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Mohammed Arif T/A Trinity Fisheries v Her Majesty's Revenue and Customs [2005] UKVAT V19296 (18 October 2005)

19296

VAT — PENALTIES — evasion — fish & chip shop — assessments arrived at from contents of till rolls showing takings — taxpayer contended that till used for calculations and so rolls should not have been used as evidence of takings — taxpayer disbelieved — insufficient mitigation for co-operation — penalty upheld but assessments reduced — appeal allowed in part

MANCHESTER TRIBUNAL CENTRE

MOHAMMED ARIF trading as TRINITY FISHERIES Appellant

- and -

THE COMMISSIONERS FOR

HER MAJESTY'S REVENUE AND CUSTOMS Respondents

Tribunal: Michael Johnson (Chairman)

Rayna Dean FCA

Carole Roberts

Sitting in public in Manchester on 7 and 8 February, 4, 6 and 9 May, and 8 – 10, 17 and 18 August 2005

Tahir Nawaz, principal of T Nawaz & Co, Chartered Accountants, for the Appellant

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

DECISION

Index Paragraphs Page

Nature of the appeal and procedural matters 1 – 15 2

How "Trinity Fisheries" was run 16 – 20 5

Investigation of "Trinity Fisheries"

(retail side) 21 – 38 6

Investigation of "Trinity Fisheries"

(supply side) 39 – 48 9

Significance of the till rolls 49 – 59 11

The assessments under VATA section 73(1) 60 – 65 13

The alleged dishonesty and the assessment under

VATA sections 60(1) and 76 66 – 84 14

The Appellant's case 85 – 101 17

The submissions of the Respondents 102 – 109 19 The submissions of the Appellant 110 – 120 20

Mr Nawaz's letter to the tribunal

dated 2 August 2005 121 – 149 21

Decision of the tribunal with reasons 150 – 166 26

Costs 167 28

Nature of the appeal and procedure

This is an appeal against a number of assessments for value added tax issued by Her Majesty's Customs and Excise ("Customs") against the Appellant, Mr Arif. He was registered for VAT with effect from 1 June 1992. Most of the assessments are pursuant to section 73(1) of the Value Added Tax Act 1994 ("VATA"). They relate to Mr Arif's fish and chip shop business in Trinity Street, Huddersfield, known as "Trinity Fisheries". These assessments were issued because Customs had formed the view that Mr Arif's returns for VAT were incomplete. They cover the periods 07/95 to 01/99 inclusive and total £58,964.00, not including interest.

Mr Arif also appeals against an assessment pursuant to section 76(1)(b) of VATA – ie a penalty assessment. This assessment was issued because Customs had formed the view that there had been evasion of VAT as mentioned in section 60(1) of VATA. Under that sub-section, a person (a) doing any act or omitting to take any action for the purpose of evading VAT; (b) whose conduct involves dishonesty, whether or not such as to give rise to criminal liability, is liable to a penalty equal to the amount of the VAT evaded or sought to be evaded by his conduct. Section 60 makes it clear that such liability is an alternative to criminal prosecution.

Although the starting-point for the amount of the penalty is provided to be the amount of VAT evaded, that is subject to mitigation. By section 70 of VATA, Customs, or on appeal, the tribunal, may reduce the penalty to such amount as they think proper. In this case, the penalty appealed against is £56,022.81, ie the £58,964.00 of tax assessed, mitigated to the extent of approximately 5 per cent by Customs.

Section 60(7) of VATA places upon the Commissioners for Her Majesty's Revenue and Customs ("HMRC"), as they now are, the burden of proving before this tribunal the matters specified in section 60(1)(a) and (b). In this appeal, the Appellant has put HMRC to such proof. His position is that, whether or not additional VAT was due, he is not liable for tax evasion and that the assessments under section 73(1) of VATA should be overturned as not having been made to the best judgment of Customs, or should at the very least be reduced in amount. Subject to the burden of proof just mentioned, it is well established that, even in the case of assessments said to involve dishonesty, the burden of proof rests upon the Appellant to show that the assessments are wrong.

This appeal includes what is known under the Value Added Tax Tribunals Rules 1986 SI 1986/590 ("the Tribunal Rules") as an "evasion penalty appeal" – otherwise called a Category 1 appeal. Mr Puzey, representing HMRC, opened the appeal and presented his case first, pursuant to rule 27(2) of the Tribunal Rules (as amended). When it came to closing submissions, he claimed the right to the last word, in reliance upon rule 27(2)(a), which substitutes the word "Commissioners" for the words "the appellant or applicant" in rule 27(1)(j). We ruled against Mr Puzey having the last word, and it is convenient for us to set out at this point our reasons why.

Rule 27(4) of the Tribunal Rules provides –

"Subject to the foregoing provisions of this rule, a tribunal may regulate its own procedure as it may think fit and in particular may determine the order in which the matters mentioned in paragraphs (1) and (2) are to take place."

At first sight it appears correct, as Mr Puzey steadfastly submitted (having been provided by the tribunal with an opportunity to amplify his submissions on the point following an initial oral ruling against him by the tribunal), that rule 27(4) must yield to rule 27(1) and (2), ie the "foregoing provisions" of the rule. He referred us to De Voil's Indirect Tax Service at paragraph V5.451 which states, in part: "The Commissioners open the hearing and make the final address in an evasion penalty appeal". From the standpoint of domestic law, Mr Puzey said, these were civil proceedings, although the penalty had the status of a criminal charge for the purposes of the Human Rights Convention. He said that rule 27 reflected the inherent margin of appreciation of a state to regulate the rules of procedure in its courts and tribunals.

However these proceedings are not only in relation to an evasion penalty but also relate to straightforward assessments under section 73(1) of VATA. Moreover we note that De Voil is silent upon the convention that has developed in our civil courts and tribunals whereby, when the advocate who should be last to address the tribunal has raised matters not dealt with in the closing address of the advocate who has previously made his closing address, the previous advocate is permitted a limited right of reply to deal with any points that he has not previously dealt with. This practice is not provided for in rule 27, but it is a useful one, and can be extremely helpful to the tribunal, which otherwise might not have heard full argument.

Having regard to the final words of rule 27(4), there is nothing, in our view, preventing us from treating as the final address mentioned in rule 27(1)(j) the limited right of reply aforesaid. The sequence of closing addresses thus becomes –

HMRC's advocate makes an address closing his case – not provided for in rule 27;

The Appellant's advocate makes an address closing his case – provided for in rule 27(1)(i);

HMRC's advocate has a final limited right of reply by way of amplification of his previous address – provided for in rule 27(1)(j), when read with rule 27(2)(a).

