Waheed (t/a E R Cars) v Customs & Excise [2003] UKVAT V18421 (08 December 2003)

OUTPUT TAX – minicab firm acting as agent for the drivers but not accounting for tax on the charge to the drivers for hire of radios – appeal dismissed

LONDON TRIBUNAL CENTRE

	ABDUL WAHEED T/A E  R CARS	Appellant

	- and -

	THE COMMISSIONERS OF CUSTOMS AND EXCISE	Respondents

			Tribunal:	DR JOHN F AVERY JONES CBE (Chairman)
ELIZABETH MACLEOD CIPM					

Sitting in public in London on 2 December 2003

The Appellant did not appear and was not represented

Robert Kellar, counsel instructed by the Solicitor for the Customs and Excise for the Respondents

© CROWN COPYRIGHT 2003

DECISION

1.	Abdul Waheed trading as E R cars appeals against an assessment for £13,550 plus interest in respect of periods 11/97 to 02/00 made on 27 November 2000.  The Commissioners were represented by Mr Robert Kellar.  
2.	The Appellant did not attend and was not represented.  The Tribunal received a fax from Mr K S Raja, the Appellant’s accountant representative, saying “We write to indicate to you that our client is unable to attend the hearing on 2 December 2003 due to illness.  We will forward the medical certificate on receipt to you.”  The fax is timed 18.55 hours on 1 December 2003, after the Tribunal was closed and too late to prevent the Commissioners’ representative and their witness from attending.  Mr Kellar requested that the appeal be heard in the Appellant’s absence under rule 26(2) of the VAT Tribunals Rules 1986.  In the absence of any explanation why Mr Raja could not have attended and not having seen any medical certificate and so not knowing whether it would show that this was really a case of last minute illness, we agreed to do so.  
3.	The Appellant is a minicab operator.  The assessment arises because no VAT is charged on the £70 per week paid by drivers for the hire of the radio.
4.	We heard evidence from Mr Richard Edwards, the officer who visited on 14 June 2000.  His VAT audit report states under the heading checks made that “Agent vs principal situation investigated with respect to cash account work, papers and previous correspondence reviewed, written agreement with drivers examined.”  Under the heading summary of outputs he records: 
“Cash work (trader acts as agent).  
Fares are retained by drivers.  Drivers are self-employed and trader charges them £70 per week for the hire of their radios.  Cars belong to the drivers.  There is no advertising on the side of cars.  Maintenance of car down to the driver and drivers responsible for taxing.  Drivers buy own petrol.  Calls come through to the E&R line and are relayed to the drivers.  Drivers take cheques.”
[There is then a heading about accounts work where he records that the Appellant acts as principal.]
Mr Edwards followed up his visit by letters of 4 July, 4 August, 30 August, 15 September, and 12 October 2000, none of which was replied to by the Appellant.  
5.	On the basis of that evidence we find that the Appellant acts as agent in respect of cash work.  It follows that the hire of the radios is taxable.
6.	The amount of the assessment was calculated on the assumption that on average 10 drivers paid £70 per week for the whole period assessed.  The calculation was given to the Appellants by letter from Mr Edwards of 12 October 2000.  Although Mr Edwards could not confirm that the average of 10 drivers applied to the whole period assessed it is clear that he acted on the basis of information that this was the current estimate when he came to make the assessment and the Appellant has not disputed it.
7.	We should mention one further point.  We saw correspondence with the Appellant’s former accountants, Rixvi & Co, in 1997 in which they stated that the Appellant acted as principal and the Commissioners agreed that the radio hire charges were not liable to VAT.  Our understanding is that this would follow if the Appellant did act as principal.  Since it is clear from Mr Edwards’ investigations at his visit on 14 June 2000 that the Appellant does not act as principal we do not consider that this correspondence is relevant.  Either it was based on a misunderstanding of whether the Appellants acted as agents or they have since changed the way they operate.
8.	Accordingly we dismiss the appeal.  As the appeal was heard in the absence of the Appellant the Tribunal may set aside this decision on such terms at it thinks just, on the application of the Appellant (or its representative) served at the London Tribunal centre within 14 days after the date of release of this decision.  If any such application is made it should state the reason why the Tribunal was not informed earlier about the illness of the Appellant, and be accompanied by the medical certificate if this has not already been sent.  It should also state whether the Appellant disagrees with the principle of the decision or the amount assessed and the reasons for any such disagreement.

J F AVERY JONES

CHAIRMAN

LON/01/22