18830
VAT – hot food takeaway – under declarations of takings alleged over a number of accounting periods – disparity between cashbook and other records examined – appeal dismissed

MANCHESTER TRIBUNAL CENTRE

                                                        

	ALI SHER FAYYAZ T/A PIZZA PIT STOP 	Appellant

	- and -

	THE COMMISSIONERS OF CUSTOMS AND EXCISE	Respondents

				Tribunal:	Mrs E Gilliland (Chairman)
						Mr A E Brown (Member)

Sitting in public in Manchester on 14 March 2003, 19 August 2003, 20 August 2003, and 17 May 2004

Mr T Nawaz, Chartered Accountant, for the Appellant

Mr J Cannan of counsel instructed by the solicitor’s office of HM Customs and Excise for the respondents

	© CROWN COPYRIGHT 2004

DECISION
1.	The appeal before the tribunal is that of Mr Ali Sher Fayyaz (the Appellant) trading as Pizza Pit Stop a hot food takeaway business at premises in Moorfield Shopping Centre Crosland Moor Huddersfield against an assessment dated 1 February 2002 raised by the Commissioners under s. 73 of the Value Added Tax Act 1994  (the Act). The assessment is in the sum of £19236 tax and is in respect of the accounting periods 2/99 to 02/01. The Appellant was registered for VAT with effect from 1 February 1998.   
2.	The Appellant has been represented at the four days of the hearing (14 March 2003, 19 August 2003, 20 August 2003 and 17 May 2004) by Mr T Nawaz, Chartered Accountant. The Appellant has given evidence to the tribunal as has Mr Nawaz.  Mr Jonathan Cannan, Counsel for the Commissioners had called two witnesses namely Mrs. Sylvia Anne Jones an officer of Customs and Excise and Mr Martin David Mummery, the assessing officer. In the event Mrs. Jones though she attended did not give oral testimony. Mr Nawaz was permitted by the Tribunal to submit his final submissions in writing and a copy dated 7 June 2004 was duly produced. No further submissions on the same have been received from the Commissioners.
3.	We propose to look initially at the chronology and the evidence relating to the series of relevant attendances interviews and correspondence and set out our findings in respect of each. We shall then consider the role of the tribunal.  The assessment was raised by the Commissioners on the basis that the gross takings of the business were recorded after the deduction of payments out. This has been strongly disputed by the Appellant. His case is that an alleged admission to this effect was not made and that the assessment has been founded on a fallacy that his returns were cash returns after net payments.
4.	The events before the tribunal commenced with an unannounced visit to the premises in the early hours of Saturday 5 May 2001 by the officers Martyn Elliott and Mr Mummery. At that stage Mr Elliott was the lead officer but he later left the case and it was Mr Mummery who made the calculations and issued the assessment. It has appeared in the course of the evidence that there were some earlier unannounced attendances but they have not been fully recorded in the evidence before us nor taken into account by us. In the Appellant’s bundle of documents (referred to in this decision with a capital A followed by the page number) we have copies of Mr Elliott’s manuscript notebooks for 4-5 May 2001 and 5 May 2001 (A11-13) together with typed-up copies of Mr Mummery’s notebooks for visits made and interviews (A6-10). Both Mr Elliott and separately Mr Mummery, according to their notes, had been at the Appellant’s premises earlier in the evening of 4 May 2001 and purchased food. Mr Mummery has confirmed that he obtained a receipt and that it was later found that his meal was recorded in the till receipts.  The officers wished to check the cashed-up takings for Friday 4 May 2001.   It was for this purpose that they returned to the premises in the early hours of 5 May 2001 and Mr Elliott introduced them then to the persons there. The Appellant was not present. The takings were recorded as totaling £458.10. Later that day Mr Elliott this time with Mrs. Jones returned for the Z reading for that same day of 4 May 2001 (a copy is in the Commissioner’s bundle (C) at page 44) and it showed a total of £742.20.  The Appellant’s bookkeeper, Anne Mallinson, was there (A13). There has been issue between the parties as to the amount of the float. The Commissioner’s figures allow this at £150 but Mr Nawaz has indicated that in addition to £150 the records show £70 of change. This would make a figure for the float of some  £220 as the correct allowance against the takings. The Appellant referred to a float of £200 sometimes £150 in the interview notes for 16 May 2001 mentioned below. It is clear, as was confirmed by the evidence of Mr Mummery, that to these figures - when the calculation for the assessment was done - were also added figures from the records of suppliers of chicken to the business Clarke & Whitham for purchases of chicken, in excess of those the Commissioners saw shown in the business records. There were further adjustments and we look at these later in this decision. The officers on 5 May 2001 took away with them some business records and there is a receipt in the bundle (A14).  There is also available to us the witness statement of Mrs. Jones to which no objection has been made. (A23).