In evasion penalty appeals, there is, we think, a great deal to be said for adopting the above order. Notwithstanding Mr Puzey's submissions, we think that the reality is that an appellant in an evasion penalty appeal is in the position of a defendant to a quasi-criminal charge, because in practice the element of dishonesty, or the lack of it, tends to be decisive. In a criminal jury trial, he or his advocate would address the jury last. There is a danger that, in his closing address, if given first in order, an appellant or his advocate might omit to deal with matters raised by HMRC in their closing address, simply because, speaking first, he would not know precisely what HMRC will say. That could create an adverse impression, because it may look as though those matters were deliberately not dealt with. It is moreover not in the interests of a fair trial that submissions which fully cover the ground might not have been presented.

For those reasons we feel that, generally speaking, an appellant ought to make the second closing address in civil evasion appeals, despite what the Tribunal Rules provide. In our view, fairness to HMRC is preserved by permitting a limited right of reply, which in this case we have directed that Mr Puzey should have, and which he has exercised.

We are aware that both Mr Puzey and Mr Nawaz, representing the Appellant, are unhappy with this solution. Mr Puzey submitted that the tribunal could not twist the Tribunal Rules in this way. He submitted that we were bound to accord him the last word. We disagree. We think that the Tribunal Rules cater for a flexible approach. We identify good reasons, set out above, for not giving him the last word, and we think that the right of reply protects HMRC from prejudice.

Mr Nawaz, for his part, is concerned that, having been accorded by the tribunal the right of reply, Mr Puzey has at our invitation lodged with the tribunal a written submission by way of reply that goes beyond the limited right of reply we envisaged. We think that Mr Nawaz has a good point. It makes nonsense of our ruling as to the order of closing speeches if, in effect, Mr Puzey achieves in writing after the hearing an additional final word that we decided that he should not have at the hearing.

We record that our intention was, as expressed by us at the hearing, that the reply accorded to Mr Puzey should be limited to dealing with points raised by Mr Nawaz in his final speech that Mr Puzey had not dealt with in his final speech. The chairman has scrutinized the written submissions by way of reply in the light of this ruling, and has excluded from consideration by the tribunal as a whole submissions which would not have been permitted to be made by way of reply had they been made orally. These submissions have been put out of mind, and are perforce not referred to in this decision.

Except where otherwise indicated, the statements made by us in paragraphs 16 to 84 of this decision are findings of fact that we make for the purposes of our decision. We heard oral evidence from the following four persons called as witnesses on behalf of HMRC –

Mr Martin David Mummery;

Mr Dean Foster;

Mrs Angela Dena McCalmon (née Norris);

Mrs Mary Sharpe.

It was agreed that the witness statements of three further witnesses could be read without the need for them to be cross-examined, namely Mr George Andrew Lumb, Mrs Sylvia Anne Jones and Mrs Amanda Jane Hodgson (née Boldy). All the witnesses who gave evidence on behalf of HMRC were officers of Customs. The only witness to give oral evidence on behalf of the Appellant was Mr Arif himself. Additionally we received in evidence the contents of a bundle of documentation ("the Tribunal Bundle") to which reference is made below.

How "Trinity Fisheries" was operated

From approximately 1988 onwards, the Appellant Mr Arif helped his family to run a newsagents and grocers shop known as "Ali & Sons", located in Trinity Street, Huddersfield (described as "Trinity Road" in his witness statement). In the mid-1990s Mr Arif acquired and developed the former café premises opposite "Ali & Sons" into a fish & chip shop and opened those premises for business, initially trading from them as "Ali & Sons" and subsequently as "Trinity Fisheries".

As well as fish and chips, Mr Arif sold lassi, milk shakes, ras malai and other products. "Trinity Fisheries" was operated initially with the assistance of members of Mr Arif's family. Outside (i.e. non-family) staff were hired as time progressed. The newsagents and grocery business came to be run by Mr Arif's brother-in-law, so leaving Mr Arif free to concentrate on running "Trinity Fisheries" alone.

It is common ground that eventually a till was used in the "Trinity Fisheries" premises. Mr Arif says that there was not originally a till there. It is in dispute what tills may have been used, when and in what manner. As will appear, the "sheet anchor" of Customs' case is one particular overprinted till roll which came into their possession. Customs rely heavily upon that roll as indicating takings in excess of those declared. Mr Arif accepts that he used to seek to reconcile the daily cash takings of his business with till readings ("Z" readings) that he would normally take at the end of each day's trading. He says, however, that his till rolls are misleading so far as they might be thought to evidence his actual takings. The reasons for this are at the heart of his defence to tax evasion, and are considered below.

The nature of the trade at "Trinity Fisheries" and the level of trade from time to time have been matters of dispute before the tribunal. The observations made by Customs, described in the next section of this decision, have been scrutinized in detail, and it has been shown that doubt exists as to the accuracy of retail sales transactions recorded by Customs, particularly in relation to sales which were zero-rated for VAT. How this might affect the appeal is a matter that the tribunal needs to consider.

Questions have also arisen over the fish and potato supplies of the business. The tribunal has had evidence of discrepancies between the records of suppliers and the records of "Trinity Fisheries". The tribunal needs to weigh this evidence and decide upon its significance.

Investigation of "Trinity Fisheries" by Customs (retail side)

The interest of Customs in "Trinity Fisheries" began in 1998. On 3 June 1998, Mr Dean Foster, an officer of Customs, visited the premises of "Trinity Fisheries" and began to assemble the information contained in a Form VAT465B ("Report on Visit to Trader") that he eventually signed on 16 October 1998. It appears that Mr Arif produced his quarterly records of expenses and purchases for Mr Foster to examine, and a number of other records, and that Mr Foster identified some inconsistencies, especially in relation to the trading quarter 10/97. The Form VAT465B states that Mr Arif did not have a till.

This is contradicted by the contents of a Form VAT465A ("Summary of Trading Activities and Records"), initialled by Mr Foster and also dated 16 October 1998. This, on its reverse page, speaks of "cash … deposited in drawer under till on receipt".

Mr Foster's explanation of the inconsistency was that there was no till on 3 June 1998 but that it was subsequently established that there was a till.

On returning to his office following his visit on 3 June 1998, Mr Foster considered whether Mr Arif's business warranted the attention of Customs' local "Cash Team". The "Cash Team" was a group of Customs officers whose duties included investigating the businesses of certain traders, including small business takeaway proprietors, for the purpose of identifying underdeclarations of VAT. The business of "Trinity Fisheries" was referred to the "Cash Team" for investigation.

