TJ’s Café  v Customs and Excise [2005] UKVAT 19073 (29 April 2005)

19073
VAT – Appeal against compulsory registration – Appellant’s takings above the registration threshold by a small amount – Held the Commissioners have no discretion not to register a trader in such circumstances – Appeal dismissed 

LONDON TRIBUNAL CENTRE

TJ’s CAFÉ 	Appellant

-	and –

THE COMMISSIONERS OF CUSTOMS AND EXCISE	Respondents

		Tribunal:	 JOHN WALTERS QC  (Chairman)
				 RUTH WATTS DAVIES MCHIMA, FCIPD	 

Sitting in public in London on 21 January 2005

The Appellant was not present or represented at the hearing

Philip Webb, Senior Officer, Advocate, in the Office of the Solicitor for the Customs and Excise, for the Respondents

© CROWN COPYRIGHT 2005

DECISION

1.	The Appellant, TJ’s Café, appeals against its registration for VAT by the Commissioners with effect from 1 March 2002.  It appears that the Appellant, through its representatives, Walderslade Accounting Services Ltd., applied to the Commissioners for a cancellation of the VAT registration by a letter dated 7 November 2003, and deregistration was refused by the Commissioners by their letter dated 9 December 2003.  There is no appeal before us against that refusal. Nevertheless we add a short comment on the refusal, at the end of this Decision.

2.	At the hearing of the appeal, on 21 January 2005, the Appellant was not present or represented and on the application of Mr Philip Webb, who appeared for the Commissioners, we agreed to hear the appeal in the absence of the Appellant, pursuant to rule 26(2) of the VAT Tribunals Rules 1986.

3.	The Commissioners’ case is that records of takings obtained (with some difficulty) from the Appellant show that the value of its taxable supplies in the period of one year ending at the end of January 2002 exceeded the registration threshold prescribed by paragraph 1(1)(a) of Schedule 1 to the VAT Act 1994 (then £54,000), and that this imposed an obligation on the Commissioners to register the Appellant with effect from the end of the next month following (that is, February 2002) by virtue of paragraph 5(2) of the same Schedule.

4.	These provisions are clear on their terms and the Commissioners have construed their obligation correctly, provided they are correct in their assertion that the Appellant’s takings exceeded £54,000 in the year ending 31 January 2002.  This is the factual issue determinative of the appeal and the burden is on the Appellant to show that its takings did not exceed £54,000 in that year.

5.	The Tribunal received a letter dated 19 January 2005 from Walderslade Accounting Services Ltd, on behalf of the Appellant, the gist of which was that in the last period of trading, from 1 April 2003 to 5 March 2004, the net turnover was £52,356. (In passing, we note that this is not a period of 12 months and, on an annualised basis, the turnover corresponds to over £57,000, which exceeds the then current deregistration threshold of £54,000.)   This fact was stated in the context of a complaint that the Commissioners had not agreed to the request for cancellation of registration made in the letter dated 7 November 2003, which we have already referred to.

6.	In their letter dated 19 January 2005, Walderslade Accounting Services Ltd. also say: “As Customs and Excise are well aware, the first time that VAT was exceeded the total amount in excess of the threshold was £58.81, so that TJ’s Café has in fact been charged in the period alone from the 1st March 2002 to 31st June 2003 £8,653.04 in VAT, which has in fact forced the business into liquidation”.

7.	We take the reference to £58.81 to be a reference to the figure of £54,058.81 in the schedule of takings of the Appellant, which was produced by the Commissioners for the purposes of the appeal, and which was the figure shown as the cumulative total of takings for the year from 22 January 2001 to 21 January 2002.  We heard evidence (which was, of course, uncontradicted, and which we accept) from Mr Eric John Greene, an officer of Customs and Excise, to the effect that this schedule was prepared by him from data contained in the Appellant’s own weekly summary records, copies of which were before us.

8.	Walderslade Accounting Services Ltd.’s letter dated 19 January 2005 thus makes it plain that the fact that the takings of the Appellant in the year ended 21 January 2002 was above the compulsory VAT registration threshold is not denied.

9.	The schedule of receipts shows that the business took more in the last week of January 2002 than it had done in the last week of January 2001. In these circumstances the assertion that the Appellant’s takings exceeded £54,000 in the year ending 31 January 2002 is made out, and we so find.

10.	The Commissioners’ obligation to register the Appellant for VAT in these circumstances was mandatory.  Paragraph 5(2) of Schedule 1 to the VAT Act provides that the Commissioners “shall register any such person” (emphasis supplied).  They have therefore no discretion not to register a person whose taxable supplies exceed the relevant threshold level, but only by a relatively small amount.  The Appellant’s argument that the business should not have been registered for VAT because a consequence of that registration is to render the business not commercially viable, has therefore no merit.

11.	We therefore dismiss the appeal.

12.	It appears, however, from the papers, including the letter from Walderslade Accounting Services Ltd. of 19 January 2005, that the Appellant’s main complaint may be that the Commissioners refused the application to deregister, made on 7 November 2003. 

13.	The Commissioners’ obligation to cancel a VAT registration on the request of the registered person is conditional on their being satisfied that at the proposed date of deregistration, which cannot be earlier than the date when the request for cancellation is made, the person concerned is not liable to be registered for VAT (see: paragraph 6(1) and 7(1), Schedule 1, VAT Act 1994).

14.	The Commissioners, in their response dated 9 December 2003 (sent to the Appellant) to Walderslade Accounting Services Ltd.’s request for cancellation of registration of 7 November 2003, pointed out that they had not then received the Appellant’s VAT return for the period 09/03.  This was apparently received on 1 April 2004.  It showed takings in that period of £15,410.  The returns with our papers for the periods 06/03, 03/03 and 12/02 show takings of £13,524, £13,517 and £42,163 respectively.  The aggregate takings for the year ended 30 September 2003, according to the returns submitted by the Appellant and signed by Mrs. Elliott on its behalf, were thus significantly in excess of the applicable deregistration threshold (£54,000), and it appears therefore that the Commissioners could not have complied with any request for cancellation of registration made on 7 November 2003.  We were told that no other request for cancellation of registration was made by the Appellant. 

JOHN WALTERS QC
CHAIRMAN

RELEASED: 29 April 2005

LON/04/924