5.	There is a notebook record from Mr Mummery and oral evidence has also been given by him of a meeting he and Mr Elliott had on 16 May 2001 with the Appellant and a friend of the Appellant. Mr Mummery has recorded that the operation of the till and the records it produced and the cashing-up procedure were discussed with the Appellant.  The procedure as described by the Appellant was that a daily Z reading was taken and this was compared with the cash in the till from which a £200 float would be taken before counting. The figure was recorded on a piece of paper daily and at the end of the week an employee would complete a record of sales. Neither the Z readings nor the piece of paper were kept after the end of the week. Sales and purchases were recorded and there was a “red book”, that is a cashbook, setting these out and this was completed by Mrs. Mallinson.  The details of the takings she took from a canister which had in it receipts and records of takings. From this the Appellant’s then Accountants prepared the VAT returns.  Mr Mummery’s record shows that Mr Elliott raised with the Appellant that the highest figure in a list of weekly takings from registration to 26 February 2001 was £1222 compared with the Z reading for 4 May 2001. The Appellant referred to business having picked up since Christmas. He suggested also that the reading could have been for two days though Mr Elliott said to him that Mrs. Mallinson had confirmed that she had taken a Z reading the day before. The issue as to the said reading being for a two day period has been raised again by Mr Nawaz at the hearing.  Mr Mummery’s record shows that a print of the last five days was shown. It is indicated that the Appellant then produced seven Z readings and there is a copy receipt for these at A16. There is at C10 a copy of a letter dated 21 May 2001 from Mr Elliott to the Appellant raising two issues requiring explanation these being first the missing chicken purchases (i.e. not recorded in the cash book) and secondly the takings figure of £742.20 for Friday 4 May 2001. There was a schedule enclosed for six days takings, which Mr Elliott said showed a total of £2356.66 and thus was more than the highest ever declared weekly takings.  Mr Nawaz sought to deal with this point in his final submissions saying that on 5 May 2001 an explanation had been given that cash had been taken out during the day and that there was some uncertainty as to what the bookkeeper Mrs. Mallinson had in fact said.  Mr Nawaz has pointed out that a higher figure for takings being £1360 was in fact achieved on 17 April 2000.  In replies given during his examination-in-chief Mr Mummery said when asked how matters had been left after the meeting on 16 May that he felt there was under declaration and was looking to the Appellant to “come back with something realistic”. We would refer also to a reply from Mr Mummery as to the preparation of his notes that the questions were not written down, the replies only and these were not in shorthand but “abbreviated” form.
6.	A further meeting took place on 23 May 2001 as recorded at A8 and 9.  On this occasion the two officers Elliott and Mummery attended and the Appellant was present with Mrs. Mallinson. The notes record – but this has been totally rejected by the Appellant and his representative- that Mrs. Mallinson had said that the Appellant had been using as the takings figure a total after the deduction of some items though they had not been claiming for everything. It was also said at that meeting that on that Friday that the officers had visited the premises (4 May) the figures had been exceptionally high. The deductions made would be cash payments out of the till such as wages and local purchases. As regards the Clarke & Whitham invoices it is recorded that the Appellant said that he would take home one box per week (£25) that staff ate chicken and there would be wastage. It is also recorded that the Appellant suggested that the officers look at the declared sales and add the cash payments to see what the sales were. Later the Appellant is said to have limited this to the last six months only when he said there had been an improvement in the trading position. In a letter dated 13 July 2001 (C11) addressed to the Appellant Mr Elliott wrote: “From analysing your books and records I do not accept that under declaration of tax began six months ago and the schedules record this fact.”
