Courts Plc v Customs and Excise

The Tribunal began by noting (in paragraph 10 of the Decision) that although the process of assessment is not defined in the 1994 Act itself, a distinction falls to be drawn between the making of an assessment and the notification of the assessment to the taxpayer.

In paragraph 11 of the Decision the Tribunal said this:

“Protective assessments, which are not a different type of assessment but a normal assessment made in particular circumstances, are required to keep time limits open where decisions in other cases are under appeal where eventually the court will declare what has always been the law. This is particularly necessary now that there is a three-year time limit for assessing. The Tribunal has also held in DFS Furniture Company plc v. Customs & Excise Commrs. (2002) VAT Decision no. 17,818 [a decision subsequently upheld by the Court of Appeal: see [2004] 1 WLR 2159] that the [ECJ] decision in Primback was not ‘evidence of facts’ enabling time limits to be extended. The only way in which the Commissioners can keep time limits open is accordingly to make a protective assessment.”

In paragraph 12 of the Decision the Tribunal turned to the issue as to Mr Gurd’s state of mind when he completed the VAT641 in December 1999 and retained it in his file. With reference to the fact that in so doing Mr Gurd was following the guidance he had been given, the Tribunal said this:

“We can see no reason for saying that this did not constitute a decision by the Commissioners, although split between two persons [i.e. Mr Gurd and the colleague who gave the guidance], to make an assessment.”

The Tribunal went on to conclude that the fact that the December 1999 VAT641 was never processed, with the consequence that no amendment was made to Courts’ ledger account in respect of it, did not lead to the conclusion that the completion of the VAT641 was ineffective to create a debt due to the Commissioners. The Tribunal concluded (in paragraph 15 of the Decision) that the VAT641 coupled with the letter dated 16 December 1999 were effective to create a debt due to the Commissioners (albeit a debt which was not immediately enforceable). Accordingly, the Tribunal found (in paragraph 17 of the Decision) that a valid assessment was made on 16 December 1999.

The Tribunal found (in paragraph 21 of the Decision) that the assessment made in May 2000 was valid and was rightly made in order to reflect the fact that part of the VAT shown as due in the December 1999 VAT641 was due in any event, regardless of the outcome of the Primback litigation. The Tribunal described the May 2000 assessment as an “alternative assessment, the effect of which was to reduce the amount that had been assessed on 16 December 1999”. Although the Tribunal did not specifically refer to the June 2000 assessment in this connection, it is implicit in its reasoning that in referring to the May 2000 assessment it was referring to the May 2000 assessment as subsequently varied by the June 2000 assessment.

As to the events of November and December 2001, the Tribunal concluded (in paragraph 23 of the Decision) that it was clear from the contents of Mr Gurd’s letter dated 27 November 2001 that he cannot have intended “both to ask for payment of sums previously assessed and to make a new assessment in the same total sum by completing and processing the Form VAT 641”. The Decision continues:

“He intended, and it is objectively clear that what he was doing was, to prepare a document for inputting on the computer that would result in the debt being shown on the ledger. No doubt it is much simpler to have one document processed than the previous four documents. The computer automatically generated a form 655 of 19 December 2001 which Mr Gurd accepts he should have intercepted, and which was later withdrawn. But [Courts], having been asked to pay the earlier listed assessments by Mr Gurd’s letter dated 27 November 2001, must have realised that the form VAT 655 sent to them on [19] December 2001 for the same total figure was an error and was not a new assessment. Accordingly we decide that, although Mr Gurd went through all the procedures for making and processing an assessment culminating in the Form VAT 655 of 19 December 2001, in the light of all the circumstances he did not make another assessment on that date.”

The Tribunal accordingly found (in paragraph 24 of the Decision) that nothing that happened after 16 December 1999 affected the validity of the assessment made on that date, save only that the figures were varied as set out in Mr Gurd’s letter dated 6 July 2000 by reason of the May/June 2000 assessments, which were made on an alternative basis.

I am well aware that the summary of the judge’s judgment which follows does not do justice to the care and thoroughness with which the judge addressed the issues before him. However, since his judgment is now reported, a summary is all that is required for present purposes.

As a preface to his consideration of this issue, the judge formulated a series of general propositions which he considered to be justified on the authorities, as follows (paragraph 53 of the judgment):

Addressing the issue as to Mr Gurd’s state of mind on 16 December 1999, the judge said this (in paragraphs 54 and 55 of the judgment):

“54.

