United Kingdom VAT & Duties Tribunals Decisions

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Cite as: [2003] UKVAT V18266

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Jandu Textiles Ltd v Customs & Excise [2003] UKVAT V18266 (08 August 2003)

ASSESSMENT — manufacturer of adults' and children's clothing — underdeclaration of sales of adult clothing — calculation based on purchases of long zips — appeal allowed in part

MANCHESTER TRIBUNAL CENTRE

JANDU TEXTILES LIMITED Appellant

- and -

THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents

Tribunal: Lady Mitting (Chairman)

Mr J D Kippest

Sitting in public in Birmingham on 25 February 2003, 26 February 2003, 9 June 2003 and10 June 2003

Mr R Yewdall, VAT consultant, for the Appellant

Miss S Williams of counsel instructed by the Solicitor for the Customs and Excise for the Respondents

© CROWN COPYRIGHT 2003


 


DECISION

1. The Appellant was appealing against the following three assessments:-

(1) An assessment in the sum of £26,723 plus interest representing arrears of VAT for the periods 12/96 to 03/99 and being issued on 11 January 2000

(2) An assessment in the sum of £3,642 plus interest for the periods 03/97 to 03/99 being issued on the 6 March 2000

(3) An assessment initially in the sum of £32,143 plus interest issued on 13 September 2000 and being subsequently amended on the 19 June 2001 to £364 plus interest, this assessment being for the periods 06/99 to 06/00

