Gandhi Tandoori Restaurant
| Jurisdiction | UK Non-devolved |
| Judgment Date | 02 February 1989 |
| Date | 02 February 1989 |
| Court | Value Added Tax Tribunal |
VAT Tribunal
The following cases were referred to in the decision:
Amis v Colls (HMIT) TAX(1960) 39 TC 148
Khawaja v Secretary of State for the Home Department UNK(1983) 1 All ER 765
R v Ghosh UNK[1982] 2 All ER 689
Van Boeckel v C & E Commrs VAT(1980) 1 BVC 378
Fraudulent evasion of tax - Civil penalty - Guidelines - Finance Act 1985, Finance Act 1985 section 13sec. 13, section 27 subsec-or-para (1)27(1).
This was the second case on Finance Act 1985, section 13sec. 13 and the president laid down various guidelines.
There were two issues: (1) whether restaurant takings had been underdeclared for VAT purposes; and (2) whether an assessment to a civil penalty for fraudulent evasion of VAT calculated at 100 per cent of the tax evaded was justified or should be reduced to take account of any co-operation of the appellant with the commissioners' investigators.
The appellant did not appear at the hearing and the solicitor representing him took no further part in the proceedings, after her application for an adjournment was refused, because she had no instructions. From May 1985 Mr Rahman (R) was responsible for the management and control of the business. R went abroad to attend his father, who was ill, and did not return in time for the hearing. The tribunal proceeded under rule 26(2) of the VAT Tribunals Rules 1986.
The appellant was a restaurateur in Orpington selling restaurant meals and take-away food. He appealed against two assessments made alleging underdeclarations of VAT from 1 October 1984 to 30 June 1987. The grounds of appeal were "the assessment is incorrect and cannot be substantiated".
Witness statements from the proprietors of firms supplying the appellant with food were read, as was a statement from the man who prepared the appellant's VAT returns. On comparing the appellant's purchase records with its suppliers' invoices substantial discrepancies were shown, and many of the invoices for food were not recorded in the appellant's purchase book.
Three of the commissioners' officers gave evidence that they and colleagues (who were not called to give evidence) observed the appellant's premises and counted people entering and remaining over half an hour, and people leaving with small carrier bags. The officers deduced that the former ate meals on the premises while the latter purchased take-away meals. On seven occasions officers ate at the restaurant, keeping records of the dates of and bills for their meals. On 18 May 1987 two officers interviewed R at the restaurant. R said he counted the bills and money daily and recorded them in a book which he produced. Most of the officers' meals were not there recorded, while substantially fewer take-away meals were accounted for than the officers' observations recorded. R gave no satisfactory explanation for any of the discrepancies at the interview. The officers judged that R had not declared 40 per cent of the takings, and assessed the appellant accordingly.
The officers also inspected bank statements, which showed that R had banked nearly 85 per cent of the declared takings of the appellant. Two of the officers stated that restaurants like the appellant's banked, at most, 60 per cent of their takings. (One officer did not speak from personal experience, but related what she had been told by colleagues and the other had dealt with only seven or eight such restaurants in his career.) The officers estimated that only 50.74 per cent of the actual takings were banked.
The commissioners accepted that the burden of proof on the question whether the appellant's actions fell within Finance Act 1985, section 13sec. 13 lay upon them. The officers thought that "only full co-operation with a full disclosure of the [VAT] evaded enables [the commissioners] to consider any reduction of any penalty that might be imposed".
Held, dismissing the trader's appeal against all three assessments:
A. The underdeclaration assessments:
1. The commissioners had assessed the appellant to the best of their judgment. The officers' observations of the appellant's premises and inspections of the appellant's books, the discrepancies and the absence of any adequate explanation by R when interviewed entitled the commissioners to assess the appellant in the figures that they did. The commissioners had fairly considered all material placed before them, had come to a reasonable decision as to the amount of tax due and were not required to make any further investigations. (Dicta of Woolf J in Van Boeckel v C & E Commrs VAT(1980) 1 BVC 378 applied.)
2. The officer's evidence as to bankings was of very little assistance as corroborative evidence of underdeclaration of output tax. The nature of the officers' evidence was unsatisfactory, while factors peculiar to a trader's business (e.g. whether supplies and staff were paid for in cash or by cheque) would materially affect the average amount banked. Accordingly the tribunal would disregard that part of their...
To continue reading
Request your trial
-
Khan (trading as Greyhound Dry Cleaners) v Commissioners of Customs and Excise
...First Indian Cavalry Club Ltd v C & E CommrsTAX [1998] BTC 5,030 Funke v FranceHRC (1993) 16 EHRR 297 Gandhi Tandoori RestaurantVAT (1989) 4 BVC 535 Internationale Handelsgesellschaft mbH v Einfuhr- und Vorratsstelle für Getreide und Futtermittel (Case 11/70) [1970] ECR 1125 Johnston v Chie......
-
1st Indian Cavalry Club Ltd and Another v Commissioners of Customs and Excise
...Brown v Brown SC1972 SC 123 Eutectic Welding Alloys Co Ltd v Whitting1969 SLT (Notes) 79 Gandhi Tandoori Restaurant VAT(1989) VATTR 39; (1989) 4 BVC 535 Gatoil International Inc v Arkwright-Boston Manufacturers Mutual Insurance CoELR[1985] AC 255 Gribben v Gribben1976 SLT 266 Hendry v Clan ......
-
Plant Force (Leeds) Ltd
...1 WLR 1476 (“Barlow Clowes”), Abou-Rahmah v Al-Haji Abdul Kadir Abacha [2007] WTLR 1 (“Abou-Rahmah”), Gandhi Tandoori Restaurant VAT(1989) 4 BVC 535 (“Gandhi”) and Thomson VAT[2002] BVC 4,031 (“Thomson”).[97] Mr Barnett agreed these were relevant decisions. In his opening he said that it ha......
-
Serla Ltd
...1994 section 60s 60(1) VATA 1994, the maximum penalty was 100 per cent of the tax. Mr Hillier referred to Gandhi Tandoori RestaurantVAT(1989) 4 BVC 535, and R v GhoshUNK [1982] 2 All ER 689; [1982] QB 1053. [51]The other periods were within Finance Act 2007 schedule 24Sch 24 FA 2007. Mr Hil......