[2009] UKFTT 381 (TC)

TC00316
Appeal number:  EDN/09/86

Voluntary Registration:  Non-licensed café – whether TOGC – various grounds – principal reason no liquor licence; new business more in keeping with summer trade.  Appeal Allowed.

FIRST-TIER TRIBUNAL

TAX 

	AMANDA CARGILL & KELLY MCWILLIAMS
	T/A THE PENDE CAFÉ 	Appellant

	- and -

	THE COMMISSIONERS FOR HER MAJESTY’S
	REVENUE AND CUSTOMS (VAT)	Respondents

			TRIBUNAL JUDGE: 	Mrs G Pritchard, BL., MBA., WS
			(Members):			S A Rae, LLB., WS
							Ian M P Condie, CA

Sitting in public in Edinburgh on Monday 9 November 2009

Kelly McWilliams, for the Appellant

Andrew Scott, Shepherd and Wedderburn, LLP instructed by the General Counsel and Solicitor to HM Revenue and Customs for the Respondents

© CROWN COPYRIGHT 2009

DECISION

1.	This is an appeal by Amanda Cargill and Kelly McWilliams (The Appellants) of The Pende Café, Arbroath against a decision contained in a letter dated 13.01.09 by Mr Colin McKenzie an officer of HMRC to Messrs FourM, Chartered Accountants, Dundee.  The letter was in response to their letter of 15.12.08 protesting that their clients, the Appellants, should not have registered voluntarily for VAT purposes on the day of an inspection visit carried out by Mr McKenzie and Sarah Pullar both HMRC officers to the premises The Pende Café on 02.10.08.  
2.	The Decision was that HMRC considered the business begun by the Appellants had the characteristics of a transfer as a going concern and was subject to VAT registration from the commencement date, 05.06.08.
3.	At the Hearing Miss Kelly McWilliams appeared and explained Miss Amanda Cargill is no longer in partnership with her.  Throughout this decision Miss McWilliams will be referred to as the Appellant, as she is the sole trader with responsibility for the business known as The Pende Café (the business).  HMRC was represented by Mr Andrew Scott of Shepherd and Wedderburn.
4.	The issue in the appeal arises from advice given to the Appellant by her Chartered Accountant that it had not been necessary for the business to be registered voluntarily for VAT from 05.06.08 because the business was a new business and was not, as had been advised to Amanda Cargill in an interview on the premises on 02.10.08 by Mr Colin McKenzie the HMRC officer, required to be registered.  On the day of that visit on 02.10.08 Amanda Cargill had completed and returned a VAT 1 Application Form to HMRC and the business had been voluntarily registered.  Throughout this decision a transfer of a going concern shall be referred to as a TOGC.
5.	The written evidence consisted firstly of a bundle of documents lodged by HMRC which when quoted shall be referred to as “Bundle P…” where appropriate.
6.	Secondly, the Appellant lodged her draft accounts for the period 21.05.08 (not the start date of trading which was 05.06.08) to 31.03.09 when Miss Cargill’s status as partner ended.  She also lodged a letter from Ms Louise Walker dated 01.11.09 the previous tenant of the premises prior to the occupation by the business.
7.	Thirdly, oral evidence was given by the Appellant.  She was credible.  Oral evidence was also given by Mr Colin McKenzie for HMRC.
8.	There were two procedural issues for this Tribunal.  They were:- 
(One)  Mr Scott sought to have Mr McKenzie identify to whom he spoke at The Pende Café on 02.10.08.  Mr McKenzie could not remember to whom he spoke but he said he had seen 2 women with dark hair.  That was not credible since clearly he had access to his own report which did state to whom he spoke .  From Bundle P35 line 36 he knew he had spoken to Amanda Cargill.  The Tribunal found his evidence that he had seen 2 women to be evasive.  He appeared to have the Appellant Kelly McWilliams name in July Bundle P35 line 26 but clearly had not asked to see her or made an appointment before calling.  It was an unfortunate lapse as the Appellant Miss McWilliams had in her evidence denied ever being approached by HMRC officers.  Mr McKenzie also was asked at least to describe whom he met but did not describe Miss McWilliams accurately or even indicate he recognised her sitting immediately to his left beside Mr Scott in the Tribunal Chamber.  It was clear he and Miss Pullar had spoken to Amanda Cargill. 
(Two)  The second procedural matter arose during Mr Scott’s submission when it became apparent during a comment by one of the Tribunal members that there seemed to have been no proper consideration of the seasonal nature of the trade and no actual liability might have been apparent had till figures actually been calculated or even extrapolated properly.  This might have therefore brought in VATA S3, and Schedule 1 para 2, and para 3 meaning a TOGC had not occurred.  We suggested an adjournment to allow Mr Scott to take instruction.  He asked if he might bring Mr McKenzie back to give further evidence.  We adjourned to allow Mr Scott to take instruction.  On our return we invited Miss McWilliams to comment on what was explained was an unusual request but might also give her an opportunity to further cross-examine.  She immediately and robustly objected which we found in all the circumstances to which she had been subject neither surprising nor obstructive.  We allowed her objection and did not hear further evidence.
