United Kingdom VAT & Duties Tribunals Decisions

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Cite as: [2004] UKVAT V18665

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Discover Travel & Tours International v Customs and Excise [2004] UKVAT V18665 (21 June 2004)

VAT — whether assessment under s. 85 VATA 1994 entered into where Customs erroneously notified Tribunal Centre that assessment under appeal had been withdrawn but withdrawn notice before Centre served it on appellant — on facts held that no agreement under s. 85 entered into

MANCHESTER TRIBUNAL CENTRE

DISCOVER TRAVEL & TOURS INTERNATIONAL LTD Appellant

- and -

THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents

Tribunal: Mr J D Demack (Chairman)

Sitting in public in Manchester on 25 March 2004

Mr Nigel Gibbon solicitor for the Appellant

Mr Richards Shaw of the solicitor's office of HM Customs and Excise for the Respondents

DECISION

In this appeal by Discover Travel & Tours Ltd ('Discover'), I am required to decide whether the appeal has been settled by an agreement made between the parties under s. 85 of the Value Added Tax Act 1994, so that "the like consequences shall ensue for all purposes as would have ensued if, at the time when the agreement was come to, a tribunal had determined the appeal in accordance with the terms of the agreement ..." Discover claims that the "like consequences" in the instant case are that the assessments under appeal should be treated as discharged.

Discover makes its claim against the following background. On 15 May 2002 it was assessed to VAT of £30,034. It appealed against the assessment on 5 June 2002 including in its Notice of Appeal a hardship application. The Commissioners opposed that application and, on 11 July 2002, themselves applied for the appeal to be dismissed.

For reasons I am unable to explain, the tribunal did not act on that application. Nothing then happened until 19 November 2002 when the Commissioners gave notice to the tribunal in the following terms:

"TAKE NOTICE the that Commissioners of Customs and Excise HEREBY INVITE the Appellant to WITHDRAW their appeal

The grounds for this Application are that the Commissioners have withdrawn the Assessment in dispute"

The tribunal did not immediately act on that notice, to which I shall henceforth refer as "the 19 November Notice".

On 21 November 2002 Mr Killock of Customs Central Region Appeals Team wrote to Discover saying that its case had been considered by the VAT Policy Team with responsibility for the Tour Operators' Margin Scheme and travel agents. He asked it to provide copies of certain documents, to clarify whether it had been accounting for VAT "via" the TOMS scheme, and for an explanation of why it claimed certain payments were not consideration.

On 22 November 2002 the Commissioners' Manchester Solicitor's office sent a fax marked "URGENT" to the Manchester Tribunal Centre in these terms:

"PLEASE NOTE THAT THE ATTACHED NOTICE [the 19 November Notice] WAS SERVED IN ERROR. PLEASE DO NOT SERVE ON THE APPELLANT. THE APPEAL IS PROCEEDING AS NORMAL"

The fax was ignored by the Centre, and on 28 November the 19 November Notice was served on Discover.

Discover, by its solicitors, Messrs Nigel Gibbon & Co, responded on 10 December 2002 by its own notice saying that consequent upon the 19 November Notice it applied for its reasonable costs consequent upon or incidental to the appeal to be met by the Commissioners and for the application to be stoodover for a month for the parties to negotiate its costs.

On 13 December 2002 the Commissioners formally withdrew the 19 November Notice on the grounds that "the Commissioners served the previous notice in error and the Officers' Assessment has not been withdrawn therefore the appeal should continue as normal".

Against that factual background, Mr Gibbon, for Discover, claimed that any document sent by the Commissioners' Solicitor's office during the currency of an appeal carried with it the Commissioners' ostensible authority and was sufficient to bind them (see Taylor & Taylor v Customs & Excise Commissioners (1993) Decision No 10980 applying Waugh v Clifford [1983] 1 ALL ER 1095).

