United Kingdom VAT & Duties Tribunals (Excise) Decisions

BELFAST TRIBUNAL CENTRE

BANBRIDGE AND DISTRICT MASONIC SOCIAL CLUB Appellant

and –

THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents

Tribunal: STEPHEN OLIVER QC (Chairman)

HEATHER GIBSON

Sitting in public in Belfast on 28 January 2005

Robert Forsythe for the Appellant

James Puzey, counsel, instructed by the Solicitor for the Customs and Excise, for the Respondents

© CROWN COPYRIGHT 2005

DECISION

1. In this appeal, Banbridge and District Masonic Social Club, challenge an assessment for Amusement Machine Licence Duty of £80 covering a period from 22 October 2002 to 29 October 2002 inclusive notified to it on the 21 January 2004. The assessment is based upon the Respondents' identification of a category B amusement machine having been provided for play on the Appellant's premises before an Amusement Machine Licence had been granted. The Appellant contends that having realised that the Licence was overdue, the Club's former Honorary Secretary applied for renewal on 29 October 2002 requesting renewal as of 22 October 2002. On receipt of the renewal the former Honorary Secretary filed the Licence in the public display frame without giving further thought to same and assuming that same had been properly issued by the Respondents.
2. Robert Forsythe, a former Clerk of the Petty Sessions, appeared for the Appellant and James Puzey of Counsel for the Respondents. We were provided with an agreed bundle of documents.
3. 3. The Appellant was established some 30 years ago and carries on business as a social club from premises at 6 Church Square, Banbridge, Co Down, Northern Ireland. During an audit of the said premises, evidence was found of an amusement machine which did not have a Licence between 22 October 2002 and 29 October 2002 inclusive. The machine in question, namely a five-penny jackpot prize (low rate), had operated during that period. The previous Licence, for a 12 month period, ran from 22 October 2001 to 21 October 2002. An Application for a Licence for a 12 months period commencing on 22 October 2002 was received from the Appellant by the Respondents on 30 October 2002. A new Amusement Machine Licence was issued for the 12 month period from 30 October 2002 to 29 October 2003 inclusive.
4. The Respondents considered that the Appellant appeared to be in default and a Default Notice was issued on 5 January 2004 requesting production of every Amusement Machine Licence in force in relation to a dutiable machine provided for play on the club premises during the default period 22 October 2002 to 29 October 2002. The Appellant produced copies of the Licences held by it. This showed that Licence (Number 1080960) (a 12 months Licence for one Category B machine) expired on 21 October 2002. This Licence was superseded by a further Licence (Number 1229392) (for one Category B machine) which had an effective date of 30 October 2002 with an expiry date of 29 October 2003. The machine in question had been provided for play during the period 22 October 2002 to 29 October 2002 inclusive. There was no Licence in force for that period. The Appellant, in a letter dated 15 January 2004, acknowledged that a Licence had not been in force for the 8 day period in question. The Appellant asserted that the Respondents' offices in England and Scotland should be answerable for this mistake, since having mailed the prescribed tariff annually to the Respondents, the Club should have received correctly applicable Licences on each occasion.
5. 5. On 21 January 2004 the Respondents issued a Default Licence under paragraph 3(1) to Schedule 4A of the Betting and Gaming Duties Act 1981 for the period 22 October 2002 to 29 October 2002 for one Category B machine. This resulted in the assessment, in the sum of £80, being issued to cover one month's duty.
6. The assessment was issued pursuant to Section 12 of the Finance Act 1994. Under Section 4 such an assessment would be reviewed, if so requested. The Appellant requested such a review by letter dated 17 February 2004. A review was carried out and, as communicated to the Appellant by letter dated 1 April 2004, the original decision to issue a Default Licence and the assessment of duty was upheld.
7. The Respondents contended as follows:

(a) As Licence Number 1080960 expired on 21 October 2002, a new Licence was required to be in force from 22 October 2002 to 29 October 2002 pursuant to Section 21(1) of the Betting and Gaming Duties Act 1981.

(b) Paragraph 2 of Schedule 4A provides for the issue of a Default Notice indicating that one or more amusement machines have been provided for play on specified premises during an alleged default period and requesting production of all relevant Licences. Accordingly the Respondents issued a Default Notice on 5 January 2004.

(c) A Default Licence was issued to the Appellant on 21 January 2004 in accordance with paragraph 3(1) of Schedule 4A.

