Spc00709

DISCOVERY ASSESSMENT – jeopardy amendment and closure – Appellant did not appear – appeal dismissed

THE SPECIAL COMMISSIONERS

	R D RICHARDS	Appellant

	- and -

	THE COMMISSIONERS FOR HER MAJESTY’S
	REVENUE AND CUSTOMS	Respondents

		Special Commissioner: 	DR JOHN F. AVERY JONES CBE 

Sitting in public in London on 18 August 2008

The Appellant did not appear and was not represented

Warren Mitchell, HMRC Appeals Unit London and Anglia, for the Respondents

© CROWN COPYRIGHT 2008

DECISION

1.	Mr R D Richards appeals against a discovery assessment for 2000-01 (tax £1,450) made on 24 January 2005, a jeopardy amendment for 2001-02 (tax and Class 4 National Insurance contributions £285,544.15) made on 25 July 2005, and a closure notice for 2002-03 tax and Class 4 National Insurance contributions £22,347.60) made on 8 February 2007.  There is a closure notice for 2001-02 made on 14 March 2006 in the same figure as the jeopardy amendment but this has not been appealed.  The Appellant did not appear and was not represented, and the Respondents (“the Revenue”) were represented by Mr Warren Mitchell.
2.	So far as the discovery assessment for 2000-01 is concerned the Revenue established in relation to the following year that bank charges were overstated and sought information to support the deduction in 2000-01 which was never provided.  I find that the Inspector has discovered that the deduction for 2000-01 is likely to have been overstated and in the absence of any explanation by the Appellant I find that there has been negligent conduct by the Appellant entitling the Revenue to make the discovery assessment.
3.	Since the jeopardy amendment was made the Revenue have proposed a reduction in the figure from tax and Class 4 National Insurance Contributions of £285,544.15 to £215,457.75.  The Revenue propose an increase in the closure for 2002-03 from £22,347.60 to £57,778 in accordance with a schedule that has been put to the Appellant.  It appears to me that the closure notice should be increased in accordance with those figures.
4.	The onus of proof is on the Appellant to show that the assessment and amendments are excessive and he has done nothing to show this.  
5.	Accordingly I dismiss the appeal against the discovery assessment for 2000-01, reduce the jeopardy amendment for 2001-02 to tax and Class 4 National Insurance contributions of £215,457.75, and increase the closure notice for 2002-03 to tax of £57,778.
6.	Mr Mitchell drew my attention to the difficulty caused by the absence of any appeal against the closure notice for 2001-02 made in the same figure as the jeopardy amendment when the jeopardy amendment has been reduced.  He undertook on behalf of the Revenue not to collect any tax due in respect of the closure notice in excess of the reduced figure of the jeopardy amendment, which seems to me is the only way of dealing with the problem.
7.	In view of the non-attendance of the Appellant Mr Mitchell asks for costs limited to the out of pocket expenses of the three representatives of the Revenue (himself, a colleague, and the Inspector as a potential witness) attending the hearing unnecessarily.
8.	My jurisdiction to award costs is contained in Regulation 21 of the Special Commissioners (Jurisdiction and Procedure) Regulations 1994 which provides:
“(1) Subject to paragraph (2) below, a Tribunal may make an order awarding the costs of, or incidental to, the hearing of any proceedings by it against any party to those proceedings (including a party who has withdrawn his appeal or application) if it is of the opinion that the party has acted wholly unreasonably in connection with the hearing in question.
(2) No order shall be made under paragraph (1) above against a party without first giving that party an opportunity of making representations against the making of the order.
(3) An order under paragraph (1) above may require the party against whom it is made to pay to the other party or parties the whole or part of the costs incurred by the other party or parties of, or incidental to, the hearing of the proceedings, such costs to be taxed if not otherwise agreed.
(4) Any costs required to be taxed pursuant to an order under this regulation shall be taxed in the county court according to such of the scales prescribed by rules of court for proceedings in the county court as may be directed by the order or, in the absence of any such direction, by the county court….”
9.	The Appellant has taken no active part in this appeal.  He did not comply with any of the Directions regarding documents and witness statements and nor did he tell the Tribunal or the Revenue that he would not attend the hearing.  I find that he has acted wholly unreasonably in connection with the hearing in making the Revenue incur unnecessary costs of travel to the hearing.  Therefore in accordance with regulation 21(2) I give the Appellant seven days from the date of release of this decision to show why I should not award the costs Mr Mitchell asked for.  If the Appellant does not respond I shall award these costs, and if he responds I shall make a decision in the light of his representations.

JOHN F. AVERY JONES

SPECIAL COMMISSIONER
RELEASE DATE: 20 August 2008

SC 3010/08