7.	A meeting planned for 26 July 2001 was preceded by correspondence. A letter from Adu & Co. the Appellant’s then accountants received by the Commissioners on 23 July 2001 (C12) responded to the schedules, which had been produced by the Commissioners. The issues raised by the accountants as to why the schedules did not properly reflect the position came under the heads of (a) drawings; (b) capital introduced; (c) expenses paid by cheque; (d) rent (and arrears); and (e) the calculation for extra chicken. All these matters have been before the tribunal. The meeting on 26 July 2001 was duly held. There is at A 9-10 a copy of the interview records kept by Mr Mummery. The meeting was held at the offices of the accountants but no note of the proceedings has been provided from their papers.  After that meeting Mr Adu was to prepare schedules to the then current period re rent and some CB payments by cheque.
8.	Mr Adu’s reply was received by the Commissioners on 9 August 2001 (C 14-15). He now set the weekly expenditure of the Appellant at £200 not £350 as per the Commissioners’ schedules and this was a more specific figure than in his earlier letter when he had said that the Appellant did not have a fixed amount but withdrew between £200-£250 weekly dependent on the bills that had to be paid. He said that the Commissioners figure for rent was overstated by £1015.34.  He put a figure for payments of expenses by cheque at £1354.42. Wasted weekly chicken was £25 and thus for the period in question £3575. He did state that he had not included cancelled or “house” orders. Mr Adu accordingly in this letter set out his summary of expenses overestimated at £27,394 with the VAT thereon at £4,080.  We do note also that in both these letters the accountant has referred to information being received by him from the Appellant. The response from the Commissioners was not made until 18 January 2002 in a letter from Mr Mummery. (C 16-17). The various points which had been raised were considered by him. Drawings at £200 per week he accepted. On the question of capital the officer considered that the revised cash purchases for 8/98 and 11/98 more than covered capital introduced and as these two periods were not to be assessed the point had already been covered. The rent calculated in the schedules was to remain as Mr Mummery pointed out that his revised schedules covered only the assessment period, which included rent payments of £1,164.72 in the period 2/99. Expenses paid by cheque as detailed in the accountant’s letter had been accepted and thus deleted.  Mr Mummery did not see wastage as relevant as the Appellant had paid out for the wasted goods and therefore that did not have a bearing on the calculation of the assessments. This was a cash calculation not a mark-up exercise.  It was at this stage that the schedules were amended to produce the total tax now claimed of £19,236. Mr Mummery forwarded his amended schedules. Explanatory notes to his calculations were attached. As has been confirmed by Mr Mummery his starting point was the disputed declaration said to have been made on 23 May 2001 that only net cash takings for the week were declared and purchases by cash excluded. The cash book cash payments schedule is at C 49-75. Each week ending is noted and cash book entries shown with in each case additional amounts inserted for extra chicken, wages, and drawings on the basis of the formulae set out in notes to the schedules and supported by copy invoices and calculations. Wages were a part of the calculation at approximately £450 per week (C19).  The information as to opening hours said to have been supplied by an officer Andrew Lumb was objected to as unsupported evidence but at the hearing based on the evidence at the hearing the Commissioners conceded a revision of the hours from 132 as originally shown at C 20 to 128. The Appellant had said that he paid the minimum wage from it being introduced though he referred also to part-time student help. The seven Z readings have been scheduled and copies of these readings are at C 44-47. These various issues have been the subject of detailed examination and cross-examination by the representatives of the parties of the witnesses called.
9.	The Appellant in his evidence denied any admission at the meeting on 23 May 2001 or otherwise that his returns were based on takings less cash payments. Present at that meeting were Mr Elliott and Mr Mummery. Mr Elliott has not been called as a witness and it has not been suggested by the Commissioners that he could not have been called. His notes have been referred to earlier. Mr Mummery was present. His notes are also available and he has given first-hand evidence to the tribunal.  Also present at that meeting was Mrs. Mallinson. She has not been called as a witness nor provided a witness statement and again there has been no indication that she could not have been called. The Appellant has said that Mrs. Mallinson did not make the admission attributed to her and that in any event it was not her place to do so as she would not know. We are however quite satisfied that Mrs. Mallinson would not have been at the meeting had the Appellant not wished her to be there and she did have a working knowledge of the business.  Mr Mummery has confirmed his record of the meeting and we accept it as accurate.  In respect of cash taken from the till in response to questions in cross-examination Mr Mummery acknowledged that he did not know who took the money out and when they had done so. It should be noted regarding the manuscript notes of Mr Elliott though he is not here to be examined on them that he recorded that F. Chaudry had said that money had been taken out of the till (A 13).   
