United Kingdom VAT & Duties Tribunals Decisions

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Cite as: [2007] UKVAT V20080

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Winshill Scaffolding Services Ltd v Revenue & Customs [2007] UKVAT V20080 (19 March 2007)

20080

VAT — security — whether amount demanded reasonable and whether demand itself reasonable — in both cases yes — appeal dismissed

MANCHESTER TRIBUNAL CENTRE

WINSHILL SCAFFOLDING SERVICES LIMITED Appellant

- and -

THE COMMISSIONERS FOR

HER MAJESTY'S REVENUE AND CUSTOMS Respondents

Tribunal: David Demack

Marilyn Crompton

Sitting in public in Manchester on 14 March 2007

The Appellant did not appear and was not represented

Mr Richard Mansell of the Solicitor's Office for HM Revenue and Customs for the Respondents

© CROWN COPYRIGHT 2007


 


DECISION

1. This is an appeal by Winshill Scaffolding Services Limited ("Winshill") against a decision of the Commissioners for Her Majesty's Revenue and Customs ("HMRC") dated 12 April 2006 requiring it to give security for future taxable supplies in the sum of £32,059.52. The requirement was made under the powers contained in paragraph 4(2)(a) of Schedule 11 to the Value Added Tax Act 1994. For reasons we shall indicate later, that requirement was reduced to £21,200 on 5 May 2006.

2. In its Notice of Appeal against the requirement given on 19 May 2006, Winshill gave its reason for appealing as "Up to date".

3. When the appeal was called on for hearing, Winshill was not represented. We therefore instructed our clerk to enquire whether it intended to be represented. She informed us that she had telephoned the company only to be told that business commitments of the directors prevented their attendance at the hearing. In those circumstances, on the application of Mr Richard Mansell of the solicitor's office of HMRC, we determined to proceed under rule 26(2) of the VAT Tribunals Rules 1986, as amended, i.e. in Winshill's absence.

4. We took oral evidence from Mrs Ruth Morris, the officer of HMRC who determined that security should be required of Winshill, and were presented with a bundle of copy documents. From that evidence, we find the following facts to have been established.

5. Mr Nigel Malcolm Bowler traded on his own account as a supplier of scaffolding services and was registered for VAT from 21 September 1994 to 31 May 2005. From period 08/03 to 05/05 he failed to account for tax due from him in the sum of £132,922.30. As a result he was assessed not only to that tax, but also to surcharges of £11,799.15 and interest of £224.61, a total of £144,946.06.

6. On 1 June 2005 the business carried on by Mr Bowler was transferred as a going concern to Winshill, which registered for VAT on that date. Winshill's directors were, and are, Mr Bowler and his wife. As a result of the transfer Winshill became liable to HMRC for the whole of the sum of £144,946.06 owed by Mr Bowler.

7. On 17 August 2005 by letter HMRC required Winshill to give security for future taxable supplies in the sum of £38,000. Winshill's first return, for period 10/05, was a repayment return in the sum of £18,441.10. HMRC accepted that return, but instead of repaying the sum due under it to Winshill, offset against it its overall liability to them. Winshill's returns for periods 10/05 and 11/05, although both made a few days late, were accompanied by the tax due under them. As a result, HMRC reconsidered the requirement for security of 17 August 2005, and withdrew it. But Winshill was warned that any future default would result in further security action being taken. In the event, Winshill's cheque for the tax for period 12/05 was returned unpaid by its bankers, and it failed to make a return for period 01/06. For the latter period, it was centrally assessed to £6,290. It also failed to make a return for period 02/06.

8. It was against that background that HMRC made the requirement for security of 12 April 2006. On officers attending the business premise of Winshill to serve the notice of requirement, Winshill produced the two outstanding returns and a cheque for the amount due under them. The cheque was paid.

9. As the amount due under the returns referred to in the last preceding paragraph had been taken into account in calculating the amount of security demanded on 12 April 2006, HMRC decided to deduct the amount in question from the security demanded. That resulted in the amount required being reduced to £21,200.

10. The sum of £21,200 security required was based on the three returns made by Winshill immediately prior to the demand. The sums in question were as follows:

    10/05 5,904.57

    11/05 6,541.29

    12/05 3,528.52

    15,974.38

11. Dividing the resultant total by three, and multiplying the result by four, as is HMRC's standard practice in requiring security from taxpayers making monthly returns, they arrived at a total security required of £21,299.36, which they rounded down to £21,200 in the requirement itself. We are quite satisfied that in so calculating the security required, HMRC acted reasonably.

12. In evidence, Mrs Morris, informed us that she was concerned about Winshill's somewhat casual attitude to its VAT obligations and indicated that shortage of money appeared to play no part in its failure to pay the tax due from it on time, its directors at one stage having made a six week round the world trip.

13. We are also satisfied that in requiring security of Winshill, HMRC acted reasonably. It follows that we dismiss the appeal.

14. We also direct that Winshill pay HMRC's costs in the sum of £300.00.

    DAVID DEMACK

    CHAIRMAN
    Release Date: 19 March 2007

    MAN/06/0351