[2010] UKFTT 622 (TC)

								TC00864

Appeal number:  LON/2006/0502

Appeal –Supervisory jurisdiction of fir-tier Tribunal – Whether assessment correct given information available – Yes – Whether Appellant discharged burden of proof – No – Appeal dismissed and Assessments upheld

FIRST-TIER TRIBUNAL
TAX CHAMBER

	MITHRAS (WINE BARS) LTD	Appellant

	- and -

	THE COMMISSIONERS FOR HER MAJESTY’S
	REVENUE AND CUSTOMS (Value Added Tax)	Respondents

				TRIBUNAL: 	 DR K KHAN (Judge)

Tim Browne, Counsel, instructed by Whitemans, Solicitors, for the Appellant 

Surabjit Singh, Counsel, instructed by the General Counsel for HIMRC, for the Respondents

© CROWN COPYRIGHT 2010

DECISION

1.	This matter has been referred back to the Tax Chamber of the First-tier Tribunal (“the FTT”) by the Upper Tribunal (Tax and Chancery Chambers), a decision by Sir Stephen Oliver QC [2010] UKUT 115 (TCC) after hearing the matter on appeal on 5 March 2010.

2.	In that decision, Sir Stephen Oliver said that the FTT had failed to address his primary task of determining the correct amount of task based on the material placed before it.  The FTT should have exercised a full appellate jurisdiction and decided for itself the correct amount of tax due.

3.	The appeal was therefore allowed.

4.	He said that since the FTT had not properly applied the law the matter should be remitted back to the FTT to be considered afresh in the light of the correct approach.

5.	He drew reference to the case of Customs and Excise Commissioners v Pegasus Birds Ltd [2004] EWCA Civ 1015, and [2004] STC 1509, where Carnwath LJ summarised the correct position with regard to the tribunal duties in this matter.  

6.	The Tribunal should remember that its primary task is to find the correct amount of tax, so far as possible on the material properly available to it, the burden resting on the taxpayer.  In all but the very exceptional cases, that should be the focus of the hearing, and the Tribunal should not allow it to be diverted into an attack on the Commissioners’ exercise of judgment at the time of the assessment (paragraph 38).

7.	The authorities which were referred to on appeal considering an appeal against the amount of an assessment raised by the Commissioners the Tribunal has a full appellate jurisdiction and is able to decide for itself the correct amount of the tax due.

8.	It is not necessary to recite the facts of the FTT decision since this matter can be added as an appendage to that decision.  

9.	The Respondents and Appellant were asked to submit any further submissions to the FTT in deciding the matter which has been remitted back to the same panel of the FTT that originally heard the appeal (it should be noted that one member of the Tribunal Mrs S Johnson has now retired).

10.	The Appellant made further submissions through their counsel, Mr Tim Brown, relating to the quantum.  Their submissions were as follows:
1.	The Appellant confirms that it relies on the submissions advanced orally at the original hearing and in the written Submissions and Material Evidence Schedule dated 2 March 2009 that the quantum of the VAT assessment is incorrect because of percentages calculated by HMRC on the basis of two days invigilation and on Mr Walton’s examination of four days records should be disregarded.  The only reliable figures are those provided by the Appellant which are based on over 30 days trading using the new/re-programme tills (which have been accepted as accurate by HMRC).

2.	The Appellant also submits that the HMRC two day invigilation and four days records should be treated as a single day each of the Appellant’s daily records using the new/re-programme tills.  The Appellant’s 37 day figures should also be included in the calculation for final figures.  In other words each day must be treated equally and as it were averaged out.

3.	The Appellant believed that there is a certain unfairness in that higher weighting is given to the HMRC figures based on the two days invigilation and four days records.  The Appellant has provided charts relating to Bar Capitale 1, 2 and Deli 4 and Deli 6 using HMRC assessment calculations and the Appellant’s calculations and providing average percentages comparisons and asked that these comparisons be considered by the Tribunal.  The percentage provided based on HMRC figures and that tend to be higher than the percentage calculation based on the Appellant’s figures.

11.	The Tribunal, after having reviewed the new submissions by the Appellant and taking into account the submissions made at the time of the hearing finds the following.  The Tribunal understands the submissions made by the Appellant with regard to the new/reprogrammed tills.  However, there is no clear evidence that these were introduced until approximately November 2006.  We are concerned about periods before that time.  Further, evidence was presented at the hearing to show that there were “glitches” in the system which made some of the information produced by these tills unreliable.  There was also concern at the time, as recorded in the earlier decision of FTT that the VAT pattern was not always used where takeaway food was eaten in.  It is felt that the information provided by the new re-programme tills would be unreliable therefore.

12.	The till analysis which was used by the Commissioners in arriving at their figures were therefore for an earlier period.

13.	The Appellant has made valid argument in saying that the invigilation for one or two days may not be representative of the figures.  However, insufficient evidence to report those figures were presented by the Appellant.  The Appellant did not clearly rebut or show that the figures and the splits arrived at by the Commissioners were inaccurate.  In the circumstances, the Tribunal can find no reasons for calling into question those assessments.

14.	The Appellants were asked to provide self-invigilation figures undertaken for the relevant periods but this was not provided.  It would appear that there were no available self-invigilation figures or indeed such exercise was not undertaken by the Appellant.  Records of gross takings were provided to the Commissioners but these were not organised nor were they complete it is difficult to establish precise information from those figures. In the circumstances, the Commissioners were not able to interrogate the percentage splits in sales from the figures presented.

15.	The Appellant has, in its new submissions, sought to average out the HMRC figures with its figures.  This averaging out would not present a fair percentage of the split given that there were questions raised about the new/reprogrammed tills.  It must be remembered that it is up to the Appellant to provide evidence to rebut the assessments which have been made by the Commissioners.  It is not felt that this has been done.  It is understandable that the Appellant would feel that the HMRC figures were more heavily relied upon than the figures presented by the Appellant even though the Appellant’s figures covered a longer period (37 days).  However, the Tribunal found that the Appellant’s figures were not reliable.
16.	The FTT has therefore considered the evidence afresh together with the new submissions by the Appellant and       the correct amounts were assessed by the Commissioners.  It must be remembered, that the Appellant has not questioned any findings of fact by the FTT.

17.	In the circumstances the appeal would therefore be dismissed on the grounds that the correct amount of tax due has been assessed.

18.	This document contains full findings of fact and reasons for the decision. Any party dissatisfied with this decision has a right to apply for permission to appeal against it pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009.   The application must be received by this Tribunal not later than 56 days after this decision is sent to that party.  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.

DR K KHAN
TRIBUNAL JUDGE

RELEASE DATE: 1 December 2010