United Kingdom VAT & Duties Tribunals Decisions

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Cite as: [2004] UKVAT V18684

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Sohal v Customs and Excise [2004] UKVAT V18684 (06 July 2004)

18684

VALUE ADDED TAX — trader found selling excise goods on which duty not paid — conviction for selling goods without payment of duty and of fraudulent evasion of VAT — whether trader liable to register — yes — assessment based on admission by appellant to Crown Court — whether tribunal should interfere — no — appeal dismissed

MANCHESTER TRIBUNAL CENTRE

GOBIND SINGH SOHAL Appellant

- and -

THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents

Tribunal: Mr C P Bishopp (Chairman)

Mrs M P Kostick BA FCA CTA (Member)

Mr C B H Gill (Member)

Sitting in public in Manchester on 29 June 2004

The Appellant did not appear and was not represented

Mr Nigel Poole, of counsel, instructed by the Solicitor's Office of HM Customs and Excise, for the Respondents

© CROWN COPYRIGHT 2004


 


DECISION
1. This is an appeal by Gobind Singh Sohal against the determination, set out in a letter written to him by the Commissioners on 14 September 2001, that he should have been registered for value added tax for the period from 1 January 1997 to 3 February 1998 (and his consequential compulsory registration for that period), and to assess him to value added tax for which he should have accounted amounting to £85,000.
2. Mr Sohal did not attend the hearing and was not represented, although he had been professionally represented in the past. It appeared to us that notification of the hearing had been properly sent to his representative, and had not been returned as undeliverable. There was no communication from the appellant or his representatives explaining or excusing his absence or seeking a postponement. Nigel Poole, counsel for the Commissioners, asked us to hear the case in the appellant's absence. We considered that it was appropriate that we should do so.
3. The circumstances of the case are somewhat unusual. Mr Sohal was discovered by the Commissioners to be selling alcoholic drink which had not borne United Kingdom excise duty, from premises at a trading estate in Ormskirk, Lancashire, and to be storing significant quantities of undutied alcoholic liquor at his home nearby. He was prosecuted at Preston Crown Court for two offences of keeping goods chargeable with excise duty which had not been paid, contrary to section 170(1)(b) of the Customs and Excise Management Act 1979 – one offence at the trading estate and the other at his home; an offence of fraudulent evasion of excise duty, contrary to section 170(2) of the 1979 Act; and an offence of fraudulent evasion of VAT contrary to section 72(1) of the Value Added Tax Act 1994 between 1 January 1997 and 3 February 1998. So much was apparent from the indictment which Mr Poole produced to us. He was able also to show by documentary evidence that on 6 July 2001 Mr Sohal was convicted, on his own admission, of four offences and was sentenced to a term of imprisonment. However, the certificate of conviction which he produced does not match the indictment, in that none of the offences recorded in it is described as the fraudulent evasion of VAT.
4. Mr Poole was able, however, to produce a further document, described as "Basis of Plea", and he also called as a witness Richard Smith, the Customs officer who had led the investigation which resulted in Mr Sohal's conviction, and who could tell us about the circumstances of Mr Sohal's prosecution and conviction. He told us that Mr Sohal had been arrested, and the goods found, on 3 February 1998 – the last day of the period to which the compulsory registration and assessment relate – and that some records had been found showing that he had been trading from at least 1 January 1997, the first day of that period.
5. Mr Smith explained that the indictment produced by Mr Poole correctly reflected the offences with which Mr Sohal had been charged. During the course of the prosecution there were discussions between counsel on both sides – to which Mr Smith, as the case officer, was privy – in which agreement was reached upon the amount of excise duty and VAT which Mr Sohal would admit to having evaded, and which the Commissioners would regard as an acceptable admission. The "Basis of Plea" had been prepared by counsel as a result of those discussions. It, too, unfortunately contained a mistake in that the fourth count of the indictment was incorrectly recited as an offence of evasion of excise duty, although the narrative following the count itself made it clear that the offence charged was in fact one of evading VAT. Mr Smith also told us that, to the best of his belief, the counts in the indictment had not been amended in any way, that Mr Sohal had pleaded guilty to all four of the counts without amendment, and that he had been convicted of them on the strength of that plea.
6. Although we were initially concerned that we were being asked to determine the appeal by relying on documents which, on their face, did not appear to support the Commissioners' case, we are satisfied from what Mr Smith told us that the error in the "Basis of Plea" is almost certainly due to a word processing mistake, and that it was intended to reflect the fourth count in the indictment as it is drawn. It also makes no sense that a man charged with the fraudulent evasion of VAT should instead be convicted, as the certificate of conviction suggests, of "being knowingly concerned in fraudulent evasion of prohibition or restriction on importation of goods" – that could not be a lesser, or alternative, charge to one of evading VAT - and we are satisfied that the certificate, too, contains a clerical mistake.
7. The "Basis of Plea", as Mr Smith explained in his evidence, reflects a concession by Mr Sohal that he had sold goods – which by their nature are all subject to VAT at the standard rate – to a value of £600,000, of which the VAT fraction is £89,362. The Commissioners accepted that there would be some allowable input tax (not on the goods themselves since the offences committed by Mr Sohal were such that the person from whom he procured the goods would not have accounted for output tax on the price he paid for them) but on other overheads of his business. Mr Smith also confirmed that the "Basis of Plea" reflected accurately the agreement reached between counsel that £4,000 should be allowed in respect of input tax with the result that the appellant's net liability, rounded down somewhat, was £85,000.
8. The grounds of appeal served on behalf of Mr Sohal say no more than "VAT is not payable by Mr Sohal." There is no challenge to the amount assessed, nor is the validity or relevance of the conviction put in issue. We do not understand those grounds. If, as appears to be implicit in his own admission to the Crown Court, Mr Sohal sold taxable goods to the value of £600,000 in the period from 1 January 1997 to 3 February 1998, he must have been liable to register for VAT, since his turnover was far above the threshold for registration, and to account for output tax on his sales. He was, as we are satisfied, not registered and he has not accounted for output tax. We can discern no merit at all in the grounds of appeal. We also see no grounds upon which we could interfere with the amount of an assessment based upon the appellant's own admission.
9. The appeal must, therefore, be dismissed. Mr Poole sought a direction for costs in the Commissioners' favour, since the appellant had failed to attend the hearing without prior notification. We think it appropriate that we should make such a direction, and we do so. The costs are assessed at £250 and are to be paid by 31 August 2004.

COLIN BISHOPP

CHAIRMAN

Release Date 06/07/2004

MAN/01/0817