[2010] UKFTT 93 (TC)

TC00404

Appeal number MAN/08/1555

VAT – input tax – insufficient evidence of supply.

FIRST-TIER TRIBUNAL

TAX 

	BARNSLEY METAL COMPANY LIMITED	Appellant

	- and -

	THE COMMISSIONERS FOR HER MAJESTY’S
	REVENUE AND CUSTOMS	Respondents

DECISION NOTICE: full findings of fact and reasons for the decision

				TRIBUNAL: 	Judge R Barlow
						Member Mrs M C Ainsworth

Sitting in public at Manchester on 27 January 2010

No appearance by the Appellant

Ms Lisa Linklater of counsel, instructed by the General Counsel and Solicitor to HM Revenue and Customs, for the Respondents

© CROWN COPYRIGHT 2010

DECISION

1.	When this case was called on there was no appearance by the appellant but the Tribunal, being satisfied that the hearing had been properly notified to the appellant, decided to hear the case in its absence.
2.	This is an appeal against the Commissioners’ assessment for VAT in the sum of £54,464 for the three month prescribed accounting period ended 31 May 2008.  The assessment arises from an allegedly overpaid or over credited amount of input tax claimed by the appellant in that period.
3.	 The input tax in question was in respect of purchases of scrap metal which the appellant claimed it had purchased from a company called SHS Limited, which the Commissioners were not satisfied the appellant had in fact purchased.
4.	The burden of proving that it had purchased the metal in question by way of a taxable supply lies upon the appellant and despite the appellant’s non-attendance we have examined the evidence produced by the respondents and such documentary evidence as the appellant has produced.
5.	On a visit to the appellant on 2 June 2008 an officer of HMRC examined the appellant’s purchase records and saw a number of invoices three of which were in the form of sales invoices apparently showing sales to SHS Limited by the appellant and 24 of which were sales invoices showing sales by SHS Limited to the appellant.  
6.	The appellant’s director, Mr Whittaker, told an officer of HMRC on a visit on 10 July 2008 that he had delivery notes for the purchases in question.  They have not been produced nor has other alternative evidence of purchase that was referred to at various times been produced.  Mr Whittaker said that SHS Limited had first contacted him via the telephone and that they were based “down South”.  He had not visited their premises and only knew the person he dealt with as Mike.  Mr Whittaker had not telephoned SHS on the number shown on their invoices and had always contacted Mike by mobile phone on a number which he had by then mislaid.  He admitted he wrote the SHS sales invoices out for Mike because Mike was illiterate.  He also said that on some occasions Mike had delivered goods but had not been paid at the time of delivery and had returned down South on the day of delivery only to return the next day for his money.
7.	The SHS invoices show their address as being in Poole in Dorset and a local officer visited the address.  She found that it was occupied by a Mr White who had a financial services business and was a director or company secretary of several companies including a company called Solar Rays Limited of which he was the company secretary and a Mr Martin Smith was a director.  Solar Rays Limited had registered for VAT intending to trade as a supplier of solar heating panels and its registration number was the one that appeared on the SHS invoices produced by the appellant.  Mr Smith was also a director of SHS Ltd but he said that company had no connection with the address in Poole and it had de-registered for VAT before the time of the sales allegedly made to the appellant and he said that that company had been set up to trade in solar heating kits but had never in fact traded.  There is no evidence that the real SHS made any of the supplies contended for by the appellant.
8.	After some prompting the appellant’s solicitor explained that the three invoices which were admittedly in the form of sales invoices were in fact intended to be self-billing purchase invoices.  The appellant did not have permission to create self billing invoices.
9.	The appellant has failed to prove that the supplies in question took place.  It is quite clear that no such supply was made by SHS and so clearly an explanation was called for and some alternative evidence sufficient to prove that a supply had occurred was needed (even if by some other person or company) and although the appellant’s director has asserted in correspondence that he has such alternative evidence it has not been produced.  We find, on a balance of probabilities, that the supplies did not in fact take place and so the appellant has no right to claim input tax and the assessment is upheld in full.  The appeal is dismissed.
10.	This appeal was lodged in the VAT and Duties Tribunal and, Ms Linklater having so applied, we direct that the Tribunal Rules relating to costs as they applied before 1 April 2009 should apply to this appeal and we direct the respondents’ costs of this appeal, limited to those for the hearing on 27 January 2010, are to be paid by the appellant to be assessed by a Judge of the Tribunal sitting alone if not agreed between the parties. 
11.	The appellant has a right to apply for permission to appeal, on a point of law, against this decision pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009.   The parties are referred to “Guidance to accompany a Decision from the First-tier Tribunal (Tax Chamber)” which accompanies and forms part of this decision notice.

RICHARD BARLOW

TRIBUNAL JUDGE
RELEASE DATE: 24 February 2010