He submitted that the Commissioners' attempt to withdraw the 19 November Notice was of no effect for by 13 December 2002 it had been sealed by Discover's own Notice of 10 December 2002 (see Lamdec v Customs & Excise Commissioners (1991) Decision No 6078 where the Commissioners wrote direct to the appellant purporting to withdraw an earlier letter which had in effect reversed the disputed decision): there was no facility in s. 85 of the 1994 Act to resile from an agreement within that section. Mr Gibbon added that the fact (if it were a fact) that neither party contemplated settling the appeal by a s. 85 agreement was irrelevant if the form of the agreement had the effect in law of settling the appeal (again see Lamdec). He further added that the fact (if it were a fact) that the 19 November Notice may have been sent by the Commissioners by mistake was irrelevant (again see Landec where it was held – similarly to the instant appeal – that although the appellant might have been surprised that the Commissioners had reversed their decision, nevertheless "the terms could hardly be clearer").

Of the Commissioners' subsequent attempt to withdraw the 19 November Notice and any claim they might make that they should not be penalised for an error of the tribunal, Mr Gibbon made four points:

1) it was known to all parties in litigation in the tribunal that the tribunal acted as a "post box" in sending correspondence and pleadings to the parties;

2) if one party sent a communication to the tribunal, it did so in the expectation that it would be served on the other party;

3) where a party sent a communication to the tribunal in error that party should take reasonable steps to inform the other that a communication had been sent in error, in which case if the notification of the error arrived with the other party in advance of the original communication the other party would know that the terms of the original communication were erroneous if received; and

4) in the instant case the Commissioners made no attempt to inform Discover that the 19 November Notice had been issued in error by the time Discover had already accepted the terms of the offer to withdraw its appeal.

Mr Gibbon submitted that in all the circumstances the parties had entered into a valid agreement on terms offered by the Commissioners, and that agreement was one made under s. 85 of the 1994 Act.

Mr Shaw, of the solicitor's office of Customs and Excise, for the Commissioners, submitted that the words in the 19 November Notice "that the Commissioners have withdrawn the assessment in dispute" did not constitute an offer to withdraw the assessment in return for the withdrawal of the appeal or for any other form of consideration as, on the face of the statement, the withdrawal of the assessment had been made by the Commissioners without anything being required in return: in the absence of an offer, no acceptance was possible, and therefore the 19 November Notice was incapable of forming the basis of a s. 85 agreement (see R (DFS Furniture Co plc) v Customs & Excise Commissioners [2003] STC 1).

Whilst accepting that a solicitor had ostensible authority vis-à-vis the tribunal or opposing litigant in the case of litigation, Mr Shaw distinguished the circumstances of the instant case from those in Waugh v Clifford, Lamdec and Taylor & Taylor, as being devoid of negotiations or discussions with a view to the disposal of the appeal or matters in dispute; and in any event, he maintained, no offer had been made.

Mr Shaw, having accepted that although the tribunal and Discover were entitled to rely on the ostensible authority of the Commissioners' solicitor in stating that the disputed decision had been withdrawn, contended that the statement in that behalf was of no immediate consequence: it was not, of itself, capable of disposing of the appeal and Discover did not suffer any prejudice by acting in reliance on the misstatement. (The effect of the 13 December Notice (if not the fax to the tribunal of 22 November 2002) was, in Mr Shaw's submission, pursuant to s. 85 (4) of the 1994 Act, to render Discover's withdrawal of its appeal ineffective).

Of Mr Gibbon's argument that, in the alternative to being an offer to withdraw the assessment, the 19 November Notice was itself a document withdrawing the assessment, Mr Shaw accepted that there was no format required by law for withdrawal of an assessment, but submitted that there was a difference between the withdrawal of an assessment and the notification of its withdrawal. He contended that the 19 November Notice was nothing more than the notification of the withdrawal of the assessment and, there having in fact been no withdrawal, was of no effect. The assessment remained extant.

I entirely agree with the case for the Commissioners presented by Mr Shaw. The language of the 19 November Notice is not that of withdrawal; it is at best that of notification.

I hold that the assessment under appeal was not withdrawn; it remains extant as does Discover's appeal against it. I should perhaps say that in so deciding I have considered most carefully all the submissions of Mr Gibbon. Whilst attractively presented, I am not persuaded by them. In particular, I am loath to accept that there ever was a s. 85 agreement from which the Commissioners could resile; the terms of the 19 November Notice never amounted to an offer which Discover could accept.

I decide the preliminary point in favour of the Commissioners

DAVID DEMACK

CHAIRMAN

RELEASE DATE:21/06/2004

MAN/02/411