10.	In considering the conflict of evidence between Mr Mummery and the Appellant it is to our mind appropriate to look at the correspondence particularly that with Mr Adu. Mr Mummery’s assessment was clearly drawn on the basis of adding back cash and Mr Adu did not challenge the principle. Further when Mr Mummery specifically stated in a letter of 18 January 2002  (C16-17) to Mr Adu that the assessment was based on “the admission by your client that gross takings were recorded after the deduction of cash payments paid out” there was no challenge by Mr Adu. It is clear that the Appellant at some stage dispensed with the services of Mr Adu and Mr Nawaz has sought to discredit this correspondence. The Appellant in examination-in-chief said that he did not know of the letters sent on his behalf. We do not accept this. As we have indicated above Mr Adu had referred to contact between the Appellant and him on the matters raised by the Commissioners; Mr Adu was the accountant who was responsible for the VAT returns and prepared the business accounts.  We are satisfied that as a professional person he would not have attended a meeting with officers of Customs and Excise unless he had instructions to do so. We accept the validity of the accountant’s correspondence on the record. We have considered also the evidence of Mr Mummery. He was cross-examined by Mr Nawaz and when he could not reply from personal knowledge he made that clear. He was however before the tribunal quite clear as to the nature of the evidence he had had before him when making the assessment namely the statements of chicken purchases from the suppliers with on the reverse  manuscript entries not in the cash book; the Z reading of 4 May 2001 which he compared with takings previously declared and between which he found substantial disparity; and the list of Z readings (C 43) from which he took a six day reading (£2,356.66) and again identified a  considerable increase on past figures. Our conclusion is that Mr Mummery was an honest witness and we accept his evidence. We are satisfied and find that it was valid for the officer to base his assessment on an admission that there had been cash payments out before takings were declared. We proceed to identify those payments.
11.	The cash payments, which were examined by Mr Mummery were as shown above drawings, wages, rent and chicken purchases. It is clear to us from the documentary evidence obtained by the Commissioners from Clarke & Whitham that more chickens were supplied to the Appellant over the period of the assessment than were recorded in the cashbook. Indeed the Appellant’s representative has suggested that the estimates in respect of chicken purchases by the Appellant are not challenged though the validity of the reason for their omission is in that they were not for the shop.  Mr Mummery in his calculation of the gross takings wrote back sums in respect of the under declared chicken on the basis that they would have been paid for out of receipts. The amount of chicken not accounted for is however not simply one box per week at £25 as suggested by the Appellant in evidence but sums in excess of up to £100 or thereabouts (see C49-75). The Appellant’s evidence in relation to the chicken, and in particular the amount, is inconsistent with the amounts actually supplied and we reject his evidence on that. We agree with Mr Mummery that the question of wastage does not arise. The issue is by how much the takings have been reduced by the payment for the unrecorded chicken purchases. What happens to the chicken, whether some went on wastage, was consumed by staff or members of the Appellant’s family, is in our judgment not relevant. It has also been put on the Appellant’s behalf that supplies were paid for at the depot rather than at the premises. We do not accept that this might establish that the payments were thus not from the till. The payment had to come from somewhere and   no evidence has been produced to support any conclusion other than that monies in the business were used or indeed available.
12.	During the course of the hearing the Appellant’s representative produced a blank document (A24) which he has stated is a reconciliation statement completed in respect of the business daily reconciling the cash in the drawer with the Z readings and he sought to use this to establish that rather than deducting the cash payments the cash purchases were in fact added back to the cash collected at the end of the day. This he has called crucial evidence of a system in place that would prevent cash differences going unrecorded. This he relies on also as evidence that the Appellant never made any admission of deducting cash from the takings. It has been suggested that this was the “ piece of paper” referred to in the interview record of 16 May 2001 (A8) as completed daily and retained