2. The Appellant company produced clothing for adults and children from premises at 38 Holyhead Road, Handsworth, Birmingham. The business was operated by Mr Prem Lal Jandu who had been involved in the business since taking it over as a sole proprietor on 1 May 1983. The business was operated as a sole proprietorship until 1 April 1994 when Mr Jandu took his wife into partnership and then on 1 July 1998 the business was incorporated and transferred as a going concern to Jandu Textiles Limited. We heard oral evidence from Mr Jandu, with the aid of an interpreter and on behalf of the Commissioners from Mr L Wiseman, Mr A Milne and Mrs M Steggles.
3. Contained within the statement of case and referred to in evidence were a number of extraneous matters about which the Commissioners had at some stage expressed concern. However as the issues central to the appeal before us developed, it became clear that such matters had no bearing on the assessments . These issues were identified and agreed by both Mr Yewdall and Miss Williams as not being germane to the issues before the tribunal and no reference need therefore be made to them within this decision.
4. Mr Wiseman's first involvement with the business was on 29 October 1998 when he made a control visit. He knew from the Commissioners' records that concerns had been expressed in the past about Mr Jandu's record keeping. By letter dated 21 December 1990, Mr Jandu had been advised as to the nature of the records he should keep. By letter dated 16 August 1993 he had been informed that for supplies to be zero-rated, his invoices had to show the sizes of the clothing supplied and that for cash sales the name and address of the customer should also be shown. Mr Wiseman also noted from previous VAT returns that large amounts of zero-rated children's wear had been declared.
5. On 29 October, Mr Wiseman saw Mr Jandu and his bookkeeper, Mr Naseem. Mr Wiseman discussed with them the operation of the business, establishing that there were some 8 employees plus some home workers. Mr Wiseman carried out a preliminary analysis of returns, invoices, bankings, purchases and in particular the purchase of zips. He discussed the nature of the records kept and took away with him all available records, consisting of a sales and purchase daybook covering June 1996 to June 1998, invoices, cheque stubs, bank statements and purchase invoices. No record was kept of orders. Cutting patterns in the form of set cardboard cut-outs were seen by Mr Wiseman but these were not visibly sized and did not appear to carry any form of identification as to size.
6. The one contentious issue arising out of this interview was whether Mr Wiseman discussed with Mr Jandu the practice of cutting zips. Mr Wiseman said he did but Mr Jandu said he did not. For clarification we referred to Mr Wiseman's contemporaneous notes and also to his visit report made up immediately on his return to the office. Although Mr Wiseman had told us that he had noted the conversation down, no reference to it was found in either document. Mr Wiseman attempted to explain this apparent deficiency in his note by saying that he was concentrating on setting up a rapport with Mr Jandu whose English was "difficult" and concentration was needed to converse with him. On balance, we find that the cutting of zips was not mentioned on this occasion. Mr Wiseman had told us that the cutting of zips would have been critical to his analysis of zip purchases and it therefore seems to us inconceivable that, given this, he would have failed to make some reference to it both in his contemporaneous note and in the visit report made up afterwards.
7. On 2 November 1998, Mr Wiseman made an unannounced visit to return the records. The visit lasted no more than a few minutes, Mr Wiseman noting down that he saw 4 employees working on adult sized clothes and the production area was full of adult sized clothes.
8. On 10 March 1999, Mr Wiseman wrote to Mr Jandu setting out the detailed requirements for his record keeping to support a claim for zero-rating. He also set out a number of miscellaneous discrepancies, irrelevant to the decision under appeal which he had identified in the records and for which an assessment was raised against which no appeal was lodged.
9. On 19 July 1999, Mr Wiseman made a further unannounced visit to the premises, this time taking with him Mr Milne who at the time was a fraud investigator. Mr Wiseman had referred the matter to Mr Milne because he suspected an underdeclaration which could have been fraudulent. Mr Milne's principle concern on the visit was to establish which clothing Mr Jandu had been identifying as adults' because Mr Wiseman had reported to him that the number of adult zips purchased was not reflected in the declaration of sales of adult clothing. On this visit, the officers noted that the staff were working on adult garments and the stock on the premises contained a larger volume of adults' clothes than children's. Mr Jandu explained that a great deal of his current stock had been made speculatively for the winter season and for which he still did not have a purchaser. Also some customers returned stock which could lead to large stock piles being held. There was a discussion of the sizing of garments, Mr Jandu saying that adult jackets would normally take 26 inch/27inch zips. There is a discrepancy in the notes of the two officers regarding the length of zips which Mr Jandu said he used in children's clothes. Mr Wiseman's note referred to the longest children's zip being 24 inches whereas Mr Milne's note refers to 25 inches. It may well be that Mr Jandu gave a bracket of 24 inch/25 inch and we do not see the difference as material.
10. Mr Milne discussed record keeping with Mr Jandu pointing out that Mr Jandu was still not complying with the requirements that had been set out for him in correspondence. There was reference to an invoice book which Mr Jandu could not put his hands upon (this was later found and produced).
11. Mr Wiseman told us that at this meeting he examined numerous garments of differing styles. He and Mr Jandu had deliberately searched for the children's jacket with the longest zip. The styles which Mr Wiseman examined included jackets with rolled collars which would take a longer zip (anything up to 4 inches longer) as the zip had to travel through the roll to the top edge of the garment. Apart from one jacket with a 26 inch zip, the longest zip found in any child's jacket was 24 inches. We were also told by Mr Wiseman that he asked Mr Jandu if he cut zips to which Mr Jandu replied that neither he nor his staff cut zips, only pre-cut zips being used. Mr Jandu denied again that he had been asked about cutting zips so again we referred to the contemporaneous notes made by the officers. A note of the conversation is included in Mr Wiseman's visit notes but not in those of Mr Milne. It was accepted that both officers were together for most of the meeting but Mr Milne told us that he did wander away while Mr Wiseman was measuring garments and although he was in the same area he was looking at stock while Mr Wiseman measured and he would not necessarily therefore have been within earshot or, if he was, would not necessarily have taken in what was being said. We accept Mr Wiseman's account of the conversation and accept that he did ask Mr Jandu if he cut zips to which the response was that he did not. The notes of both Mr Wiseman and Mr Milne reflect their own areas of specific concern. Mr Wiseman's notes do not record the details of the discussion between Mr Milne and Mr Jandu over records. Mr Milne, who remembered Mr Wiseman measuring stock, made no reference in his notes to this whereas the major part of Mr Wiseman's notes were concerned with measurements and styles etc. Mr Wiseman's notes contained diagrams of styles which he examined and measured and the reference to cutting zips falls immediately beneath the diagrams. We have no reason to doubt the accuracy of the notes and reject any implied suggestion that this part of the note may have been fabricated.
12. Following Mr Wiseman's meetings with Mr Jandu and his examination of stock, records and the accounts, he formed the view that Mr Jandu was underdeclaring his sale of adult sized clothing. His examination of zip purchases led him to believe that far more zips of 27 inches plus in length had been purchased than could be justified in the declared sales when children's clothing took zips in the main of 24 inches or less and the longest observed children's zip being only 26 inches. Additionally Mr Jandu had denied cutting zips and indeed Mr Wiseman had found no evidence that zips were cut either in his observation of the production process or in supporting records. There were for example no invoices showing the purchase of sliders which would have been necessary if a second zip was to be created out of one single longer zip.
13. An agreed analysis of zero rated and standard rated jackets was produced at the hearing in the following form. This document was produced for us by Mrs Steggles during the hearing itself and would not therefore have been a document used by Mr Wiseman but it would reflect, albeit in a different form, the information which he would have had before him from a combination of records and returns.

