TC02909: Wendy Lane
| Jurisdiction | UK Non-devolved |
| Judgment Date | 04 October 2013 |
| Neutral Citation | [2013] UKFTT 521 (TC) |
| Date | 04 October 2013 |
| Court | First-tier Tribunal (Tax Chamber) |
[2013] UKFTT 521 (TC)
Judge John Brooks, William Haarer.
The Appellant in person on 5 April 2013 but did not appear and was not represented on 20 September 2013
Lynne Ratenett, of HM Revenue and Customs, on 5 April 2013 and Erika Carroll, of HM Revenue and Customs, on 20 September 2013 appeared for the Respondents
VAT - Compulsory registration - Supplies of cleaning services to owners of holiday cottages - Contract between owners of cottages and appellant - Whether appellant supplying cleaning services itself or engaging cleaners as agent of owners - Appeal dismissed.
[1]Mrs Wendy Lane, who trades as SPOT ON!, undertakes caretaking and housekeeping services for owners of holiday properties and second homes in North Cornwall. She appeals against a decision of HM Revenue and Customs ("HMRC") to compulsorily register her for VAT from 1 November 1999 on the basis that her business turnover exceeded the then VAT registration threshold of £51,000 in September 1999 on the grounds that she did not supply cleaning services to the property owners herself but, acting as their agent, engaged cleaners on their behalf and retained a commission from the total amounts paid by them for doing so.
[2]This appeal first came on for a hearing in Plymouth on 5 April 2013. On the morning of that hearing Mrs Lane provided the Tribunal and HMRC with copies of some of the agreements between SPOT ON! and property owners and forms setting out the details of the particular property and the requirements of its owner, eg the address, changeover day, whether bed linen and towels were provided etc. However, despite having been provided with the Documents Bundle by HMRC in November 2012 and knowing that they had not been included in it, Mrs Lane did not bring a copy of the terms and conditions to the hearing.
[3]As it appeared that the content of these terms and conditions could be determinative of the appeal and, to give effect to the overriding objective of the Tribunal Rules (First-tier Tribunal) (Tax Chamber) Rules 2009 to deal with cases "fairly and justly", we reluctantly decided that the appeal should be adjourned to allow Mrs Lane an opportunity to produce the terms and conditions and directed that she did so by 30 April 2013.
[4]Mrs Lane complied with the direction and, on 5 July 2013 the parties were notified the adjourned hearing was re-listed for a hearing in Plymouth on 20 September 2013. Despite having been given notice of the date of the hearing it became apparent in the days before it was due to take place, but only after being contacted by the Tribunal, that Mrs Lane was unlikely to attend due to transport difficulties. However, she did send a letter, dated 19 September 2013, to the Tribunal setting out her case. On the morning of the hearing Mrs Lane confirmed in a telephone conversation with the Tribunal clerk that she was not going to be present.
[5]Under rule 33 of the Tribunal Rules (First-tier Tribunal) (Tax Chamber) Rules 2009 a hearing may proceed in the absence of a party if the Tribunal -
(a) is satisfied that the party has been notified of the hearing …; and
(b) considers it to be in the interests of justice to proceed with the hearing.
We were satisfied that Mrs Lane had been notified of the date of the hearing in July 2013 which had given her over two months to make arrangements to attend the hearing and, as we were in receipt of her letter 19 September 2013 considered it to be in the interests justice to proceed with the hearing without Mrs Lane being present.
[6]Although there was not a Statement or Schedule of Agreed facts it was clear that the following summary of facts, attached to HMRC's skeleton argument which although not formally agreed, was not disputed.
(2) On 5 October 2006 HMRC Officer Stephen Gray received details from JobCentre Plus in Truro relating to SPOT ON! which provided cleaning services to local holiday cottages.
(3) On 1 November 2006 Officer Gray wrote to SPOT ON! to arrange a date for a visit to discuss the business.
(4) On 6 November 2006 Officer Gray issued a letter to SPOT ON! stating that it had not been possible to find a VAT Registration number for the business and requesting the completion of a questionnaire.
(5) On 6 December 2006 Officer Gray issued a reminder for the completed questionnaire.
(6) On 1 February 2007 Officer Gray wrote with the proposed date of 13 February 2007 for a visit.
(7) On 11 April 2007 Officer Gray wrote proposing another visit on 23 April 2007.
(8) A file note by Officer Gray note that upon arriving at [the address] he found a note from Mrs Lane stating that she had to accompany someone to a hospital appointment so could not attend the meeting.
