Neutral Citation Number: [2008] EWHC 3401 (Ch) 
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

Royal Courts of Justice
Strand, London, WC2A 2LL 
	
Thursday, 3rd April 2008

BEFORE:

THE HONOURABLE MR JUSTICE LEWISON

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BETWEEN:

WILD
Claimant
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COMMISSIONERS FOR REVENUE & CUSTOMS
Defendant
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Wordwave International, a Merrill Communications Company
PO Box 1336, Kingston-Upon-Thames, Surrey KT1 1QT
Tel No: 020 8974 7300  Fax No: 020 8974 7301
Email Address: tape@merrillcorp.com
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MR A O’CONNOR appeared on behalf of the Claimant
Mr Michael Wild appeared in person

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Judgment
Thursday, 3rd April 2008

JUDGMENT

MR JUSTICE LEWISON:   

1.	Mr and Mrs Wild appeal against a decision of a VAT and Duties Tribunal which was given on 19th February 2004.  The background to the matter is that Mr and Mrs Wild traded as a partnership under the name of Audrey’s Pianos.  The business was buying and selling pianos.  They registered for VAT in May 1989 and subsequently set up a number of limited companies with the idea of using those companies as vehicles for conducting different areas of the business of buying and selling pianos.
2.	They were visited many times by officers of Customs & Excise in connection with their VAT.  In December 2000, after many years, the Commissioners reached the view that the limited companies did not independently make taxable supplies but were part of an overall trading partnership.
3.	In consequence of that decision by the Commissioners, they issued eight assessments for under-declarations of VAT.  The assessments were made under the best judgment provisions of section 73 of the VAT Act 1994.  Mr and Mrs Wild appealed to the VAT and duties tribunal against those assessments.  The tribunal decided that some of the assessments had been issued out of time and discharged them, but upheld the remainder, in some cases with reductions in the amount of VAT assessed.  Mr and Mrs Wild now appeal against the decision of the Tribunal.
4.	Under the provisions of section 11 of the Tribunals and Inquiries Act 1992, Mr and Mrs Wild are entitled to appeal if they are dissatisfied in point of law with the decision of the Tribunal.  The question therefore for me is whether the Tribunal have made any error of law.
5.	The first ground which Mr Wild, who appears in person, advanced was that Mrs Crinian, the VAT inspector, who was the principal witness for the Commissioners, had not been cross-examined by his own witness, Mr Stuart-Smith, who was an accountant advising Mr and Mrs Wild.  Mr and Mrs Wild were, however, represented at the tribunal hearing by Mr Nigel Ferrington, a senior VAT consultant with Abbey Tax Protection Limited, and he had the opportunity to cross-examine Mrs Crinian, which in fact he did.  This ground of appeal was fundamentally a misconception about the respective functions of witness and advocate in contested tribunal hearings.  Mr Wild said, no doubt correctly, that Mr Ferrington had not been involved in the events about which the evidence was being given, but that is the norm for any legal or other representative of a party in contested proceedings.  The legal representative finds out about what his client says happened as regards the events in dispute by taking instructions and uses those instructions to conduct a cross-examination of the other side’s witnesses.  
6.	I am quite satisfied that the procedure which the tribunal followed was in accordance with the ordinary procedure which is followed by courts and tribunals up and down the country and that there has been no procedural irregularity in not permitting Mrs Crinian to be cross-examined by Mr Stuart-Smith.
7.	The principal ground of appeal, however, is the contention by Mr Wild that the Tribunal’s decision that the limited companies were acting as partners in an overall partnership trading under the name of Audrey’s Pianos with Mr and Mrs Wild, was wrong in law.  The reasons why he says that the Tribunal made an error of law can be summarised as follows.  First, he says, that Customs & Excise insisted that the companies were separate entities and that all the companies were separately liable for VAT with VAT being paid separately on sales of pianos.  Second, he says, Customs & Excise insisted that management charges should be raised against the individual companies and that those management charges should themselves bear VAT.  Third, he says, Customs & Excise disallowed expenses incurred by the companies, for example, on a refurbishment of premises on the ground that those expenses were incurred for separate legal entities.  Fourth, he says, this process continued between 1985 and 2001 with the compliance of officers of Customs & Excise and it was not until November 2001 that Customs & Excise changed their view and imposed the change retrospectively, contrary to the previous practice.