	ZR jackets	SR jackets	Total jackets	SR as % of total jackets
12/96	13342	1440	14782	9.74%
03/97	5978	100	6078	1.64%
06/97	12211	100	12311	0.81%
09/97	6166	90	6256	0.14%
12/97	8961	534	9495	5.62%
03/98	6800	825	7625	10.81%
06/98	13326	483	13809	3.49%
09/98	14649	1189	15838	7.50%
12/98	16131	2415	18546	13.02%
03/99	5469	513	5982	8.57%
06/99	11156	0	11156	0%
09/99	6730	1070	7800	13.71%
12/99	9567	2490	12057	20.65%
03/00	3369	220	3589	6.12%
	133855	11469	145324	7.89%

14. An agreed analysis of zip purchases, excluding pocket zips, was also produced to us. This recorded the purchase of zips measuring 15 inches to 31 inches, quarter by quarter from 06/96 to 06/00. We set out only that part of the analysis which refers to zips in excess of 27 inches but the total figures for each quarter are included on the far right so that the number of shorter zips purchased can in fact be calculated. For the entire period covered by the analysis, 27 inch plus zips represented 11.83% of the total purchased.

Zip Size	27"	28"	29"	30"	31"	Totals
Qtr
6/96						26440
9/96						25832
12/96		100				6945
3/97						9900
6/97	100	200	200			6675
9/97						7900
12/97	2916	4595	200			9286
3/98		3600	300	200		12818
6/98	550	1700	500			8850
9/98		1000	1000	1600		19600
12/98		100				21498
3/99			400		300	2642
6/99	1100					4846
9/99	100					4100
12/99						5400
3/00						500
6/00						2200
Totals	4766	11295	2600	1800	300	175432

15. Mr Wiseman's calculation of the underdeclaration was produced in the following form:-

Zips 27" +

Opening Stock: 1640

Closing Stock: (8945)

Stock difference: (7305)

Purchases: 11936

Sales calculated

(stock difference + purchases): 4631

Declared Sales: 1549

Discrepancy: 3082

16. For the purposes of his calculation, because Mr Wiseman had seen one example of a child's jacket with a 26 inch zip, Mr Wiseman concluded that all zips of 27 inches plus were used only in adult garments. Mr Wiseman in his calculation took the opening and closing stock figures entirely from Mr Jandu's own figures produced by his accountant. The stock figures were compiled from Mr Jandu's records for the years ending 31 March 1997 and 31 March 1998 which in summary showed the following:

	Opening			Closing
Finished goods	Mens jackets	200		Mens jackets	220
	Mens jackets	80		Ladies jackets	200
	Ladies wear	80		Mens wear	500
	Ladies jackets	150
	Mens wear	400
	Subtotal	910		Subtotal	920
Work in progress		0		Mens jackets	150
				Mens jackets	175
	Subtotal	0		Subtotal	325
Raw materials		0		Zips 30"	1800
				29"	2700
				28"	3100
	Subtotal	0		Subtotal	6600
Obsolete/dead stock	Ladies Jackets	350		Mens jackets	450
	Mens jackets	300		Ladies jackets	650
	Mens jackets	80
	Subtotal	730		Subtotal	1100
Total		1640			8945

