Nasim and Another. v Commissioners of Customs and Excise
| Jurisdiction | England & Wales |
| Judgment Date | 26 March 1987 |
| Date | 26 March 1987 |
| Court | Crown Court |
Queen's Bench Division (Crown Office List).
Mr. Kevin Prosser (instructed by Messrs. Metson Cross & Co.) for the appellants.
Mr. G.R. Sankey (instructed by the Solicitor for Customs and Excise) for the Crown.
Before: Simon Brown J.
The following case was referred to in the judgment:
Narich Pty. Ltd. v. The Commissioner of Pay-roll Tax ICRTAX[1984] I.C.R. 286; [1984] BTC 8019
This was an appeal from the decision of a VAT Tribunal (1985) 2 BVC 205,306 that the appellant, N, had continued to make taxable supplies after she had effectively transferred her restaurant business to the former head waiter.
N and her daughter carried on a restaurant business in partnership and were registered for VAT. The restaurant premises were held under a lease containing covenants against assignment or underletting. N ran the business until January 1981, when she entered into an agreement with M, the head waiter, for him to take over running the restaurant in return for a fixed weekly payment to N (to include the rent). M was to be responsible for all outgoings except rent and was to be entitled to the profits. The agreement provided for N to assist M with the paperwork involved in running the restaurant. She continued to prepare and sign VAT returns from information provided by M and prepared PAYE returns which included, from some time in 1982, £80 per week drawn by M. N also visited the restaurant regularly after the date of the agreement so that it would not appear to the landlord that there had been any breach of covenant.
The VAT returns indicated that takings were in the region of £650 per week, but investigations by the Customs and Excise revealed that M had been cheating; takings were nearer to £2,000 per week. It was not suggested that N connived at the fraud or even knew of it. M died in August 1984.
N and her daughter were assessed to VAT for a period between January 1981 and August 1983 in the sum of £22,750, on the basis that N had continued to carry on the restaurant business and to make taxable supplies after January 1981 through M as manager. A VAT Tribunal dismissed an appeal against the assessment; it accepted that N took no part in the running of the restaurant after January 1981, but relied on the provision in the agreement that N would assist with the paperwork, and on an inference that M had become an employee when he started taking £80 per week, treating it as salary, and on the fact that N remained "entitled to a large share of any profitability that might accrue to the business".
N appealed contending that the Tribunal could not reasonably have come to the conclusion that she continued to run the restaurant when the takings and profits belonged to M who was in no sense under her control or direction.
The issue was whether N had carried on the business, selling meals for profit and making taxable supplies, through M, or whether M had carried on the business and made taxable supplies on his own account. N could only be regarded as having carried on the business if her relationship with M was that of master and servant, or principal and agent.
Held, allowing N's appeal:
The Tribunal had erred in law in that there was only one reasonable and proper conclusion available to them on the evidence. Nothing in the agreement or the surrounding circumstances pointed to an agency relationship or an employment, and N was not entitled to any of the profits as such but only to the fixed weekly sum. The terms of the agreement provided M with the opportunity of running the business on his own account, albeit at the cost of the fixed weekly payment to N. N could not reasonably be said to have been controlling the business in any sense, and she had no control over M's decision to pay himself a wage out of the takings which were his to do with as he liked. Accordingly, N ceased to make taxable supplies after the date of the agreement; in the relevant period the business was M's, and he alone made taxable supplies. The Tribunal's decision would be quashed.
Mrs. T.S. Nasim and her daughter (trading as Yasmine Restaurant) appealed against the decision of a VAT Tribunal sitting in London given on 29 July 1985. The grounds of appeal were:
(2) The VAT Tribunal erred in law in holding that Mr. Matin was an employee of the appellants over the relevant period, in that the Tribunal improperly regarded the facts that Mrs. Nasim prepared and signed the VAT returns and undertook other paperwork and prepared the PAYE documentation as indicating a degree of control over Mr. Matin; and in that there was no evidence to justify the finding that a salary was paid to Mr. Matin; and in that the Tribunal failed to take into account all factors relevant to the question whether or not Mr. Matin was an employee or was self-employed.
(3) Accordingly, the VAT Tribunal erred in law in holding that the relevant taxable supplies were made by the appellants in the course or furtherance of any business carried on by them for the purposes of theValue Added Tax Act 1983 section 2Value Added Tax Act 1983, sec. 2.
Simon Brown J.: This is an appeal under section 13 subsec-or-para (1)sec. 13(1) of the Tribunals and Inquiries Act 1971 against the determination of a London VAT Tribunal (1985) 2 BVC 205,306 dated 29 July 1985, deciding a preliminary point in favour...
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Alongi v Commissioners of Inland Revenue
...of Inland Revenue) for the Crown. The following cases were referred to in the opinion of the court: Nasim & Anor v C & E Commrs TAX[1987] BTC 5062 Ransom (HMIT) v Higgs TAX(1974) 50 TC 1 Spedding v Sabine (HMIT) TAX(1954) 35 TC 239 This was an appeal against a decision of the general commis......
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