Findings-in-Fact
9.	From the evidence we find the following facts:
9.1	Ms Louise Walker ran a fine dining restaurant called “The Courtyard” with a licence to sell alcoholic liquor from the premises 19 Market Place, Arbroath DD11 1HR.  The premises are situated up a pend off Arbroath High Street.  A pend is a mainly pedestrian alley at street level leading to the area behind the buildings at the entry.  
9.2	Arbroath is now mainly a seaside resort with large caravan parks and many Bed and Breakfast establishments so holidaymakers often require catered facilities.  It was clear from the Appellant’s evidence she was aware of and we find the trade was seasonal in nature.   The Appellant had worked in Arbroath for 8 or 9 years as a waitress.  She had worked for Louise Walker in The Courtyard which was a licensed restaurant for fine dining.  As it had a licence to sell alcoholic liquor The Courtyard kept a very large stock of fine wines, and also spirits and beers.  The beer was on tap.
9.3	The Courtyard was the Appellant’s only experience of a fine dining restaurant as her previous experience was in cafés mostly having a big summer trade.  Whilst working for Ms Walker she was aware there was no call for fine dining provision in Arbroath.  The customers The Courtyard needed were the sort who were just couples or groups of four out together for a four or five course meal accompanied by fine wines.  The chef was Louise Walker’s husband.  The stock consisted of fine food, chicken, steaks and game all kept in very large commercial fridges.  As well as that the chef had all his own special cooking equipment including mixers and knives and the like which belonged to him.  Tables were glass.  Cutlery was heavyweight silver.  Tables were set with flowers and candles.  There was a full a la carte menu.  There were wine coolers and very nice wine glasses.  The quality was according to the Appellant “far too high” to make a profit, at the prices charged.  
9.4	As the restaurant sometimes had no customers at all, it became obvious that difficulties would arise, which happened.  Miss Amanda Cargill and the Appellant along with 2 kitchen hands Helen and Paul all worked for Louise Walker and were worried about their jobs.  By May 2008 the trouble was very real as the gas was to be cut off, the electricity cut off and the council tax payment was being actively pursued for non-payment.
9.5	The Appellant believed a café of the traditional seaside town sort might be a possibility as she had experience of that.  She did not have licensed trade experience.  The Courtyard had been open less than one year.  She approached the landlord whom she knew was Mrs Anne Franconeri and made enquiry as to the possibility of a tenancy.  Because Mrs Franconeri had lost money with Louise Walker she was only willing to let the premises to the Appellant and Amanda Cargill on rather more robust terms, more significantly demanding than Louise Walker’s terms.  They were not permitted to run a licensed restaurant as had been run by Louise Walker.  Mrs Franconeri would not entertain that as she believed it would not be possible to make a profit.  In addition even if the new business the Appellant and Amanda Cargill wanted to run failed they required to undertake they would pay three years rent.  In addition the terms of the tenancy would include annual rental uplifts, another condition to which Louise Walker had not been subject.
9.6	The Appellant was keen to catch the summer trade.  Louise Walker called on the Appellant at home one day to tell her the business was closing.  She closed her business on or about 02.05.08.  She actually was declared bankrupt late in the summer of 2008.  During the next 2-3 weeks the Appellant and Amanda Cargill made all the arrangements to commence their new business.  They agreed to buy the existing tables and chairs, one small fridge for butter and milk, a chest freezer, kettle, cooker, microwave, dishwasher, cutlery (which was never used in the café as it was unsuitable) and two stainless steel work tables for the kitchen.  There was no formal contract between the Appellant and Louise Walker and a receipt alone evidenced the transaction for these items.  They did not take any stock as it was unsuitable for a café.  They did not take the large freezers used for keeping fresh stock.  They did not take any of the alcoholic liquor stock.  They did not acquire any of the kitchen tools.  They had the beer pumps removed by the supplier who owned them.