17. Confusion arose because on the face of the calculations it appeared, from the heading "Zips 27" +" and from Mr Wiseman's explanation that the stock figures in so far as they related to garments included only those with 27 inch plus zips and indeed that is what Mr Wiseman told us the calculation represented in his evidence in chief. However, in cross examination he conceded that this was not necessarily so as many adult garments included zips of 26 inches or less. What the stock figures in reality therefore represented were all adult garments, irrespective of length of zip. The 27 inch plus zips are however the only zips included in the raw materials. In the Appellant's stock records, it so happens that for the year ended 31 March 1997, although zips of shorter length were recorded, none were recorded of 27 inch plus.
18. Mr Wiseman concluded from his calculation that there was a discrepancy between anticipated sales and declared sales of standard-rated garments of 198.96% and he applied this uplift to the declared output tax on standard-rated sales of garments for all periods from 12/96 to 03/99 inclusive and thus reached an underdeclaration figure of £26,723 for which amount he raised the first assessment. He later discovered that he had made a transpositional error in his calculation and the correct percentage underdeclaration should have been 231.24%. Applying the corrected figures, he raised the second calculation to correct his error, omitting the first quarter which was by then out of time.
19. Mr Wiseman was not asked by either Miss Williams or Mr Yewdall why he considered it appropriate to project his assessment back for 3 years. We, the tribunal therefore asked him to which his reply was that it was normal departmental policy, the department not considering it to be a good use of resources to carry out any further exercises.
20. Mr Wiseman raised his third assessment in September 2000 because he was still not satisfied that Mr Jandu was keeping all the necessary records to substantiate a claim for zero-rating. Certainly his invoices were an improvement and were in the main showing the sizes of children's garments supplied but Mr Jandu had not adopted the other requirements stipulated by Mr Wiseman and he considered an assessment appropriate to rectify matters. He therefore raised an assessment which in effect denied the Appellant its claim for zero rating and applied a standard rating to all declared sales.
21. Mrs Steggles became involved when she was asked to review the assessments. She asked Mr Wiseman to accompany her on a visit to the premises which took place on 23 May 2001. The visit took place, not only in the presence of Mr Jandu but also of Mr Yewdall. Mr Wiseman was able to compare the premises with how he had observed them to be on his earlier visits and he immediately noticed a lot of effort had been put into tidying up. Stock was bagged or hanging up and in particular he was shown a substantially larger stock of zips. On his first visit he had seen a couple of large boxes in the hallway but on this visit he was shown additional boxes in a back room and further supplies in wrapped poly bags. Mr Wiseman was not asked and Mrs Steggles could not recall whether the bags were labelled as to size. Mr Yewdall put it to Mr Wiseman that there had on this visit been as many as 30,000 zips. Mr Wiseman would only say that there were certainly "lots" but he had no point of reference from which to estimate the exact quantity. The officers were also shown large stocks of clothing, some of which could have been old stock, they could not tell.
22. On this visit, for the first time, Mr Jandu produced an order book which it was understood to be the first order book he had ever kept. It began in July 1999 but its existence had never been revealed to the Commissioners before. Mr Jandu also produced two or three invoices for the purchase of sliders dated early 2001. Again, this was the first evidence shown to the Commissioners of the purchase of sliders. The officers were also shown by a member of staff how to cut a zip and insert the cut zip into a garment. Both Mr Wiseman and Mrs Steggles formed the view they were being given a demonstration rather than observing a routine production process, especially as there were no other staff working there.
23. Mrs Steggles considered that Mr Wiseman's first two assessments should be upheld. He had made use of all the records made available to him. There was no possible way in which he could have calculated the then stock other than by reference to Mr Jandu's records. However, Mrs Steggles did consider that given the new evidence available to her in the form of the order book, the third assessment should be amended. For the first time there was supporting evidence behind the invoices to support the claim for zero rating. She therefore amended the assessment to reinstate the zero rating as claimed but she applied the percentage uplift calculated by Mr Wiseman to the standard-rated sales – in other words the third assessment was, as amended, now in the same form as the first. Mrs Steggles told us that she could think of no alternative method of calculation which would have been any more accurate given the inadequacy of the records.
