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United Kingdom VAT & Duties Tribunals Decisions
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Shires Crane Hire Ltd v Customs and Excise [2004] UKVAT V18613 (27 May 2004)
URL: http://www.bailii.org/uk/cases/UKVAT/2004/V18613.html
Cite as:
[2004] UKVAT V18613
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Shires Crane Hire Ltd v Customs and Excise [2004] UKVAT V18613 (27 May 2004)
SECURITY — sole trader owing £78,360 over ten year period – deregistered owing £23,400 – formation of Appellant on transfer as a going concern - £19,250 security required – commissioners had acted reasonable – case dismissed
MANCHESTER TRIBUNAL CENTRE
SHIRES CRANE HIRE LIMITED Appellant
- and -
THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents
Tribunal: MR D S PORTER (Chairman)
Sitting in public in Manchester on 13 April 2004
Mr D Hadfield Chartered Accountant appearing for the Appellant
Mr B Haley of the Solicitor's Office of HM Customs and Excise for the Respondents
© CROWN COPYRIGHT 2004
DECISION
By a Notice of Appeal dated the 10th November 2003, Shires Crane Hire Limited (the Appellant) appealed through its accountant Mr Hadfield against the notice of requirement to give security under paragraph 4(2) of Schedule 11 of the Value Added Tax Act 1994, requiring the sum of £19,250.00 to be deposited if monthly return were to be submitted.
The Parties
- Mr B Haley of the Solicitors' Office appeared for the Respondents and produced a bundle of copy documents and called Mr I Pumphrey a senior officer in te security division at Chesterfield. Mr M Hadfield appeared for the Appellant and called Mr D H Shires the Managing Director of the Appellant.
The facts
- Mr Shires started in business in 1973. His daughter handled all the book- keeping but had no qualification in this area. He signed the cheques but never really checked his daughter's work.
- In April 1993 office assessments were raised by the Respondents through to April 1998. Returns were thereafter submitted by Mr Shires but were inaccurate. By June 1993 £34,785 was assessed to be outstanding with interest of £5,205.06 and penalties of £1,158. The Respondents were of the opinion that the returns had been completed to suit the cash requirements of the business. Mr Shires argued that he had really left his daughter to submit the returns and it may well have been that estimates had been used but the intention was not to defraud the Respondents but to get the returns in by the required date.
- The sole trader business was transferred to the Appellant at the beginning of 2003. By October 2003 Mr Shires had paid off all except £21,921 of his sole trader liability. By the time this matter came to the hearing he had paid of the entirety of the liability including the interest and penalty. The Appellant was up to date with its returns. Mr Shires daughter was no longer working for him as his book-keeper and the Accountants were dealing with his VAT by monthly returns on a cash basis
- I find as fact the matters set out in paragraphs 3 to 5 above.
The summing up
- Mr Haley submitted that the Tribunal had to consider the facts before Mr Pumfrey who was the security officer in October 2003 when the decision to require security was made. Although Mr Shires had started in business in 1973, he had had a poor compliance record from 1993 up to the formation of the Appellant. He had failed to supervise the preparation of the returns in circumstances in which it could be argued that he had deliberately falsified the returns to accommodate the cash flow. At the time of the formation of the Appellant, there was some £24,000 owing and there had been some £78,360 undeclared over the period of ten years. Further, it was not unusual for individuals to form companies in these sort of circumstances so that they could avoid personal liability for VAT purposes. In all the circumstances Mr Pumfrey was right to require the security as there was at the time a very real risk that the VAT would remain unpaid
- Mr Hadfield submitted that Mr Shires had not been dishonest with regard to the under declaration, he had merely been careless. He had formed the Appellant on the basis that there would be a considerable corporation tax advantage as had been intended by Mr Brown the Chancellor of the Exchequer. Mr Shires had cleared all the liability for the under declared VAT as well as the interest and penalties. The Appellant had never been behind with its VAT returns. In fact Mr Shires had now employed a trained bookkeeper in the place of his daughter. Mr Hadfield's firm is now preparing the VAT returns and the Appellant is paying on a monthly basis. Mr Hadfield conceded that for the purposes of the hearing to day the Tribunal had to decide whether Mr Pumphrey acted reasonably in October 2003. He conceded that he probably had.
Decision
- I have considered the facts and I find that Mr Pumfrey acted reasonably when he required the deposit of £19,250. I therefore dismiss the appeal. Mr Pumfrey was correct in considering that the Respondents were clearly at risk that VAT would not be paid on the facts before him in October 2003. Mr Shires has since honoured his commitments in relation to his VAT liability up to the time that he formed the Appellant. He gave his evidence in a straight forward and honest way and I consider that he was careless but not dishonest. In view of the fact that the Appellant has complied with its VAT obligations since its formation and there is now no money due from Mr Shires to the Respondents, I would suggest that the Respondents might consider reducing the requirement for security or even waive it altogether.
- The Commissioners made no application for costs and I award none.
D S PORTER
CHAIRMAN
Released:
MAN/03/760