until weekly the information was used by Mrs. Mallinson in the preparation of the figures she obtained for the Accountants. The Appellant has said that he completed these reconciliations himself. No completed reconciliation statement has been produced to us for the period in question and indeed Mr Nawaz has put it to us that the Commissioners when they visited the premises took away with them completed forms which they have subsequently lost or suppressed. It has however been the Appellant’s evidence that the forms were destroyed after a week, as were usually the Z readings. At the most therefore it would seem that there would only be a maximum of seven available at any one time. When Mr Mummery was cross-examined on this his reply was that they did not see them and did not take them. The form produced to the tribunal on 20 August 2003 was as indicated a blank form with no figures. Mr Nawaz took the Appellant through the document as to how he would have filled it in. There were a number of boxes under various heads including £ notes and pence of various denominations, cheques, shopping, total, float, CID (cash in drawer), reading, discrepancy and miscellaneous. There were at the bottom twelve boxes under the heading wages.  The Appellant said that his name would be written in at the top of each form and that he filled in the form 99.9% of the time though he did acknowledge that would mean the time that he was there. It is clear to us however that the Appellant cannot have filled any such forms for the week of 4 May 2001 as he was in Pakistan from February until his return during the week of 7 May 2001. There is no evidence in our view, which shows that such forms were in fact used.
13.	It is also clear to us that the amount of wages that the Appellant said were paid weekly does not accord with the amount of wages paid out in the cash book nor with the Appellant’s Profit and Loss accounts for 1999 and 2000. If there had been a reconciliation including wages we would have expected the correct figures to have been inserted in the daily reconciliation and that these would have found their way into the Appellant’s cashbook and Profit and Loss account. We reject the suggestion that items such as wages and the other items identified on the blank form produced to the tribunal were indeed added back to the till contents to produce the true takings. We are satisfied that the Appellant did not fill in one of these forms daily. We find also that it has not been established that the Commissioners took away any such completed forms. The likelihood to our mind is that there were none when either Mr Elliott or Mr Mummery called and papers and documents were taken. 
14.	It has been suggested also that the Z reading taken on 5 May 2001 at 10.16 a.m. showing the sum of £742. 20  (C 44) having been rung up on the till related not just to Friday 4 May but also to the previous day and thus that the Commissioners’ view that this was indicative of significant under declaration because the highest previous weekly total was considerably higher (£1360) was unsound. Mr Mummery’s evidence was that Mrs. Mallinson had said on 23 May 2001 that the Z readings were done on a daily basis and she had said that that Friday’s takings were good because it was a Bank holiday weekend and other local factors were also mentioned. The money in the till had been counted at £458.10. but the Z reading showed £742.20.  As we have indicated it was not suggested when the discrepancy was first raised that the Z readings related to more that one day’s takings. This was only raised when the Appellant returned from Pakistan and attended the meeting on 16 May 2001.  We are satisfied on the evidence that the suggestion is not supported and was merely an attempt to explain away the discrepancy between the amount in the till and the amount that had been rung through.
15.	The Appellant’s representative made lengthy final submissions in writing and we would deal with various points with which we have not otherwise dealt.  On the question of disclosure of documents he has criticised the Commissioners and referred to a series of requests he made for all “ material of relevance” to be produced and he followed this up once more on the first day of the hearing. Whilst in some respects the Commissioners were tardy in putting together their bundle of documents we are satisfied that there was nothing sinister or improper on the part of the Commissioners in this and that they have disclosed the material. Their Counsel has checked this. We do not accept the claim that reconciliation statements and further Z readings had been available at the premises and had disappeared through the intervention of the officers of the Commissioners whether by purpose or through incompetence. These are serious charges and we have not found them substantiated. There are other explanations including simply that some may not have been completed in the absence of the owner when there was an enquiry under way. We have found it possible to follow the methodology of the assessment by way of