24. Mr Jandu gave evidence with the aid of an interpreter, Mr Singh. He told us that his company made both adult and children's clothes but mainly children's. He denied supplying any underdeclared adult clothes. He told us his record keeping was basic and until visited by Mr Wiseman he had kept no permanent record of orders, orders merely being noted down on scraps of paper which were later discarded. The stock figures for zips upon which Mr Wiseman had based his assessment were inaccurate. He, Mr Jandu, had given the stock figures to his accountant but they were only estimated and in any event did not take account of the large stock of what he called "mixed dead stock". These were old loose zips of different sizes and different colours numbering approximately 20,000. The only zips he counted for stock purposes were those in packs or part packs.
25. He also told us that it was his practice to cut zips down. He was specifically asked about the period over which he had done this to which he replied he had always cut zips. His explanation for doing so was based on economics. Zips came in packs of 100. If he received an order for say 100 garments in 5 different sizes, he could complete this order by purchasing just one pack of zips and cutting them down to the size required rather than by purchasing 5 packs of different lengths and only using a few of each pack. It was put to him that this might be a perfectly reasonable explanation if he traded only in very small quantities of clothes but he was trading in vast quantities making the exercise not so logical. In answer to this he said that he could never be certain that a particular customer would come back to him and he did not therefore want to over purchase on a particular size of zip. He cut the zips with scissors, sewing the cut end into the garment. At the time of the officer's visit he had not needed sliders because these would only be necessary if an additional zip was being created and this was not the case because the fashion at that time was for long zips and the parts left over were therefore too short for reuse. They were merely waste. He denied he had ever been asked by Mr Wiseman if he cut zips.
26. Mr Jandu agreed that on the visit of 25 November 1999, the officers would have seen him producing only adult stock and we were referred to an order for 60 men's jacket dated 20 November and invoiced 26 November. This was the order which would have been being produced at the time of the visit. With reference to the visit on 19 July 1999, when again only adults' stock was observed Mr Jandu explained that if there was a lull between orders, he would make speculatively for stock. We were referred to an order dated 12 July which was invoiced on 19 July, the next order being dated 24 July and invoiced 26 July. Between the 19^th and the 24^th, the workforce would have been producing adult stock speculatively.
27. Mr Jandu produced to us some clothes, accepted by the Commissioners to be children's clothes, which included a girl's coat with a 28 inch zip. In cross examination, Mr Jandu said the largest zip he would use in children's clothes would be 28 inch or 29 inch and would depend on style. Of his 30 inch zips, he estimated he cut down some 70-80% for use in children's clothes. The length of zip used in children's clothes would be dictated by the style which would in turn be dictated by the fashion. If the fashion was for long jackets he would use 27-28 inch zips or if it was for jackets with rolled collars, the zips would be some 4 inches longer to accommodate the roll. This style of jacket was normally made over the autumn.
28. On behalf of the Commissioners, Miss Williams submitted that the view formed by Mr Wiseman that there had been an underdeclaration and his calculation of the underdeclaration were both fully justified given the paucity of available records and evidence. The calculation made by Mr Wiseman had relied upon the Appellant's own figures taken from his records. Miss Williams contended that it did not make economic sense to cut zips in the manner described by Mr Jandu and highlighted the lack of evidence of the purchase of sliders before 30 April 2001. Miss Williams also pointed out that none of the jackets uplifted by the Commissioners had cut zips in them. The Commissioners accepted that zero-rated children's clothing was produced and that is reflected in the assessments after review. All the assessments as they presently stand show a predominance of children's wear, the assessments essentially being based on what was actually observed to be being manufactured at the time of the visits, on what was actually seen and the parts exercise based on the Appellant's own records.
29. On behalf of the Appellant, Mr Yewdall contended that there had been no underdeclaration. The reason long zips were purchased was so that they could be cut down and used in all sizes of garment. Mr Yewdall's basic contention was that Mr Wiseman's calculation was fundamentally flawed because the clothing taken as the stock figures would not all have 27 inch zips in them. He pointed out from the schedule of zip purchases that in the 12 months prior to March 1997 only 100 zips of a length exceeding 27 inches were purchased. It is therefore highly improbable that 1,640 garments could have been made with zips exceeding 27 inches. Mr Yewdall submitted that the fact that the schedule showed that zips over 27 inches accounted for only 11.83% of the total zips purchased was inconsistent with the percentage uplift of 231.24. Mr Yewdall pointed out that the analysis of children's and adult jackets produced was completely inconsistent with the zip purchase analysis and not only were zips used that must have been part of general stock but adult zips must also have been used in the manufacture of children's garments.