On the face of it, Mr Gurd’s action in completing the VAT 641 on 16 December 1999, coupled with his action in sending out the December 1999 letter stating that the Commissioners had made assessments under section 73 for the eight relevant periods, points strongly to a decision having been made to make the assessments. Why go through these steps if, in truth, no decision to assess had been made? Essentially, two matters are urged against this conclusion. First, the Tribunal’s finding that, but for the advice contained in Mr Excell’s e-mail coupled with the draft TA 2/99, Mr Gurd would not have acted at all. Second, the Tribunal’s finding that the decision was split between Mr Gurd and another coupled with (a) the absence of any clear indication as to who precisely that other was and (b) the absence of any evidence, even if that other was Mr Excell, as to what involvement that the other person had in the decision, let alone what his intentions were with regard to the making of any assessments for the eight relevant periods.

55.

The first of those matters does not seem to me to lead to the conclusion that, having received the e-mail advice, Mr Gurd’s action in filling out the VAT 641 did not presuppose a decision to make an assessment for the eight relevant periods in the amounts set out on that form. The fact that, left to his own devices, Mr Gurd would not have proceeded to make any assessments at all is neither here nor there. A decision to make an assessment, in the sense referred to in [Don Pasquale], implies no more than that the assessment made was intended by the maker of it to be an assessment in the amount assessed. There is no reason for thinking that that was not the case when Mr Gurd filled out and signed the form. As to the second matter, the finding that there was a split decision must be understood in the context in which it was made. The decision was only split in the sense that it was because, and only because, Mr Excell or some other person took the view that assessments should be made of amounts of tax recoverable if the Primback litigation should be resolved in the Commissioners’ favour that Mr Gurd acted at all in the matter. There is nothing else in what the Tribunal said to indicate in what way the other person was involved in the decision to assess. In reality, on the Tribunal’s own findings, the decision-maker was Mr Gurd. In my judgment the Tribunal’s conclusion, contained in paragraph 12 of its decision, that there was a decision to assess is correct.”

The judge then turned to the issue as to whether the VAT641 which was completed on 16 December 1999 constituted an assessment, for the purposes of section 73 of the 1994 Act; or whether, as contended by Courts, the assessment process must include the generation of a VAT655. The judge concluded (in paragraph 57 of his judgment) that an assessment is ‘made’ when the VAT641 has been completed and signed off. He continued as follows (in paragraphs 58 and 59 of the judgment):

“58.

What follows after the form has been completed and signed off is the processing of the assessment and is not a part of the assessment itself. The processing is essentially clerical in nature: the inputting of the information from the VAT 641 into a computerised system which (a) updates the taxpayer’s ledger and (b) generates the production of a VAT 655 and a VAT 667A (or their equivalents) which are the means devised for notifying the taxpayer of the assessment and of the balance due from him on his account with the Commissioners in consequence of the assessment. The mention in table 34 of the fact that, before the taxpayer’s file is updated following the completion of the VAT 641, a number of checks are carried out and, if any errors as detailed in appendix G are found, the completed VAT 641 may be rejected, does not mean that the assessment is not yet complete. I heard nothing to indicate that the subsequent processes, including the check by reference to appendix G, involves the application to the contents of the completed form of any kind of independent judgment on the amount to be assessed. Indeed, it was not apparent to me what appendix G even contained.

59.

I am not persuaded that considerations of convenience and certainty point to the creation of the VAT 655 as marking the completion of the process of assessment. The question is not what convenience and certainty would suggest but what the point is at which, having regard to the procedures laid down by the Commissioners, the judgment has been made as to the amount to be assessed. The evidence of internal practice indicates that this point is reached when the VAT 641 has been completed and signed off.”

In paragraph 61 of his judgment the judge said this, with reference to the December 1999 assessment:

“The assessments, although not notified by a VAT 655, were not conditional. They were notified to Courts by the December1999 letter in terms which made it clear (a) that assessments for the eight relevant periods had been made and (b) that the assessments were intended to give rise to a present liability although enforcement was to await the outcome of the Primback litigation.”

The judge accordingly agreed with the Tribunal on the Assessment Issue.

In paragraph 65 of the judgment the judge concluded that the Tribunal was correct to describe the May and June 2000 assessments as having been made on an alternative basis, “in the sense that, whatever the outcome of the Primback litigation, those later assessments were payable”. In support of his conclusion, the judge cited [Glasgow], quoting from the opinion of the court, delivered by Lord Hamilton (see paragraph 46 above).

The judge then turned to the events of November and December 2001 and addressed the question whether the VAT641 which was completed on 23 November 2001, coupled with Mr Gurd’s letter dated 27 November 2001 and the processing of the VAT641 on 19 December 2001 (involving the generation of a VAT655), constituted an assessment; and if so, whether in the light of that assessment the December 1999 assessment is to be regarded as having been superseded.

In paragraph 73 of his judgment the judge concluded that it was difficult to escape the conclusion that the November 2001 VAT641 “was intended to and did operate as assessments of the five accounting periods subsequent to the eight periods in question”. That being so, he concluded (in disagreement with the Tribunal) that it must also have been intended to operate, and did operate, as an assessment in relation to each of the eight periods in question.

