United Kingdom VAT & Duties Tribunals Decisions

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You are here: BAILII >> Databases >> United Kingdom VAT & Duties Tribunals Decisions >> Telefoni v Revenue and Customs [2005] UKVAT V19223 (23 August 2005)
URL: http://www.bailii.org/uk/cases/UKVAT/2005/V19223.html
Cite as: [2005] UKVAT V19223

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Telefoni v Revenue and Customs [2005] UKVAT V19223 (23 August 2005)

19223

APPEAL — original hearing conducted partly in appellant's absence and appeal dismissed — decision of first tribunal set aside at instance of appellant — fresh hearing of appeal conducted in appellant's absence and appeal again dismissed without hearing evidence — decision of second tribunal set aside at instance of appellant — appellant failing to attend or be represented at hearing before third tribunal — absence inadequately explained — whether appellant afforded adequate opportunity to present his case — yes — whether incumbent upon third tribunal to hear evidence — no — appeal yet again dismissed without hearing evidence

MANCHESTER TRIBUNAL CENTRE

BAHRAM TELEFONI Appellant

- and -

HER MAJESTY'S REVENUE AND CUSTOMS Respondents

Tribunal: Michael Johnson (Chairman)

John E Davison

Sitting in public in North Shields, Tyne and Wear on 21 June 2005

The Appellant did not appear and was not represented

James Puzey, counsel, instructed by the Acting Solicitor for HM Revenue and Customs, for the Respondents

© CROWN COPYRIGHT 2005


 


DECISION

Background

1. This is the latest hearing of an appeal against "best judgment" assessments for value added tax totalling £28,865 and misdeclaration penalties totalling £3,391. These are revised figures, taken from paragraphs 5(j) and (k) respectively of the Statement of Case of the Commissioners of Customs and Excise – now Her Majesty's Revenue and Customs ("HMRC") – dated 8 August 2000. The Appellant carried on the business of a pizza takeaway in Blaydon, Tyne and Wear, and the assessments relate to that business.
2. When the hearing of the appeal was due to start, it was apparent that the Appellant had not attended, nor had he sent a representative. HMRC were represented by James Puzey of counsel. The tribunal clerk telephoned the number held on file for the Appellant and spoke to a lady said to be Mrs Telefoni. She said that the Appellant was currently in Iran. She stated that she was unaware of the tribunal hearing.
3. On the tribunal file is a letter from the Appellant personally to the Manchester Tribunal Centre, dated 28 February 2005, and received on 2 March 2005. That letter indicates inter alia as follows –

That at the appeal hearing the Appellant would be represented by International VAT Consultants of Leeds ("IVC");

That a variety of dates for the hearing of the appeal would be inconvenient to the Appellant: 21 June 2005 was not specified by the Appellant as an inconvenient date.

4. The Manchester Tribunal Centre notified IVC of the date, time and place of the hearing, as they were the Appellant's chosen representatives.
5. As well as speaking to the lady who said that she was Mrs Telefoni, the tribunal clerk telephoned IVC on the morning of the appeal hearing and spoke to Mr Taylor of that firm. Mr Taylor indicated that he had written to the Manchester Tribunal Centre, by letter dated 6 June 2005, to say that IVC were no longer representing the Appellant. IVC had also written a letter to the Appellant dated 2 June 2005 saying that they could no longer represent him. We have seen copies of both those letters.
6. The Appellant has not been in touch with the tribunal to explain what, if any, representation he would have at the hearing of the appeal in the absence of IVC. Nor has the Appellant been in touch with the tribunal to state that he would personally be unavailable on 21 June 2005. We are at a loss to understand why the Appellant, whether or not his circumstances have obliged him to be in Iran, has neither arranged alternative representation nor done the tribunal the courtesy of contacting the Tribunal Centre and applying to move the date of the hearing, if genuinely inconvenient to him.
7. For the above reasons we decided to proceed with the hearing of the appeal in the absence of the Appellant or a representative acting for him, as we are empowered to do pursuant to rule 26(2) of the Value Added Tax Tribunals Rules 1986 (as amended) ("the rules").

Previous decisions of tribunals hearing this appeal

8. Two previous tribunals have heard this appeal.
9. At the first hearing of the appeal, on 24 January 2001, before a tribunal consisting of John Fryer-Spedding CBE, chairman and Roland Presho as member, the Appellant represented himself. That hearing was adjourned because, according to the written decision of the tribunal, the Appellant wished to call three witnesses to give evidence on his behalf who were not present and who were required for cross-examination on their witness statements.
10. That hearing was resumed on 24 March 2003. The Appellant was not then present or represented. The tribunal proceeded under rule 26(2) of the rules, formed a view adverse to the Appellant on the evidence adduced, and dismissed the appeal.
11. In November 2003 the Appellant successfully applied to have that decision set aside, on the basis that he had not been able to present relevant evidence.
12. A second tribunal reheard the appeal on 12 July 2004. The chairman of that tribunal was Colin Bishopp and he was joined as member by John Davison, who has sat also as member of the instant tribunal. The appeal again proceeded under rule 26(2) of the rules and it was again dismissed.

