07/04/2004 03 0762 NICOLE DESIGNS LTD Miss J Warburton Mr J P M Denny Manchester 1 April The Appellant did not appear and was not represented Mr B Haley of the Solicitor's office of HM Customs and Excise for the Respondents 
	 Security — common directors —appeal dismissed — Value Added Tax Act 1994 Schedule 11 paragraph 4(2)

MANCHESTER TRIBUNAL CENTRE

 
 	
	NICOLE DESIGNS LTD	Appellant

	- and -

	THE COMMISSIONERS OF CUSTOMS AND EXCISE	Respondents

				Tribunal:	 Miss J Warburton (Chairman)
						 Mr J P M Denny (Member)	

Sitting in public in Manchester on 1 April 2004

The Appellant did not appear and was not represented

Mr B Haley of the Solicitor's office of HM Customs and Excise for the Respondents

	© CROWN COPYRIGHT 2004

DECISION

1.	This is an appeal by Nicole Designs Ltd against a requirement to give security under paragraph 4(2) of Schedule 11 of the Value Added Tax Act 1994.  The appeal is in respect of a Notice of Requirement contained in a letter dated 16 October 2003 to give security in the sum of £32,200.
2.	The Commissioners were represented by Mr B Haley of the Solicitor’s office of HM Customs and Excise who put in a bundle of copy documents.  No one appearing on behalf of the Appellant, the Tribunal determined to proceed under rule 26(2) of the Value Added Tax Tribunal Rules 1986.
3.	We heard in evidence on oath from Mr D H Price, an officer of HM Customs and Excise at the VAT Security and Insolvency Unit in Halifax.  From the documents submitted and the oral evidence we find the facts to be as follows.
4.	Daljit Singh Grewal and Manmohan Singh Grewal were partners in NS Grewal and Sons which traded from Unit 15 Enfield Street, Leeds.  The partnership left the Commissioners with a debt in excess of £25,000.  A similar manufacturing business was carried on from the same premises from March 2002 by NS Grewal Limited.  The directors of that company in addition to the two partners of NS Grewal & Sons were Savraj Sing Grewal and Balraj Singh Grewal.  That company left the Commissioners with a debt in excess of £80,000.
5.	The Appellant company took a transfer of the business from NS Grewal Limited and trades from the same premises.  The directors are Daljit Singh Grewal, Balraj Singh Grewal and Christopher John James.
6.	NS Grewal Ltd was served with a Notice of Requirement to give security on 6 February 2003.  The company appealed to the Tribunal and at the hearing advised that it had ceased trading.  A Notice of Security was then served on the Appellants on 16 October 2003.
7.	The Notice of Requirement was issued by Mr Price.  He gave evidence that in determining to issue the Notice of Requirement he had had regard to the fact that the Appellant company was carrying on the same business at the same premises as a previous company and previous partnership which shared common directors and partners.  The previous partnership and company both owned considerable sums in VAT and in respect of default surcharges and he considered that there was a risk to the Revenue.
8.	Mr Price calculated the amount of security, based on the Appellant’s first return as £32,200 representing 6 months VAT.  There was a minor miscalculation and the sum should have been £31,826.17.  The second return of the Appellant’s shows a higher turnover but that return was not available until after the Notice of Requirement was issued.
9.	The Appellant in its Notice of Appeal as grounds for the Appeal stated that the company was now up to date with its liabilities.  The documents show that 3 returns have been made and all VAT paid, albeit not all on time.
10.	Mr Haley for the Commissioners submitted that in the light of the history of the business passing directly from the partnership to NS Grewal Limited and then to the Appellant and the sums owned by the partnership and the previous company that the decision to seek security on 16 October 2003 was a reasonable one.  The small error in calculation of the security did not vitiate the decision.  Matters arising since the decision, in particular the Appellant’s VAT record, were irrelevant.  Mr Haley relied on Customs and Excise Commissioners v Peachtree Enterprises Ltd [1994] STC 747 to support his decision.
11.	The Court of Appeal in John Dee Ltd v Customs and Excise Commissioners [1995] STC 265 set out the jurisdiction of the Tribunal on security cases. Accordingly, we must ask ourselves whether the Commissioners had acted in a way which no reasonable panel of Commissioners could have acted, whether they had taken into account some irrelevant matter, whether they had disregarded something to which they should have given weight and whether they had erred on a point of law.
12.	We have considered the decision taken by Mr Price on behalf of the Commissioners and concluded that he did none of these things.  The decision to seek security and the amount of security were reasonable at the time the decision was made 16 October 2003.
13.	Accordingly the appeal is dismissed.
14.	Mr Haley made an application for costs in the sum of £100 and we direct that that sum be paid by the Appellant.

MISS J WARBURTON
CHAIRMAN
MAN/03/0762