However, in paragraph 75 of his judgment, the judge said this:

“But it does not follow from a conclusion that new assessments were made that the December 1999 assessments were thereby withdrawn. Nor that Mr Gurd’s actions at that time (including his letter of 27 November) should lead to the conclusion either that there never was any intention in December 1999 to make any assessments. On the contrary, fairly read that letter, sent four days after Mr Gurd had completed the VAT 641 for the thirteen periods, assumes that the earlier assessments were and remained valid assessments which, having regard to the ECJ ruling in Primback, the Commissioners now intended to enforce.”

The judge accordingly agreed with the Tribunal’s conclusion on the Subsequent Events Issue (albeit for different reasons), and he dismissed Courts’ appeal.

Grounds 1 to 7 inclusive of Courts’ 10 grounds of appeal relate to the Assessment issue. They raise once again Courts’ primary contention that no assessment was made, for the purposes of section 73 of the 1994 Act, on 16 December 1999. Grounds 1 to 4 and ground 6 summarise arguments presented to the Tribunal and to the judge in support of that primary contention. By ground 5 it is contended that the judge was right to reject the Tribunal’s finding that the purported assessment on 16 December 1999 was a decision split between Mr Gurd and a colleague, but that the judge should have gone on to conclude that, given the absence of any evidence that Mr Gurd’s colleague had participated in the assessment itself, there had been no proper decision by the Commissioners to make an assessment. By ground 7 it is contended that the judge was wrong to conclude that the ‘assessment’ on 16 December 1999 was the subject of an appropriate documentary record in circumstances where the normal internal process was deliberately not followed.

Grounds 8 to 10 inclusive raise once again the Subsequent Events Issue. Courts’ contend that even if a valid assessment was made on 16 December 1999, in the light of subsequent events it no longer has effect.

By a Respondent’s Notice dated 6 January 2004 the Commissioners invite this court to uphold the judge’s decision on the additional grounds that no decision was taken to make an assessment in November/December 2001 and that the judge was in error in interfering with the Tribunal’s conclusion that no assessment was made at that time.

In this court Mr Cordara (leading Mr David Scorey) essentially rehearsed the arguments which he presented to the judge.

Addressing the Assessment Issue, he submits that there is no power under section 73 of the 1994 Act to make so-called ‘protective assessments’, and that any such attempts at assessment fail to meet the requirements of a valid and binding assessment in so far as they do not create, and are not intended to create, an immediate and enforceable debt; rather, they are by their nature both speculative and conditional.

He submits that as at 16 December 1999 it could not be said that any VAT was ‘due’ from Courts, since Mr Gurd’s letter of that date did not contain any stipulation to that effect; rather, it simply stated that the VAT in question would be due, and/or claimed, if the Commissioners appeal to the House of Lords in Primback were successful. Mr Cordara goes so far as to submit that it is unacceptable that the State should be able to create a debt and then seek to hold it in abeyance, unenforced, pending the outcome of some future contingency. He submits that the effect of the so-called ‘protective assessment’ in December 1999 was to leave Courts in a state of limbo, not knowing whether or not it was subject to an assessment to tax. A purported assessment of tax which is not actually due is, he submits, a contradiction in terms, given the terms of section 73(9).

Mr Cordara further submits that, for broadly the same reasons, the purported assessment in December 1999 was simply too uncertain in its terms to constitute a valid assessment for the purposes of section 73.

Turning to the evidence as to the Commissioners’ internal procedures for the making of an assessment, Mr Cordara submits that the purported assessment in December 1999 failed to comply with those procedures (a) because no decision was taken to make an assessment, and (b) because the process of assessment includes the processing of the VAT641, resulting in the generation of the VAT655.

As to (a), he submits that Mr Gurd did no more than follow the advice of his colleague in generating a document (the VAT641) which did not itself constitute a full assessment. On the evidence, he submits, Mr Gurd did not intend, still less did he decide, to make an assessment of VAT which was due: he was doing no more than calculating the amount of VAT which would become due if the Commissioners’ appeal in Primback were successful.

He further submits that, in such circumstances, it cannot be said that Mr Gurd exercised his ‘best judgment’, as required by section 73(1). The exercise of ‘best judgment’ requires, he submits, positive and independent cognitive input; whereas in the instant case Mr Gurd simply followed an instruction which was not specifically aimed at Courts and which did not take into account Courts’ circumstances.

Accordingly, he submits, in December 1999 no one on behalf of the Commissioners applied his mind properly or at all to the issue of the assessment: Mr Gurd signed off the VAT641 because he thought he had been instructed to do so, and his colleague who gave such instructions was not concerned with, and did not consider, the facts of the particular case. He submits that the Tribunal’s finding that the decision was ‘split’ between the two of them was not a finding reasonably open to the Tribunal on the evidence, and that the judge was accordingly right to conclude (in paragraph 55 of his judgment, quoted in paragraph 58 above) that “the decision maker [that is, the sole decision-maker] was Mr Gurd”; but that the judge should have gone on to hold that the only decision which Mr Gurd took was not a decision to assess – it was no more than a decision to adopt an unorthodox procedure with a view to preventing time running.