Non-appearance of the Appellant

13. The file shows that IVC, when instructed by the Appellant, advised the retention of Richard Barlow as counsel for the Appellant. This is a very longstanding appeal, overdue for final resolution, and it is understandable that, when IVC applied to stand the appeal out of the list last year so that Mr Barlow could represent the Appellant at the first rehearing, that application was refused.
14. In the event, IVC offered to represent the Appellant at that rehearing, but the Appellant preferred to represent himself. However, for a number of reasons, the Appellant did not attend that rehearing.
15. The tribunal rehearing the appeal in 2004 decided the appeal without hearing fresh evidence. The reason that the tribunal heard no new evidence was that there was none to call, in the absence of the Appellant. As it was put in paragraph 5 of the decision (lines 11 – 17 on page 3):

"We considered hearing the Respondents' evidence in Mr Telefoni's absence but concluded that there was no good reason for us to do so. The earlier decision had been set aside in order to enable Mr Telefoni to call witnesses and put his side of the case. He had not taken advantage of that opportunity, and we were in exactly the same position as the first tribunal. Although we recognise its decision has been set aside, we could see no purpose to our repeating what the first tribunal had done."

16. The first tribunal had made findings of fact, and formed a view, on the basis of such evidence as it had been able to receive; logically, therefore, it was otiose to rehear that evidence, and form a fresh view, when no fresh evidence was available.
17. The Appellant, however, applied to set aside that decision also. At a hearing on 6 January 2005 the chairman, Colin Bishopp, for reasons expressed at length and attached to his direction, set aside this second decision. So this appeal went back into the list for further rehearing and has now come before the instant tribunal, one of whose members (Mr Davison) also sat last time.

Basis of the further rehearing under the rules

18. Rule 26(3) of the rules provides for the setting aside of decisions made in the absence of a party under rule 26(2), on such terms as the tribunal "thinks just". The reason for rule 26(3) is obviously that, unless a power to set aside is available, the end result might be unjust.
19. Rule 26 was amended by the VAT Tribunals (Amendment) Rules 1994 SI 1994/2617. That statutory instrument added rule 26(3). It also added rule 26(4).
20. Rule 26(4) caters for the case where an appellant applies to have a decision of a tribunal set aside, and then does not attend the hearing of the application. If, in consequence, the application is dismissed, then prior to 1994, an appellant might simply apply to set aside the result of that application, and a perpetual lack of finality to the appeal might result. That state of affairs is now obviated by rule 26(4), which removes the appellant's further entitlement to apply to set aside if he does not attend the hearing of an initial application in that regard.
21. By his direction of 6 January 2005, Mr Bishopp thought it just to set aside the decision resulting from the hearing on 12 July 2004. What, however, of the situation where, when the appeal is listed for rehearing in consequence, an appellant fails to attend on that occasion?
22. The kind of mischief sought to be prevented by rule 26(4) is then in danger of recurrence. Say that each time a substantive hearing of the appeal takes place, the appellant absents himself. Each time, the tribunal proceeds under rule 26(2) and dismisses the appeal. Each time, the appellant then applies to set aside the decision and attends on that application. Each time, for good reason shown, the tribunal sets aside the immediately preceding decision. In such circumstances, the appeal process, at least potentially, could go on forever, notwithstanding rule 26(4).
23. There is, however, a solution to this dilemma. If it be predicated, as in our view it must, that the reason for setting aside a decision is because it would be unjust to the party not hitherto in attendance to be deprived of the opportunity to present their case, the dilemma resolves itself into the provision of that opportunity. It is not contrary to the rules of natural justice not to have heard the other party's case; rather that may be so if that party has not been afforded the opportunity to present their case.

Decision of the tribunal with reasons

24. In the present case, the Appellant has had three opportunities to present his case, namely on 24 March 2003, 12 July 2004 and 21 June 2005. In respect of the first two of these dates, he seems to have shown that good grounds existed for concluding that he lacked the opportunity to present his case, so that injustice might result. However we cannot see how that can be true of 21 June 2005.
25. We find ourselves in the position in which the first tribunal was placed on 24 March 2003, namely without a case put forward on behalf of the Appellant to disprove that of HMRC. We do not know why there has been no attendance on the part of the Appellant to take advantage of the opportunity afforded by the direction of 6 January 2005. So far as we can see, the Appellant has had the opportunity that should, in all justice, be afforded to him to put his case.
26. The Appellant has never put his case, and the first tribunal that heard the appeal reached the conclusion it did, dismissing the appeal. Like the second tribunal, we see no purpose in hearing the existing evidence afresh, in view of the decision reached in 2003.
27. We indicated at the hearing on 21 June 2005 that the appeal was dismissed, and that our reasons would be released in a short formal decision. This document contains our reasons for dismissing the appeal.

Costs

28. On behalf of HMRC, Mr Puzey applied for costs. He invited us to assess summarily the costs of HMRC relating to the most recent steps in the appeal in the amount of £1,000, representing less than the sum of costs actually incurred by HMRC that might be demonstrated if the extra expense of a Schedule of Costs were to be incurred.
29. We think that the non-attendance of the Appellant has resulted in all the costs of and about the hearing on 21 June 2005 having been thrown away by the fault of the Appellant. We therefore order him to pay the costs of HMRC so incurred. Having regard to the experience and seniority of Mr Puzey, and in view of the unusual and technical nature of the hearing, we think that to quantify those costs in the sum of £1,000 is eminently reasonable in the circumstances, and so we duly assess them in that amount.

MICHAEL JOHNSON

CHAIRMAN
Release Date: 23 August 2005

MAN/99/0907