United Kingdom VAT & Duties Tribunals Decisions

Wainbody Estates v Customs and Excise [2004] UKVAT V18732 (20 August 2004)

ASSESSMENTS – whether made to best judgment – whether wrong in law and/or excessive

LONDON TRIBUNAL CENTRE

WAINBODY ESTATES Appellant

- and -

THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents

Tribunal: Peter H Lawson (Chairman)

Richard Corke FCA

Sitting in public in Bristol on 25 November 2003

Nigel King, Accountant, for the Appellant

David Bettoney, Senior Officer, for the Respondents

© CROWN COPYRIGHT 2004


 


DECISION
1. This is an appeal against an assessment dated 3 September 1999 made by the Commissioners by which they disallowed input tax in the sum of £20,909 and £3,480.80 interest.
2. The Appellant is a partnership. The partners are Mr Christopher Charles Trietline and Mrs Gladys May Trietline. The Appellant was registered for VAT with effect from 1 April 1973. The Appellant's business is mixed farming and horse dealing.
3. The facts in this case derive partly from the Commissioners' Statement of Case (insofar as it was not disputed) and partly by Mrs Louise Hanson (now Mrs Donaldson), an officer at the Droitwich VAT Office and Mr Martyn Thomas, a senior officer.
4. On 17 March 1997 Mrs Hanson visited the Appellant at The Wainhouse, Abberley, Worcestershire (at that date its principal place of business) to examine its books and records. Mrs Hanson found numerous errors in the purchase and sales records which she explained to Mr Trietline and the Appellant's bookkeeper. On 27 March 1997, Mrs Hanson wrote to the Appellant enclosing a schedule of discrepancies she had identified on her visit. The letter explained the Commissioners' power, in circumstances where there are concerns about the completeness and accuracy of VAT returns, to assess to best judgment the amount of VAT considered to be due.
5. Mr Trietline, on behalf of the Appellant, wrote to Mrs Hanson on 14 April 1997 in response to her letter dated 27 March 1997. His letter commented briefly on each of the items in the schedule. It also enclosed some photocopies of bills and invoices, stating that the originals were held at the Appellant's office.
6. On 6 June 1997 Mrs Hanson wrote again to the Appellant, indicating that, as evidence had not been received to support all items on the schedule, an assessment would follow. On 9 June 1997 Mr Trietline replied on behalf of the Appellant, enclosing further invoices.
7. In or about November 1997, the Appellant moved its principal place of business to Vowchurch Court, Vowchurch, Hereford HR2 0RB. The Commissioners' papers relating to the Appellant were, accordingly, transferred to the Gloucester VAT Office.
8. The majority of the items set out in the schedule were the subject of an assessment made by Mrs Hanson and notified to the Appellant by the Gloucester VAT Office by a Notice of Assessment dated 5 March 1998.
9. On 23 March 1998 Mr Finn and Mr Nicholas Pass (a Customs officer) visited the Appellant at Vowchurch Court by prior arrangement. The purpose of the visit was to discuss the irregularities set out in the schedule and Notice of Assessment dated 5 March 1998.
10. On 21 December 1998 officers from the Cardiff and Gloucester VAT Offices (including Mr Martyn Thomas and Mr Robert Snare ) went to Vowchurch Court where they executed a search warrant and arrested Mr Trietline. A cautioned interview of Mr Trietline was undertaken by Mr Thomas and Mr Snare at Hereford Police Station on the same day.
11. The assessment now under appeal was made by Mr Thomas and notified to the Appellant by Notice of Assessment dated 3 September 1999 by which the Commissioners disallowed input tax in the total sum of £20,909. A summary and explanation of the items included in the 1999 assessment were set out in Appendix A in the Statement of Case. At the hearing the Commissioners agreed that two amounts of input tax which had been disallowed, namely Moores & Allen £102 and G L Evans £1125 should be reinstated and the assessment of £20,909 should be reduced accordingly.
12. By the 1999 assessment the Commissioners disallowed a total of £2,849 input tax which had been claimed by the Appellant in respect of services said to have been supplied to it by James Scott, a firm of solicitors. The assessment in respect of the James Scott items was made on the basis that the services were not, in fact, supplied to the Appellant but related either to advice given to Mr Trietline in relation to personal matters or to advice given to Mr Trietline and Mr Tangye in connection with litigation involving International Factors Limited and Deadman Transport Limited of which Mr Trietline and Mr Tangye were directors.
13. By the 1999 assessment the Commissioners also disallowed £12,250 input tax which had been claimed by the Appellant in respect of services said to have been supplied to it by James Beauchamp, a firm of solicitors. The assessment in respect of that item was made on the basis that the services were not, in fact, supplied to the Appellant.
14. The James Beauchamp item is the first item in the schedule prepared by Mrs Hanson after her visit on 17 March 1997 under the heading "purchases". The Appellant's purchase records showed £70,000 in respect of services provided by that firm (on which VAT due was £12,250). However, the invoice produced in support of that entry was in respect of services with a value of £50,000, on which the VAT due was £8,750.
15. For the sake of completeness, the Commissioners mentioned that the assessment dated 5 March 1998 did not include an assessment in respect of the James Beauchamp item on the basis that, as at that date, evidence of the facts, sufficient in their opinion to justify the making of an assessment, had not come to the Commissioners' knowledge. As at March 1998, the position, as understood by the Commissioners, was that there was nothing to suggest that the services in question had not been provided to the Appellant.
16. The Birmingham VAT Office carried out an investigation to locate James Beauchamp's papers. They found that, following the Law Society intervention and a prosecution of Mr James Westall (a partner in James Beauchamp) the firm's papers were in the hands of the West Mercia Police. From an examination of these papers by Mr Finn and Mr Pass on 8 April 1998 it appeared that:
    