(d) Under paragraph 4(2) and 4(3) of Schedule 4A the Respondents may issue an assessment of duty for the Default period for an amount equivalent to the duty which would have been payable if the Default Licence had been a Licence granted under Schedule 4.

(e) Paragraph 4(7) of Schedule 4A provides that where the Default Licence is for a period which is less than a complete month, the part month shall be treated as a full month.

(f) In this case the duty was calculated in accordance with Section 23 of the Betting and Gaming Duties Act 1981 at £80.

(g) Under paragraph 7 Part II of Schedule 4A, the period for which a Licence is granted shall begin on the day the application is received by the Respondents or a later date if requested. The Respondents contend that the Licence cannot be backdated.

8. In the course of the hearing, Mr Puzey submitted that where an existing Licence was due to expire and a gaming machine was going to be provided for play in the period subsequent to such expiry, the Licence Holder should anticipate that application forms have to be sent to the Respondents. He submitted that if an assessment were not levied, then this would be unfair on those persons who had properly maintained the appropriate Licence. He stated that it would be wrong not to make such an assessment.
9. Mr Forsythe appearing for the Appellant, advised the Tribunal that the Club had been founded some 30 years ago to provide social intercourse for the members of the Masonic fraternity in the Banbridge area. He stated that the Appellant strictly observed the laws of the State and prided itself on being scrupulously law-abiding. Mr Forsythe stated that previously the Club had been a very popular place but support had declined in recent years. It opened only on Friday and Saturday nights. Profits made were devoted towards charitable purposes. Mr Forsythe admitted that the Appellant had not conformed to the letter of the law but asserted that in its efforts to obtain a commencement date from 22 October 2002 they had complied with the spirit of the law. Mr Forsythe admitted that there had been no delay in obtaining the necessary application forms. He stated that during the period of default, the Club was only open on 2 nights and would not have lifted more than £11. Subsequently it had become apparent that only 3 or 4 persons used the machine in question and it had become unprofitable. Consequently the Appellant had voluntarily decided to remove the gaming machine.
10. Mr Forsythe indicated that the failure to obtain the Licence had been due to inadvertence by the former Honorary Secretary and there had been no intention to avoid paying the due debts of the Club. He asked that the Tribunal remit the £80 or such portion that the Tribunal considered to be reasonable. He indicated that the monies could be used towards the upkeep of the Club and hence free-up other funds to be applied towards charitable purposes.
11. The Tribunal carefully considered all the evidence before it and the submissions made on behalf of both parties.
12. The Tribunal concluded that paragraph 7, part II of Schedule 4 of the Betting and Gaming Duties Act did not provide for the backdating of a Gaming Licence to commence on a date earlier than the application was received. Consequently the Tribunal accepted that whilst it was clear from the Appellant's Licence Application that it required the Licence to commence on 22 October 2002, the Respondents correctly applied the commencement date of the new Licence as 30 October 2002 being the date when the application was received. Consequently the Tribunal accepted that for the period 22 October 2002 to 29 October 2002 a Category B amusement machine was provided for play by the Appellant without a valid Licence. Following the issue of a Default Notice on 5 January 2004, the Respondents issued a Default Licence to the Appellant on 21 January 2004 in accordance with paragraph 3 of Schedule 4A of the Betting and Gaming Duties act. The Tribunal accepted that the correct duty due on a Category B amusement machine for one month was £80. Furthermore, the Tribunal accepted that where the period of default is less than one month, paragraph 4(7) of Schedule 4A of the Betting and Gaming Duties Act provides that for calculation of the assessment, that period shall be treated as a complete month. Consequently the Tribunal accepted that the duty assessed of £80 was correct.
13. The Tribunal fully accepted that the default occurred as a result of inadvertence and that the Appellant had attempted to rectify same by seeking a commencement date for the Licence of 22 October 2002. The Tribunal also accepted that the Appellant applied its profits towards charitable purposes.
14. However having fully considered the matter, the Tribunal concluded that there was no statutory authority for the Tribunal to reduce or remit the duty assessed. In any event the Appellant had not provided evidence justifying any remission of the £80 duty assessed.
15. We are of the unanimous view that the appeal must be dismissed. Mr Puzey did not seek any direction in respect of costs, and none will be made.

STEPHEN OLIVER QC

CHAIRMAN

RELEASED: 19 May 2005

LON/04/8033