Grange (S. J.) Ltd v Commissioners of Customs and Excise
| Jurisdiction | England & Wales |
| Judge | THE MASTER OF THE ROLLS,LORD JUSTICE BRIDGE,LORD JUSTICE TEMPLEMAN |
| Judgment Date | 21 November 1978 |
| Judgment citation (vLex) | [1978] EWCA Civ J1121-2 |
| Court | Court of Appeal (Civil Division) |
| Date | 21 November 1978 |
[1978] EWCA Civ J1121-2
The Master of the Rolls (Lord Denning)
Lord Justice Bridge and
Lord Justice Templeman
In The Supreme Court of Judicature
Court of Appeal
On Appeal from the High Court of Justice
Queen's Bench Division
(Mr. Justice Neill)
MR. S. T. BATES. Q.C. and MR. D.A. SHIRLEY (instructed by Messrs. Herbert Smith & Co., Solicitors, London) appeared on behalf of the Appellants (Respondents).
THE SOLICITOR-GENERAL (MR. P. ARCHER. Q.C.) and MR. H. WOOLF (instructed by G.F. Gloak, Esq., Solicitor for the Customs & Excise) appeared on behalf of the Respondents (Appellants).
We have heard this case urgently. We understand that many hundreds of cases before tribunals have been held up awaiting it. So we give judgment at once.
V. A. T. was imposed by the Finance Act 1972. It came into force from the beginning of April 1973. Every trader has to send in returns every three months showing the amount of V. A. T payable by him. This is because every three months is a "prescribed accounting period" under section 30(c) of the Act. Forms are provided for this. purpose. Each trader has to show what goods he has sold during the three months, together with the V. A. T. on those sales. It is usually ten per cent. The trader is allowed to deduct the V. A. T. which has been paid by him to his own suppliers. Then, taking the difference between the two amounts| the net tax is left which is payable by him for the three months.
S. J. Grange Ltd. are jewellers in Sherborne. They send in their returns every three months, that is, for every "prescribed accounting period". For the three months ending December 1973 they put in a net tax payable of £243.09. For the following three months, ended March 1974, it was £213.74. For the next three months, ended June 1974, it was £409.13. For the three months ended September 1974 it was £457.64. And for the quarter ended December 1974 it was £459.54. So everything looked as though it was in order. They sent in their returns for every "prescribed accounting period". They also paid, as they had to, to the Commissioners of Customs and Excise the amount of tax which they said by their returns was payable.
The Commissioners have inspectors. They go round thecountry to help traders put in their returns. In so doing, they may find mistakes or omissions. They cannot visit everybody, but in January 1975 one of these inspectors visited S. J. Grange Ltd. He inspected this company's records. (The Commissioners of Customs and Excise are entitled under the statute to call for all the documents relating to the goods - that is, the invoices and soon - to see if the trader has been keeping his accounts properly. That is section 35(2) (b)). The inspector looked at the books and took some of them away. Over the next few months there were nine meetings between representatives of S.J. Grange Ltd. and the Commissioners of Customs and Excise. Eventually in August 1975 there was a meeting which the accountants and the solicitors attended. Then there were further investigations. I will not go into the details, but the result was that the Commissioners came to the conclusion that these traders' returns were incomplete and incorrect. As a result, in July 1976 they made a notice of assessment on S.J. Grange Ltd. as the statute permits under section 31.
On the 15th July, 1976 the Commissioners served this notice of assessment on S.J. Grange Ltd. of Cheap Street, Sherborne, Dorset;
"Examination of your records for the period 1st April, 1973, to 31st December, 1974, has disclosed an under declaration of the amount shown above £2,571.68. The sum should be paid at once to the VAT Central Unit, H.M. Customs and Excise"
You will see that that notice was for a period of 21 months. That gives rise to the point of law. S.J. Grange Ltd.say that that notice of assessment was completely bad. They say that a valid notice of assessment could not be given for a continuous period of 21 months from the 1st April, 1973 to the 31st December, 1974. They say that it ought to have been split up into three-monthly periods: and that as it was not split up it was bad. The judge upheld this argument. The Commissioners appeal to this court.
Before dealing with the argument, I would just note what happened afterwards. The accounts were investigated. The inspectors found that the assessment of £2, 571 was too much. They suggested that the right figure should be £1, 972. 75. The Inspectors put in a schedule in which they suggested various ways in which the trader had made mistakes. It is not yet proved, but is interesting as illustrating what may happen. For instance, china and glass were bought by the trader for resale. The books showed £4, 000 worth of glass coming in, but there were no entries of any sales out. Yet it was very likely that the traded sold glass on which V. A. T. would be payable. Another instance was where a customer bought jewellery and the trader made a valuation for him free of charge, because he wanted it for insurance purposes. The valuations showed £4, 000 worth of goods sold: but the books contained no entries of the sale of this jewellery. Again, the day book contained entries or valuation, "but the invoices did not correspond to those entries. Those are examples to illustrate the problems which face the inspectors when they come to make an assessment. It is suggested that in such ways over a period of twenty-one months V. A. T. has not been paid in an amount of £1, 972. 75. But the inspectors cannot say in which quarter this amount became due. The goods mayhave "been sold in any of those months from April 1973 to December 1974. Therefore, as they cannot say in which three months any of the goods were sold, the only way of dealing with it is to make the assessment for the whole period from April 1973 to December 1974.