In the wake of the visit mentioned, Mr Foster wrote to Mr Arif a letter dated June 1998 (the precise date does not appear from the copy that we have seen). That letter set out, in a series of "bullet points", a number of matters relating to VAT which Mr Foster wanted Mr Arif to attend to. In particular, the letter called upon Mr Arif to keep a record including "all payments as they are received by you or on your behalf from cash customers for your retail supplies" (the underlining was present in the letter). There was no specific reference in the letter to the use of a till.

On three occasions, on 17 July and 1 and 5 August 1998, officers of Customs (Mr Lumb, Mr Mummery and Miss Norris respectively) went to the premises of "Trinity Fisheries" and made test purchases. On each of these occasions the purchase was rung into a till. The purchases were organized by Miss Norris (she is now Mrs McCalmon), of the "Cash Team". She told the tribunal that she was responsible for the whole of Customs' involvement with this case.

Thus far, Customs had not attempted to assemble information of their own about the takings of Mr Arif's business. That process commenced in February 1999. On 25 February 1999, Miss Norris and Mr Foster attended at the premises at 23.30 hrs with a view to watching Mr Arif cash up his takings. Miss Norris made two sets of notes, copies of which we have seen. Three members of Mr Arif's staff were present at the premises that evening. Mr Arif himself was not present, but Miss Norris spoke to him over the telephone and he agreed to a meeting the following day.

We find that Mr Arif was co-operative, just as he had been co-operative when visited by Mr Foster in June 1998. When Miss Norris told him that she was concerned about his VAT and that she intended to carry out some checks that evening, he instructed her how to take a reading from his till. She duly took a till reading of £563.81 at 23.50 hrs. Mr Arif was also content to allow a cashing-up, which was done. The cash counted came to £438, but a member of staff told Miss Norris that Mr Arif had been in that afternoon and had taken some cash from the till.

The next morning, Miss Norris met Mr Arif at his flat. Mr Arif's accountant, Mr Qureshi, was also present. Discussion took place as to how long Mr Arif had had a till. It transpired that he had had more than one till over a period of time. However we do not find that he had had a till in place continuously since any particular date. We find that it is probable, for reasons connected with the repair, maintenance or replacement of tills, that there had been occasions when the premises did not contain a till, but that a till was in place at the premises more often than not.

Miss Norris recorded in the notes that she made of her meeting with Mr Arif on 26 February 1999 that Mr Arif was accustomed to take one "Z" reading per day from the till, either at the close of trading or, if he was not there at the time, in the morning.

Customs carried out a full-day invigilation of the trading of "Trinity Fisheries" on 26 February 1999. A "Z" reading taken at 23.00 hrs showed £946.50. The cash counted was £945.10 – an insignificant discrepancy.

26 February 1999 was a Friday. Mr Arif was accustomed to record his daily takings in exercise books, at one figure per day. According to this record, takings of over £900 in one day were atypical. The record shows that Fridays were the business's best trading day of the week. Over £800 of takings had been recorded on various occasions on that day of the week, but never more than £900.

Customs formed the view that "counter-measures" (as they have been described) were employed on 26 February 1999, meaning devices to depress the level of takings. The main such "counter-measures", being those which in our judgment might carry any weight, are said to have been that fish were not being sold for the full price normally demanded and that customers were not being served when the business ran out of food. Mr Arif is recorded in Miss Norris's notes as having said that the day was very busy, that he could not keep up with demand, hence running out of food, and that the business had had a large quantity of fresh haddock that day, and so could charge less than full price for fish & chips for most of the day.

This tribunal accepts, as a matter of common sense, that a fish & chip shop can have good days and bad days, and that the level of demand for food and the available supply of it can have a significant effect on takings. It seems slightly odd that shortages of food resulting from heavy demand should have been coupled with sales at a lower than usual price. But this may of course be attributable, as has been claimed, to the existence of "special offers" on food sold. The alleged "counter-measures" have been given an innocent explanation and we think that this cannot properly be discounted.

In the course of an impressively well-prepared and thorough cross-examination, Mr Nawaz took Mrs McCalmon (as she now is) through the invigilation sheets on which Customs recorded the retail transactions of the business observed on 26 February 1999 and compared these with the relevant till rolls (dealt with in the next but one section of this decision). In consequence, we are satisfied that these sheets do not present the correct picture. The principal respect in which they fall short of the ideal is that they do not accurately distinguish between standard-rated and zero-rated values, so that inadequate account is taken of sales that should correctly be zero-rated for VAT.

This became so obvious that Mrs McCalmon in the end had in our judgment no answer to Mr Nawaz's points made to her in this regard. Mr Puzey indicated his willingness to prepare and submit an "Invigilation Sheet/ Till Roll Analysis for Zero-rated Sales", which he did. For that purpose, Customs did not accept that peas, baked beans or sauces were likely to be sold cold and thus be properly zero-rated for VAT, as suggested by Mr Nawaz, and neither does this tribunal. Mr Nawaz suggested that in certain circumstances these products might be sold from the refrigerator, but we find that to be inherently very unlikely. Customers do not go to a fish & chip shop to buy food that they are then required to heat up themselves. However the Analysis indicated that a figure for zero-rated sales of 5 per cent is unlikely to be wide of the mark. The tribunal has received no evidence going to show that some other figure should be taken for zero-rated sales.

Had matters rested at that point, this tribunal would have been unhappy with the conclusion that VAT had been underdeclared. True, an invigilation had been performed which suggested that the recorded figures for takings on which Mr Arif's declarations of VAT had been based were low, but on the strength of the evidence so far assembled, not so suspiciously low, in our view, that they could be concluded to be false. For Customs to reach a conclusion that there had been underdeclarations, either additional observations of the business, or an examination of the supply side (i.e. the purchases of the business), or some other evidence, would at that stage be required.

Customs did not in this case further observe the conduct of the business – although they noted how the level of declared takings appeared to increase following 26 February 1999. Customs did, however, proceed to consider the evidence of the suppliers to the business, and the significance of one particular feature of the till rolls used in the business. So we turn next to the supply side and then to the till rolls.

Investigation of "Trinity Fisheries" by Customs (supply side)

"Trinity Fisheries" obtained supplies of potatoes from John Dudding Ltd of Wakefield ("Duddings") and from Bamford Brothers of Southowram, Halifax ("Bamfords"). Fish was obtained from Sail Brand Ltd ("Sail Brand") of Huddersfield.

Miss Norris (as she then was) obtained from Duddings and Sail Brand copies of their ledger account details of supplies made to "Trinity Fisheries".