    (1) there was correspondence between Mr Westall of James Beauchamp and Mr Trietline concerning fees of £50,000 charged by that firm in respect of services provided to Plumella. This included a letter dated 10 April 1997 from Mr Westall which stated that two invoices had been raised in the name of the Appellant for £25,000 each plus VAT, and that these had been "dated upon your insistence in such a way as to help you with regard to VAT".
    
    (2) James Beauchamp's records included one entry in respect of services to the Appellant; this was for £25,000 plus £4,375 VAT dated 31 March 1997.
    
    (3) James Beauchamp's records included an entry of £25,000 plus £4,375 VAT dated April 1997 in respect of services provided to Plumella.
17. The records of James Beauchamp appeared to point to possible discrepancies in the records of the Appellant and to the possibility that that firm might have issued an invoice or invoices to the Appellant for services which had, in fact been provided to Plumella.
18. Accordingly, Mr Finn and Mr Pass revisited the Appellant on 9 April 1998 and took up its records with a view to examining them alongside Plumella's records. They entered into correspondence with Mr Trietline and Plumella's accountants concerning access to the company's records. The reason given why Plumella's records could not be made available was that they had been lost in the post.
19. In the execution of the search warrant on 21 December 1998, officers from the Cardiff and Gloucester VAT offices found Plumella's records and a series of photocopied invoices for which no originals were available.
20. In the course of the further cautioned interview of Mr Trietline at Hereford Police Station on 15 March 1999, Mr Trietline was questioned about the discrepancies between the records of the Appellant, Plumella and James Beauchamp. In the absence of an adequate explanation, it was concluded that the services in question had not, in fact, been provided by James Beauchamp to the Appellant. Accordingly, the assessment now under appeal was made, by which the Commissioners disallowed input tax in the sum of £12,250 in respect of the James Beauchamp item.
21. By the 1999 assessment seven further items were disallowed in respect of input tax which had been claimed by the Appellant in respect of goods and services said to have been supplied to it. Assessments were made on the basis that the goods or services in question were either not supplied at all or were not supplied to the Appellant or the suppliers were not taxable persons.
22. The Appellant appealed the assessment in relation to these items on the basis that they were excessive, wrong in law and not to the assessing officer's best judgment. The Commissioners, naturally did not accept these allegations and contend that the assessment was made to best judgment.
23. Except as stated in paragraph 11 above the Appellant has not demonstrated that the other input tax items making up the £20,909 disallowed related to the business of the Appellant and accordingly the appeal is dismissed.
    
    There will be no direction as to costs.
PETER H LAWSON CHAIRMAN RELEASED:

LON/99/1293