Don Pasquale (A Firm) v Commissioners of Customs and Excise
| Jurisdiction | England & Wales |
| Judgment Date | 01 December 1989 |
| Date | 01 December 1989 |
| Court | Queen's Bench Division |
Queen's Bench Division (Crown Office List).
Roch J.
Mr J Smouha (instructed by Teacher Stern Selby) for the taxpayers.
Mr Nigel Pleming (instructed by the Solicitor for Customs and Excise) for the Crown.
Value added tax - Failure to make returns or pay tax - Assessment - Whether appeal against assessment could be entertained without payment of tax assessed - Finding that on balance of probabilities taxpayers would suffer hardship if ordered to pay full amount of tax determined by commissioners to be due - Whether VAT tribunal entitled to order taxpayers to pay part of total tax assessed before appeal could be entertained - Value Added Tax Act 1983, Value Added Tax Act 1983 section 40 subsec-or-para (3)sec. 40(3)(b).
This was an appeal against a decision of the VAT tribunal under theValue Added Tax Act 1983, Value Added Tax Act 1983 section 40 subsec-or-para (3)sec. 40(3)(b) not to entertain the taxpayers' appeal. Having found that to pay the full amount of the tax assessed would cause the taxpayers to suffer hardship, the tribunal refused to hear the appeal unless part of the tax was paid ((1989) 4 BVC 1432; (LON/88/620 & 626) No. 4327).
The taxpayers ("the partners") carried on the business of a restaurant in partnership. No VAT was paid by the partnership nor were returns made between 1 June 1981 and 31 August 1987 comprising 25 quarterly accounting periods.
On 6 May 1988 the Customs and Excise issued notices of assessment on three pages of VAT form 191. The first two pages each represented ten quarters amounting to £21,033.39 and £25,271.23 respectively and the third page represented five quarters amounting to £10,403.62 making a total of £56,708.24.
The partners appealed to the tribunal under either Value Added Tax Act 1983 section 40 subsec-or-para (1)sec. 40(1)(b) orValue Added Tax Act 1983 section 40 subsec-or-para (1)(m) of the 1983 Act. They made an application to the tribunal that their appeal be entertained without payment or deposit of the tax determined to be payable by the commissioners. The tribunal had power to grant the application by virtue of Value Added Tax Act 1983 section 40 subsec-or-para (3)sec. 40(3)(b) if it was found that the partners would otherwise suffer hardship.
The tribunal found that the partners would suffer hardship if they were ordered to pay the full amount, however, regarding the assessment for each quarter as a separate assessment, the tribunal ordered payment of the tax assessed for the last five quarters appearing on the third page of the form.
The partners appealed contending that their appeal to the tribunal was against a single decision of the commissioners that the total amount of £56,708.24 was payable and it was not open to the tribunal to order payment of part of it. Having found that on the balance of probabilities the partners would suffer hardship if they had to pay or deposit the whole of the £56,708.24, the tribunal should have decided to entertain the appeal notwithstanding that that amount had not been paid or deposited.
The partners submitted that wording of Value Added Tax Act 1983 section 40 subsec-or-para (3)sec. 40(3) referred to "the appeal" and "the amount which the commissioners have determined to be payable" and that amount was £56,708.24. The tribunal chairman himself had treated the appeal as a single appeal by saying that the "appeal" would not be competent until the sums representing the total of the last five quarterly periods had been paid or deposited. The partners further submitted that had it been intended to give the tribunal power to order that part of the sum involved be paid or deposited, the words "or part of that amount" could have appeared inValue Added Tax Act 1983 section 40 subsec-or-para (3)sec. 40(3)(b).
The commissioners, while accepting that the tribunal had no power to sever the amount at stake in an appeal, contended that each assessment for a quarterly period was a separate decision. Although there was a single notice of appeal, there were notionally 25 appeals from 25 assessments. The result of the tribunal's decision was that the appeals against the first 20 assessments could go forward without payment of the tax determined to be due but the appeals in respect of the last five assessments could not.
Held, allowing the partners' appeal:
1. The assessment made by the commissioners constituted a single "decision" within the meaning of Value Added Tax Act 1983 section 40 subsec-or-para (3)sec. 40(3) from which there was a single "appeal". It followed that the tribunal was not entitled to require part of the sum assessed to be paid as a condition of entertaining the appeal.
2. Accordingly, the tribunal having found that, on the balance of probabilities, the partners would suffer hardship if they had to pay the whole amount, it should have decided to entertain the appeal despite non-payment.
By a notice of motion dated 17 October 1989 the taxpayers ("the partners") appealed from a decision of the chairman of the VAT Tribunal refusing to entertain their appeal unless part of the amount assessed were paid or deposited. The grounds of the appeal were that the tribunal erred in law:
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1. in holding for the purposes of an application under the...
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