted to Mr. Whitton. After some months Mr. Evans formed the view that Mr. Whitton was failing to exercise proper control. On the 23rd September 1978 Mr. Whitton sold his share and interest in the partnership to Ardbrugh Contractors Ltd. (the third Appellant) and on the following day Mr. and Mrs. Evans took that Company into partnership with them in the business. Mr. and Mrs. Evans and the Company thereafter continued to carry on the business together in partnership under the name "The Grape Escape Wine Bar" until the 7th September 1979 when the partnership was dissolved and the business, property and assets of the partnership were sold.
A return was made of VAT for the first period for which the partners were required to make such a return, namely, the period from mid-March to 30 June 1978, and then assessments were made by the Commissioners in default of returns for the periods of three months to 30 September and 31 December 1978, and the amounts then assessed were duly paid. On 14 September 1979, Mr. Evans informed a Mr. Taylor, who is a Customs officer, that the partnership had ceased to trade on 7 September 1979. Mr. Taylor thereupon initiated enquiries which led to the assessment which was under appeal before the Tribunal, which was an assessment in the sum of £4,272.58, and which was expressed to relate to the period from 10 March 1978, to 7 September 1979, that is to say, the whole of the period during which a business under the name "The Grape Escape Wine Bar", whatever its partners, had been carried on. The letter accompanying the assessment, which is dated 22 April 1980, from the Customs and Excise to The Grape Escape Wine Bar, C/o Messrs. J.M. & G.M. Evans, shows that the assessment was arrived at in relation to two periods. First the period from 10 March to 30 September 1978, for which an assessment was made in the sum of £1,075.37, and, secondly, the period from 1 October 1978, to 7 September 1979, for which an assessment was made in the sum of £3,197.21p, the two together making up the actual sum assessed of £4,272.58p.
On appeal to the Tribunal the challenge to these figures failed, that is to say, it was the Tribunal's decision that the assessment was properly made so far as any of the calculations were concerned, and no appeal against that can be pursued or is pursued. The Tribunal held that the assessment could not be made...
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