The Duddings ledger entries cover the period 1 January 1998 – 2 March 1999. Miss Norris had in her possession Mr Arif's quarterly cash books detailing his potato purchases and also a set of purchase invoices. She compared his records with those of Duddings. She found that all purchases of potatoes appeared to be reconciled with supplies other than in the initial 3 or 4 months of the period. Miss Norris prepared a schedule identifying the supplies contained in and apparently missing from the records of "Trinity Fisheries" respectively.

Miss Norris did not obtain details of supplies made to "Trinity Fisheries" by Bamfords. She was familiar with Bamfords' procedures from previous experience. Bamfords would make supplies for cash and invoice for quantities of goods delivered. She told us that these cash invoices would not show the name of the trader supplied and that they would not be declared. She did not feel that it would be useful to concentrate on Bamfords, as she would not have expected a record of supplies made to "Trinity Fisheries".

Miss Norris was also familiar with the procedures of Sail Brand from previous experience. During a visit to that company made in 1995, unconnected with "Trinity Fisheries", she had ascertained that approximately 20 of Sail Brand's customers operated both an account and a cash delivery service with Sail Brand at the same time. We were referred to the Form VAT 465B relating to that visit, which explains this. The tribunal was also referred to a witness statement dated 23 November 1999, prepared before the issue of this appeal and not apparently in contemplation of it, from Mr Nicholas Patrick Dudeney, a director of Sail Brand, confirming that goods might be supplied by Sail Brand both on account and on a cash on delivery basis. Seeing that Mr Dudeney was not tendered for cross-examination, it is right that we should treat the contents of this document with caution. Nevertheless, seeing that Miss Norris herself attended at Sail Brand's premises and ascertained the contents of her signed Form VAT465B, we accept that Sail Brand had the trading practice mentioned.

Amongst the documents assembled by Miss Norris were a number of Sail Brand sales invoices. The invoices cover dates from 25 October 1997 to 2 June 1999 inclusive. The dates of other such invoices are unclear. Her colleague Mr Lewis scheduled the Sail Brand invoices. She compared them with recorded purchases shown in the books of "Trinity Fisheries". Miss Norris ascertained that, apparently, cash purchases of "Trinity Fisheries" from Sail Brand had not been declared. For a reason that she no longer recalled when she gave evidence to the tribunal, Miss Norris did the comparison only in respect of one quarter, that of 01/98.

In summary, on the supply side, Miss Norris possessed –

Reconciled information suggesting a partial non-declaration of potato purchases from Duddings;

Information that potatoes had been obtained from Bamfords but without any form of reconciliation;

Limited reconciled information suggesting a partial non-declaration of fish purchases from Sail Brand.

Based upon this, Miss Norris's colleague Mr Johnson commenced, and Miss Norris later contributed to and completed, a 26-page "Analysis of Fish and Potato Purchases" that had apparently been made by "Trinity Fisheries".

During the course of cross-examination, Mr Nawaz demonstrated inconsistencies between this "Analysis" and Mr Arif's cash-books. Mrs McCalmon's response was that Customs were working from purchase invoices seen, not from the cash-book entries. However, Mrs McCalmon was constrained to admit that, on the face of week 10 of the cash-book entries, there appeared to be a possible duplication of fish purchase invoices which could be inconsistent with the "Analysis". With regard to the completeness and accuracy of the "Analysis", Mrs McCalmon said that all that she could suggest was that invoices were missing at the time that the "Analysis" was drawn up. It is unclear to the tribunal what invoices were or might have been to the hand of Customs. This in our view leaves a question-mark over the reliability of the "Analysis". We consider that Mr Nawaz has succeeded in demonstrating that there could well be gaps and inconsistencies in the purchase information presented to the tribunal, such as it is.

We bear in mind that, by two letters both dated 2 August 1999, Mrs McCalmon's colleague Mrs Sharpe called upon Mr Arif and his then adviser to provide Customs with full details of purchases by the business. This was not done, so that Customs had to rely upon what information they had in considering the supply side. However, just as the results of the invigilation on 26 February 1999 were not in our view conclusive as to suppression, so we think that the supply side information obtained by Customs and presented to the tribunal is insufficiently conclusive of suppression.

Significance of the till rolls

A number of till rolls were placed in evidence and given exhibit numbers. These rolls have not proved to be straightforward to interpret. In the first place, the timings shown on the rolls are inaccurate. The till contained a 24-hour clock but this was wrongly set. The times shown on the till entries are approximately 14 hours and 37 minutes adrift of the correct time, according to the evidence we have received. Furthermore the date was wrongly set. Most importantly, some of the entries are difficult to read, because the roll was used more than once – ie overprinted. This is of major significance in this appeal, because, as mentioned, HMRC's case is founded upon the evidence of the till rolls.

It will be recalled that Miss Norris took a till reading when she attended at the premises of "Trinity Fisheries" on 25 February 1999. She believed that this was a "Z" reading but it was in fact an "X" reading ("Z" readings are cumulative since the last "Z" reading was taken; "X" readings can be taken if a total is required without interrupting the "Z" reading sequence). She took several more "X" readings that night. The readings all showed a figure of £84,417.33.

The following day, when she met Mr Arif and Mr Qureshi, Miss Norris took Mr Arif's records away with her. Miss Norris analysed the rolls she had obtained (Tribunal Exhibits Nos 1 to 7). She had examples of both audit rolls and receipt rolls but not a complete set (normally a till will contain both kinds of roll at once, to provide a double record). Miss Norris looked at the sequence of "Z" readings from 11 to 26 February 1999. These appeared to show that more than one "Z" reading per day had been taken.

Miss Norris scrutinized the audit roll appearing to cover the period from 10 February 1999 onwards. This appeared to have been through the till twice, so it was not easy to read. It is legible on one side but not on the other. However Miss Norris managed to extract certain information from it. We were shown the roll in tribunal, and have examined it closely since the hearing in the course of arriving at our reserved decision, and we are in agreement that the roll does contain the information Miss Norris extracted.

In particular we agree that two dates on the roll are discernible. These dates translate to 11 and 16 February 1999 (on the roll they appear as "20/3/00" and "25/03/00" respectively). We agree that what appear to be two gross (or "grand") takings figures – whether they are in fact gross takings figures is disputed – are discernible in respect of those dates. The daily takings themselves are unclear. A receipts roll for this period was lacking.

Miss Norris looked at the information she possessed to see if she could extract any other dates and apparent takings by reference to any other dates. She drew a blank. However, with regard to the dates and apparent takings she had identified, she considered that she could say with confidence how much had gone through the till between those dates. Only if mistakes had been made would this not be an accurate record of takings.