9.7	We find as fact the period of closure was not significant for the Appellant and Amanda Cargill.
9.8	However, they did not acquire a transfer of the alcoholic liquor licence to their names.  It was not permitted by Anne Franconeri.  Nor would they necessarily have been eligible for it without experience.  They took on none of Louise Walker’s debts with utilities or suppliers.  Although two of The Courtyard staff were taken on they were declared to be not subject to “transfer of undertaking” protection.  Legal advice was sought on these employment terms.
9.9	The type of business therefore changed from a fine dining restaurant to a seaside café.
9.10	The premises were closed until 05.06.08 though the Appellant had access prior to that through an informal arrangement for the purpose of decoration.
9.11	The Appellant and Miss Cargill opened and operated a traditional seaside café.  They had laminated ‘all day’ menus and internal and external chalk notice boards advertising daily “specials” offering hot and cold filled rolls, toasties, sandwiches and salads.  Beverages were tea, coffee, milk drinks and coca cola none of which had previously been available as single items.  Soft drinks were available also.  They were open for shorter hours from 10am – 6pm rather than The Courtyard licensed restaurant hours until midnight.  They had to buy glasses for water and juice and cups and saucers for tea and coffee.  The coffee machine was rented.
9.12	The Appellant believed she had started a new business and was not liable to be registered for VAT.  Amanda Cargill was the person responsible for doing the books and making payments.  She did not register for VAT either.  Although they hoped to make a profit they did not have a clear idea of what their expected turnover might be.
9.13	On 19.08.08 following a street survey in Arbroath by Mr Colin McKenzie HMRC issued an enquiry form to The Pende Café requesting information (Bundle P17) to which the Appellant did not reply.  Nor did Miss Cargill.  The Appellant was unaware of it.
9.14	A reminder was also sent, of which the Appellant was unaware.
9.15	On 02.10.08 Mr McKenzie called at The Pende Café and spoke with a person whom he named in his report as noted above as Amanda Cargill which evidence we find as fact.  He had not written specifically to Miss McWilliams the Appellant and partner in his correspondence though at Bundle P35 line 26 it can be seen at the entry 29.07.08 he was aware that she was at least one of the principals operating the business.  In trading terms the partners of a business are the persons registered for VAT.  He did not speak to the Appellant when he visited the café on 02.10.08.  He was accompanied by Sarah Pullar another officer of HMRC.
9.16	Miss Pullar advised Amanda Cargill who was the person to whom they spoke that she was subject to the rules regarding transfer of a going concern and was required to register for VAT.  (Bundle P36, line 10/11).  This decision was based on the following information recorded at Bundle P35/36.  It included their turnover of £19,896 from 05.06.08 to 31.08.08, the information found above about what assets they had bought, the time of closure and opening, and employment of 2 staff, the kitchen hands Helen and Paul though he only stayed 2 weeks.  No allowance for seasonal trade was made.  They calculated the likely net tax liability of the likely arrears given their decision.
9.17	They also apparently contemplated the penalty provision (Bundle P36, line 29).
9.18	The Bundle P36 states that they left the VAT and VAT notes but we find that Mr McKenzie either observed or advised as to what was necessary as Amanda Cargill who completed and signed the form has ticked Box 9 confirming the question that the business was either taken over as a going concern or was a change of legal status.  She also ticked that the registration was voluntary as she was trading below the VAT threshold at that time.  She also entered the likely turnover as £79,586.04.  These entries reflect the decision taken by Mr McKenzie and Miss Pullar and intimated to Miss Cargill in the interview.  The form was signed on 02.10.08 the date of the visit.
9.19	We therefore find the grossed up figure of £79,586.04 was calculated on 02.10.08 by multiplying the summer trade the business produced over June, July and August by 4, by HMRC.  This is reflected in the notes as if taken from the VAT1.
