United Kingdom VAT & Duties Tribunals Decisions

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Cite as: [2004] UKVAT V18617

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Richardson v Customs and Excise [2004] UKVAT V18617 (27 May 2004)

DRAFT 11 May 04 MAN/03/0448

VAT – registration of trader and effective registration date – vehicle sales on garage forecourt – claim of trader he sold on commission basis only and not as owner of vehicles – appeal dismissed.

MANCHESTER TRIBUNAL CENTRE

KEVIN RICHARDSON Appellant

- and -

THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents

Tribunal: Mrs E Gilliland (Chairman)

Mr R G Grice (Member)

Sitting in public in Birmingham on 11 March 2004

No attendance by or on behalf of the Appellant

Mr. Jonathan of counsel instructed by the Solicitors Office of HM Customs and Excise for the Respondents

DECISION

The appeal before the Tribunal is that of Kevin Richardson (the Appellant) against a decision of the Commissioners notified to the Appellant's Accountant by letter dated 13 September 2002 to compulsorily register the Appellant for Value Added Tax from 1 November 2001 under Schedule 1, paragraph 5(2) of the Value Added Tax Act 1994 (the Act) and a decision of the Commissioners after reconsideration to uphold that decision notified by letter dated 8 May 2003. The Appellant has not attended nor is he represented at today's hearing. Counsel for the Commissioners has requested that we proceed under Rule 26(2) of the Value Added Tax Tribunals Rules 1986. As we have no explanation as to why neither the Appellant nor his representative is able to appear, we propose to proceed.

The business of the Appellant dealt with in the appeal is the sale of vehicles from the forecourt of garage premises at Mill Garage The Causeway Thorney Peterborough. The garage premises themselves are used by a Mr. Lloyd who runs there a service and repair garage. When looking at the matter first the Commissioners were considering whether there were two sole proprietors or one sole proprietor with an employee or a partnership operating from the premises. The grounds of the Appellant's appeal were set out in his undated Notice of Appeal as follows:

"I do not think I need to be registered as I do not own the vehicles I sell, therefore my turnover should relate to the commission I charge, which is below the threshold.

Proof of ownership will be made available".

In the absence of any attendance on the part of the Appellant Mr Cannan for the Commissioners has not called any witnesses. He has however referred the Tribunal to the witness statements of Kornel Kiwerski who made the decision of 13 September 2002 as to compulsory registration and the registration date and of Helen Diana Cox the Appeals and Reconsiderations Officer who confirmed that decision on 8 May 2003. Neither witness statement has been challenged. Counsel has referred us also to the records and documents in the bundle before us including the notes made on 15 August 2002 by Mr. Kiwerski of a meeting on 14 August 2002 at the Accountant's offices at which were present the Appellant Mr. Mohammed Usaf his Accountant and Mr Kiwerski.

It is clear from the witness statement of Mr. Kiwerski that he considered there were discrepancies in the information he had originally received and that subsequently presented by the Accountant. At the meeting it was established that the Appellant had been trading for 19 months and not 9 months as had been put forward originally. The Appellant had set out the background of how he came to be selling motor vehicles and his business was described as the selling of motor vehicles for travellers for commission on each sale; he himself did not own the vehicles and thus the full selling price should not be taken into account when calculating turnover. As to his site he paid no rent to Mr. Lloyd but looked after the forecourt and did also some odd jobs; he sold some cars for Mr. Lloyd on commission and Mr. Lloyd was able to use the Appellant's contacts for the borrowing of vehicles. It appears that Mr. Lloyd provided a facility also for cashing cheques. The Accountant produced some sales invoices and a Sales book and copies of the entries are in the bundle. In his witness statement Mr. Kiwerski refers to a telephone conversation he had with Mr. Lloyd who told him that the Appellant paid him commission for the right to sell vehicles from the site.

Counsel for the Commissioners has taken us through the copy invoices and associated sales records including those which involved a part exchange. We are told that the Appellant had said at the meeting that the invoices were in standard form for the motor trade and were dated and not numbered. In the view of the Commissioners it was a cash business with a relatively quick turnover and the records showed values for the vehicles substantially between £2000 and £3000. They considered that the start-up cost for the Appellant would not be large.

We find the records of the Appellant before us limited and they do not to our mind give a full trading history. We have noted that there is nothing on the invoices to demonstrate the points made by the Appellant that all vehicles were owned by third parties and that commission was paid; nor has any proof of ownership been produced although the Notice of Appeal had said that this would be made available. The copy of the sales records shows a column with a commission figure for each transaction. The Appellant has told the Commissioners that he could identify the commission paid on looking at the sale price even though the invoices themselves showed no commission figure. He seems to have said that the commission was fixed at the beginning of a transaction but was unsure as to what the usual commission rate was. The records indicate an average commission of £250 on a vehicle sold for £3000 to £4000. Following these figures through however on the basis quoted by the Appellant shows a commission rate of 5.8% and a total figure earned in a 20 month period of £7900 against a sales total of £134,930. We do not find these figures credible even though the Appellant has suggested that his outgoings and personal needs are small.

The onus in this matter is on the Appellant to show that the decisions of the Commissioners appealed against were wrong. We do not find any of the Appellant's explanations plausible nor are they supported in the paperwork produced. The copy invoices do not show a seller's name but the reason for this given at the meeting was that the invoices produced were not the top copies which would have had a rubber stamp for Mill Garage still not the seller on the argument presented. As to the vehicle registration document it did not matter what name was on it as long as one was handed over. Warranties were given in some cases but we do not know who would be bearing the cost of these if work were required. It has not been shown to our satisfaction indeed how the Appellant would keep in touch with a traveller when selling for him when on his own admission he had few telephone numbers. There was no insurance cover for vehicles left at the site which were at the owner's risk. We accept the submissions of the Commissioners and find that the Appellant was the sole proprietor of a business selling vehicles on his own account. The sales records show the Vat threshold as exceeded at the end of September 2001 and the Commissioners were accordingly correct in compulsorily registering the Appellant with effect from 1 November 2001.

The appeal is dismissed.

The Commissioners have sought costs in view of the non-attendance of the Appellant personally or by representation. They place these at £1000 taking into account preparation time Counsel's appearance and travelling. We consider that the Commissioners are entitled to such costs and direct that the Appellant pay to the Commissioners the sum of £1000.

MRS E GILLILAND

CHAIRMAN

MAN/03/0448