(9) On 12 July 2007 Officer Gray accompanied by a colleague undertook an unannounced visit to see Mrs Lane. Notes of the meeting were produced and sent to Mrs Lane.
(10) On 16 October 2007 Officer Peter Ogdon, based in HMRC's Shipley office in West Yorkshire, following a request from Officer Gray, undertook a review of business records held at the premises of Craig Tulley [of Gilbert Tax] in Birkin, North Yorkshire. Mr Tulley had been appointed by Mrs Lane on 7 February 2007 to act on her behalf.
(11) On 18 October 2007 Officer Ogdon sent Officer Gray by email details of the takings figures that he had obtained from Mrs Lane's books. The figures had been recorded in three "Cathedral Books".
(12) On 24 October 2007 Officer Gray wrote to Mrs Lane stating that based on the turnover figures she should have been registered for VAT from 1 November 1999. Mrs Lane was asked to complete a Form VAT1 - Application for Registration.
(13) On 24 October 2007 Officer Gray passed details relating to Mrs Lane's registration for VAT to HMRC's National Registration Unit for compulsory registration action to be taken.
(14) In the absence of Mrs Lane completing form VAT1, Officer Gray wrote to Mrs Lane on 16 November 2007 stating that action had been taken to compulsorily register her for VAT from 1 November 1999 advising her of her VAT registration number.
(15) On 12 May 2008 HMRC issued to Mrs Lane an assessment for VAT in the sum of £126,380 for the period 1 November 1999 to 31 January 2008.
(16) On 2 October 2008 Kinsellas, acting for Mrs Lane sent a letter of appeal to HMRC in respect of the assessment of 12 May 2008. They stated that Mrs Lane may not be liable to be registered for VAT due to a legal technicality.
(17) On 18 December 2008 Officer Moscardini of HMRC wrote to Kinsellas setting out the background to the case and advising that there was no right of appeal against the assessment in the absence of a VAT return. It was sated that Mrs Lane had the right of appeal against the decision for compulsory registration. Kinsellas were asked to expand on the previously stated grounds of "a legal technicality".
(18) On 28 January 2009 Officer Moscardini once again asked for clarification as to why Kinsellas considered VAT was not technically chargeable - a deadline of 20 February was set for receipt of the information.
(19) On 9 April 2009 Kinsellas set out that they consider the assessment had not been made to best judgement, the figures having been derived from perceived gross income. They also stated that they believed their client acted as an agent between the owners of holiday homes and the local suppliers of services that they required. Acting as agent their client received gross payments for these services which were then passed on to the supplier less her commission. They stated that they had seen records supporting the contention.
(20) On 23 April 2009, Officer Rimes of HMRC requested the evidence to support the contention that Mrs Lane was not liable for registration.
(21) On 6 May 2009 Kinsellas stated they would contact the Tribunal to make an appeal against the compulsory registration.
(22) On 15 May 2009 Kinsellas advised HMRC that they were trying to obtain the necessary evidence. The red books maintained by their client contained, at the back a contemporaneous record of commissions received by SPOT ON!. The records previously held by Craig Tulley at Gilbert Tax had been handed to another adviser and Kinsellas were trying to identify the recipients.
(23) On 26 May 2009 Officer Rimes sent to Kinsellas a copy of the spreadsheet prepared by Officer Gray and advised that the case had been sent for reconsideration.
(24) On 2 July 2009 Kinsellas issued a letter to the Review Officer, Tina Saunders, stating that they had completed a review of the business records collected from the offices of Gilbert Tax in June 2009. It was necessary to ask Mrs Lane for further information.
(25) On 28 September 2010 Officer Saunders wrote to Mrs Lane with the result of her review. The decision to compulsorily register Mrs Lane from 1 November 1999 was upheld. Kinsellas had stated that they would provide evidence supporting their belief that Mrs Lane had acted as an agent; Officer Saunders commented that this had not been provided.
(26) On 29 October Kinsellas submitted an appeal to the Tribunal.
[7]The following documents setting out its services terms were provided by SPOT ON! to property owners.
SPOT ON! provides a comprehensive and flexible support for owners of furnished holiday accommodation and second homes, which they use for their own holidays, or which they let to other people, either privately or through a Booking Agent.
Many owners, especially those who live in other parts of the country, are pleased to have the day-to-day responsibility and care of their property taken over by someone on the spot. Holidaymakers also appreciate having someone local they can call on should they have any problems during their stay. Because of our experience (we are now in our 10th successful year - and proud to be the first and longest running holiday property management company in North Cornwall!), because we confine our activities to North Cornwall, and...
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