9.20	The Appellant was very concerned that they had to charge VAT in the business as she was certain she should not be required to register.  However she and Miss Cargill had panicked a bit after the visit about Miss Cargill having sent the registration form which she finally told the Appellant about.  However they decided eventually to seek guidance and were told by their Accountant he believed they ought not to have been registered.  He therefore wrote to HMRC setting out the grounds, very much in the nature of the findings above.  (Bundle Pp 43-44).  HMRC through Mr Colin McKenzie replied on 13.12.08 refusing to reconsider the voluntary registration and giving their reasons including quoting Kenmuir (sic) v Frizzell 1968 ICR 159 and the principle of taking the substance of the transaction between parties so that it put “the transferee in possession of a going concern which he could carry on without interruption”.
9.21	In cross-examination Mr McKenzie continued to give this case the wrong name and had no idea what the case was about.  He could give no details and no background to the ‘substance’ referred to by Lord C J Widgery.
9.22	He also decided the type of business was the same and referred to VAT Notice 700/9 at Para 8.3 where an example is given which includes “e.g. an Italian restaurant becoming a Mexican restaurant is still a restaurant”.  He gave no concession on any matter and advised a reconsideration could be requested and if having objection, that the Appellant was not satisfied, an appeal could be made.  The Appellant’s solicitors Whelan & Co had also advised the Appellant she was not liable to be registered and they wrote (Bundle P49) dismissing the claim by HMRC that the box ticked by Louise Walker in her deregistration form that she had transferred the business as a going concern as irrelevant to his client’s position since she was unaware of it.  It was also in his view, an incorrect statement in any event, as having any real bearing on his client’s position.
9.23	He also reinforced the claim that the transfer of undertakings (TUPE) provisions did not apply in this business to the previous employees.  He also claimed that his client was not put in the position of being able to carry on the previous business, as she had not been put in the position laid out in Kenmuir (sic) v Frizzell where the “vital consideration is whether the effective transaction was to put the transferee in possession of a going concern, the activities of which he could carry on without interruption”.
9.24	The reconsideration was made and refused by letter dated 17.03.09 pointing out that the transfer of assets was the first consideration for HMRC, as “if there has been no transfer of assets there is no TOGC”.  (Bundle P53).
9.25	The letter goes on to discuss further requirements outlined in VAT Notice 700/9 para 2.3.1 relating to Business Activities and also stated the writer understood there was no challenge to the decision that the type of business was the same.  We consider this assumption was incorrect as the letter from the Appellant’s accountants makes just that claim, and the letter from their Solicitor also states they were not put in possession of a going concern.  
9.26	At R McKenna’s letter referring to said para 2.3.4, in respect of the assets acquired it is explained that the assets used must be used for the same kind of business.  
9.27	Where the letter refers to said para 2.3.4, it appeared to the Tribunal the lack of a licence to sell alcoholic liquor had not occurred to HMRC as preventing TOGC provisions applying.  It appeared to the Tribunal that the extrapolation referred to in that review letter of R McKenna dated 17.03.09 (Bundle Pp 131-133) is what Mr McKenzie did, but did not as Ms McKenna suggests take account of shorter hours or the lack of an alcoholic liquor licence.  Her assertion on that at Bundle P132 line 32, 33, 34 & 35 is in our view unsound.
9.28	The letter goes on to VAT Notice 700/9 para 2.3.4 and the requirement to register.  It compares the previous business figures taking no account of the extrapolation of the high summer turnover figures being likely to be greatly reduced in the less busy months of extrapolation.  It also purports to take account of shorter hours.  
9.29	Mr Colin McKenzie was asked by Mr Scott about VAT 1 and by the Tribunal about how the grossed up figure had been calculated.  He said he did not know.  The Tribunal found this not credible.  It was commented on at the time by the Judge that even a simple piece of mental arithmetic showed a straight multiplication had been applied.  Telling us he had no idea was unhelpful, and evasive, and appeared unlikely from an HMRC officer.
9.30	The letter of review by R McKenna then claims the business met the business activity comparisons and asset comparisons and VAT Registration requirement.  R McKenna also comments on the suggestion there has been a TOGC as the same employees were taken on.  We disagree with that particular assertion in this case.  We find the employees were separately employed by the Appellant and Amanda Cargill.  Kenmir v Frizzell was of course an employment case.  We shall deal with the consequences of that case being used here, below in our reasons.