the written and oral evidence. Accordingly we do not consider there is anything of substance in the point and are satisfied that the Commissioners have not suppressed evidence. On the matter of evidence produced late we would refer to the reconciliation statement. The blank form referred to above was first presented during the course of the hearing. Mr Nawaz has referred to reluctance on the part of the tribunal to admit in evidence this blank reconciliation statement. It was our view that a blank form was likely to be of little probative value or indeed relevance. Nor do we consider that how the Appellant may cash up now can give the answer to what happened on 4 May 2001 when the Appellant was not present nor does it throw light on what he may have done earlier.  In the event however we admitted it and heard the Appellant’s representative take the Appellant through how he would have completed it. We have set out in this decision our findings in relation to this document.  Mr Nawaz brought up also, particularly when questioning Mr Mummery, and sought to make much of the failure of the Commissioners to use or produce a Case Control sheet. We are satisfied that the lack of such a document has not prejudiced the Appellant. Mr Mummery has given direct evidence as to how he went about raising the assessment and the information from his own personal knowledge the interview records and the correspondence upon which he relied. There is ample documentary evidence to show how he arrived at the amount. He was cross-examined on all these matters. It is necessary in the interests of justice that disclosure be directed to the relevant calculations and documents. The emphasis Mr Nawaz sought to place on there being no Case Control sheet thus harming the Appellant’s case was in our view made without any real foundation having been laid showing what these documents or calculations might be or their relevance.  
16.	We would comment also that it is quite wrong to suggest as Mr Nawaz has in his closing submissions that the tribunal acted as if “the Commissioners could do no wrong” or alternatively that the tribunal was there to rubber-stamp their actions.  In an open part of the hearing the tribunal would immediately have taken the opportunity to make it clear that these comments were unsupported and objectionable both in content and context. The Appellant’s representative has sought also to object to the tribunal asking questions of the Appellant and has suggested that the Appellant was “ badgered”.  It was perfectly reasonable for the tribunal in a matter such as the instant case where the operation of the till was relevant to seek clarification after cross- and re-examination from the Appellant of his knowledge of the sequence of the till procedures.  This could only be seen as of value to the presentation of the Appellant’s case as it afforded the chance to meet the tribunal’s queries and put the replies on record.  As to a corresponding lack of questioning of Mr Mummery on the till rolls and the “missing” evidence, Mr Mummery was examined and cross-examined at length by the representatives of the parties on these points. Mr Nawaz has suggested that the Appellant had a limited knowledge of the English language and that he was confused at times. The Appellant was however represented at the hearing by Mr Nawaz and it was for Mr Nawaz, if he had reason to believe that any answers given by the Appellant were given under a misapprehension or that he did not understand what was being said, to seek to clarify the matter in his examination or re-examination of his witness. The operation of a till even if bought second hand is something which is normally well within the understanding of a retail businessman. We reject any suggestion that the Appellant did not have a fair hearing. He had a full opportunity to put his case through his highly experienced representative. Further the tribunal saw the Appellant in the witness box and we were able to hear his responses to the questions asked. Whilst many of his replies were to the effect that he did not know, we are satisfied that this was not through any lack of comprehension. The requirements of a fair trial were fully met. 
17.	The role of the tribunal referring to the judgment of Chadwick LJ in Rahman No.2 [2003] STC 156 is pursuing the underlying purpose of the legislative provisions “ to ensure that the taxable person accounts for the correct amount of tax”.  In the instant case in his Notice of Appeal submitted to the tribunal on his behalf by Mr Nawaz the Appellant set out his grounds as follows: “the assessment seems to be based on cash expenditure which is not accepted or agreed. The appellant wishes to put the commissioners to proof of the figures they have incorporated. Any without prejudice discussions/comments are withdrawn.”  We are not clear what Mr Nawaz was referring to by way of “strict proof”. The burden is on the Appellant to establish on the balance of probabilities that the assessment is excessive and we consider that the Appellant in establishing this should show what corrections should be made to make the assessment right or more nearly right.
