United Kingdom VAT & Duties Tribunals Decisions

Snaepress Ltd (t/a Bar Uno) v Revenue & Customs [2006] UKVAT V19707 (15 August 2006)

19707

SECURITY – involvement of same director and security in three other companies leaving VAT debts – appeal dismissed

LONDON TRIBUNAL CENTRE

SNAEPRESS LIMITED T/A BAR UNO Appellant

- and -

THE COMMISSIONERS FOR HER MAJESTY'S

REVENUE AND CUSTOMS Respondents

Tribunal: DR JOHN F AVERY JONES CBE (Chairman)

DIANA WILSON

Sitting in public in London on 11 August 2006

The Appellant did not appear and was not represented (but see paragraph 6)

Simon Chambers, senior officer, for the Respondents

© CROWN COPYRIGHT 2006

DECISION

1. Snaepress Limited trading as Bar Uno appeals against a requirement to provide security of £7,600 (or £5,000 if returns are monthly). When the appeal was called on the Appellant was not present and the Tribunal heard the appeal in the Appellant's absence. Customs were represented by Mr S Chalmers.
2. Mr Chalmers called Ms Sarah Saunders, officer standing in for the officer who had made the decision who was unable to attend owing to the disruption of flights at all airports starting the previous day.
3. We find the following facts:

(1) Security of £7,600 (or £5,000 for monthly returns) was demanded on 1 February 2006. This was calculated from the Appellant's stated expected turnover of £150,000 in the application form with an allowance for input tax of 41.93 per cent based on Customs' internal figures for the same trade classification. The amount of the security represented six months' VAT (or four months for monthly returns).

(2) The director of the Appellant is Mr Younis Berkati ("YB") and the company secretary is his father Mr Abdeslam Berkati ("AB"). They had both been involved in the following companies:

(a) WKD Camden limited trading as The Mint Bar with YB as director and AB as company secretary for which a debt of £10,312 had been written off when it ceased to trade on 1 January 2005.

(b) Tidebar Limited trading as Bar Uno from the same premises with YB as director and AB as company secretary which had a VAT debt of £18,957.98 when it ceased to trade on 1 September 2005. The Appellant has since that date traded from the same premises under the same name with the same director and company secretary.

(c) Glodeal Limited trading as Zumbar with AB as director and YB as company secretary which at the time of the security demand was still registered and owed £8,225.80, but was now de-registered having failed to render returns for periods 02/05, 05/05, 08/05 and 11/05 and owed over £17,000.

(3) In its application for registration the Appellant had incorrectly answered "no" to two questions asking whether the director were, or had been in the past two years, involved in any other business.

4. In the absence of the Appellant the Tribunal enquired whether the security could be reduced by taking the recorded turnover. Ms Saunders stated (and we accept) that a visiting officer had taken a Z-reading from the till at Tidebar Limited subsequently to the security demand and had estimated that the net VAT was £5,000 per quarter. The Appellant had only three quarters trading and she considered that figures from the predecessor company trading from the same premises under the same name and with the same management should also be taken into account. Accordingly she considered that the security figures now looked on the low side and would not reduce them if deciding the issue today.
5. We consider that the facts show that there was ample reason for the security demand and Customs had acted entirely reasonably in making the demand. We dismiss the appeal.
6. After the Tribunal Member and the representatives of Customs had left the building, Mr C Michael arrived at about 11.15 to represent the Appellant together with Mr Younis Berkati. The Chairman explained that it was not then possible to reconvene the Tribunal that had already decided the case but that he would hear his representations and then decide what should be done.
7. Mr Michael made the following points:

(1) The six and four month periods for which the security was calculated were too long.

(2) VAT had been paid in all three quarters for which the Appellant had traded.

(3) The turnover figure of £150,000 on which the calculation was based was too high and gave rise to too high a net VAT figure. The quantum of net VAT was between £3,018 and £3,445 in each of the three quarters for which the Appellant had made returns. Figures for Tidebar Limited had been given to the liquidator and missing VAT returns could be made.

(4) WKD Camden Limited T/A the Mint Bar was below the threshold for registration and he thought that Customs must have registered it compulsorily.

(5) YB was only company secretary of Glodeal Limited and has not responsible for the running of the company.

(6) The Appellant's business was suffering a cash flow problem and had to give priority to paying the rent.

8. The Chairman's informal reaction to these points, following the same numbering, was:

(1) The Tribunal had consistently adopted the calculation of security based on these periods for more than 20 years.

(2) This was known to Customs as appeared from their bundle of documents.

(3) The officer had given figures for net VAT of £5,000 per quarter based on a Z-reading from the till of the predecessor company, Tidebar Limited trading as Bar Uno from the same premises in the absence of three returns. Since the Appellant's trading was less than a year Customs were likely to want to include figures for the predecessor company to make up a complete year. If returns for Tidebar Limited were now completed from figures given to the liquidator Customs could be asked to reconsider the amount of security, and the Appellant would have another right of appeal from that decision.

(4) Even if WKD Camden Limited were ignored, the predecessor company owed VAT of £18,957.98 and Glodeal Limited over £17,000, which was unlikely to change the position.

(5) Customs had been aware that YB was only company secretary as this was in the Statement of Case.

(6) This meant that payment of VAT was at risk.

9. The Chairman's informal conclusion was that the Appellant would be better off completing the missing returns for Tidebar Limited and seeing if Customs would reduce the amount of security based on a year's trading figures. However, as the hearing was in the Appellant's absence it is entitled to apply to the Tribunal for a rehearing within 14 days of the date of release of this Decision.

JOHN F AVERY JONES

CHAIRMAN

RELEASE DATE: 15 August 2006

LON/06/0199