9.31	At no time is the matter of the alcoholic liquor licence given any consideration as part of the business activity.
9.32	No arrangement had been entered into between Louise Walker and the Appellant and Amanda Cargill in writing.  No transfer of premises occurred between Louise Walker and the Appellant and Amanda Cargill who entered into a different separate leasing arrangement with regard to a let of the premises, directly from the over landlord under very different provisions.
Decision
10.	The Tribunal decided on a balance of probability that on this occasion no transfer of a going concern took place when the Appellant and Amanda Cargill went into business.
Reasons
11.	Our reasoning is simple.  Our reasons are as follows:
11.1	Some of the assets in Louise Walker’s business were acquired by the Appellant and Amanda Cargill.  The new business therefore required to be considered as having the potential of being classed for VAT purposes as a transfer of a going concern (TOGC).  Several requirements require to be fulfilled in addition which the Tribunal were not satisfied had occurred.
11.2	The simplest is contained in the VAT 1 and the letter by the reviewing officer (P132) on the amount of anticipated revenue of the new business which was calculated by the visiting officers on the income generated in the three busiest months this type of business could hope to generate trade.  Mr McKenzie was very vague when asked how that calculation was made when it occurred in the VAT 1 registration form.  It was quite obvious by simple mental arithmetic to see he had multiplied the 3 month figure by 4 to achieve an anticipated 12 months figure.  It had the unfortunate effect of him appearing evasive.  He avoided what was apparent from listening to the evidence that pressure had been exerted to obtain a VAT 1 from Amanda Cargill on 2.10.08 which was achieved.  
11.3	He accepted he had taken no account of the seasonal nature of the trade and made no enquiries about that.  
11.4	This lack of consideration of seasonal trade etc was repeated on actual figures by the reviewing officer who also included a reference to the previous trader’s figures.  The previous trader had sold alcoholic liquor, had fine dining and remained open until late each evening.  We found the comparison had no substance.  We found the calculations unreliable.  Even looking at the draft accounts which reflected the effort the Appellant and Amanda Cargill, made the turnover figure extrapolated from that (which extrapolation we do not consider accurate in a business of this sort as it includes the high season figures at the front end) reflect how closely the business might be to the VAT registration level but not necessarily over it.  What also troubled us was that that figure was used to put Amanda Cargill under pressure to complete and return the VAT registration form the very day of the visit. 
11.5	The officers had verbally informed her she was required to register which she did that very day.  She regretted the verbal decision being issued in this way as both Miss McWilliams and Miss Cargill had chosen not to register quite positively and for good reason.  In all the circumstances it would in our view have been more appropriate for a compulsory registration to have occurred allowing a clearer path to the appeal process.  
11.6	Coupled with the lack of proper knowledge of case law the whole impression of Mr McKenzie was of lack of care or proper application to the task he was called on to perform.  He did not identify the Appellant as someone to whom he spoke.
11.7	Another reason is that although Louise Walker, the prior proprietor ticked the box that she was transferring the business as a going concern that was not true.  She had not been competent to transfer the premises nor had she made arrangements for that transfer.  She had made no arrangements with the new business with regard to the alcoholic liquor licence.  She had in fact undergone a change in status herself in that she was unable to pay her debts, leading to her bankruptcy in 2008.
11.8	The question the Tribunal must ask is whether the Appellant and Amanda Cargill could carry on Louise Walker’s business.  Clearly without a licence to sell alcoholic liquor they could not.  No one could book an evening meal.  The customers of Louise Walker’s, The Courtyard restaurant could not enjoy the same facilities in The Pende Café.  There was no facility for storing large quantities of fresh food.  There was no facility for preparing full meals.  There was no chef.  The nature of the business had changed substantially as the clientele was entirely new consisting of families, parents with children and similar groups having bacon rolls, toasties and the like with tea, coffee and soft drinks.  Indeed the tables the Appellant acquired were no use to her and required to be changed as they were glass and unsuitable for child customers.  In addition lower grade cutlery was required when and if used.