Between "Z" reading No 118 on 11 February 1999 and "Z" reading No 123 on 16 February 1999 the grand total of takings had gone up from £71,328.76 to £76,706.42. From a separate roll in her possession, Miss Norris could see that "Z" reading No 136 on 26 February 1999 was £85,928.98. The differences between these figures appeared to represent takings of the business. Out of fairness to the Appellant, Miss Norris recalculated these differences so as to disregard the takings on 25 and 26 February 1999, when Customs were at the premises. Nevertheless she could see that, apparently, the takings since 11 February 1999 were considerably in excess of the figures declared by Mr Arif on which his VAT returns had been based. She calculated alleged suppression rates in respect of Mr Arif's takings for the periods 11 – 16 and 17 – 26 February 1999 respectively.

In tribunal Mrs McCalmon (Miss Norris) accepted that one of the "Z" readings on which she relied was taken part way through a day's trading and not at the end of trading or the beginning of trading the following day. She therefore added an estimated half day's trading of £300 to the declared takings for purposes of calculating the alleged shortfall in declarations. She also revisited the rest of her calculations and adjusted the resultant alleged suppression rates accordingly. We record that her final revised calculations appear at page 72a of the Tribunal Bundle, as to which she told the tribunal, "I now stand by this".

The significance of these calculations, arrived at from the February 1999 till rolls, is that the section 73(1) assessments were founded upon the original version of these calculations. The assessments were not founded upon the other evidence of suppression, such as it was. During Mr Puzey's re-examination of Mrs McCalmon, she explained that, in constructing an assessment, she would have regard to the takings of a business that she was assessing, from which the VAT due is properly worked out. The "Analysis" referred to in paragraph 47 above was not relied upon to construct the assessments under appeal. Nor did she rely upon any percentage suppression rate derived from the invigilation of 26 February 1999.

She did not accept the above "Z" readings as the basis for her calculation without first considering how the figure of £84,417.33 mentioned in paragraph 51 above might have been arrived at. In other words, she attempted to cross-check the rationale of the conclusion she had provisionally derived. But in doing so, she used "Z" readings for the business taken since 26 February 1999. She noticed that the level of declared takings had increased since that date, in the order of approximately £1,000 per week. The cross-check seemed to her to be unreliable, and she fell back on the method of calculation explained in paragraph 55 above.

We record that there is no evidence to suggest that there has been any "doctoring" of till rolls. This was put to Mrs McCalmon in cross-examination and accepted by her as correct. She frankly agreed that she had not examined the rolls to the extent that Mr Nawaz has done.

The assessments under VATA section 73(1)

The correspondence shows that Mr Arif was due to attend at Customs' offices for an interview on Thursday, 1 April 1999, in company with his accountant if desired. That date was altered to Thursday, 6 May 1999. However prior to the altered date, Mr Arif changed advisers and on the basis of new advice, he then declined to attend for interview.

On 16 June 1999, Miss Norris sent to Mr Arif some schedules containing preliminary calculations for allegedly underdeclared VAT in respect of the business of "Trinity Fisheries". In correspondence, Mr Arif's adviser queried the methodology of the calculations. On 26 July 1999, Mr Arif's adviser wrote to Customs to say that VAT had been overdeclared by reason of no account having been taken of zero-rated sales; that sales of sacks of potatoes had been made which were not recorded in declared sales; and that there had been no underdeclaration of VAT.

In her letter to Mr Arif's adviser dated 2 August 1999, mentioned above, Mrs Sharpe requested an estimate of the VAT allegedly overdeclared and details of the undeclared sales of sacks of potatoes. In her letter of even date sent directly to Mr Arif, Mrs Sharpe wrote inter alia as follows –

"Miss Norris is in the process of compiling schedules detailing VAT considered to have been evaded. She would prefer to have had the benefit of seeing all the business records before exercising best judgment. Can you please ensure that the records are either made available at your business address or delivered to our Bradford office marked for Miss Norris before 13 August 1999."

There is no dispute, of course, that Customs had already had sight of various documents, otherwise Miss Norris's preliminary calculations could not have been made. These had been prepared on the basis of the February 1999 till rolls and the books of the business uplifted at that time. It appears to the tribunal that Miss Norris had taken a view as to intended assessments and that the letter of 2 August 1999 to Mr Arif's adviser was written as a final attempt to procure a proper response to the calculations put forward by Customs on which the proposed assessments would be based.

With a letter dated 25 August 1999 written to Mr Arif's adviser, Miss Norris sent what was in effect a final schedule of VAT said to have been suppressed. She stated at the end of her letter that unless she received further information within 14 days to indicate why the schedule of VAT arrears was incorrect, the assessments would be issued.

The assessments under section 73(1) were made in Miss Norris's name on 1 October 1999. The latest period of trading assessed was that ending 31 January 1999 and the earliest that commencing 1 May 1995. The suppression rate uniformly attributed to all periods assessed was 45.62 per cent. Zero-rated sales were allowed at 5 per cent. The figure of 45.62 per cent comes from the calculation at page 72 of the Tribunal Bundle (the final version of which is at page 72a).

The alleged dishonesty and the assessment under VATA sections 60(1) and 76

In this case HMRC not only allege that Mr Arif has failed to pay all the VAT due from him, they allege that he has deliberately evaded the payment of VAT. Prior to re-amending their Statement of Case at the hearing, HMRC's allegations of dishonesty were that Mr Arif had pretended that he never used a till in his business whereas in fact he used one; that he adopted so-called "counter-measures" during the invigilation on 26 February 1999; and that he had not co-operated with Customs in their investigations nor explained the apparent suppression.

In paragraph 29 of this decision we state our findings in relation to tills. We do not find that anything dishonest has been proved in relation to the presence or absence of a till in the "Trinity Fisheries" premises. We think that that ground of alleged dishonesty is without foundation.

In paragraph 34 of this decision we state our findings in relation to the alleged "counter-measures". "Counter-measures" may have been going on, but we do not find this proved to the requisite high degree.

In paragraph 28 of this decision we state that we think that Mr Arif was co-operative in the respects there mentioned. He moreover allowed his documents to be uplifted by Customs and retained for the purpose of constructing assessments. It is true that he did not allow himself to be interviewed, nor did he provide a reasoned response to the letters written to him by Customs quantifying the tax allegedly suppressed. We turn to the matter of the interview below. We do not think that the degree of lack of co-operation evidenced in this case is indicative in itself of dishonesty.

We do however attach importance to the explanations that have been advanced for the evidence of the till rolls, which we examine in the next section of this decision.

In its re-amended form, HMRC's Statement of Case extends the allegation with regard to the use of a till. As we do not find that the Appellant provided untruthful information with regard to the use of a till, nothing turns upon this amendment.

