R v Dealy
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE McCOWAN |
| Judgment Date | 17 November 1994 |
| Judgment citation (vLex) | [1994] EWCA Crim J1117-14 |
| Court | Court of Appeal (Criminal Division) |
| Docket Number | No. 93/6424/X4 |
| Date | 17 November 1994 |
[1994] EWCA Crim J1117-14
IN THE COURT OF APPEAL CRIMINAL DIVISION
Before: Lord Justice McCowan Mr Justice Schiemann and Mr Justice Dyson
No. 93/6424/X4
MR M MURPHY QC and MR P KELSON appeared on behalf of the Appellant
MR S GULLICK and MISS RIGBY appeared on behalf of the Crown
Thursday 17th November 1994
On 28th July 1993 in the Crown Court at Doncaster before His Honour Judge Crabtree, the appellant was convicted by an 11 to 1 majority on an indictment containing four counts of being knowingly concerned in the fraudulent evasion of Value Added Tax. On 1st October 1993 he was sentenced to a community service order for 180 hours on each count concurrent. He was also disqualified from acting as a director of a limited company or from taking part in the management of a limited company for 5 years, and was further ordered to pay £1,500 prosecution costs.
He appeals against conviction on a question of law certified by the trial judge as a fit case for appeal. He also takes an additional point which we shall look at in time.
The prosecution case was this. It was alleged that the appellant, the managing director of a company registered for Value Added Tax with effect from 1st December 1989, had fraudulently evaded payment of the tax to a total of
£186,198 between 1st January 1990 and 31st July 1991. The four counts in the indictment were specimen counts.
In October 1989 the appellant was part owner of a company with an address in Finkle Street, Bentley. On 6th December 1989 the name of the company was changed to Yorkshire Clothing Company Limited, at the same address, and registered for Value Added Tax. At some stage, however, the company moved its premises to a trading estate in Rotherham without informing Customs and Excise. The first Value Added Tax return should have been made by the end of January 1990 for the month of December 1989. No returns were made and assessments were issued at regular intervals by the Customs and Excise to the address in Finkle Street. That for 1st December to 31st March 1990 was paid. That for April to June 1990 was paid in part. Assessments thereafter, up to September 1991, were not paid.
On 25th July 1991 a number of Customs and Excise inspectors raided the premises at Rotherham. They found that the company had kept proper books which showed that the company was working at a loss and was being kept going by using the money owed to Value Added Tax, which was more than the sums actually assessed by Customs and Excise. A file marked 'VAT' was found to contain completed returns, unsigned and never sent in. The inspectors also found a letter dated 6th March 1991 from the appellant's accountants, expressing their concern at his course of conduct and warning him of the possible consequences, and recommending that he make a voluntary disclosure to the Customs and Excise. That he did not do.
The appellant was interviewed. He admitted his failure to submit his Value Added Tax returns but denied any intention to defraud the Commissioners.
Turning to the defence case, the appellant did not give evidence. Instead, reliance was placed on a letter written by the appellant to the Commissioners of Customs and Excise, shortly after the raid, claiming that he had always intended to pay the Value Added Tax due but had chosen instead to pay his employees while the firm was making a loss. The firm had, however, at the time of inspection, begun to show signs of making a profit and might have been able to pay off all the arrears had it not been shut down. His intention had never been dishonest.
The following point was certified by the trial judge as fit for appeal:
"Does the word 'evasion' in s.39(1) of the Value Added Tax Act 1983 mean:
a) a deliberate non-payment when a payment is due or
b) a deliberate non-payment when a payment is due with intent to make permanent default in whole or in part of that existing liability."
At the trial the appellant's counsel argued for the latter. The judge was sympathetic to that submission. Indeed, it appears that he would have acceded to it but for a case called R v. Fairclough to which we shall refer in detail. Because he felt himself bound by that case, he directed the jury on the basis that a), rather than b), was the right approach.
Let us first look at the relevant terms of s.39(1) of that Act. They read:
"If any person is knowingly concerned in or in the taking of steps with a view to the fraudulent evasion of tax by him or any other person he shall be liable."
We look next at the judge's direction to the jury on law. Beginning at page 3-C:
"Well, what does 'evasion' mean? Evasion is an English word that means to get out of something. If you evade something, you get out of its way, you dodge it, and that, of course, is what this case is about. Was Mr. Dealy trying to dodge paying the VAT that his company, the limited company, Yorkshire Clothing Company Limited, owed to the Customs and Excise?
