Dollar Land (Feltham) Ltd and Others v Commissioners of Customs and Excise
| Jurisdiction | England & Wales |
| Judgment Date | 27 January 1995 |
| Date | 27 January 1995 |
| Court | Queen's Bench Division |
Queen's Bench Division (Crown Office List).
Judge J.
Alan Moses QC and Kevin Prosser (instructed by Leslie Hyman) for the taxpayer.
Stephen Richards (instructed by the Solicitor for Customs and Excise) for the Crown.
The following cases were referred to in the judgment:
Aspin v Estill (HMIT) TAX[1987] BTC 553
Associated Provincial Picture Houses Ltd v Wednesbury CorpELR[1948] 1 KB 223
British Oxygen Co Ltd v Board of Trade ELR[1971] AC 610
Brookes VAT(LON/92/2756) No. 11,752; [1995] BVC 681
C & E Commrs v JH Corbitt (Numismatists) LtdELRVAT[1981] AC 22; (1980) 1 BVC 330
C & E Commrs v Steptoe VAT[1992] BVC 142
Food Engineering Ltd VAT(1992) VATTR 327; [1992] BVC 1523
Fresh Pasta Products VAT(LON/92/376) No. 9781; [1993] BVC 1496
Moti Mahal Indian Restaurant VAT(LON/90/1806) and (LON/91/1390) No. 9375; [1993] BVC 718
Mr Wishmore Ltd v C & E Commrs VAT(1988) 3 BVC 311
R v HMIT, ex parte Lansing Bagnall Ltd TAX[1986] BTC 353
R v Secretary of State for the Environment, ex parte Brent London Borough Council ELR[1982] QB 593
Tamdown Ltd VAT(LON/92/2921) No. 10,180; [1993] BVC 1571
Van Boeckel v C & E Commrs VAT(1980) 1 BVC 378
Value added tax - Tribunal - Jurisdiction - Discretion exercisable by Customs - Whether tribunal had power to review exercise of discretion to impose default surcharges - Value Added Tax Act 1983, s. 40(1)(o), (p); Finance Act 1985, s. 19, 21(1)(c) (Value Added Tax Act 1994 section 83 subsec-or-para (n) section 83 subsec-or-para (q) section 59 section 76 subsec-or-para (1)Value Added Tax Act 1994, s. 83(n), (q), 59, 76(1)(c)).
This was an appeal by the taxpayer against a decision of the VAT tribunal ((LON/92/887, 888 and 2067) No. 10,719; [1994] BVC 569) that the tribunal had no power to review the exercise by Customs of their discretion to impose default surcharges under the Finance Act 1985, s. 19.
Three subsidiaries of Dollar Land Holdings plc ("the taxpayers") appealed to the VAT tribunal against default surcharges imposed under the Finance Act 1985, s. 19(4). The taxpayers claimed that difficulties created by the recession amounted to a reasonable excuse for default within the Finance Act 1985, s. 19(6). The surcharge had been issued automatically by a computer at the VAT Central Unit at Southend without any proper consideration or exercise of discretion and without referring the matter to the local VAT office where the officers of Customs would be familiar with the circumstances of the case.
The tribunal concluded that the defaults were not an unavoidable consequence of the recession and that a reasonable excuse had not been established. Having found a liability to surcharge, the tribunal dismissed the appeal. While recognising that Customs had failed to exercise their discretion under s. 21(1)(c) of the 1985 Act to assess a surcharge by making the assessment automatically, the tribunal went on to say that it was "sure" that the proper exercise of the discretion would have led to the imposition of surcharges.
On appeal to the High Court the taxpayers relied on a single ground: that the tribunal had misdirected itself in law in upholding the surcharges notwithstanding the failure of Customs to exercise the discretion conferred on them by s. 19(4) of the 1985 Act.
The relevant provisions on which the decision on jurisdiction turned were the Value Added Tax Act 1983, s. 40(1)(o) and (p) which provided for appeals to the VAT tribunal against the imposition of penalties and their amount. The taxpayers contended that those provisions embraced a review of the exercise of Customs' discretion to assess any penalty once liability was established.
