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United Kingdom VAT & Duties Tribunals (Excise) Decisions
You are here: BAILII >> Databases >> United Kingdom VAT & Duties Tribunals Decisions >> United Kingdom VAT & Duties Tribunals (Excise) Decisions >> Speyside Distillers Co Ltd v Customs and Excise [2004] UKVAT(Excise) E00770 (22 July 2004)
URL: http://www.bailii.org/uk/cases/UKVAT/Excise/2004/E00770.html
Cite as: [2004] UKVAT(Excise) E770, [2004] UKVAT(Excise) E00770
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E00770
Assessment of duty for a particular period – withdrawn due to capping provisions – subsequent assessment issued covering a period within the first assessment – competence – entitlement of Commissioners to replace an assessment – appeal refused.
EDINBURGH TRIBUNAL CENTRE
SPEYSIDE DISTILLERS CO LTD Appellants
- and -
THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents
Tribunal: (Chairman): T Gordon Coutts, QC
Sitting in Edinburgh on Friday 16 July 2004
for the Appellants Ms Vicki Watts, Brechin, Tindal Oats
for the Respondents Mrs Joanna Clarke, Shepherd & Wedderburn, WS
© CROWN COPYRIGHT 2004.
DECISION
The Appellants who carry on business as distillers had a duty free sampling system which required to be audited.
As a result of investigation it became the Respondents' opinion that the Appellants had omitted to account for duty on samples on their returns.
Before the Tribunal it was agreed that the Appellants had omitted to account for duty on samples on their returns and that the Commissioners had grounds to assess. Further the assessment complied with the time limits set out by statute in the Finance Act 1994 and there was no issue over the quantum of the assessment.
The Appellants grounds of appeal as tabled were twofold. The first was that the Commissioners were not entitled to make a "further assessment" under Section 12(4) of the said Act as no further evidence came to light between the first assessment and the second assessment. This ground of appeal was not pursued.
The factual position was that an assessment ED 108/03 was made and issued on 30 June 2003. It covered goods assessed during the period 28 June 2000 – 12 July 2002. It was subjected to a Departmental Review and the entire assessment was withdrawn on the ground that the time limit had been exceeded. Assessment ED 157/03 was issued on 11 September 2003 and covered goods assessed during the period from 12 September 2000 – 12 July 2002. A review was requested but not timeously completed and was accordingly deemed to be upheld. The Appellants appealed the assessment.
The statutory provisions in relation to the making of assessments are found in Section 12 of the Finance Act 1994:
Section 12(1) Finance Act 1994 provides:
"(1) Subject to subsection (4) below, where it appears to the Commissioners-
(a) that any person is a person from whom any amount has become due in respect of any duty of excise, and
(b) that there has been a default falling within subsection (2) below
the Commissioners may assess the amount of duty due from that person to the best of their judgement and notify that amount to that person or his representative.
(1A) Subject to subsection (4) below, where it appears to the Commissioners-
(a) that any person is a person from whom any amount has become due in respect of any duty of excise; and
(b) that the amount due can be ascertained by the Commissioners,
the Commissioners may assess the amount of duty due from that person and notify that amount to that person or his representative."
Section 12(3) Finance Act 1994 provides:-
"Where an amount has been assessed as due from any person and notified in accordance with this section, it shall, subject to any appeal under section 16 below, be deemed to be an amount of duty in question due from that person and may be recovered accordingly, unless or except to the extent that, the assessment has subsequently been withdrawn or reduced".
Argued for Appellants
The Appellants argued that the act of withdrawing an assessment extinguished the underlying obligation. Section 12(1) and 12(3) properly construed imply that the amount due relates to goods. The use of the word due in Section 12(3) has a distinct meaning; it should be defined as "immediately payable" and so requires to be defined as "immediately imposing an obligation on the debtor to pay". The obligation could only arise with reference to a particular event – the provision of particular goods by the Appellants and the obligation to pay only arose as a result. The issuing of assessment 108/03 accordingly placed an immediate obligation on the Appellants to pay the debt deemed to be due. By withdrawing the assessment the obligation was extinguished. The second assessment was an attempt to revive the same obligation to pay. Any duty due under an assessment that is withdrawn cannot subsequently be due. Section 12(3) prohibits this. The duty due in both the assessments relates to the same goods and the same obligation to pay which was extinguished by the withdrawal of the assessment 108/03.
Argued for Respondents
The Commissioners contended that the purpose of Section 12(3) was to confirm the legal effect of an assessment i.e. an evaluation to best judgment by an officer of sums due the trader having failed to account for those sums. Section 12(3) states that the assessment is deemed to be an amount of duty due and the Commissioners are entitled to payment from the trader straight away albeit it is the Commissioners evaluation of what is due rather than the Traders' declaration. The use of the word 'withdraw' as opposed to 'cancel' or 'extinguish' in the statute indicates clearly that there was no intention on the part of the legislature to extinguish the obligation to pay, merely to depart from the recoverability of an assessed sum. There is no case law directly in point but reference was made to a VAT Case, Dost Mohammed T/A Aglow Fashions (10246) in which the Chairman said in relation to the withdrawal of an assessment and an argument built upon that; "on its withdrawal the assessment became a nullity. It was as if it had never existed. The effect of that is that the appealed assessment stands on its own".
Decision
The argument for the Appellant is, I find, wholly without substance or merit. The proper construction of Section 12(3) is to provide authority for the exaction of the assessed amount from the defaulting tax payer. All that the Section does is to say that the assessment is deemed to be the amount due and has to be paid unless there is an appeal or the assessment is withdrawn or restricted. It places no obstacle whatsoever on the Commissioners should they withdraw the assessment. Subject to the time limits another assessment can be made and is also deemed to be payable. I can find no assistance in the statute for the proposition that by withdrawing an assessment the Commissioners have departed from exacting duty which was payable on goods or services which has not been properly accounted for. It is illustrative that the only problem which arose in this case was the matter of time limits. Before such limits were enacted the amount would all have remained due. There is nothing unfair or incompetent about issuing an assessment in place of another the only defect in which was that it exceeded the statutory time limit. Indeed it may be to the advantage of the trader to have a fresh rather than an amended assessment from the point of view of interest.
I drew parties' attention to the decision of this Tribunal upheld by the Inner House in University Court of the University of Glasgow v Customs and Excise Commissioners 2003 STC 495 where it was held to be competent to use distinct but alternative assessments within the power of assessment conferred upon the Commissioners. If they can do that it does not seem to me to be extravagant to hold that it is perfectly competent to withdraw an assessment and issue another.
The appeal is accordingly dismissed. No motion was made in relation to expenses.
T GORDON COUTTS, QC
CHAIRMAN
RELEASE: 22 JULY 2004
EDN/04/8004