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	United Kingdom VAT & Duties Tribunals Decisions
You are here: BAILII >> Databases >> United Kingdom VAT & Duties Tribunals Decisions >> Contracts 4 Buisness v Customs & Excise [2003] UKVAT V18249 (30 July 2003) URL: http://www.bailii.org/uk/cases/UKVAT/2003/V18249.html Cite as: [2003] UKVAT V18249

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SECURITY — common directors — appeal dismissed — Value Added Tax 1994 Schedule 11 paragraph 4(2)

MANCHESTER TRIBUNAL CENTRE

CONRACTS 4 BUSINESS LIMITED Appellant

- and -

THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents

Tribunal: Miss J Warburton (Chairman)

Mr P Whitehead

Sitting in public in Manchester on 10 July 2003

Mr D Duesbury, director, for the Appellant

Mr B Haley of the Solicitor's office of HM Customs and Excise for the Respondents

© CROWN COPYRIGHT 2003


 


DECISION

1. This is an appeal by Contracts 4 Business Ltd against a requirement to give security under paragraph 4(2) of Schedule 11 of the Value Added Tax Act 1994. The appeal is in respect of a Notice of Requirement contained in a letter dated 21 January 2003 to give security in the sum of £2,200.
2. The Appellant was represented by Mr Darren Duesbury, director. The Commissioners were represented by Mr B Haley of the Solicitor's office of HM Customs and Excise who put in a bundle of copy documents.
3. We heard evidence on oath from Mr Martin Whitelegge, a senior officer of HM Customs and Excise in Chesterfield. Mr Duesbury addressed the Tribunal. From the written and oral evidence we find the facts to be as follows
4. Mr Darren Duesbury and his brother Mark have been involved in a number of companies together as either director or company secretary. The companies were and are TP Contracts and Leasing Ltd, Infoprompt Ltd, Securapay Limited, Cheernet Limited, Technosalv Ltd, Showroom Vehicle Services Ltd and the Appellant. Details appear at pages 3 to 55 of the Commissioners' bundle of documents. Infoprompt Ltd and Securapay Limited complied with VAT requirements. Cheernet Limited ceased to be registered for VAT in 2002 with a debt to Customs and Excise recorded as £63,472 although that amount has since been recalculated to a lesser figure. Technosalv Ltd went into liquidation on 26 June 2001 with a debt of £118,462.87 to Customs and Excise. TP Contracts and Leasing went into liquidation on 20 February 2003 with a debt to Customs and Excise of £365,027.40 and Showroom Vehicle Services Ltd went into liquidation on 14 January 2003 with debts to Customs and Excise of £1,121,107.44. In the course of the company liquidations the figures owing to Customs and Excise were reduced in the case of Technosalv Ltd by about half and also reduced for Showroom Vehicle Services Ltd but to a figure in excess of £350,000.
5. Mr Darren Duesbury was mainly concerned with those companies in the mobile phone business and his brother Mark with those companies involved in car sales. The Appellant's business is mobile phones and until December 2002 was called Talkingshop.Co.UK Limited. The VAT compliance record of the Appellant is set out on page 56 of Customs and Excise bundle. Whilst 8 out of 9 payments were late and on one occasion a cheque was refused on presentation, at February 2003 the amount owed to Customs and Excise was £18.72.
6. Mr Darren Duesbury only became involved with day to day operations of Showroom Vehicle Services Ltd in July 2002. He contacted an officer of Customs and Excise, Ms Woolley, to try to sort out the VAT position. He asked for the company to be liquidated in December 2002. TP Contracts and Leasing was a closely linked company and was also placed in liquidation.
7. Ms Woolley was concerned about the companies in which Darren and Mark Duesbury were involved and in December 2002 contacted Mr Whitelegge who was the officer of Customs and Excise who issued the Notice of Requirement for security on 21 January 2003. In coming to his decision to issue a Notice of Requirement he had regard to the involvement of Mr Darren and Mr Mark Duesbury in the companies which had gone into liquidation owing substantial amounts in VAT. The particulars he had regard to are set out on pages 3 to 6 of the Commissioners' bundle. When he made his decision, Showroom Vehicle Services Ltd was still trading and he understood the VAT owing was more than £1,000,000. He also issued a Notice of Requirement for security in respect of that company but the company went into liquidation before the Notice was served. Mr Whitelegge also had regard to the compliance record of the Appellant as set out on page 56 of the Customs and Excise bundle. He took account of the fact that two brothers were involved in all the companies in some capacity. He was concerned that the Appellant was changing its name and might take over business from Showroom Vehicle Services Ltd. The amount of security of £2,200 was based on previous returns by the Appellant and represented 4 months VAT.
8. Mr Duesbury for the Appellant submitted that the Appellant was a small struggling business which would find it very difficult to put up £2,200 security. The compliance record of the Appellant was not bad, the cheque which was returned was met on representation and only a small amount of VAT was now owing. The major problems in the past concerned companies in the car business run by his brother not companies in the mobile phone business run by him. The final amounts of VAT owed by Technosalv was small in relation to its turnover. He submitted that the Appellant, which was in the mobile phone business, should not be affected by problems faced by companies in the car business.
9. Mr Haley for the Commissioners submitted that in the light of the history of the companies in which Darren and Mark Duesbury had both been involved the decision to seek security in January 2003 was reasonable. The decision was reinforced by the poor compliance record of the Appellant. The only relevant factors when testing the reasonableness of the decision were those in existence in January 2003.
10. In support of his submission Mr Haley relied on the following decisions:

Customs and Excise Commissioners v Peachtree Enterprises Ltd [1994] STC 747

John Dee Ltd v Customs and Excise Commissioners [1995] STC 941

11. The Court of Appeal in the John Dee case set out the jurisdiction of the tribunal in security cases. Accordingly, we must ask ourselves whether the Commissioners had acted in a way which no reasonable panel of Commissioners could have acted, whether they had taken into account some irrelevant matter, whether they had disregarded something to which they should give weight and whether they had erred on a point of law.
12. We have considered the decision take by Mr Whitelegge on behalf of the Commissioners in January 2003 and concluded that he did none of these things. The decision to seek security and the amount of security were reasonable at the time.
13. Accordingly the appeal is dismissed
14. We would add, however, that this may be an appropriate case for the Commissioners to review the requirement for security in the light of the Appellant's present compliance record.
15. Mr Haley made no application for costs and there is thus, no direction as to costs.

MISS J WARBURTON

CHAIRMAN

Release Date:

MAN/03/178