First-tier Tribunal (Tax)

[2010] UKFTT 350 (TC)

TC 00632

Appeal reference: MAN/2007/1215

VAT – input tax – invalid invoices – no supporting evidence of the supplies having taken place – appeal dismissed

FIRST-TIER TRIBUNAL

TAX

                                                   INAYAT GULAMHUSSAIN                                  Appellant

- and -

THE COMMISSIONERS FOR

                                      HER MAJESTY’S REVENUE AND CUSTOMS         Respondents

Tribunal:        Lady Mitting (Judge)

Sitting in public in Manchester on 13 July 2010

The Appellant did not attend and was not represented

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

© CROWN COPYRIGHT 2010

DECISION

1.           The decision under appeal is that of the Commissioners to refuse the Appellant’s claim for input tax in the sum of £72,225 representing VAT for the period 12/04 to 06/06 inclusive but excluding period 09/05.  The resulting assessment was dated 28 March 2007.

2.           The assessment was raised to recover input tax already credited to the Appellant which, following an assurance visit, the Commissioners decided had not in fact been properly claimed as the invoices were deemed to be invalid and it was their view that no supplies had been made.  It was the Appellant’s case, as stated in the Notice of Appeal that the supplies had been made and that he held valid VAT invoices.

The hearing

3.           The Appellant did not attend and was not represented when the case was called on for hearing.  A postponement application had been made by letters dated 11 June and 14 June.  The letter of 11 June was from a firm called VAT Accountancy Services who sought an adjournment on the grounds that they had just been instructed and wished to review the background.  The letter of 14 June was from the Appellant personally and he sought the adjournment on the grounds that the Commissioners were withholding vital information without which eh could not conduct his case.  The postponement application was refused by letter dated 21 June 2010.  Nothing further had been heard from the Appellant or his representative and there was no explanation before the tribunal of the failure to attend today.

4.           The appeal in this case had been lodged on 9 October 2007.  It was first listed for hearing on 19 November 2008, this hearing being vacated at the request of the Appellant, the grounds for the request being that his records had only just been returned to him by the Commissioners and his representative needed time to study them.

5.           The hearing was then listed for 27 April 2009, this hearing again being vacated at the request of the Appellant who had been involved in a serious road traffic accident and suffered leg injuries.

6.           The case was listed for the third time on 23 November 2009.  Prior to the hearing a postponement application was made on the grounds that the Appellant was off work due to a bad back.  The postponement application was refused and the hearing went ahead in the absence of the Appellant.  The tribunal decision was set aside following an application by the Appellant for reinstatement.  At the same time, the tribunal issued a direction, dated 9 February 2010, directing that the Appellant should serve on the Respondents a list of the documents of which he required disclosure by 22 February 2010 and that he was also, by 22 March 2010 to produce his own list of documents.  The Appellant has complied with neither direction and indeed the Respondents have heard nothing from him since then.

7.           Against this background, I was satisfied that no grounds existed to justify any further adjournment.  There had been several previous adjournments and the Appellant had been clearly advised of the refusal of his latest application in good time for today’s hearing and there was no explanation whatsoever of his failure to attend.  The tribunal has to act fairly to both parties and I took the view that it was in the interests of justice to proceed in the absence of the Appellant.  I therefore granted the Respondents’ application to proceed in accordance with rule 33 of the Tribunal Procedure (First-Tier Tribunal) (Tax Chamber) Rules 2009.

8.           I heard oral evidence from the assessing officer Mr. David Golightly and officer Steven Owens.  I was further referred to unchallenged witness statements from officers Stephen Bailey, Jan Holden and Jacqueline Quirke.

9.           The Appellant trades under the name Slick Services and carries on the business of car body and mechanical repairs and also trades in various commodities including the supply of mobile phone accessories.

10.        On 18 and 20 December 2006, Mr. Golightly visited the Appellant’s premises to undertake pre=-credibility verification of the 09/06 return.  On examination of the records for this period and previous periods, Mr. Golightly formed the view that input tax had been claimed on a number of invoices which were not valid and for which there was no evidence of the corresponding supply.  The invoices all originated from just five traders, namely ADM Holding and Engineering Solutions; Claymore Trading Company, Superdeal Wholesale Ltd; K2 Kommunications and DK Wholesale Ltd.  The invoices, despite originating from five separate traders, were all similar in appearance.  They were in black print on pristine white unfolded paper.  There was a marked similarity in font style and printing.  A number of the invoices had corresponding receipts attached, again with a marked similarity of style but there were no other records or documents supporting the alleged purchases.  Mr. Golightly raised reference in respect of each of the five named traders which revealed the following:

1.     The VAT registration number on the invoices from ADM in fact was the group registration number of Huws Gray Ltd.  Mr. Owens visited Huws Gray and was satisfied that they had not issued the invoices.  ADM was not one of the main companies within that group and the director he saw had never heard of ADM.

2.     The invoices purportedly issued by Superdeal Wholesale Ltd did not compare to genuine sales invoices issued by that trader.  The style of the invoices differed and a check through Superdeal’s bank accounts revealed that no payments had been received matching the amounts claimed.  The visiting officer was satisfied that the invoices held by the Appellant did not originate from Superdeal and that no supplies had been made.

3.     The officer visiting K2 spoke with their bookkeeper.  Although the style of the invoices held by the Appellant was similar to the K2 style, the telephone numbers given thereon differed.  K2 only ever issued sales invoices from a pre-printed consecutively numbered invoice book of which those held by the Appellant formed no part.  The company had never dealt with the Appellant.

4.     The officer visiting Claymore, inspected that company’s records and found no sales invoices relating to the Appellant.  They also differed fundamentally in style in that Claymore’s invoices were issued manually, the telephone numbers and the general layout differing.

5.     The officer visiting DK saw no sales invoices relating to the Appellant.  The sales invoices she did see differed from those held by the Appellant and a check through DK’s bank accounts revealed no corresponding receipts.

11.        Mr. Golightly, on hearing back from his colleagues, took the view that the invoices held by the Appellant were not valid and did not represent genuine supplies of which he found no evidence.  He consequently raised the assessment.

Conclusions

12.        On the evidence I have heard, I am satisfied that the invoices held by the Appellant were not genuine and did not originate from the traders named.  I am also satisfied that those traders made no supplies to the Appellant of the goods described in the invoices.  I am therefore satisfied that the claims to input tax made by the Appellant were false claims and he was not entitled to any input tax credit upon them.  It follows that the assessment was correctly raised.  There was no evidence from the Appellant to the contrary.

13.        The appeal is therefore dismissed.  Mr. Haley made an application for a contribution to costs, which I granted in the sum of £200.  The old costs regime was in place when this appeal was begun and under that regime I have no hesitation in making the award.  The Appellant had produced no evidence at any stage of the process and has persistently caused delay.  Having succeeded in having the previous decision set aside, he then failed to comply with the tribunal’s direction that was aimed at assisting him in obtaining whatever documents he maintained the Respondents still held.  He has done absolutely nothing to help himself.  In making the award I finally took into account the fact that having failed in his postponement application for this hearing, he failed without any explanation to appear.

The Appellant has a right to apply for permission to appeal against this decision in accordance with rule 39 of the Rules.  The parties are hereby referred to “Guidance to accompany a decision from the First-Tier Tribunal (Tax Chamber)” which accompanies and forms part of this decision notice.

LADY MITTING

JUDGE
Release Date: 27 July 2010