11.9	The Appellant presented as a young woman who had been in a difficult position in her job in The Courtyard.  She knew the business was not profitable.  She and Amanda Cargill and other staff could see the business folding every day because of unwise spending in their view on expensive items such as fresh flowers and candles and high quality meats and fish.  Their jobs were at risk.  The busy summer season was just starting.  She believed she could make a go of a seaside café operation.  
11.10	The Appellant approached Anne Franconeri the over-landlord who was not the proprietor of the premises.  She had a separate rental arrangement with the owner.  Anne Franconeri set demanding terms quite different from Louise Walker’s as found above.  The Appellant was willing to start up a new business and give it a try.  She did not and could not run licensed premises.  She recognised the holiday trade was mostly over coffee, lunch and afternoon tea times so closed early at 6 pm. 
11.11	The Appellant did not consider she was required to and was in fact advised she did not require to register for VAT.  She wished she had been seen by Mr McKenzie and Miss Pullar but had no information from Amanda Cargill until after the registration had occurred.  She was a novice in running her own business but has had the courage and tenacity and determination both to attempt to run this new business in difficult economic times on “off street” premises up a pend in Arbroath.  She had also been resolute in her awareness of her tax liability, national insurance obligations and record keeping so that the visiting officers were able to access her 3 month figures for turnover for June, July and August, her three busiest months of the year.  She was impressive in her determination not to be unemployed, to seek to help her colleagues to maintain their incomes and generally play a leading and active role in applying herself to the task ahead.  She was rightly quite put out to discover what had happened on 02.10.08 as she was not consulted by HMRC during the period of the visit or by Amanda Cargill on the matter of completing and returning the VAT 1.  She panicked when she was advised and so sought the help of her accountants and her lawyer who had already advised the transaction lacked the characteristics of a TOGC.  We were satisfied the Appellant had not acted in total ignorance but positively because of her belief in her new business.  We did not find their letters fully covered the findings we have made having the benefit of all the evidence but they did comment on the fact the premises were previously licensed, on different trading hours and the separate lease.
11.12	Another reason was that HMRC also dismissed the assumption that one of the factors evidencing no TOGC was because the owners were not bound by the Transfer of Undertakings Regulations (TUPE).  This element of the argument is not commented on here as it has not been rebutted in law by HMRC.  Kenmir & Frizzell was of course an employment case, not a VAT case but it has been used to evidence TOGCs.  If indeed it is correct that the owners were not bound by TUPE Regulations then the employment in this case is not continuous.  That assertion can only be provided by the written submissions made by Whelan & Co (Bundles Pp49/50).  We were at least persuaded we could not rely on any assertion by HMRC the employment was continuous.
NOTE:	(a)	We have ignored the last two paragraphs of Whelan & Co’s letter as it was not dealt with by HMRC who perhaps ought to have replied indicating the outcome should the Appellant and Amanda Cargill not reach the VAT threshold, or the outcome should a Tribunal find there was no TOGC, which Whelan & Co do not appear to have considered.  
(b)	From the facts found another reason we consider no TOGC occurred was we did also consider that the Appellant and Amanda Cargill’s likely turnover was calculated in a somewhat simplistic way and is challengeable for the purposes of HMRC’s decision.  They ought to have taken into account when they carried out their extrapolation the seasonal nature of the trade showing perhaps local or national comparison rates to give some strength to their extrapolation.  They also could have explained how the figures compared in these months with Louise Walker.  That is all speculation but may give guidance to HMRC in future consideration.  The same is true of the shorter hours.  In the alternative they could have registered the business compulsorily and opened the avenue to appeal more quickly to these Appellants.  