Held, dismissing the taxpayers' appeal:
Neither s. 19 itself nor s. 21 made express provision for an appeal against the decision to impose a surcharge. The right of appeal was provided by the Value Added Tax Act 1983, s. 40(1)(o) and (p) which were concerned with liability and the amount of the surcharge respectively, rather than the decision to impose it. It was not possible to construe either para. (o) or para. (p) of s. 40(1) as providing by inference a power in the tribunal to review a decision by Customs to impose a surcharge. Accordingly, if liability to surcharge was established, the question whether to impose a surcharge was left to Customs' discretion. The remedy against any failure properly to exercise the discretion to assess a surcharge would be an appeal to the High Court by way of judicial review: C & E Commrs v JH Corbitt (Numismatists) Ltd VAT(1980) 1 BVC 330 followed; Food Engineering Ltd (1992) VATTR 327; VAT[1992] BVC 1523,Moti Mahal Indian Restaurant VAT(LON/90/1806) and (LON/91/1390) No. 9375; [1993] BVC 718, Fresh Pasta Products VAT(LON/92/376) No. 9781; [1993] BVC 1496 and Tamdown Ltd VAT(LON/92/2921) No. 10,180; [1993] BVC 1571 disapproved.
Per curiam: The tribunal would have been entitled to conclude that it was appropriate to impose the surcharges if Customs had directed their minds to the circumstances and properly exercised their discretion. Their statement that they were "sure" surcharges would have been assessed indicated a sufficient degree of certainty that no other outcome would have been possible.
By notice of motion, Dollar Land (Feltham) Ltd, Dollar Land (Cumbernauld) Ltd and Dollar Land (Calthorpe House) Ltd appealed against a decision of the London VAT tribunal (chairman Mr Theodore Wallace). The grounds of the appeal were that the tribunal had erred in law in upholding assessments to surcharges in spite of Customs' failure to exercise their discretion whether assessment should be made.
Judge J: Dollar Land (Feltham) Ltd, Dollar Land (Cumbernauld) Ltd, and Dollar Land (Calthorpe House) Ltd ("the taxpayers") are subsidiaries of Dollar Land Holdings plc. The Commissioners of Customs and Excise ("Customs") imposed surcharges totalling £225,062 on the three companies for a series of defaults in the payment of VAT between May 1990 and June 1992.
The taxpayers appealed to the VAT tribunal. By decision released on 28 June 1993 the tribunal (chairman Mr Theodore Wallace) dismissed the appeals.
The major issue before the tribunal was whether the considerable difficulties created by the recession then current provided the taxpayers with a reasonable excuse for their defaults. After a prolonged hearing the tribunal concluded that the defaults were not an unavoidable consequence of the recession and that a reasonable excuse for them had not been established.
It was further argued that the decision whether to impose surcharges involved the exercise of a discretion by Customs which came within the ambit of the tribunal's jurisdiction on appeal. The tribunal accepted this submission and concluded that Customs were vested with a discretion whether to make surcharge assessments which, in the present cases, they had failed to exercise. Finally the tribunal decided that notwithstanding the failure by Customs to exercise their discretion its proper exercise would have lead inevitably to the imposition of these surcharges.
The appeal to this court is brought under the Tribunals and Inquiries Act 1971. The single ground argued by Mr Alan Moses QC is that the tribunal misdirected itself in law in upholding the surcharges notwithstanding the failure of Customs to exercise their discretion. Mr Stephen Richards on behalf of Customs supports the tribunal's decision on three grounds: first, that in any event the tribunal had no jurisdiction to review the exercise of their discretion to impose surcharges and therefore was wrong to do so; second, that the tribunal wrongly concluded that the discretion had not been exercised; and third, that even if not exercised, the outcome on a proper exercise would have been identical and resulted in the imposition of the surcharges. The appeal therefore raises a number of interesting questions about the nature and extent of the jurisdiction of the VAT tribunal in the context of Customs' powers to impose surcharges.
The jurisdiction of the VAT tribunal is statutory. It arises under s. 40(1) of the Value Added Tax Act 1983 ("the 1983 Act") which provides:
An appeal shall lie to a value added tax tribunal … against the decision of the Commissioners with respect to any of the following matters …
(o) any liability to a penalty or surcharge by virtue of any of any sections 13 to 17A and 19 of the Finance Act 1985;
(p) the amount of any penalty, interest or surcharge specified in an assessment under section 21 …
Section 40(1A) adds:
… nothing in subsection (1)(p) above shall be taken to confer on a tribunal any...
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