30. Mr Yewdall also contended that the period to which the underdeclaration was applied was unsustainable, given the pattern of zip purchases. Mr Yewdall also questioned the claim of Mrs Steggles and Mr Wiseman that they had witnessed large numbers of adult garments in stock. Both officers had admitted, in evidence, to confusion over the method of measurement and as it turned out all those that were correctly measured were found to be correctly sized. Further, as a schedule comparing zips purchased to garments sold showed a short fall of 33,686 children's zips and an excess of 9,292 adult zips in the same period and there being no suggestion of children's clothes being wrongly declared, it was Mr Yewdall's submission that the excess of adult zips had to have been used in the manufacture of children's clothing.
31. For the sake of clarity we should make it clear at this stage that the Commissioners accepted first, there was no concealment of purchases and no mis-description or manipulation of sizes. Secondly, in the period for which the order book was available, orders, invoices and returns all reconciled subject to a few minor discrepancies. Thirdly, Mr Milne did not pursue his fraud enquiry after his visit, enquiries of suppliers and a taped interview in October 1999.
32. We look first at the first assessment covering the period 12/96 to 03/99 together with the second correcting assessment covering the periods 03/97 to 03/99. If one takes as a starting point the analysis of zip purchases which is accepted by both parties, it is clear that in the six periods up to 09/97 only 600 zips of 27 inches plus were purchased. In the following two periods approximately 12,000 were purchased and in the two periods thereafter some 6,000. The jacket analysis shows a very wide fluctuation in the percentage of standard-rated to total jackets invoiced, ranging from 0.14% in 09/97 when no long zips were purchased to 20.65% in 12/99 when again no long zips were purchased. There is thus no consistent correlation between the purchase of long zips and the production of adult jackets. Again, looking at actual numbers of adult jackets invoiced, only 534 were invoiced in 12/97 and 825 in 03/98. Again there is no apparent correlation between zip purchases and adult jackets invoiced.
33. If these long zips did not go into invoiced adult jackets, what happened to them? Mr Jandu puts forward two explanations. First, they went into children's roll top collared fleeces. We were told that such jackets are produced in the autumn and winter and because of the extra length needed to go into the roll top, excessively long zips would be used. We cannot accept this as a credible explanation for two reasons. First, it was not Mr Jandu's evidence that it was only in this particular winter that these items were the fashion but that roll tops were produced generally in the autumn and winter. If this were the case there should have been matching purchases of long zips in the autumn of 1996, 1998 and 1999 but there were not. Secondly, Mr Wiseman had measured a fleece with a rolled top and it did not have in it a 27 inch zip. Indeed Mr Jandu was unable to produce any children's jacket to Mr Wiseman with a 27 inch zip in it.
34. Mr Janud's second explanation is that he purchased long zips and then cut them down for use in children's clothing. Again we cannot accept that this explanation either is credible. First of all, as we have found as a fact earlier in this decision, Mr Wiseman did discuss zip cutting with Mr Jandu and he denied the practice. Secondly, until Mrs Steggles' visit, there was no evidence of zip cutting on any of the earlier visits. None of the jackets uplifted by the Commissioners contained cut zips. There was no evidence of the purchase of sliders until early in 2001. Mr Jandu explained this by saying that before that he could not have made two zips out of one single longer zip because the length that was left would not run to a second zip. Given that Mr Jandu had been trading for some 20 years and his evidence was that he had always cut zips, it is not conceivable that it was only in 2001 that he became able to make two zips out of one. Also, if Mr Jandu had always cut zips there can be no explanation as to why so few long zips were purchased before 12/97 and after 12/98. Finally, Mr Jandu's contention that it saves money to purchase long zips and cut them down just does not make economic sense. It must increase the cost because presumably longer zips cost more then shorter ones. There is the extra manufacturing process necessitated by the cutting and adapting the cut edge into the jacket. The sheer volume of orders and jackets produced by Mr Jandu also makes a nonsense of his exercise based on an order of only 100 jackets.