(c)	Looking at what is demanded by the legislation and VAT 700/9 in respect of the assets, these were transferred without VAT.  We do not find this conclusive in any way.  Neither was Miss Louise Walker’s declaration that she transferred a going concern.  However both of these events would mean HMRC looking at the circumstances.  The VAT sought by Mr McKenzie effectively meant a compulsory registration decision was made and Miss Cargill invited to comply rather than being implemented by the compulsory procedure.
12.	The Law
12.1	The Statutory provisions relating to TOGC is contained in the Authorities Bundle at tabs 1, 2, 3 and 4 which is treated as repeated here.
12.2	The Customs Notice 700/9/02 (April 2008) offers explanations as to how HMRC interpret the statutory provisions and includes the comment “each transfer is considered individually for TOGC on the basis of facts and circumstances”, on which basis our decision is made.
12.3	All the cases referred to in the Tribunal are contained in the bundle of authorities at TABS 5, 6, 7, 8, 9, 10 and 11.  
We comment as follows, using the Authorities Bundle for reference:
5.	Kenmir v Frizzell & Others (1968) AII ER 414 (Kenmir)
5(a)	We were very disappointed that Mr McKenzie from HMRC although he quoted this case did so incorrectly in the first place by calling it “Kenmuir” on paper and pronouncing it “Kenmuir” when he spoke.  In the second place he was unable to tell us when asked, what the case was about.  It also appears that the reviewing officer R McKenna did not either since if that had occurred he could have dealt with the employment issue.  However that would have required considerable research given this transaction is governed as regards employment by later statutory provision so that Kenmir may long have lost its significance in employment matters for this Appellant.  No such information exists.  Nor was Mr McKenzie aware that Mr Frizzell and his colleagues had raised actions which had been conjoined for the purpose of the decision.  He did not tell us what were the significant features of the TOGC question in that case such as goodwill or that the gentlemen concerned went from one employer making furniture in a factory to another firm making furniture in the same factory or that the sellers trade agreements and licenses were all transferred, with all the relevant documents, the firm’s name of Kenmir, and their trademark ‘Lifetime’.  He did not know the sellers were placed under a restrictive covenant preventing competition for 5 years for 25 miles.  He did not know it was provided that all Kenmir’s creditors would be paid off before the sale of the firm and all its assets were transferred.  He did not tell us Kenmir were bound to keep running until the takeover date, or that at the time of the transfer the new Kenmir issued new contracts dating from the original date of employment by the original Kenmir.
5(b)	In the Kenmir decision a Scottish case is much quoted namely Rencoule (Joiners and Shopfitters) Ltd v Hunt 1967 ITR 475 (also a 1963 Contract of Employment Act case).  This case decided that where a lessee transferred his business to a purchaser who obtained a new and separate lease of the premises that that could still be a transfer of a going concern.  As Lord Clyde said the result of the transaction where stock in trade, work in progress and an obligation to introduce the purchasers to customers of the seller involved a transfer of the goodwill was a TOGC.  For the purchasers in that case it was a condition of the contract that they obtained a lease, otherwise the contract fell.  No such condition existed in this appeal.  Nor was any arrangement made for introduction of custom nor for transfer of goodwill.
5(c)	There is also quoted in Kenmir another (unreported) case G D Ault (Isle of Wight) Ltd v Gregory.  In that case a written agreement had provided for every aspect of the business to be transferred with a restrictive covenant preventing trade of similar nature in the Sandown/Shanklin district in the Isle of Wight.  Lord Diploch commented on the wholeness of the transaction transferring the business.  As observed above there was no contract relating to the transfer of any business to the Appellant.
5(d)	Lord C J Widgery in Kenmir applying the principles set out in these two cases went on immediately in the next sentence to make the definitive statement which has been so often quoted and was all Mr McKenzie read out:
	“In deciding whether a transaction amounted to the transfer of a business, regard must be had to its substance rather than its form, and consideration must be given to the whole of the circumstances, weighing the factors which point in one direction against those which point in another”.