Any person, or business, or company, that is registered for VAT, is, in effect, an unpaid tax collector for the Government, or the Customs and Excise because they run the VAT. Every three months, the person, or the firm, is required to send in a return to the Customs and Excise showing how much VAT he should be paying over to the Customs and Excise and he, or the firm as it usually is —of course, it is usually limited companies —is required to pay that amount of VAT at the same time as sending in the return showing how much should be paid. Those who are registered for VAT have one month immediately after the end of each three-monthly period, and within that month they have to send in the return and the money.
The reality, of course, is that you are looking at the end of that month's grace. You need not look too strictly at the dates on each count on the Indictment. In a sense, the dates are not important. They are not things that matter desperately. There is no magic in the particular dates. No doubt, many people registered for VAT sometimes send in their returns and the money a week late, or a fortnight late, and the VAT people, the Customs and Excise, do not do anything much about short periods like that. Therefore, you are not concerned with the exact date of each count on the Indictment.
However, the point is that there comes a time when the person who is concerned to send in the firm's VAT Return, or his own if he is an individual, and the cheque for the amount owing, knows that the time has finally come when he must pay by the 31st of the month, or soon afterwards, anyway, and, if that person then deliberately does not send in the VAT Return and the money, at the time when he takes the decision, quite deliberately, not to send in the return, because he does not want to pay, he is, in law, evading the tax.
In each count on the Indictment, you will see that what is being alleged is the evasion of value added tax, and I have to tell you that, so far as the law is concerned, if the person concerned to send in the VAT Returns and the money when the time has come to do it, and he knows that the time has come, deliberately does not want to send them in, in order not to pay the tax because he does not want to, then, from that moment onwards, he is, in law, evading the tax.
Therefore, on each of these four counts, the first question that you must ask yourselves, because they relate to whether Mr. Dealy was concerned in the evasion of the tax, the first thing that the Prosecution have to prove in other words, is did a time come, about the end of the month that is set out in each count in the Indictment, or within a short time afterwards, that Mr. Dealy came to a deliberate decision not to send in the VAT return that was due at that time?
Secondly, did Mr. Dealy know, at the time, that he made that decision, that he did, or his firm, Yorkshire Clothing Company Limited, did, owe approximately the sort of money shown in that particular count?"
We can go on from there to 5-F:
"Thirdly, was his decision not to send in the VAT Return simply taken in order to conceal what the company owed and so, of course, was it a decision, taken deliberately, in order to get out of paying the tax that the company owed at the time that they owed it? Those are the question that you must be concentrating upon. If the answer to those questions is 'Yes', and you are sure about it, that Mr. Dealy, on any one of these counts, at the time that is being charged there, deliberately did not send in a VAT Return so as to escape paying what was due at the time, then Mr. Dealy was, at that stage, concerned in the evasion of the tax. That is the first thing that the Prosecution must prove, that he was concerned in the evasion of the tax."
We can go ahead then to page 8-A:
"That takes us on. It means that the argument passes on to the second thing that the Prosecution have to prove. Was Mr. Dealy acting fraudulently by not sending in the returns and the money?
Now, what does that word 'fraudulently' mean? You will see in every count that what is said is that he was 'knowingly' concerned in the fraudulent evasion of value added tax', and so the Prosecution have to prove, so that you are sure about it, that each time, whatever the date is, or the approximate amount of money, he decided not to send in the VAT Return, that he was acting fraudulently.
Well, what that word means, basically, is dishonesty, and here we come to it. What is dishonesty in English Law? It is a common English word and it carries its ordinary English meaning. The twelve of you must, first, look at what he did. You must decide...
To continue reading
Request your trial
-
Butt
...incurred and which there was a prima facie right to claim under section 26 VATA 1994. The following definition from R v Dealy VAT[1995] BVC 86 has been applied by the Tribunal in a number of cases involving section 60 and 61 VATA We look next at the judge's direction to the jury on law: Wel......
-
Plant Force (Leeds) Ltd
...decision makers must be aware of the need for such cogent evidence. Also, the FTT noted that the Court of Criminal Appeal in R v Dealy VAT[1995] BVC 86 quoted the following direction to the jury by the trial Evasion … means to get out of something. If you evade something, you get out of its......
-
C F Booth Ltd
...an attempt to align the VAT legislation with the Theft Act was dismissed by the Criminal Division of the Court of Appeal in R v Dealy [1995] BVC 86 which held that there was no requirement for there to be an intention to permanently deprive, as there is in the definition of theft, for there......
-
Ward
...Tribunal Ward The following cases were referred to in the decision: Georghiou VAT(LON/96/1193) No. 14,970; [1997] BVC 4120 R v Dealy VAT[1995] BVC 86 R v Ghosh UNK[1982] 2 All ER 689 R v McCarthy VAT(1981) 1 BVC 405 Woolwich Building Society v IR Commrs TAX[1992] BTC 470 Civil penalty - Dis......