[2009] UKFTT 370 (TC)

TC00308

VALUE ADDED TAX- best judgement- appellant had incomplete records – appellant argued that wastage was insufficient –wastage from appellant’s earlier records agreed at 15% - appellant claiming over 50%– assessment to best judgment – appeal dismissed

FIRST-TIER TRIBUNAL				         Appeal number: MAN/2009/-162
TAX 
 	
					FAHIMA BEGUM HUSSAIN	Appellant

- and -

THE COMMISSIONERS FOR
				HER MAJESTY’S REVENUE AND CUSTOMS	Respondents

Tribunal: David S Porter (Judge)
Mohamed Farooq (Member)

Sitting in public in Birmingham on 18 November 2009

Bernard Haley, instructed by the Acting Solicitor for HM Revenue and Customs for the Respondents and William Owen Chartered Accountant appeared for the Appellant.

© CROWN COPYRIGHT 2009

DECISION

1.	Mr Liquat Hussain (the Appellant’s husband) gave evidence on behalf of his wife Fahima Begum Hussain (the Appellant), who did not appear. The Appellant appealed against two assessments, the first dated 29 May 2008 in the sum of £4,905; the second dated 1 July 2008 in the sum of £36,289. The Appellant says that the Respondents have not allowed sufficient reduction for wastage. The Respondents say that the assessment is based on the Appellant’s own figures and that they are to best judgement.  Further the figure of 15% had been agreed for wastage by the Appellant in earlier periods.
2.	Bernard Haley appeared on behalf of the Respondents and produced a bundle of documents and called Susan Bates and Amy Groves as a witness. William Owen appeared for the Appellant and called Liquat Hussain as a witness.

The Facts

3.	Mr Owen confirmed that he had agreed all the calculations on behalf of the Appellant, other than those relating to wastage, as the figures had been prepared from the Appellant’s accounts. Mr Owen produced his calculations for the wastage for the three years 2004, 2005 and 2006. He used the figures from the accounts agreed with the Respondents and produced a wastage percentage as under:
2004	51.50%
2005	44.93%
2006	37.46%
Mr Hussain explained that the restaurant business had not been as profitable as in the past. There were now a large number of restaurants and the Appellant had to encourage their customers to come to the restaurant. As a result their customers were given complimentary drinks, while they were waiting at the “take away”, and with their meals, in the hope that this would encourage them to return. Whilst we believe that customers were given complimentary drinks from time to time we do not believe they were at the level suggested by Mr Hussain and Mr Owen. The figures 51.50%, 44.93% and 37.46 were in the view of the Respondents, a view we share, balancing figures to accommodate the actual figures produced by the Respondents from figures provided by the Appellant. 
We also note that in a letter dated 24 November 2006 that the Respondents issued a protective assessment for the financial year dated 31/10/04. This assessment was issued to safeguard any potential monies that were due to the Respondents in view of the 3 year capping rule.

The Decision

4.	We dismiss the appeal. The Respondents had calculated the profits from figures provided by the Appellant. Mr Hussain agreed that the figures had been calculated from his accounts. He also agreed that the figure of 15% had been agreed for wastage in earlier accounts. As this was a percentage he had agreed in the past, and he had not been able to produce any substantial evidence that the wastage was greater, we have decided that the assessments are to best judgment and we dismiss the appeal.

5.	As neither party asked for costs none were awarded. 

JUDGE
Release Date:16 December 2009