United Kingdom VAT & Duties Tribunals Decisions

---

You are here: BAILII >> Databases >> United Kingdom VAT & Duties Tribunals Decisions >> Haxhija & Anor (t/a Orsi Deli Foods) v Revenue & Customs [2009] UKVAT V20946 (30 January 2009)
URL: http://www.bailii.org/uk/cases/UKVAT/2009/V20946.html
Cite as: [2009] UKVAT V20946

---

[New search] [Printable RTF version] [Help]

---

Agron Haxhija and Bujar Mustapha (t/a Orsi Deli Foods v Revenue & Customs [2009] UKVAT V20946 (30 January 2009)

20946

CIVIL EVASION PENALTY – missing Z readings and finding of fact that the Appellants lied about the opening hours – appeal dismissed

LONDON TRIBUNAL CENTRE

AGRON HAXHIJA AND BUJAR MUSTAPHA

T/A ORSI DELI FOODS Appellants

- and -

THE COMMISSIONERS FOR HER MAJESTY'S

REVENUE AND CUSTOMS Respondents

Tribunal: DR JOHN F AVERY JONES CBE (Chairman)

ELIZABETH MACLEOD CIPM

Sitting in public in London on 26 January 2009

The Appellants did not appear and were not represented

Sarabjit Singh, counsel, instructed by the General Counsel and Solicitor to HM Revenue and Customs, for the Respondents

© CROWN COPYRIGHT 2009


 


DECISION

1. Messrs Agron Haxhija and Bujar Mustapha trading as Orsi Deli foods appeal against an assessment to VAT of £53,086 for periods 08/99 to 11/01 of which the major part of £46,878 is in respect of alleged evasion and only that part is under appeal, and secondly a civil evasion penalty under s 60(1) of the VAT Act 1994 of £32,810, being that part of the assessment reduced by 30 per cent mitigation. The Appellants did not appear and were not represented; HMRC were represented by Mr Sarabjit Singh.
2. We had witness statements from Officers Prendergast, Ramdial and Manly and we find the following facts:

(1) The Appellants carry on business at a shop adjacent to Paddington Station.

(2) The Appellants provided daily gross takings and Z readings for the period 9 March 2002 to 8 April 2002, these being the only records available to HMRC. The Z readings consistently jumped three numbers (for example declared readings being Nos 274 and then 277) suggesting that only one Z reading had been declared. The not re-settable grand total figure, which was at the bottom of each reading, was also inconsistent with the declared daily takings. Officer Prendergast calculated from the grand total Z readings that the total sales were £24,353.20 of which £9,996.50 had been declared, being a suppression rate of 58.95 per cent.

(3) On 14 August 2002 at an interview at which they were represented by accountants the Appellants admitted that transactions had not been recorded in the books, that the books required to be kept for VAT purposes were not correct and complete, and the VAT returns were not correct and complete, but that they were not aware of this at the time the returns were submitted. Their accountants estimated the underdeclaration to be £27,142 and the VAT £11,755.51 by assuming a mark-up of 75 per cent and that 10 per cent of purchases related to zero-rated sales, without justifying either figure. The defence put forward by the Appellants is that any underdeclaration was caused by staff theft and that the shop could hold stock of only £5,000 and so could not have made the sales contended by HMRC.

(4) Officer Prendergast was told on 9 April 2002 that the opening hours of the shop were 7am to 11pm and this was repeated at the interview on 14 August 2002. A canopy over the shop said "open 24 hours." Mr Prendergast was told on 23 April 2002 by Mr Mustapha's brother that Mr Mustapha the Appellant had just completed the night shift. The brother was told that Z readings were taken at 7am, 3pm, and 11pm. Another officer, Mr Manley was told on 20 May that the shop was open 24 hours and he and officer Ramdial saw that it was open at 1.30am on 5 September 2002. The Appellants say that it was originally open 24 hours a day but it had changed to the opening times mentioned. We do not accept this and find that it was open 24 hours a day.

3. Mr Singh contends that the assessment was made to the best of HMRC's judgment and should be confirmed. The evidence of the opening hours showed that the Appellants had been dishonest and no innocent explanation had been given for the underdeclaration of sales.
4. Since the burden is on the Appellants to displace the assessment and they have not taken part in the proceedings we dismiss the appeal against the assessment.
5. So far as the penalty is concerned, the burden is on HMRC. We have found that the shop was open 24 hours a day and infer that HMRC were told that it was open between 7am and 11pm to make the declared takings seem more credible. We find that the Appellants were dishonest in doing this. We do not accept the argument that staff theft caused the underdeclaration. It is not credible that staff would and twice a day regularly take a Z reading which reset the day's total to nil hoping that the Appellants would not notice that the whole of the amount was missing. The two missing numbered Z readings between each declared reading suggested that the 11pm reading was declared and no takings were declared between 11pm and 3pm with only takings between 3pm and 11pm being declared. Accordingly we dismiss the appeal against the penalty.
6. Mr Singh asked for costs which we award to HMRC on the standard basis and direct that these are to be determined by a tribunal Chairman.

JOHN F. AVERY JONES

CHAIRMAN

RELEASE DATE: 30 January 2009

LON/04/277