Next, the re-amended Statement of Case alleges that the results of the invigilation of 26 February 1999 are indicative of dishonesty. Our findings in relation to the invigilation appear from paragraph 37 above. We think that it is dangerous to assume dishonesty on the strength of one day's abnormally high figures for takings, and we do not do so.

Next, the re-amended Statement of Case relies upon the suppression of purchases from Duddings and Sail Brand as indicating dishonesty. Our conclusions of fact as to the supply side are contained in paragraph 48 of this decision. Although the supply side investigation by Customs was imperfect, in our view it did raise questions that it is appropriate to consider in the context of the explanations advanced for the evidence of the till rolls.

Next, the re-amended Statement of Case says that dishonesty is shown by the fact that the true takings figures for the business are those shown on the till roll uplifted on 26 February 1999, which are in excess of the declared takings for the business for the same period as covered by the till roll. We take this to be a reference to the till roll referred to in paragraph 53 above. This to our mind is the central issue in this appeal.

Finally, the re-amended Statement of Case relies on the substantial increase in declared takings following the invigilation of 26 February 1999, compared with the weeks immediately before the invigilation, as showing dishonesty. We find that declared takings did increase, in the order of £1,000 per week, and that this calls for an explanation.

Mrs Sharpe is the officer of Customs who was responsible for the penalty assessment under appeal. When Miss Norris was unsuccessful in obtaining an interview with Mr Arif, Mrs Sharpe corresponded with him in an attempt to ensure that he had read Customs' Notice 730 and understood his potential exposure to a civil evasion penalty. In a letter to him dated 30 April 1999, she explained that the interview was designed to give him the opportunity to co-operate with Customs with a view to the mitigation of such a penalty should evasion be proved.

On advice taken (we find that the particular adviser had a policy of advising his clients not to agree to interviews), Mr Arif continued to decline to be interviewed by Customs. Accordingly Mrs Sharpe wrote to him on 17 May 1999 to say that his continued refusal to attend for interview was deemed to be non-cooperation. On 7 July 1999, Mrs Sharpe wrote to Mr Arif enclosing a statement which, if signed by Mr Arif, would have amounted to an admission of evasion. Mr Arif did not sign this statement. By her letter dated 2 August 1999, mentioned above, Mrs Sharpe again reminded Mr Arif that Customs would like to interview him. In the end result, however, he was never interviewed.

On 21 September 1999, Mrs Sharpe wrote to Mr Arif to tell him that, in the light of the assessments proposed under section 73(1), a civil evasion penalty was being considered. In that letter she identified the matter of the use or non-use of a till at the "Trinity Fisheries" premises as relevant to that.

In oral evidence, Mrs Sharpe explained that, in the absence of an interview, Customs had at some point to take a decision for or against the imposition of a penalty. She told the tribunal that she was conscious that Mr Arif's adviser was advising against an interview but, for her part, she did everything in her power to bring this about.

Mrs Sharpe said that it was rare for traders not to attend for interview when asked. She discussed Mr Arif's position with colleagues and her conclusion was that the lack of an interview in his case would be relevant to mitigation should a penalty be decided upon. Hence the letters she wrote to Mr Arif on that subject.

In her letter to Mr Arif's adviser dated 2 August 1999, Mrs Sharpe asked that he should provide particulars of the alleged overdeclaration of VAT and of the sales of sacks of potatoes referred to in his letter dated 26 July 1999. No such particulars were provided. Mrs Sharpe told the tribunal that, in the light of Mr Arif's dealings with Miss Norris, and the course of the correspondence, "he should have been in no doubt where we were coming from".

Mrs Sharpe considered Miss Norris's methodology in calculating the section 73(1) assessments. Mrs Sharpe examined the till rolls, the "Z" readings and the purchase records for herself and concluded that it was best to construct the assessments on the strength of the evidence of takings rather than purchases. In addition to considering the available information on her own, Mrs Sharpe talked through with her colleagues the merits of the methodology proposed to be adopted. She told the tribunal that she and her colleagues could see that there were on the till rolls accurate reflections of the days' trading of the business. She did not think that there was any other method of constructing the assessments – Mr Arif had not kept any other record of his sales.

Mrs Sharpe played a part in the calculation of the section 73(1) assessments. She produced initial figures which were then addressed by Miss Norris, resulting in the figures shown at page 72 of the Tribunal Bundle. She weighed the evidence of dishonest conduct and decided to issue the penalty assessment by reason of what the gross takings figures for the till rolls for February 1999 indicated as to the takings of the business; the invigilation sheets and apparent "counter-measures"; the apparent suppressed purchases from Sail Brand and Duddings; and the matter of the use or non-use of a till at the premises. She was also aware of the increase in declared takings after 26 February 1999 without apparent explanation.

Mrs Sharpe decided that the appropriate level of mitigation in respect of the penalty was 5 per cent. She was mindful that, although Mr Arif had not attended an interview, he had produced records. He had also allowed a late night cash-up to take place and provided the till rolls for examination. He had however only made admissions to the extent of those contained in his adviser's letter to Customs dated 26 July 1999.

The Appellant's case

In his Defence dated 15 December 2003, Mr Arif's position was that he did not use a till for recording his daily takings – rather he counted the takings received and wrote down the total daily in his record book. He challenged the correctness of the Customs' record of the invigilation on 26 February 1999. He said that he provided his true records to Customs, ie the entries made by him in his books. He said that the burden of proof was upon Customs to prove their case beyond reasonable doubt.

In his witness statement, Mr Arif offered an explanation of the contents of the till rolls. He stated that the apparent daily gross takings totals shown on the till roll were of no consequence to him. His manual count of his daily takings was what was important. Mr Arif stated that he would often count up the cash he had taken with the aid of the till as a calculator. Sometimes he would do this after taking a "Z" reading for the day, producing another "Z" reading. Use of the till as a calculator would produce apparent additions to the total takings, unless the entries relating to the calculation were voided. He did not void those entries.

Mr Arif further stated in his witness statement that he occasionally used the till to check calculations on suppliers' invoices, to calculate wages, and for other entries.

Mr Arif's position is therefore that the "Z" readings are unreliable as an indication of total takings. His case is that the totals include, in addition to retail transactions, the results of calculations, undertaken using the till, for a range of purposes, in particular to help him count his takings for his manual record. He would not be misled by the figures shown on the till roll, as he would have the evidence of his own eyes and his own appreciation as to the amounts he had actually taken.

Mr Arif further points out in his witness statement the scope for errors in entering transactions onto the roll – for example, 50p entered as £500, or 1 entered as 11. He offered as the explanation for more than one "Z" reading in a day that the till has been used for cashing-up purposes as described. Otherwise, he states, he would have taken an "X" reading.