5(e)	Taking a broad view in this case the Tribunal considered the Appellant did not carry on a business substantially the same as that carried on before, as found and reasoned above.  It is superfluous to rehearse that here.  The Appellant and Amanda Cargill’s circumstances differ greatly from anything described in these cases.
6.	In C&E Commissioners v Dearwood Ltd (1986) STC 327, (Dearwood) which is a VAT case where the test of transfer of a business was not whether the business ‘would’ be carried on but ‘could’ be carried on.  We found it could not as above.  Again in Dearwood although the Appellant at the original Tribunal contended he was not carrying on the same business he was actually making the same goods, namely furniture though of a different sort and he actually carried on trading in the vendor’s shoes to fulfil the vendor’s contracts.  Nothing of that sort occurred in this case.  Again we do not wish to rehearse the findings but they do not resonate with the findings on the facts in Dearwood.  
7.	In Donald McPherson T/A Comet Bar VAT 10427 EDN/92/315, (McPherson) we distinguish this case again on the facts.  The license to sell alcoholic liquor was critical.  The alcoholic liquor licence was maintained by C P Vinters Ltd with a nominee licence holder Mr Gallacher whose daughter Sharon Gallacher apparently ran the bar for the previous lessee.  The new lessee of C P Vinters traded on the premises whilst there was no change in the terms of the licence.  No parallel to the Appellant’s circumstances was obvious to this Tribunal.
8.	In Houshang Tahmassebi T/A Salepepe VAT Decision 13177, (Houshang) an Italian Restaurant was changed to a Mexican Restaurant including a purchase of the residue of a lease, goodwill and equipment and furnishings.  There was a special provision relating to VAT and also relating to the transfer of the license for alcoholic liquor.
Chairman Michael Johnson, commenting on the factor which he found significant took account of the business remaining a restaurant business, and future trading being a restaurant business despite a change of cuisine.  More importantly for today’s Appellant is the stress he places on the value of the business of what he refers to as the ‘drinks’ licence.  The transfer of the licence was one of the conditions of the contract.  He also stated the Appellant in that case was ‘stepping into the shoes’ of the vendor.
He also stated that the actual transfer of the licence was important as the Appellant was depending on that for trade.
We therefore could distinguish the facts here.  This case highlights how much the Appellant and Amanda Cargill’s circumstances differed.
9.	G & P Andrews v CCE (Decision 13310) related to closure.  We are satisfied the closure period was of no significance in this case.  It was in Mr & Mrs Andrew’s case the single factor pointing in their favour, otherwise the premises were a public house, albeit dirty and with leaking toilets and other difficulties which prevented operation for a month.  However the first period of trading was rent free and experimental “with an option to purchase if so desired”.  So the same business exactly was being operated.  In that case other cases quoted related to times of closure.
10.	MPH Leisure Limited v CRC (Decision 19778) has the same characteristics of having a transfer of the licence to sell alcoholic liquor and continuing private bookings on the premises which were a private members club.  In that case no assets passed and there is in fact no statutory requirement for assets to pass to establish a TOGC, as recorded by Mr Vellins.
11.	Sam’s Bistro Ltd v CRC (Decision 19973), (Sams Bistro).  The Tribunal here highlighted that it is not the concern of the Tribunal to determine whether VAT should have been paid on any assets transferred which is also true of this Tribunal.
Again in this case there was a written contract importantly transferring goodwill, all licences pertaining in the premises and all work in progress, orders and engagements, as well as transfer of all the books and records.  In Sam’s Bistro by contrast with this Appeal the premises earlier had no liquor licence.  The liquor licence was an enhancement but of course in Sam’s Bistro even without the liquor licence the criteria of Kenmir v Frizzell and all the other cases could prevail as the new occupier could carry on the same business without a licence to sell alcoholic liquor.  The reverse is not the case.  This case again can be distinguished on the facts, from this appeal where the liquor licence was lost.
Costs
13.	No expenses are due to or by either party in respect of this appeal.

MRS G PRITCHARD, BL., MBA., WS
TRIBUNAL JUDGE

RELEASE DATE:  22 DECEMBER 2009