2003 (7) TMI 681 - Tri - Customs

Summary

Issues Involved
1. Compulsory re-registration for VAT.
2. Suppression of turnover and discrepancies in sales records.
3. Accuracy of HMCE's methods and calculations.
4. Alleged improper conduct by HMCE officers.
5. Validity of the Appellant's independent report.

Detailed Analysis

Compulsory Re-registration for VAT
The appeal concerns the compulsory re-registration of the Appellant for VAT effective from 24 October 1995, as decided by HMCE on 18 December 1997. The Appellant contested this decision, asserting that his turnover was inaccurately assessed and that the methods and calculations used by HMCE were flawed.

Suppression of Turnover and Discrepancies in Sales Records
HMCE conducted multiple investigations, including test purchases and invigilation, which revealed discrepancies in the Appellant's sales records. The Appellant's records did not align with the supplier records, indicating undeclared purchases. For instance, the declared purchases from "Atlantic Fish Wholesale Ltd" and "Brook Farm Produce" were substantially lower than the actual purchases, suggesting suppressed sales.

Accuracy of HMCE's Methods and Calculations
The Tribunal scrutinized HMCE's methods and calculations. Mr. Clark's analysis showed significant undeclared purchases, with a suppression rate of 87.20% for fish and 83.58% for chicken. Despite the Appellant's independent report challenging these figures, the Tribunal found HMCE's evidence compelling. The Tribunal noted that suppression of purchases typically equates to suppression of sales, a principle supported by the gaps in the Appellant's purchase records.

Alleged Improper Conduct by HMCE Officers
The Appellant alleged misconduct by HMCE officers during their investigations, including claims of rudeness and aggressive behavior. However, these allegations were denied by HMCE and were not substantiated by the evidence presented. The Tribunal did not find sufficient grounds to consider these complaints as impacting the validity of the re-registration decision.

Validity of the Appellant's Independent Report
The Appellant's independent report, prepared by K&M Accountants, argued that the undeclared purchases did not necessarily imply undeclared sales and attributed some purchases to personal use. However, the Tribunal found this explanation unconvincing, noting that the Appellant's takings were consistently close to the VAT registration threshold. The Tribunal concluded that even minor under-declarations would have placed the Appellant over the threshold.

Conclusion
The Tribunal dismissed the appeal, concluding that the Appellant had not properly declared his takings and that the evidence supported HMCE's decision to re-register him for VAT. The Tribunal acknowledged some doubts about HMCE's methods but ultimately found the under-declaration significant enough to justify the re-registration. There was no order for costs.