Mr Arif further stated in his witness statement that the level of takings suggested by the gross takings totals, averaging nearly £1,000 per day, was impossible. He stated that he was just about achieving that level of trade in 2005, but was not doing so at the periods relating to the assessments under appeal.

On his client's behalf, Mr Nawaz put it to Mrs McCalmon and Mrs Sharpe in cross-examination that they had not allowed for the use of the till as a calculator. He pointed out to them that Mr Arif's position had all along been that he would take one "Z" reading per day. He further demonstrated how the apparent daily totals did not correspond to the level of transactions necessary to justify the "Z" readings as totals. Mrs McCalmon and Mrs Sharpe accepted that it would have been possible to use the till as a calculator, and that that could have explained an excess of "Z" readings, and invalidated the totals. However they stuck to their position that there was nothing on these rolls to indicate that that had happened. Mrs McCalmon added that she had never before seen a till used for calculations in the way described.

Mr Nawaz was unable to draw to the attention of Mrs McCalmon or Mrs Sharpe an example of a calculation of any of the kinds described by Mr Arif in his statement which might appear from the rolls used for the purpose of the assessments under appeal.

In his oral evidence, Mr Arif told the tribunal that he did not recall when he started using till rolls for his "Trinity Fisheries" business. He described how he would sometimes use a roll more than once, resulting in overprinting, and sometimes use no roll at all. If a mistake was made at the till, he would write the details down on a piece of paper, and he encouraged his staff to do likewise. From 1999 onwards, mistakes were keyed in when they were appreciated.

Mr Arif said that he had always sought to reconcile the till readings with his manual count. He did that both before and after 1999. He took "Z" readings to see if his count tallied. He wanted there to be a check, especially if he was relying upon staff who were non-family members. He would require an explanation if he hadn't been there and there wasn't a tally – any mistakes would have to be noted.

Mr Arif said that he threw away his "Z" readings, counted the cash received and entered the amounts into his record book. He said that the cash entries would be right, and that the till entries might not necessarily match. He would put his records in a box and hand the box to his accountant.

Mr Arif described how he would use the till as a calculator. He said that he wouldn't first take a reading, nor did he clear the till after performing a calculation. He was also unsure how to void an entry in the case of a pre-programmed till such as he used. In cross-examination, Mr Puzey nevertheless demonstrated how the entries appeared to include subtractions.

Asked why his practice varied as to using the till as a calculator, Mr Arif replied that he couldn't always find a pen. Then he would use the till as a calculator. He would have to open the till, remove the money in it, use the till as a calculator, take the "Z" reading and reconcile the contents with the till roll. He did not use the till as a calculator all the time.

Mr Arif said that mistakes were made at the till. He said that he was not accustomed to take "X" readings. Use of the till as a calculator would result in a "Z" reading. This appears to contradict what was indicated in Mr Arif's witness statement, referred to in paragraph 89 above.

Mr Puzey demonstrated in cross-examination that Mr Arif's "Z" readings were irregular. There could be an ad hoc explanation for taking a reading at a particular moment; equally a reading might not be taken. Mr Arif agreed that there was no other evidence besides his manual entries by way of a record of his takings.

In re-examination, Mr Arif said that his accountant Mr Qureshi will have informed him about Customs' record-keeping requirements. Mr Arif maintained that Mr Qureshi would not have mentioned the need to keep till rolls. However we formed the clear impression that Mr Arif appreciated in 1998 that Customs were looking not just for daily manual entries of the kind kept by Mr Arif, but something more than that. Mr Arif himself identified in evidence the importance of reconciliation between the till rolls and his cash count. Yet it was his practice to discard his "Z" readings.

Mr Arif explained how errors might arise on the till roll, but he did not explain what errors there might have been specifically affecting the period used for constructing the assessments under appeal. We do not find that there were any such errors.

The submissions of the Respondents

Mr Puzey submits that the standard of proof for the purpose of section 60(1) of VATA is not the criminal standard, as stated in the Defence, but proof to a high degree of probability. We accept this submission. As we say in the first section of this decision, the burden rests upon HMRC in that regard, to the standard just mentioned; otherwise the burden of proof rests upon the Appellant, the standard being the balance of probabilities.

For a root and branch challenge to the section 73(1) assessments under appeal, Mr Puzey submits that one would have expected from the Appellant particulars of the kind referred to by the Court of Appeal in Pegasus Birds Ltd v Customs and Excise Commissioners [2004] STC 1509 (see Carnwath LJ at [38]). We agree with Mr Puzey that, whilst the position of Mr Arif has all along been that he has not underdeclared his VAT, he has not demonstrated lack of good faith, negligence or other fundamental fault on the part of Customs in relation to the issue of these assessments.

Therefore, Mr Puzey submits, the task of the tribunal in relation to the section 73(1) assessments is to scrutinize their quantitication. He submits that this can properly be done by reference to the takings evidenced by the till rolls and considered at page 72a of the Tribunal Bundle. We agree that this would be a valid approach, if the tribunal is satisfied that what the till rolls show is a true record of takings.

Mr Puzey submits that, whilst the till could have been used as a calculator, there is no evidence from the rolls relevant to the page 72a calculation to indicate that that is how Mr Arif used the till. Nor is there evidence of mistakes. We agree with these submissions.

Mr Puzey submits that it is important for Mr Arif to discredit the till roll. He submits that Mr Arif did not put forward until the hearing, either personally or by any of his advisers, the case that the takings suggested by the till roll were tainted by the use of the till as a calculator. This is largely correct, but we note that there is a reference to the use of the till for calculations in paragraph 2 of the Defence.

Mr Puzey submits that the evidence indicates a pattern of suppression. "Z" readings were taken, he says, on which it appears that reliance can be placed. Those readings are confirmatory of suppression that can be seen from the rest of the evidence. We set out our conclusion on the evidence in the next but one section of this decision.

Mr Puzey invites us to regard the evidence of Mr Arif as incredible. He says that we should reject Mr Arif's explanations of the figures derived from the till rolls grounding the assessments. As we say below, we have come to the conclusion that Mr Arif has lied to the tribunal and that he has deliberately sought to be misleading.

Mr Puzey has also addressed us about the matter of the use of tills at the "Trinity Fisheries" premises, the high takings on 26 February 1999, the alleged "counter-measures", the purchases of fish and potatoes, the level of zero-rated sales and whether the penalty under appeal should be mitigated. We deal with these matters below.

The submissions of the Appellant

Mr Nawaz submits that the evidence with regard to the presence or absence of a till at the "Trinity Fisheries" premises is not suspicious and does not indicate dishonesty. We agree.

