Mr. Wishmore Ltd v Commissioners of Customs and Excise
| Jurisdiction | England & Wales |
| Judgment Date | 24 May 1988 |
| Date | 24 May 1988 |
| Court | Queen's Bench Division |
Queens Bench Division (Crown Office List).
Mr. Roger Gray (instructed by Anthony King & Co., Billericay) for the taxpayer.
Mr. Nigel Pleming (instructed by the Solicitor of Inland Revenue) for the Crown.
Before: Farquharson J.
The following cases were referred to in the judgment:
Anglo Associates (Tyres & Exhausts) Ltd. (LON/84/466) (unreported)
Associated Provincial Picture Houses Ltd. v. Wednesbury CorporationELR[1948] 1 K.B. 223
C. & E. Commrs. v. J.H. Corbitt (Numismatists) Ltd. ELRVAT[1981] A.C. 22; (1980) 1 BVC 330
Value added tax - Commissioners' power to require security for tax - Commissioners issued notice on the basis of a "definite possibility" that tax would be lost - Whether there must be a probability that tax would be lost - Value Added Tax Act 1983 schedule 7 subsec-or-para 5Value Added Tax Act 1983, Sch. 7, para. 5(2).
This was an appeal from a decision of the VAT Tribunal (LON/87/197) No. 2526 that the Commissioners of Customs and Excise had properly required the taxpayer company to give security for VAT under the Value Added Tax Act 1983, Value Added Tax Act 1983 schedule 7 subsec-or-para 5Sch. 7, para. 5(2).
The taxpayer company was concerned with the supply and installation of double glazing. The moving spirit behind the company was its managing director, M, who had previously been responsible for two other double glazing companies which had become insolvent with a substantial deficiency. Part of the deficiency was a debt of £85,000 for VAT collected from customers which had been lost to the Commissioners of Customs and Excise.
The company was registered for VAT in 1984 since when it had fallen into arrears with returns and payment.
As a consequence of the company's failure properly to account for VAT and the managing director's background the Commissioners decided to issue a notice under the Value Added Tax Act 1983,Value Added Tax Act 1983 schedule 7 subsec-or-para 5Sch. 7, para. 5(2) requiring the company to give security of £26,700 as a condition of its continuing to trade.
A VAT Tribunal dismissed the company's appeal against the notice and the company appealed to the High Court contending that the Commissioners' case before the Tribunal was put on the basis that there was a "definite possibility" that tax might be lost. The company submitted that the proper test was whether a loss was probable, and a possibility was not enough to entitle the Commissioners to require security.
Held, dismissing the taxpayer's appeal:
1. The jurisdiction of the Tribunal was supervisory as opposed to appellate. The Tribunal could only interfere with a decision of the Commissioners if they came to the conclusion that it was one which no reasonable Commissioners could have come to.
2. The Tribunal should not be concerned with standards of proof involving possibility or probability but must restrict themselves to the question whether the taxpayer had established that the Commissioners' decision was unreasonable or had taken into account irrelevant matters or had ignored matters which should have been considered.
3. The Commissioners were fully justified in requiring security on the basis of non-payment by the person operating the earlier companies and the late returns of the taxpayer company.
By a notice of motion dated 23 February 1988 Mr. Wishmore Ltd. appealed against the decision of VAT Tribunal dated 27 January 1987.
The grounds of the appeal were that the Tribunal erred in law in holding that the test for deciding whether the Commissioners of Customs and Excise had acted reasonably in requiring security for VAT was whether there was a possibility of a loss to the Queen's Revenue and not whether there was a probability of a loss.
Farquharson J.: This is an appeal from a decision of a VAT Tribunal (chairman, Mr...
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