SECURITY  — trader involved in previous businesses with poor compliance record — reasonableness of the Commissioners’ decision — appeal dismissed.

MANCHESTER TRIBUNAL CENTRE

	MOHAMED JAMIL t/a J-JAYS RESTAURANT	Appellant

	- and -

	THE COMMISSIONERS OF CUSTOMS AND EXCISE	Respondents

				Tribunal:	Lady Mitting (Chairman)
						Mr R Grice (Member)	

Sitting in public in Birmingham on 21 October 2003 
The Appellant did not appear and was not represented
Mr R Mansell of the Solicitor’s Office of HM Customs and Excise for the Respondents

	© CROWN COPYRIGHT 2003

DECISION
1.	 The decision under appeal is that of the Commissioners contained in a letter dated 16 September 2002 to require the Appellant to give security under Schedule 11 paragraph 4(2) Value Added Tax 1994.  Security was required in the sum of £8,100.

2.	The Appellant did not attend the hearing and having satisfied ourselves that the notice of hearing had been properly served we proceeded to hear the appeal under rule 26(2) Value Added Tax Tribunals Rules 1986.  We heard oral evidence from Mr Nigel Ridsdel, on behalf of the Commissioners.

3.	The Appellant, Mr Mohamed Jamil, traded as J-Jays Restaurant from premises in Unit 2-3, Edgbaston Shopping Centre, Hagley Road, Birmingham.  The business had been registered with effect from 1 January 2002.  The case had been referred to Mr Ridsdel by a fellow officer who asked Mr Ridsdel to consider whether security was required for the protection of the revenue.  Mr Ridsdel carried out a detailed investigation and concluded that the registration did constitute a risk and that security was necessary.  Mr Ridsdel’s research showed that Mr Jamil had been involved in a number of previous VAT registrations that had either gone into formal liquidation or had otherwise ceased trading owing substantial sums of money to the Commissioners.  Mr Jamil had been a director of J-Jays Restaurant Limited which had traded from 1 June 1988 to 16 November 1993 and had gone into liquidation on 20 August 1992 owing the Commissioners £148,639.  The compliance record of this business had been poor and £118,000 of the liquidation claim related to an officer’s assessment issued in February 1993.

4.	From  1 September 1995  to  1 February 1999,  Mr Jamil  had been  a  partner  in
J-Jays Restaurant.  On cessation no debt was owed to the Commissioners but the compliance record of the company during its period of trading had been poor.  Returns were generally on time but payments uniformly late.  As it was a cash business this should not have been the case.

5.	From 11 August 1998 to 1 January 2002, Mr Jamil had been a director of J-Jays Restaurant which on deregistration had owed the Commissioners £1,297.42.  Again, the compliance record of this business was poor in that the returns were normally submitted on time but payment was universally late.  Again, this was a cash business.

6.	In his current registration as sole proprietor of J-Jays Restaurant, the first return for the business from January to July 2002 was received only 4 days late but it was accompanied only by a current cheque for £4,000, the remainder of the VAT due being rendered in post-dated cheques which were rejected by the Commissioners.  At the due date for this return therefore the Appellant’s liability for the period was £16,213.

7.	Given this trading background for the Appellant, Mr Ridsdel believed security was justified.  Mr Jamil rendered monthly returns and the amount required was based on four month liability of the estimated declared turnover in the application for registration.  In fact this was somewhat lower than would have been the case had Mr Ridsdel had before him when he raised his requirement the first return.  

8.	The only evidence tendered on behalf of the Appellant had been the Notice of Appeal which set out the following factors as the grounds for appeal.  Mr Jamil had been a director of J-Jays Restaurant Limited trading from 11 August 1998 to 1 January 2002.  This company had ceased trading on legal advice, because of a complication regarding the lease of the premises from which the company operated and Mr Jamil, again on legal advice transferred the business from the limited company into his sole name.  The current registration was therefore in effect a transfer to himself as a sole trader of a going concern.  Further, all the VAT returns of respect of the limited company had been submitted together with the relevant tax.  In fact, as recited above, this is not accurate because although the returns were submitted, the outstanding debt of £1,297 has never been paid.  The grounds of appeal also stated that the return for the first long period was submitted on time and the amount of tax due settled.  This is not entirely accurate because although the return was submitted only four days late, the amount due was not settled until 6 January 2003.  Further, it was submitted that monthly returns had been submitted for the months of August to November 2002 on a timely basis.  
9.	The tribunal looks at the state of affairs as it was when the notice of requirement was raised.  We cannot therefore take into account the fact that subsequent returns have been submitted on time.  We do not know whether this is in fact the case or whether payment was made timeously but as we say this is not relevant to our decision.  Our jurisdiction is to consider the reasonableness of the request on a Wednesbury test.  Having heard Mr Ridsdel and having looked at the documentary evidence of the previous registrations put before us and having heard nothing further from the Appellant, we find the request for security to have been entirely reasonable.  All the facts taken into account by Mr Ridsdel were relevant and we cannot see that he failed to take into account any matters which would have been material.

8.	The appeal is therefore dismissed.  Mr Mansell made an application for costs in the sum of £100, given that the Appellant did not attend.  We make an order for costs in the sum of £100 accordingly.

LADY MITTING
CHAIRMAN
Release Date:
MAN/03/72