First-tier Tribunal (Tax)

[2010] UKFTT 208 (TC)

TC00510

             Appeal number:TC/2009/10750

VALUE ADDED TAX – Cancellation of registration – whether an application stating a deregistration date of 30 June 2008 was received by the Respondents before that date – held it was not – the Respondents’ decision was not to deregister the Appellant with effect from that date but to deregister him from a later date, being the earliest date when they had received notification of the Appellant’s wish to deregister – Appellant’s appeal against that decision dismissed – paragraph 13, Schedule 1, VATA 1994 applied – Tribunal decisions in Grogan and Tindsley followed

FIRST-TIER TRIBUNAL

TAX

                                                   PETER VASS                                  Appellant

                                                           -and-

                                 THE COMMISSIONERS FOR HER MAJESTY’S

REVENUE AND CUSTOMS (Value Added Tax)                                                                Respondents

                        TRIBUNAL: JOHN WALTERS QC (TRIBUNAL JUDGE)                  

Sitting in public at 45 Bedford Square, London WC1 on 23 February 2010

John Whitehorn, A.M. Whitehorn, Accountants, for the Appellant

Gloria Orimoloye, Advocate, for the Respondents

© CROWN COPYRIGHT 2010

DECISION

1.     This is an appeal against a refusal of the Commissioners (HMRC) to deregister Mr. Vass, the Appellant, for VAT purposes with effect from 30 June 2008.

2.     Although the Appellant did not give evidence, the Tribunal received oral factual submissions from Mr. Whitehorn, representing the Appellant.  I also heard oral evidence from Mrs. Janet Commock, an Officer of HMRC, who confirmed the decision of another Officer (Satnam Dedi) to deregister the Appellant with effect from 27 October 2008, rather than the earlier date.  Mrs. Commock’s letter informing the Appellant of her decision was dated 25 February 2009.  There was also a bundle of correspondence before me. (As will appear later, the Commissioners have in fact backdated the deregistration date to 30 September 2008.)

3.     Mr. Whitehorn told the Tribunal that, in June 2008, the Appellant had signed an Application for the cancellation of his VAT registration with effect from 30 June 2008 on form VAT 7 and that he, Mr. Whitehorn, had personally taken the form to the post office and posted it. Unfortunately, he had not kept a copy of the form.  He had later found out that the VAT registration number he had been given for the Appellant and had entered on the form had been wrong because one of the 9 digits on the number had been mistakenly entered.

4.     HMRC deny receiving the form.  Mrs. Commock’s evidence was that if a form VAT 7 is received with a VAT number which cannot be recognised and associated with the taxable person concerned, there a two tests applied to ascertain which registered person is in fact concerned.  First, the document is photocopied and, presumably, the registered person is identified from his given name and address.  Alternatively the given post code is investigated to try to discover the identity of the registered person.

5.     The Appellant later received a VAT return (Form VAT 100) for completion to 31 July 2008.  Mr. Whitehorn said that at this point he realised that a mistake had occurred.  He said that on behalf of the Appellant he amended the end date of the VAT return to 30 June 2008 and, on 3 September 2008, sent it in to HMRC at Southend with an explanatory covering letter.  A file copy of that letter was with the Tribunal’s papers.  Mr. Whitehorn said that the amended return showed an entitlement to a repayment of VAT of £104.07.  HMRC say that this letter was not received by them.

6.     An assessment for the period ending 31 July 2008 was issued centrally by HMRC on 12 September 2008. It assessed VAT of £2,036 and Mr. Whitehorn accepts that if the Appellant was chargeable for the month of July (i.e. if the Appellant loses on the time of deregistration point) the amount of the assessment is not in issue.

7.     Mr. Whitehorn, on behalf of the Appellant wrote to HMRC in Southend on 26 Septembe r 2008, giving the correct VAT reference, stating:

“This client applied for de-registration in early June of this year to take effect from 30 June, I have applied to Wolverhampton to this effect. The return for the period to 31 July has been submitted so unless we hear otherwise, your ‘Notice of assessment of tax’ is being ignored.”

8.     On 3 October 2008, Mr. Whitehorn wrote to HMRC at Chesterfield referring to a telephone conversation that day.  The letter mentioned that a form to deregister from VAT had been submitted in June and that Mr. Whitehorn understood that it had not been received.  Further deregistration forms were requested.

