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Cite as: [2013] UKFTT 265 (TC)

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Kate Salisbury v Revenue & Customs [2013] UKFTT 265 (TC) (25 April 2013)
VAT - REGISTRATION
Compulsory

[2013] UKFTT 265 (TC)

TC02673

Appeal number: TC/2011/07471

VAT – Appeal against compulsory registration – Whether transfer as a going concern from taxable person – Yes – Appeal dismissed – section 49 and schedule 1 Value Added Tax Act 1994

FIRST-TIER TRIBUNAL

TAX CHAMBER

	KATE SALISBURY	Appellant

	- and -

	THE COMMISSIONERS FOR HER MAJESTY’S	Respondents
	REVENUE & CUSTOMS

TRIBUNAL:	JUDGE JOHN BROOKS
	RAYNA DEAN FCA

Sitting in public at Prestatyn Magistrates Court on 11 February 2013

The Appellant did not appear and was not represented

Susan Ellwood of HM Revenue and Customs, for the Respondents

DECISION

Introduction

1. Ms Kate Salisbury appeals against a decision of HM Revenue and Customs (“HMRC”) to compulsorily register her for VAT from 6 April 2009 on the grounds that she acquired her business, Valley Fish & Chip Shop, by way of a transfer of a going concern from a taxable person, a partnership operated by her parents. Ms Salisbury was notified of the decision in a letter from HMRC dated 23 May 2011. The decision was upheld following a review and Ms Salisbury was notified of this by HMRC in a letter dated 22 August 2011.

2. Although Ms Salisbury did not attend the hearing and there was no answer to telephone calls made by the Tribunal clerk to both her home and business numbers, we were satisfied, having seen a letter from the Tribunal, dated 8 February 2013 to HMRC to explain that her application for a postponement of the hearing had been refused, that Ms Salisbury had been notified of the hearing. As we considered that it was in the interests of justice to do so we proceeded with the hearing in Ms Salisbury’s absence in accordance with Rule 33 of the Tribunal Procedure (First-tier Tribunal)(Tax Chamber) Rules 2009.

Law

3. Section 49(1)(a) of the Value Added Tax Act 1994 (“VATA”) provides that, for the purposes of determining whether a person who acquires a business carried on by a taxable person as a going concern is liable to be registered for VAT, he or she shall be treated as having carried on the business before as well as after its transfer.

4. If the person to whom the business is transferred as a going concern is not registered for VAT, he or she is required to register under paragraph 1(2) of schedule 1 to VATA if the taxable supplies of the business in the year to the transfer exceed the VAT threshold. However, paragraph 1(3) provides that there is no requirement to register if HMRC are satisfied that the turnover in the 12 months after the transfer will not exceed the de-registration threshold.

5. Although a person who is liable to register for VAT is required by paragraph to notify HMRC within 30 days of the transfer of the business, HMRC shall register such a person from the time when the business is transferred irrespective of whether such notice has been given (see paragraph 7 schedule 1 VATA).

6. A “taxable person” is a person who is or is required to be registered for VAT (see s 2 VATA).

Facts

7. Mr Ronald Salisbury and Mrs Helen Salisbury, Ms Salisbury’s parents, acquired the Valley Fish and Chip Shop business in 2004. Originally only Mrs Salisbury was registered for VAT but this was amended in 2005 to Mr and Mrs Salisbury trading as a partnership.

8. The turnover of the business in the four VAT accounting periods to 19 January 2009 exceeded the then VAT annual threshold of £67,000 and was as follows:

04/08 £33,539

07/08 £31,932

10/08 £34,244

01/09 £14,115

9. On 19 January 2009 Mrs Salisbury sent an application to cancel the partnership’s VAT registration, Form VAT 7, to HMRC in which she indicated that the legal status of the business was to be changed from a partnership to “a group of individuals with company status” and gave the name of “Ms K Salisbury and others” as the new owner of the business.

10. Although a company, Valley Fish & Chips Limited was incorporated on 19 January 2009, with Mr and Mrs Salisbury and Ms Salisbury as its directors, a letter to HMRC from Mr Salisbury, dated 2 September 2009 explains that:

(1) the trading partnership ended on 19 January 2009;

(2) it had been intended to separate Mr and Mrs Salisbury’s interests into a limited company and a part of the business to be taken on by Ms Salisbury but this did not happen;

(3) the assets of the partnership business, including the shop premises, were still owned by Mr and Mrs Salisbury who will charge rent to the succeeding business for their use;

(4) Ms Salisbury had already registered her new venture with her own tax office;

(5) Mr and Mrs Salisbury may “at some future optional point” resume a business interest; and

(6) the company, Valley Fish & Chips Limited, was not operating. It did not have any assets or a bank account and was without funds and effectively dormant.

In his letter to HMRC of 5 March 2010, Mr Salisbury confirmed that Valley Fish & Chips Limited had not traded and was in the process of being dissolved. The company was struck off the Companies Register on 15 June 2010.

11. The “new venture” of Ms Salisbury, to which Mr Salisbury refers in his letter, was the operation, by her of the fish and chip shop business. This is confirmed by Ms Salisbury in the Form, CWF 1, dated 16 February 2011, in which she notified HMRC that she had become self-employed as a “fish fryer” trading with the same name, “Valley Fish and Chip Shop” and from the same premises as her parents had previously done.

12. Valley Fish and Chip Shop remained open without any break in trading whilst the transfer of the business from Mr and Mrs Salisbury to Ms Salisbury took place.

13. Despite requests to do so, other than assert that it did not exceed the VAT threshold, Ms Salisbury did not provide details of the business turnover to HMRC. As HMRC could not be satisfied that registration was not required Ms Salisbury was compulsorily registered for VAT on 23 May 2011 with an effective date of registration from 6 April 2009.

14. In the absence of the submission to HMRC of any VAT returns by Ms Salisbury, on 27 September 2011 an assessment was issued by HMRC in the sum of £44,476. This was based on the turnover of the business when it was operated by Mr and Mrs Salisbury.

15. In June 2012 Ms Salisbury submitted tax returns to HMRC showing turnover of her self-employed business for the three years ending 5 April. The turnover shown, and the relevant thresholds for VAT de-registration, are as follows:

Year Turnover VAT de-registration threshold

2010 £66,976 £66,000

2011 £68,952 £68,000

2012 £69,943 £71,000