Mr Nawaz submits that there was nothing out of the ordinary about the results of the invigilation on 26 February 1999, or the cash-up the previous evening. It is true that the takings on 26 February 1999 were surprisingly high, but we agree with Mr Nawaz that it is not safe to assume that the invigilation in itself demonstrated that there have been underdeclarations, nor should anything be read out of the cash-up the day before.

Mr Nawaz submits that an explanation has been offered for the circumstances of the principal alleged "counter-measures". This is correct, and although the explanation might not satisfy everyone, we think that we should accept it, bearing in mind the burden of proof upon HMRC in relation to section 60(1)(a) and (b) of VATA.

That being so, we are not prepared to decide that any lesser alleged "counter-measures" are decisive in favour of HMRC.

Mr Nawaz submits that the evidence in relation to the fish and potato purchases is not clear-cut. We think that this point is well made. Whilst this evidence taken as a whole is indicative of suppression, in point of detail it has been successfully challenged. However, the assessments under appeal have not been based upon it, and so far as the evidence goes, it is confirmatory of our decision.

Mr Nawaz submits that inadequate account has been taken of zero-rated sales. We disagree, because the Analysis referred to in paragraph 36 above suggests that 5 per cent zero-rated sales is a reasonable figure for Customs to have adopted.

Mr Nawaz submits that nothing is to be read into the increased takings after 26 February 1999. In view of our decision and the reasons for it, we reject this submission. We think that it is obvious that Mr Arif deliberately adjusted his declared takings to allow for the level of trading that had by then been appreciated by Customs. The declared figures speak for themselves.

Mr Nawaz submits that the till rolls underlying the assessments under appeal could not safely be relied upon by Customs, either for the purpose of deciding upon the section 73(1) assessments to best judgment, or in order to quantify the assessments, or as evidence of tax evasion justifying the penalty under appeal. On this, the central issue, we reject the submission of Mr Nawaz, because we believe that Mr Arif has sought to mislead us about the evidence of the till rolls, which we have concluded did show his true takings.

Mr Nawaz submits that Mr Arif has been accorded insufficient mitigation for co-operation. We think that Mr Nawaz is right as to this and that there should be increased mitigation.

Mr Nawaz submits that Mr Arif should have a fair trial and he questions whether that has happened. We agree that he must have a fair trial and we are of the view that he has received one. We amplify this in the next section of this decision.

Finally, Mr Nawaz submits that the conduct of Customs has in this and other appeals been reprehensible, particularly in relation to their retention of till rolls and non-disclosure of other documents, and that such conduct has hampered Mr Arif in his preparation for the hearing of this appeal. So far as the conduct of Customs is concerned, this tribunal has attempted to hold the balance between the parties in relation to this appeal, but we do not exist to criticize HMRC as to their policies and practices generally. We do not believe that Mr Arif has been hampered as described, for the reasons given in the next section of this decision.

The letter of 2 August 2005 written by Mr Nawaz to the tribunal

Mr Nawaz has expressed the view that the Appellant's human rights have been prejudiced and that the tribunal has demonstrated a bias against his client. He formulated this view in a letter written to the tribunal dated 2 August 2005. At his request, we deliberated about these allegations on 8 August 2005.

On that date Mr Nawaz made oral application for the tribunal to "consider its position" and for the hearing of the appeal to be recommenced before a different tribunal. We decided against this.

In this part of our decision, we begin by dealing with the allegations relating to the conduct of the tribunal, disclosure and case management respectively, and after that we deal with the allegation as to infringement of human rights.

The conduct of the tribunal

Mr Nawaz has contended that the chairman has not been "even-handed" in his conduct of the hearing. He says firstly that he has been criticized when Mr Puzey has not been; secondly that examination-in-chief of Mr Puzey's witnesses has been allowed at length, whilst he (Mr Nawaz) has not been allowed full scope in cross-examination; and lastly that the tribunal should have adjourned sooner than it did on 6 May 2005, in view of the personal circumstances of the Appellant on that day.

In relation to the first of these matters, it is in the nature of proceedings before the tribunal that, occasionally, the representatives of the parties may attract adverse criticism from the chairman. That may happen by reason of something that the representative says during the hearing, or something he does – as to which we give an example in paragraphs 137 and 138 below. It is not possible to predict the course of the proceedings, and it may well be that one advocate falls to be adversely criticized when his opponent does not. That may give rise to an apparent inconsistency of treatment. In this case, Mr Nawaz feels that he should not have been criticized by the tribunal when he was.

In our opinion such criticism as we have mentioned is not indicative of judicial bias. With regard to such criticism of Mr Nawaz as there has been by the tribunal, we are satisfied that this was justified, and we are further satisfied that, throughout the hearing, a fair and proper balance has been held between the parties.

We believe that Mr Nawaz became convinced that the tribunal was biased when we refused his application for an adjournment on the first day of the hearing. He was extremely disappointed that we were not prepared to adjourn. Thereafter he became unfavourably disposed towards the tribunal generally in a way that culminated in his letter of 2 August 2005. We regard this as highly regrettable, because Mr Nawaz is an able advocate who, using his considerable skills as a chartered accountant, has well represented his client. But we think that he allowed himself to be swayed against the tribunal in an inappropriate fashion by our decision to proceed with the hearing on 7 February 2005.

Whilst Mr Nawaz did his very considerable best to persuade us to adjourn on that occasion, he was ultimately unsuccessful, for the reasons that we expressed at the time. The persuasiveness of an advocate can be enhanced by his apparent belief in the correctness of his position, but this becomes a dangerous flaw in his armoury if he cannot abide being told that his submissions are nevertheless rejected. Every advocate who appears before a court or tribunal must become accustomed to winning on some occasions and losing on others. We think that, in this case, Mr Nawaz harboured a grudge for having had his application for an adjournment refused, and that this was unworthy of him.

As to the second matter raised, it is not right to say that the hearing has been managed in a way that is disproportionate with regard to the length of questioning allowed of witnesses by the respective representatives of the parties. We have not "time-tabled", although it is correct that we have considered whether to do so, as the hearing became increasingly protracted. In this hearing, long as it has been, we have decided that each party should be at liberty to examine and cross-examine for so long as appeared necessary, and we have adhered to this principle right until the end of the evidence.

With regard to the final matter under this head, we have throughout the hearing been sympathetic to the personal circumstances of the Appellant and Mr Nawaz himself. In paragraph 15 of our written reasons for our direction dated 7 February 2005 we stated:

"We take account of the fact that Mr Nawaz has a heavy workload and is under a degree of pressure. He also has our sympathy with regard to the recent sad loss of his younger brother. Nevertheless we consider that the history of this matter … does not justify the adjournment sought."