9.     On 22 October 2008 a form VAT 7 was submitted on behalf of the Appellant, asking for deregistration with effect from 30 June 2008.  A copy of that form is with the Tribunal’s papers.

10.  HMRC deregistered the Appellant with effect from 27 October 2008 (the date of receipt by HMRC of the form VAT 7) not 30 June 2008.

11.  Mrs. Commock’s letter to the Appellant dated 25 February 2009 drew the Appellant’s attention to paragraph 2.4 of VAT Notice 700/11, which stated as follows:

“If you are requesting voluntary deregistration, you will need to advise us of the date you wish your VAT registration to cease.  Normally his will either be the date we receive your application or a later date as agreed.  You should continue to charge and account for VAT until we confirm that you registration has been cancelled.  You cannot apply for retrospective cancellation of registration.”

12.  Mrs. Commock’s letter also referred the Appellant to the applicable law, which is paragraph 13, Schedule 1, VAT Act 1994, which is in the following terms:

“Subject to sub-paragraph (4) below [which is not suggested to be relevant], where a person satisfied the Commissioners that he is not liable to be registered under this Schedule, they shall, if he so requests, cancel his registration with effect from the day on which the request is made or from such later date as may be agreed between them and him.”

13.  On this basis Mrs Commock confirmed Officer Dedi’s decision to deregister the Appellant with effect from 27 October 2008, and not from 30 June 2008.

14.  After the appeal to the Tribunal had been brought (which was on 3 June 2009), the case was looked at by Officer Helen Cox at HMRC’s section dealing with appeals and reviews.  Miss Cox noted the receipt by HMRC of Mr. Whitehorn’s letter dated 26 September 2008 (see above), which was received by HMRC on 29 September 2008.  Ms. Cox stated in a letter to Mr. Whitehorn dated 15 July 2009 that she was prepared to accept 29 September 2008 as the date of notification and so the de-registration date was backdated from 27 October 2008 to 30 September 2008.  Miss Cox stated that “regrettably, the constraints of the law do not allow me to backdate the cancellation any further”.

15.  Mr. Whitehorn argues that the original form VAT 7, posted in June 2008, ceased to be his or the Appellant’s property on posting and so a valid request for deregistration was made at that time.

16.  Ms. Orimoloye invites the Tribunal to uphold HMRC’s decision not to agree a deregistration date of 30 June 2008.

17.  She referred me to the Tribunal decisions in the appeals of Neil and Alma Grogon, trading as Value Plus (16084) and Ian and Gaynor Tindsley (trading as Padway Nurseries) [2004] UK V18571 in both of which the Tribunal had supported HMRC’s interpretation of paragraph 13 of Schedule 1 to the VAT Act.

18.  I must decide on the balance of probabilities whether HMRC received the original form VAT 7 which Mr. Whitehorn says he sent in June 2008, indicating 30 June 2008 as the deregistration date. On the basis of the evidence, which included no copy of the original form VAT 7 and only a file copy of the letter Mr. Whitehorn says he sent on 3 September 2008, and Mrs. Commock’s explanation of HMRC’s procedures where correspondence is received bearing an incorrect VAT registration number, I conclude that it is more likely than not that HMRC did not receive either a form VAT 7 in June 2008 indicating 30 June 2008 as the deregistration date, or Mr. Whitehorn’s letter dated 3 September 2008.

19.  On the basis of this finding, I, like the Tribunals in Grogon and Tindsley, have no alternative but to apply paragraph 13 of Schedule 1 to the VAT Act as contended for by Ms. Orimoloye.  Accordingly the appeal must be dismissed and the Appellant’s deregistration must take effect from 30 September 2008.

20.  This document contains full findings of fact and reasons for the decision. Any party dissatisfied with this decision has a right to apply for permission to appeal against it pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009.   The application must be received by this Tribunal not later than 56 days after this decision is sent to that party.  The parties are referred to “Guidance to accompany a Decision from the First-tier Tribunal (Tax Chamber)” which accompanies and forms part of this decision notice.

JOHN WALTERS QC

TRIBUNAL JUDGE

RELEASE DATE: 7 May 2010