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United Kingdom VAT & Duties Tribunals Decisions |
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You are here: BAILII >> Databases >> United Kingdom VAT & Duties Tribunals Decisions >> The Coffee Denn Ltd v Revenue & Customs [2009] UKVAT V20907 (06 January 2009) URL: http://www.bailii.org/uk/cases/UKVAT/2009/V20907.html Cite as: [2009] UKVAT V20907 |
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20907
Value Added Tax - Appeal against assessment based on the contention that turnover had been suppressed such that the business that had been de-registered as having a turnover below the registration threshold should have been re-registered when its adjusted turnover exceeded the threshold - Appeal allowed in part
LONDON TRIBUNAL CENTRE
THE COFFEE DENN LIMITED Appellant
- and –
THE COMMISSIONERS FOR HER MAJESTY'S REVENUE & CUSTOMS Respondents
Tribunal: HOWARD M NOWLAN (Chairman)
MRS NORAH CLARKE
Sitting in Cardiff on 27 November 2008
Khan Rahman of Rahman & Co, for the Appellant
Mrs Crinnion of the Solicitor's Office of HMRC, for the Respondents
© CROWN COPYRIGHT 2008
DECISION
Introduction
The background facts
The evidence
The course of the HMRC enquiries into the level of turnover of the Appellant
The relevant law
The contentions on behalf of the Appellant
• the fact that Mr. Dennison's son, Mark Dennison took a sub-lease of the premises and operated a, "bistro style" restaurant business, with a much fuller menu than that of the Coffee Denn, under the name "The Denn", from 4 May 2004 to 26 November 2005, operating on Wednesday, Thursday, Friday and Saturday evenings and on Sunday, precluded any argument that the Appellant was trading on Sundays in this period;
• the same fact accounted for why 98 of the till print-outs had not been retained by the Appellant, since the same till was used by both businesses, and the Z readings, and print-outs attributable to The Denn had been handed to Mark Dennison;
• Mr. Dennison had retained those parts of the till print-outs that were relevant for his purpose in drawing up accounts, particularly when he believed that the Appellant was not liable to VAT;
• had Mr. Dennison wanted to conceal the missing till print-outs he could have programmed the Olympia machine not to attach sequential numbers to each Z reading, but he did not do so;
• whilst at this distance in time, Mr. Dennison could often not account for why additional till readings had been taken, often but not always on a Sunday, he did suggest that the till had been difficult to operate, and a reading was often taken at the end of the week to check that the last Z reading had indeed zero'd the takings figure;
• an additional explanation of the additional Z readings was that it was often on Sundays that Mr. and Mrs. Dennison would amend the menus, and when they did this they had to programme each new or changed item and indicate the price for the item. In order then to check that the machine had recorded matters correctly, they would often operate the till as if a customer had ordered the new or changed item to see that the correct price came up, and would then have to take a Z reading to delete from the machine what would appear to be a sale, but was in fact simply a test order to check that the machine was operating properly;
• when the Olympia till was replaced in April 2006 by a more sophisticated till which did record and retain aggregate takings figures, HMRC officers had found nothing dubious or challengeable in relation to the figures produced on the new till, and there was relatively little difference between the Appellant's claimed turnover with the old till, and the undisputed figures generated by the new machine;
• when the business was closed on a Sunday, there would often be work to be done, cleaning and maintaining the premises, changing menu items, and preparing for the week ahead, so that it was entirely natural that the phone would be used on Sundays, without occasioning any reasonable inference that the business was trading;
• credit card slips were accumulated until there were sufficient to make it worthwhile transmitting them for collection. The credit card company rendered a charge for every occasion when payments were collected and credited to the Appellant's account, regardless of the number of payments claimed, so that it made sense to retain and collect several payments together and to have them all collected together. It followed of course that payments might well be collected on days other than the day when the items purchased had been ordered and paid for, and it was quite common for the collections to be made, when the business was closed, on Sundays;
• on the rare occasions when the business was open on a Sunday no Z reading would be taken on the Sunday so that the Monday Z reading would record the takings on both Sunday and Monday;
• Mr. Dennison's disability, and the fact that he had had knee operations in 2002 and 2003, aged about 63, amply justified the proposition that the Appellant would not generally trade on Sundays, particularly as business would generally not be good on Sundays when the adjacent shops were closed; so that
• the Respondents had failed to make out their case and to prove that the Appellant's turnover had been under-stated.
The contentions on behalf of the Respondents
• the deliberate destruction of the tails of the till print-outs was highly suspicious, and it was not convincing for Mr. Dennison to say that he tore off the aggregate print out figures "to save space, when storing the till rolls";
• the fact that a Sunday menu was displayed when the officers first visited, coupled with the facts that Z readings were regularly taken on Sundays, the phone was used on Sundays and credit card payments were collected on Sundays as well as other days all suggested that The Coffee Denn was open on Sundays;
• Mr. Dennison had admitted that the business was open on Sundays on request, and that it had been open for about 10 Sundays in the year of the officers' visit but this was not matched by a single available till reading for a Sunday, and none of the Z totals for any Monday was notably higher than the average daily takings, so as to suggest that the Monday reading included takings for both Sunday and Monday; so that
• the Appellant had failed in proving, it having the burden of proof, that its declared figures were accurate, and that the increased turnover figures substituted by HMRC were inappropriate.
Our decision
HOWARD M NOWLAN
CHAIRMAN
RELEASED: 6 January 2009
LON 2007/1061