35. The only explanation that we can see for the extraordinary purchase of long zips is that they went into none declared adult jackets – the view formed by Mr Wiseman. We therefore accept the Commissioners' contention that there was an underdeclaration by the Appellant of standard-rated sales. We look next at how Mr Wiseman calculated that underdeclaration. His calculation was taken entirely from the Appellant's own records. There was no element of guess work or assumption and the calculation was an arithmetical one based on the Appellant's own figures. Mr Jandu's first challenge to the calculation is thus that his stock records were inaccurate. Indeed it is quite obvious that they were, at least in relation to the purchase of long zips because there was no opening stock and the closing stock for 29 inch zips exceeded those purchased. Given the acceptance by the Commissioners that there were no concealed purchases, some of the closing stock must have been in stock but unrecorded in March 1997. This however is the fault of the Appellant's record keeping, not of Mr Wiseman's calculation. We believe that he was fully justified in basing the calculation on the stock records when no other more accurate records were available to him. The Appellant's second challenge to the calculation is that, as conceded by Mr Wiseman in cross examination, the stock of adult jackets recorded would not necessarily have had 27 inch plus zips in them. This however does not matter and cannot undermine the calculation provided Mr Wiseman compared like with like which he did. Both opening and closing stock take identical goods, namely all finished adult jackets recorded as being in stock, regardless of length of zip and all 27 inch plus zips. We also believe that Mr Wiseman was fully justified in taking 27 inch plus zips as being for use in adult clothes. He had been told by Mr Jandu that no child's jacket would take a zip longer than 25 inches. He also included 26 inch zips as being for children because of all the children's jackets he had examined, including roll necks, he had seen just one with a 26 inch zip.
36. We therefore accept that given the information in Mr Wiseman's possession, his methodology was reasonable and acceptable.
37. We now come to look at the periods covered by the first two assessments. Again, referring to the agreed analysis of zip purchases, what is apparent is that there was a short period of 4 quarters namely 12/97 to 09/98 when an exceptionally large quantity of long zips was purchased. Mr Wiseman has however projected his calculations back and forward over periods when very few such zips were purchased and certainly in nothing like the quantities that could have produced the percentage uplift applied. We were somewhat surprised that neither Miss Williams nor Mr Yewdall sought to explore with Mr Wiseman his justification for carrying the assessments so far back. When we questioned him, he sought to justify it only by reference to departmental policy. Clearly policy alone, in a case such as this, cannot justify an assessment if there is no other evidence at all of underdeclaration. Given that the very basis of the belief that there was an underdeclaration was the quite exceptional purchase of long zips, in periods when there was no such purchase we cannot see any justification for believing that there had been an underdeclaration.
38. We therefore uphold the assessments in relation to the periods 12/97 to 09/98 inclusive but for those periods 12/96 to 09/97 and 12/98 to 03/99, we find that there was no underdeclaration and allow the appeal.
39. In relation to the third assessment, in its form as amended by Mrs Steggles, again we are far from satisfied that there was any underdeclaration during the period covered by the assessment namely 06/99 to 06/00. The only supporting evidence could be in relation to 06/99 when 1,100 27 inch zips were purchased and no standard-rated jackets were invoiced. However in the following quarter 1,070 such jackets were apparently produced with only 100 long zips being purchased. Other than these 1,200 zips, no long zips were purchased during the period covered by the assessment. Mrs Steggles in her evidence explained why she felt that Mr Wiseman's original assessment for this period should not stand, given the production of the order book but she did not seek to explain why she had substituted an assessment based upon Mr Wiseman's original calculation. Indeed she did not seek to explain why she felt there had been an underdeclaration at all during this period or, if she felt there had been, to what extent. We find there was no underdeclaration for the periods 06/99 to 06/00.
40. In summary therefore, we find that there was no underdeclaration during the periods 12/96 to 09/97 inclusive or from 12/98 to 06/00 inclusive. For these periods, the appeal is allowed. In respect of the periods 12/97 to 09/98, we dismiss the appeal and uphold the assessments.
41. Mr Yewdall did not seek to argue, in terms, that the assessments were not raised to best judgment although this was probably implicit in his assertion the calculation was flawed. We should however make it clear that in relation to those periods when we find there was an underdeclaration we are perfectly satisfied for the reasons given above that the assessment was raised to best judgment in the light of Van Boeckel and Rahman.
42. The appeal is therefore allowed in part. The Commissioners made no application for costs. The Appellant did apply for costs and we direct that the Commissioners should pay the Appellant one half of its costs to be fixed by a tribunal chairman sitting alone if not capable of agreement.

LADY MITTING

CHAIRMAN

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