18.	Mr Nawaz submitted that the tribunal should discharge the assessment. Counsel for the Commissioners has offered two minor adjustments, which we have noted elsewhere. The tribunal does have power to “give a direction specifying the correct amount of tax and such a direction has the effect of an assessment” (s. 84 (5) of the Act). Further, should the tribunal find the amount of tax payable substantially different from the assessment it may seek some explanation and look at the approach of the Commissioners. It is not entirely clear to us the extent to which the Appellant’s representative is claiming that the decision of the Commissioners in the instant case was not made to the best of their judgment in the sense that it was made in bad faith. In his final submissions he does refer to the assessment being “spurious”, one of the words used by Woolf J. in Van Boeckel (Van Boeckel v Customs and Excise Commissioners [1981] STC 290) in the term “a spurious estimate”. 
19.	The difficulty in the instant case is that while the Appellant has denied the accuracy of the Commissioners’ calculations and the assessment and has disputed the figures he has not produced evidence as to the way in which the calculations are excessive except merely to say that the assessment must be discharged and presumably that the returns submitted require no adjustment. The Appellant has said that he was not an expert on tills but it is not credible to us that he could not answer straightforward questions as to what he did himself or what others did on his behalf.  The Appellant seems to have considered that simply by saying that he was not there on certain of the relevant dates or that someone else wrote it or that Mrs. Mallinson did not work in the shop was a sufficient answer without further explanation. The questions asked by the officers and later put at the hearing were quite specific relating to the running of his business of which he took the profits. We cannot accept that in his long periods of absence those who were there did not have a clear indication of what they were to do, yet even the Appellant’s nephew whom he had said was left in charge has not made a witness statement. There is in our view no factual foundation for any suggestion that the assessment was not made to best judgment.
20.	We do not consider that there was any bad faith or capriciousness in the steps taken by the officer in calculating the assessment. It was not a spurious estimate. We are satisfied that he made the assessment to the best of his judgment on the material available to him. We have examined the method of calculation to review this in the light of the material before the Commissioners. We have referred above to the specific issues of the drawings, wages, rent and chicken purchases and to the steps taken by the Commissioners to produce updated figures from the data obtained. The various adjustments sought by Adu & Co. were examined and clear reasons given by the officer when not agreed.  The Appellant produced a form which was to establish that a proper system was in place by which to identify specific daily payments out and thus to match cash in the till with Z readings. For the reasons already given we do not consider that such a protocol was operated. Nor has it been established in our judgment that the Z readings should be taken as gross rather than as net takings.  
21.	Counsel for the Commissioners confirmed that they would make two alterations to the figures to allow in the Appellant’s favour a credit for zero- rated cold foods thus reducing the assessment figures by some one and one half to two per cent. In addition an allowance will be made in respect of the reduction in the figure for hours worked by staff from 132 to 128 (C20). We endorse both of these corrections and direct accordingly. However these are minor in content and following the principle in John Dee (John Dee Ltd. v Customs & Excise [1995] STC 941) we do not consider that the assessment is flawed. We are assured by Counsel that the mathematics in these matters are such that no further reference to the tribunal will be necessary. 
22.	Accordingly we dismiss the appeal.
23.	We afforded to the representatives of the parties the opportunity to address us on costs dependant on the outcome of the appeal. The Appellant’s representative did not propose to seek costs. Counsel for the Commissioners said that he would seek costs (which he did not quantify) in respect of the attendance of Mrs. Jones at the hearing. It is clear that there was some confusion as to precisely when it was ascertained that oral testimony from that witness would not be necessary. We are therefore not of a mind to require payment of costs in this connection. The Commissioners had not otherwise sought costs and we therefore make no direction as to costs.

E GILLILAND
CHAIRMAN
Release Date: 3 November 2004

MAN/2002/0252

££Fayyaz (t/a Pizza Pit Stop) v Customs and Excise [2004] UKVAT V18830 (03 November 2004)