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	United Kingdom VAT & Duties Tribunals Decisions
You are here: BAILII >> Databases >> United Kingdom VAT & Duties Tribunals Decisions >> Begum v Revenue & Customs [2006] UKVAT V19768 (07 September 2006) URL: http://www.bailii.org/uk/cases/UKVAT/2006/V19768.html Cite as: [2006] UKVAT V19768

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19768

VALUE ADDED TAX – compulsory registration – decision to register based on Appellant's own records - no evidence to show that decision incorrect – appeal dismissed.

LATE REGISTRATION PENALTY – no reasonable excuse or grounds for mitigation established – appeal dismissed

MANCHESTER TRIBUNAL CENTRE

MONUARA BEGUM Appellant

- and -

THE COMMISSIONERS FOR

HER MAJESTY'S REVENUE AND CUSTOMS Respondents

Tribunal: Colin Bishopp (Chairman)

Peter Whitehead

Sitting in public in Manchester on 4 September 2006

The Appellant did not appear and was not represented

Sara Williams, counsel, instructed by the Acting Solicitor for HM Revenue and Customs for the Respondents

© CROWN COPYRIGHT 2006


 


DECISION

1. This is an appeal by Monuara Begum against two decisions of the Respondents: that she be registered for VAT, compulsorily, from 1 December 2003, and that she should be subject to a penalty of £1,112 for her failure to register voluntarily from that date. The decisions were made under, respectively, section 3 and Schedule 1 to the Value Added Tax Act 1994, and section 67(1) of that Act.
2. When the appeal was called for hearing the Respondents were represented by Sara Williams of counsel, but the Appellant did not appear and was not represented, although the appeal had been pursued on her behalf by accountants. We agreed to Miss Williams' request that we hear the appeal in the Appellant's absence, because there was no apparent reason why she and her representatives were not present and notice of the hearing appeared to have been sent correctly and in good time. If Miss Begum is dissatisfied with this decision, she may apply for a direction that it be set aside; such an application must be made within 14 days of the release of the decision.
3. We take the following facts from the statement of case and the unchallenged statement of Janet Commock, an officer of HM Revenue and Customs who dealt with the later stages of the case. The Appellant trades as a restaurateur from premises in Oldham. She was not registered for VAT when a visit was made by an officer of what was then HM Customs and Excise to her accountants in October 2004. Miss Begum's somewhat sparse accounting records were examined, as was her profit and loss account, prepared by the accountants, for the year ended 31 March 2004. It showed, or appeared to show, turnover during the year of £59,046, though a note had been added stating that tips amounted to £3,882 (The copy profit and loss account produced to us also shows what is described as "rental income" of £3,840 but, mysteriously, it has been deducted from the annual turnover in arriving at the figure for profit. This oddity was not dealt with in the correspondence between the Respondents and Miss Begum's accountants and we have no explanation of it.)
4. The registration threshold from 1 April 2003 to 31 March 2004 was £56,000. The officer took the view that the turnover figure in the annual accounts was reliable, and that either the tips were not included in the declared turnover of £59,046 or, if they were, nevertheless formed part of the taxable turnover, and concluded that the threshold had been exceeded by the end of April 2003 and that, by virtue of paragraph 5(2) of Schedule 1 to the 1994 Act, Miss Begum was liable to be registered from 1 July 2003. Since no application for voluntary registration was forthcoming, she caused her to be compulsorily registered from that date. The officer was fortified in her view that the threshold had been exceeded by her discovery that Miss Begum's records did not include all of the purchase invoices she had received from one of her suppliers (with whom a cross-check was made) and that her disclosed cash expenses plus bankings averaged some £1,200 per week, suggesting turnover exceeding £60,000 per year.
5. Miss Begum protested, through her accountants, and the decision was reviewed. As a result, the effective date of registration was amended to 1 December 2003, upon the basis that turnover had increased progressively during the year, and the threshold had been breached only in October 2003. The accountants' argument that the declared turnover included tips which did not fall to be counted as taxable turnover was not accepted since, despite several requests, no evidence to support the argument was produced.
6. It is for the Appellant to show that her grounds of appeal (that her turnover has at all times been below the threshold) are made out. No material has been produced which could lead us to that conclusion: the decision to register Miss Begum was based on her own records and the contention that some of the declared turnover should be excluded is mere assertion, unsupported by evidence. We can only dismiss the appeal against the decision to register Miss Begum.
7. The penalty is imposed automatically if a person fails to register by the due date, as section 67(1) of the Act makes clear. A person may escape the penalty if he or she can show a reasonable excuse (see section 67(8)) and there is scope for mitigation (see section 70). However, nothing has been advanced which would make it possible for us to find a reasonable excuse, or to reduce the penalty. The only argument put forward is that Miss Begum was not liable to register, a contention we have rejected. This part of her appeal, too, must therefore be dismissed.
8. We make no direction in respect of costs.

Colin Bishopp

CHAIRMAN
Release Date: 7 September 2006

MAN/06/0206