First-tier Tribunal (Tax)

[2009] UKFTT 245 (TC)

TC00194

REGISTRATION – compulsory registration with effective date five years earlier than date of decision and notification – are Commissioners time barred? – no – appeal dismissed

FIRST-TIER TRIBUNAL (TAX CHAMBER)

                                      BALJIT SINGH T/A BS CONSTRUCTION                     Appellant

- and -

THE COMMISSIONERS FOR

                                      HER MAJESTY’S REVENUE AND CUSTOMS         Respondents

Tribunal:        Lady Mitting (Judge)

                        Mr. J D Kippest (Member)

Sitting in public in Birmingham on 11 August 2009

Mr. Lipman for the Appellant

Mr. Haley, instructed by the General Counsel and Solicitor to Her Majesty’s Revenue and Customs for the Respondents

© CROWN COPYRIGHT 2009

DECISION

1.           The Appellant appeals against the decision of the Commissioners to compulsorily register him for VAT with effect from 1 September 2003, notification to the Appellant of the decision being by letter dated 12 August 2008.

2.           The facts were not in dispute and no oral evidence was called.  Before the tribunal was an unchallenged witness statement from Mrs. Sarah Jones on behalf of the Commissioners.

The Facts

3.           On 21 April 2008, Mrs. Jones wrote to Mr. Singh advising him that she had had sight of his self-assessment returns and it appeared to her that he had been trading above the VAT threshold for several years, thus giving rise to a potential liability for him to register for VAT.  Other than a holding letter from his accountants, Messrs Farmiloes, no response was received and a further letter - created electronically on 30 June but sent out undated - asked for a response to the original letter.  On 7 July Farmiloes returned this letter expressing their disappointment that it was undated.  Mrs. Jones sent out a further copy dated 7 July 2008.  No response was received and Mrs. Jones therefore, using Mr. Singh’s own self-assessment figures, calculated that during the month of July 2003 the turnover threshold had been breached (£56,000 at that time) and he should therefore have been registered with effect from 1 September 2003.  Mrs. Jones arranged for this date to be entered into the register and notification was given to Mr. Singh by letter dated 12 August 2008.  Although the correct date was entered on the register, Mrs. Jones inadvertently, in her letter of 12 August, referred to the EDR as being 1 September 2004.  This was corrected by letter dated 22 December 2008 and no issue was taken on this error or its rectification by the Appellant.

Submissions of behalf of the Appellant

4.           Mr. Lipman very helpfully put in a statement of facts and a skeleton argument.  The tribunal was able to ascertain that the Appellant did not challenge the fact that the registration threshold was passed in July 2003 and therefore that all other issues aside, 1 September 2003 would have been the correct EDR.  Mr. Lipman’s sole argument was that the Commissioners were out of time to register Mr. Singh compulsorily by virtue of Sections 73(6) and 77(1)(a) VATA 1994.  Applying these two Sections, Mr. Lipman submitted that the Commissioners had had sufficient evidence of Mr. Singh’s sales / business income from his tax returns for a number of years and considerably in excess of the time period laid down in the two sections referred to.

5.           In support of his contention, Mr. Lipman referred us to the tribunal case of Sophie Holdings Ltd (sitting 12 February 2009 – reference and date of release of decision not known) and the High Court judgment of Pegasus Birds Ltd v HM Customs and Excise EWHC Admin 1096.  Although this case later went to the Court of Appeal it was the High Court judgment which Mr. Lipman took us to.  In Pegasus Birds, we were referred specifically to paragraphs 14, 19, 21, 22, 23 and 30.  In Sophie Holdings, he referred us to sections 23, 24, 29, 50, 71, 80 and 91.  Mr. Lipman took from the cases, that the purpose of the legislation was to protect the taxpayer from tardy assessments and the test had to be objective.  He also referred us specifically to the legal principles set out in paragraph 19 of Pegasus Birds and repeated in paragraph 50 of Sophie Holdings.

6.           Mr. Lipman concluded by reminding the tribunal that Mr. Singh had ceased trading in July 2007 and the Commissioners would therefore not be able to go back six years in raising an assessment.

Conclusions

7.           We have read carefully both cases referred to by Mr. Lipman and indeed the legislation on which he relies.  It is our view that his argument is ill-founded in that the legislation refers not to the compulsory registration of a trader but to the raising of an assessment.  All the Commissioners have done so far in respect of Mr. Singh is to compulsorily register him.  No assessment has been raised and the legislation relied upon is not therefore relevant to the issue.  Schedule 1 VAT Act 1994 clearly sets out the liability of a trader to become registered once his taxable supplies have exceeded the  threshold at any given time and further, if the trader does not voluntarily inform the Commissioners of his liability to be registered, the Commissioners have the power to compulsorily register him.  There is no time limit on when this can be done and the Commissioners are not therefore “out of time” in their registration of Mr. Singh.  Mr. Lipman, in the final paragraph of his skeleton argument, submitted that the same legal principles should apply to the raising of an assessment as to compulsory registration.  We do not accept this contention.  The statute is quite clear that the time bars refer to assessments.  It is not open to us to extend that principle to the area of registration.

8.           The appeal is therefore dismissed.  There was no application for costs and no order is made.

MAN/2008/1180

LADY MITTING

JUDGE
Release Date: 25 September 2009