There it is. The Commissioners say that from a practical point of view they can only do it in that way because it is the only sensible way of doing it. But the trader says that on the true construction of the statute the Commissioners have to split it up into three-monthly periods.
The question in this case turns on the interpretation of a few words in section 31 of the Finance Act 1972. Subsection (1) supports the Commissioners' point of view. It says;
"Where a taxable person has failed to make any returns required under this Fart of this Act or to keep any documents and afford the facilities necessary to verify such returns or where it appears to the Commissioners that such returns are incomplete or incorrect they may assess the amount of tax due from him to the best of their judgment and notify it to him".
Stopping there, there is nothing to prevent the Commissioners making an assessment for any period, whether it be three months, 12 months, 21 months or longer. But the trader says that an assessment can only be made for a prescribed accounting period; and that is three months. In support, he relies on section 31(2), which says:
"An assessment under subsection (1) of this section of an amount of tax due for any prescribed accounting period shall not be made after the later of the following:- (a) two years after the end of the prescribed accounting period; or (b) one year after evidence of facts, sufficientin the opinion of the Commissioners to justify the making of the assessment, comes to their knowledge".
The trader said that the amount "due for any prescribed accounting period" can only be calculated sensibly in regard to each accounting period. So they submitted that the notice of assessment must relate to each accounting period separately.
The judge accepted that argument. I can see the force of it. It is literally correct. But it leads to such impracticable results that it is necessary to do a little adjustment so as to make the section workable. This can be done by reading in a few words, such as lord Justice Bridge suggested in the course of the argument. That is, after "for any prescribed accounting period" read in these words, "which is included in the notice of assessment". Making this interpolation, it means that the two years in 2(a) runs from the end of the first three months included in the assessment.
The same problem arises under subsection 4, which says: "An assessment under subsection (1) or subsection (3) of this section shall not be made more than six years after the end of the prescribed accounting period", and so forth. Again a workable result is obtained by reading in after "prescribed accounting period" the words "which is included in the notice of assessment".
But most cases will not be subject to those time limits. The usual time limit will be the one year after knowledge by the Commissioners of the facts, see section 31(2) (b).
So read, it means that in all cases where it is impossible for the Commissioners of...
To continue reading
Request your trial
-
Stewarts Hardware v Commissioner of General Consumption Tax ; Dominion House Ltd v Commissioner of General Consumption Tax [Consolidated Suits]
..."the scheme of the Act admits of no other interpretation". Counsel also cited and relied upon the dicta of Neill J. in S.J. Grange Ltd. v Customs and Excise Commissioner [1979] 2 All E.R. 90 to support the proposition that an assessment must be confined to a single prescribed accounting per......
-
University Court of the University of Glasgow and Others v Commissioners of Customs and Excise
...(No. 2)UNKTAX[2002] EWCA Civ 1881; [2003] BTC 5114 Ridgeons Bulk Ltd v C & E Commrs TAX[1994] BTC 5090 SJ Grange Ltd v C & E Commrs WLR[1979] 1 WLR 239 Vestey v IR Commrs ELR[1980] AC 1148 Julian Ghosh (instructed by Dundas & Wilson, CS) for the Andrew Young (instructed by Shepherd & Wedder......
-
House (t/a P & J Autos) v Commissioners of Customs and Excise
... ... 4(1) of Sch. 7 to the Value Added Tax Act 1983, in one total amount even where they had the necessary information and would have been able to make separate assessments for each prescribed accounting period. SJ Grange Ltd v C & E Commrs VAT (1978) 1 BVC 210 explained. C & E Commrs v Le Rififi Ltd VAT [1995] BVC 55 followed. 2. Customs were entitled to treat the schedules in the letter sent to the taxpayer as part of the notice of assessment. So long as a taxpayer was notified of the ... ...
-
Commissioners of Customs and Excise v Le Rififi Ltd
... ... Edward Cohen (instructed by Tarlo Lyons) for the taxpayers ... The following cases were referred to in the judgments ... Ashville Investments Ltd v Elmer Contractors LtdELR [1989] QB 488 ... Don Pasquale (a firm) v C & E Commrs VAT (1990) 5 BVC 76 ... Grange (SJ) Ltd v C & E Commrs VAT (1978) 1 BVC 210 ... Grunwick Processing Laboratories Ltd v C & E Commrs VAT (1986) 2 BVC 200,240 ... Hack v London Provident Building Society ELR (1883) 23 ChD 103 ... International Language Centres Ltd v C & E Commrs VAT (1983) 1 BVC 545 ... Value added tax - ... ...