S.J. Grange Ltd v Commissioners of Customs and Excise
| Jurisdiction | England & Wales |
| Judgment Date | 25 July 1978 |
| Date | 25 July 1978 |
| Court | Queen's Bench Division |
Queen's Bench Division.
Mr. D. Shirley (instructed by Messrs. Herbert Smith & Co.) for the company.
Mr. H. Woolf (instructed by the Solicitor for Customs & Excise) for the Crown.
Before: Neill J.
Value added tax - Assessment covering a period of twenty-one months - Whether an assessment confined to a "prescribed accounting period" of three months - section 31Finance Act 1972, sec. 31 (now schedule 7 subsec-or-para 4Sch. 7, para. 4, but as amended).
This was an appeal by S.J. Grange Ltd. ("the company") against a decision of the Birmingham Value Added Tax Tribunal that the Commissioners were entitled to raise an assessment that covered a number of accounting periods.
The company was assessed for VAT in a single sum for a period of 21 months from 1 April 1973 to 31 December 1974. The company appealed to a VAT Tribunal contending that a valid assessment had to be restricted to a "prescribed accounting period" of three months only. The Tribunal dismissed the appeal holding that section 31 subsec-or-para (1)Finance Act 1972, sec. 31(1) authorised the making of one assessment for several prescribed accounting periods. The company appealed.
Held, allowing the taxpayer's appeal:
Notwithstanding the absence of an express stipulation in Finance Act 1972, section 31 subsec-or-para (1)sec. 31(1) that an assessment had to be made "for" or "in respect of" or "by reference to" any prescribed accounting period such a stipulation could be implied from Finance Act 1972, section 31 subsec-or-para (2) section 31 subsec-or-para (4)sec. 31(2) and (4) which imposed time limits on which assessments might be made, such time limits relating to prescribed accounting periods.
Neill J.: This is an appeal by S.J. Grange Limited (whom I shall call "the company") against a decision of a VAT Tribunal sitting at Exeter on 19 September 1977. The decision was dated 4 November 1977 and notified to the company on 10 November 1977.
By that decision the Tribunal dismissed an appeal by the company brought under section 40 subsec-or-para (1)sec. 40(1)(b) of the Finance Act 1972 (which I shall call "the 1972 Act") against an assessment for tax made on the company by the Commissioners in the summer of 1976 in accordance or in purported accordance with section 31 subsec-or-para (1)sec. 31(1) of the 1972 Act.
The matters raised by this appeal are:
(2) the validity of that assessment;
(3) whether the Tribunal should have heard evidence before reaching a decision that that assessment was made within the time limit prescribed by section 31 subsec-or-para (2)para. (b) of sec. 31(2) of the 1972 Act, and
(4) the date when that assessment was made.
The first of these matters is a matter of some general importance.
VAT under the 1972 Act can be considered under two main headings:
(a) value added tax chargeable on the supply of goods or services in the United Kingdom, and
(b) value added tax chargeable on the importation of goods into the United Kingdom.
This case is concerned with an assessment made on the supply of goods in the United Kingdom and it will not be necessary for me to make any detailed references to any provisions relating to importation. I may note in passing, however, that by section 2 subsec-or-para (3)sec. 2(3) of the 1972 Act, it is provided that VAT "on the importation of goods shall be charged and payable as if it were a duty of customs".
The scope of the tax is set out in section 2sec. 2 of the 1972 Act. In relation to the supply of goods and services, section 2 subsec-or-para (2)sec. 2(2) provides:
Tax on the supply of goods or services shall be charged only where -
(a) the supply is a taxabled supply; and
(b) the goods or services are supplied by a taxable person in the course of a business carried on by him;
and shall be payable by the person supplying the goods or services.
It will be seen, therefore, that value added tax is chargeable under section 2 subsec-or-para (2)sec. 2(2) if the following conditions are satisfied: (a) the supply is of goods or services, (b) the supply is a taxable supply, (c) the supply is by a taxable person, and (d) the supply is in the course of a business carried on by the taxable person.
The tax, it is to be noted, is payable by the person supplying the goods or services.
Two phrases in section 2 subsec-or-para (2)sec. 2(2)require a short explanation. First, "taxable supply". "Taxable supply" means any supply of goods or services in the United Kingdom other than an exempt supply; see section 46 subsec-or-para (1)section 46(1). No question arises in this case as to any supply being exempt and I need say no more about the matter. The supply of goods by the company was plainly a taxable supply. Second, "taxable person". By section 46 subsec-or-para (1)sec. 46(1),it is provided that the phrase "taxable person" has the meaning assigned to it by section 4sec. 4. section 4Section 4 says this:
(2) A person who makes or intends to make taxable supplies is a taxable person while he is or is required to be registered under this Part of this Act.
(3) schedule 1Schedule 1 to this Act shall have effect with respect to the registration of persons under this Part of this Act.
In the present case, it is common ground that the company was a taxable person making taxable supplies of goods in the course of its business. So I turn to consider in outline some of the provisions in the 1972 Act relating to the collection of tax.
It will be remembered that tax is payable by the supplier of the goods or services. It was therefore necessary to make provision in the 1972 Act, and in the regulations made thereunder, for a system to secure the due collection of the tax. At this stage, I need only refer to the following aspects of the system which was adopted:
(a) A person who supplies goods or services in the course of his business to a value in excess of a prescribed amount is required to be registered; see the 1972 Act. section 4 schedule 1sec. 4 and Sch. 1; the Value Added Tax (General) Regulations 1972 (which I shall call "the 1972 Regulations"), reg. 3-7.
(b) A registered person is required to make returns showing the amount of tax payable by him; see the 1972 Act, section 30 subsec-or-para (2)sec. 30(2); the 1972 Regulations, reg. 46.
(c) When a registered person makes a return he has to pay to the Commissioners the amount of tax shown in the return to be due; see the 1972 Act, section 30 subsec-or-para (1)sec. 30(1);the 1972 Regulations, reg. 48.
(d) The making of returns and the payment of the tax shown in the returns are made by reference to what are called "prescribed accounting periods". Subject to exceptions of limited importance, these prescribed accounting periods are periods of three months beginning on the first day of the first of these months; see the 1972 Act, section 30 subsec-or-para (1)sec. 30(1); the 1972 Regulations, reg. 46.
(e) If a taxable person fails to make any returns required under the 1972 Act, (and in certain other events), the Commissioners may assess the amount of tax due from him to the best of their judgment and notify it to him. One of the other events in which an assessment can be made is if the returns appear to be incomplete or incorrect; the 1972 Act, section 31 subsec-or-para (1)sec. 31(1) and see also section 31 subsec-or-para (3)sec. 31(3).
(f) There are limitation periods within which assessments under section 31sec. 31 have to be made unless there is evidence of fraud or wilful default or neglect; see the 1972 Act, section 31 subsec-or-para (2)sec. 31(2) and also section 31 subsec-or-para (4)(4). Mr. Shirley has placed emphasis in the course of his submissions on the wording of section 31 subsec-or-para (2)sec. 31(2) and I shall have to return to this subsection later.
(g) When an assessment has been made and notified to the taxable person, the amount is deemed to be an amount of tax due from him; see the 1972 Act, section 31 subsec-or-para (6)sec. 31(6).
It will be seen, therefore, viewing the matter in broad outline, that the legislation makes provision for the registration of taxable persons, for a system of periodic returns and the concurrent...
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