United Kingdom VAT & Duties Tribunals Decisions

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Cite as: [2004] UKVAT V18801

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R Ettling and Mrs S F Miller T/A Buttery Cafe v The Customs and Excise [2004] UKVAT V18801 (15 October 2004)

18801

COMPULSORY REGISTRATION – suppression rate determined using comparative figures including a Bank Holiday and a day following a Bank Holiday which were lower that usual – evidence accepted of a large party on one of the invigilation days – registration date directed to be recalculated

LONDON TRIBUNAL CENTRE

R. ETTLING AND MRS S.F. MILLER T/A THE BUTTERY CAFE Appellant

- and -

THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents

Tribunal: DR JOHN F AVERY JONES CBE (Chairman)

TONY RING FTII ATT

Sitting in public in London on 4 October 2004

The Appellants in person

Mrs P Crinnion, Senior Officer, HM Customs and Excise, for the Respondents

© CROWN COPYRIGHT 2004

DECISION

Mr R Ettling and Mrs Miller trading as the Buttery Café appeal against a decision in a letter from the Commissioners dated 15 October 2003 that they were compulsorily registrable from 1 October 2002. The Appellants appeared in person; the Commissioners were represented by Mrs P Crinnion.

We heard evidence from Mrs Miller, and from two officers, Miss Laura Castle, Mr Simon Kiefer, and the reviewing officer Mr Bill Beedie.

We find the following facts.

(1) The Appellants run a café in Broadstairs that is primarily used by regulars rather than passing trade. The trade is not particularly seasonable except that less zero-rated take-away cold food is sold in the winter.

(2) Miss Castle visited the Appellants on Wednesday 8 January 2003 when it was closing at 2 pm and took a Z reading of £233.60.

(3) Two invigilation visits were made by Miss Castle and other officers on Friday 28 March 2003 and Tuesday 13 May 2003 at which all transactions in the day were recorded. The totals for those days were £242.45 and £170.65.

(4) Miss Castle made the decision to register by comparing these three days with first the average takings for the same day of the week in the month concerned: Wednesdays in January 2002 (£106.15), Fridays in March 2002 (£112.35) and Tuesdays in May 2002 (£115.90) respectively. Secondly she compared these days with the average for the same day of the week for the period from 13 August 2001 to 30 December 2002 (£131.42, £124.99 and £134.12). From this she worked out the suppression rate: under the first comparison 54.55%, 53.66%, 32.08%, average taking the three days together 48.29%. Under the second comparison this amounted to 43.74%, 48.44% and 21.40% average of the three days 39.63%. She then averaged all 8 percentages (including the two combinations of the days) to arrive at 42.72%, which she rounded down to 42%. She then assumed that there had been a constant rate of suppression rising from nil in the year to August 1989 and rising by 3 percentage points per annum. Applying the resulting suppression rate of 39% to the accounts to August 2002 the sales become £56,186.88 (the declared turnover for this period was estimated at £34,274 and is now found to be £35,422 which will mean that this figure is higher) compared to the registration limit of £55,000. Accordingly she compulsorily registered the Appellants from 1 October 2002.

At the hearing Mrs Miller contended that 28 March 2003 was not a typical day as a party of 8 or 10 came in for lunch. A statement was made by Mr P B Sparrow of Ideas Unlimited saying that a group of old friends visited him as a surprise sometime towards the end of March of whom 8 or 10 had lunch at he Appellant's cafe. There are entries of £17.70 at 13.21 hours and £5.70 at 13.23 hours, the former being by far the largest item in the day and the latter only exceed by 6 other entries that day. Although this evidence was not in the form of a witness statement, he did not give oral evidence, and he did not state the date definitely, this evidence is consistent with the entries on the invigilation sheets, and we accept his evidence. It is not typical of other days and we consider that the calculations should exclude £23.40 from the takings for that day.

The Tribunal pointed out that included in the monthly comparisons of the Fridays in March 2002 was Good Friday, the takings on which were unusually low at £100.10; the other Fridays in the month were all over £110. And included in the comparisons for May 2002 is the Tuesday after the bank holiday on which the takings £97.25; the other Tuesdays in the month were all above £116. We consider that the inclusion of these days of comparison in the calculations has distorted the monthly comparisons, making them an unreliable guide to any suppression rate. It is noticeable that the same-month comparisons give suppression rates of 54.55%, 53.66% and 32.08%, while the comparison with the longer period give the very different rates of 43.74%, 48.44% and 21.40%, showing that the two methods do not give comparable results.

We consider that only the comparisons based on the same day of the week during whole period of 13 August 2001 to 31 December 2002 should be used but with the reduction of the £23.40 for 28 March 2003. We calculate that the average suppression rate using that method is 37.36% (but do not so decide in case we have made an arithmetic mistake), which even if applied in full (without tapering the rate of suppression as the Commissioners used in their calculation to the year to August 2002) would not make the Appellants registrable for that year. Whether it does so at the end of the year to August 2003 (or during the year) we leave the Commissioners to recalculate.

We express the hope that in future where a reviewing officer reviews comparisons such as the ones in this case, he or she should be on the look out for unusual days such as Bank Holidays or days immediately following, particularly where one of the figures in the comparison is unusually low.

Accordingly we allow the appeal to the extent of directing the recalculation of the figures in the light of this decision to determine the date on which the Appellant were registrable. If the resulting registration date cannot be agreed either party is at liberty to reinstate the appeal.

J F AVERY JONES

CHAIRMAN

Release Date: 15 October 2004

LON/04/159