8.	The Tribunal dealt with the question of partnership in two places in the lengthy decision.  In paragraph 110 the Tribunal says this:
“Initially it appeared there was a partnership consisting of Mr and Mrs Wild which was carrying on the business.  Then companies appeared and it is not clear from the evidence just how many companies there were, nor the actual role of each, nor whether they carried on any business independently of each other.  There are said to have been bank accounts of each company, yet the companies’ accounts make no mention of any balance or overdraft, although Mr Wild had told Mrs Crinian that he paid receipts into one or other of these accounts.  On behalf of the appellants it was more than once stressed that the companies were separate legal entities.  That is, of course, strictly true.  However, there is no reason why a company cannot be a member of a partnership.  It was the Commissioner’s contention that that was the situation here and Mr and Mrs Wild, together with all the companies, constituted a partnership as opposed to the partnership consisting of Mr and Mrs Wild alone, to which we have referred as “the partnership”, which carried on the whole of the business.  At first sight, that is how the business appeared to us and we begin by looking to see if that was the reality.”  [Quote unchecked]
9.	The Commissioners’ legal self-direction, namely that there is no reason why a company cannot be a member of a partnership, is plainly correct.  The Tribunal, having given itself that direction, then went on to consider the evidence before it.  The Tribunal pointed out in paragraph 111 that they were hampered by the absence of evidence from Mr and Mrs Wild, especially from Mr Wild himself, who took the major part of running the business.  They were dependent, therefore, on the evidence given to them by Mr Stuart-Smith and Mr Saunders.
10.	They went on to consider the evidence that had been given.  In paragraph 113 they noted that no bank statements or other banking documents were produced to the Tribunal, and repeated that the companies ‘ annual accounts made no mention of any balance at the bank.  They came to the conclusion that the likelihood was that the companies’ bank accounts were either dormant or used only occasionally when a particular company might require to have a credit balance and that the business was run through the partnership bank account or accounts.
11.	They then continued to examine the evidence and reached their conclusion in paragraph 126 as follows:
“It was the Commissioner’s case from an early stage that Mr and Mrs Wild, together with the companies which they had set up, were trading in partnership.  On a number of occasions over several years that was challenged by or on behalf of the appellants, who contended that that was not so, because each of the companies was a separate legal entity and each was trading on its own account.  There was no legal argument on the topic of partnership at the hearing.  However, since the matter was raised over the years, we think it right to give a view.  The fact that all the purchases were made by the partnership, that the partnership determined which company, if any, dealt with which piano or category of pianos, that most receipts were paid into a single bank account and into others only when they needed toping up, all lead us to the view that there was a single business carried on by the partnership, together with all the companies, with the possible exception of High Cliff School of Music, and that together Mr and Mrs Wild and the companies were carrying on the business of buying and selling pianos, whether new or second hand or on commission as a partnership, they may not have intended it to be a partnership, but it has long been the law that, in spite of a trader’s intention, if the facts establish a partnership, then a partnership is what it is.”  [Quote unchecked]
12.	The matters upon which Mr Wild now relies, which I have summarised, are, in essence, questions of fact.  It does not appear that these questions of fact were raised before the Tribunal.  They have carefully set out all the evidence that was given to them and with the exception of one query about management charges in a letter from one of the Customs Officers to Mr and Mrs Wild, these matters are simply not raised.  As the Tribunal themselves recorded, the question of partnership was not argued and the Tribunal went out of their way to give consideration to it.  There is, in my judgment, no error of law in the way in which the Tribunal directed themselves about whether a partnership did or did not exist.  It follows, therefore, that there has been no error of law shown for the purposes of section 11 of the Tribunal and Inquiries Act 1992, with the consequence that this appeal must be dismissed.