Finally, as to (a) above, Mr Cordara relies on the assessments made in May and June 2000 as evidence tending to confirm that no decision to assess was made in December 1999, submitting that the May/June 2000 assessments were not in truth ‘alternative’ assessments, as the judge found. (I return to Mr Cordara’s submissions about ‘alternative assessments’ in paragraph 83 below, in the context of the Subsequent Events Issue.)

As to (b) above, Mr Cordara relies on the observations of Lawrence Collins J in Cheesman (quoted in paragraph 43 above) as providing support, albeit indirectly, for the proposition that under the Commissioners’ own internal procedures an assessment is not ‘made’ until a VAT641 has been processed, and a VAT655 generated (notwithstanding that the VAT655 may not be sent to the taxpayer). The checks carried out by the computer at the processing stage, and its automatic calculation of interest and penalties, are, he submits, equally part and parcel of the assessment process.

He submits that the judge’s conclusion (in paragraph 61 of his judgment, quoted in paragraph 60 above) that the December 1999 assessment was not conditional ignores that fact that it could not have been enforced so long as the Commissioners’ appeal in Primback was pending, and that if that appeal had failed it could not have been enforced at all.

Mr Cordara also seeks to rely on the fact that the purported assessment in December 1999 was not posted to Courts’ ledger account. He points out that this account is the sole account between the Commissioners and Courts, and that it is designed to cover both sums claimed and sums in dispute.

Turning to the Subsequent Events Issue, Mr Cordara submits (as he submitted below) that if, contrary to Courts’ primary contention, a valid assessment was made in December 1999, that assessment was later withdrawn or superseded by reason of valid notices of assessment issued by the Commissioners in May/June 2000 and/or in December 2001 covering the same subject-matter.

As to the May/June 2000 assessments, Mr Cordara submits that in concluding that they were alternative assessments to the December 1999 assessment the judge gave an impermissibly wide interpretation to Lord Hamilton’s observations in Glasgow (quoted in paragraph 46 above). He accepts, as he must, that in Glasgow the Court of Session held that the Commissioners had power to issue alternative assessments, but he submits that the court also laid down very careful rules as to when this might occur. He submits that those rules do not justify the conduct of the Commissioners in the instant case, and that the May/June 2000 assessments were not ‘alternative’ assessments within the meaning of that expression as explained by Lord Hamilton in Glasgow.

As to the events of November/December 2001, Mr Cordara submits that the judge was right (in a paragraphs 73 and 74 of his judgment) to reject the Tribunal’s conclusion that Mr Gurd did not intend the VAT641 completed on 23 November 2001 (coupled with the resulting VAT655) to operate as an assessment, but that he was wrong to conclude (in paragraph 75 of his judgment: quoted in paragraph 65 above) that these later assessments did not supersede the December 1999 assessment. Mr Cordara submits that the terms of Mr Gurd’s letter dated 27 November 2001 are inconsistent with an intention on Mr Gurd’s part that the December 1999 assessment should remain on foot.

Mr Cordara also submits that the judge was wrong in so far as it is implicit in his reasoning that the Commissioners may make cumulative assessments in relation to the same period. Mr Cordara submits that Glasgow does not support such a conclusion, and that where an assessment is made in relation to a particular period and subsequently another assessment is made in relation to that same period, the original (earlier) assessment is to be taken to have been discharged.

Mr Cordara’s written skeleton argument concludes with a section somewhat optimistically entitled ‘Merits’, the expressed purpose of which is to dispel any idea that the issues raised by Courts might be regarded as ‘mere technicality’. However, since (unsurprisingly, to my mind) Mr Cordara did not specifically refer to this part of his skeleton argument in the course of his lengthy oral submissions, it is not necessary for me to attempt to summarise it.

Addressing the Assessment Issue, Mr Kenneth Parker QC (leading Mr Peter Mantle) submits that Mr Gurd’s letter dated 16 December 1999 is the clearest evidence that an assessment was made on that date. He accepts that the letter does not identify the precise moment on that day at which the process of assessment was completed, but he points out that there is no issue in the instant case as to timing. Rather, the issue in the instant case is whether what was done on 16 December 1999 constituted an assessment.

Mr Parker also reminds us that there is no procedure prescribed by statute for making an assessment, for the purposes of section 73. He submits that, having regard to the internal procedures in operation at the material time, the generation of the VAT655 is more naturally to be regarded as part of the process of notification once an assessment has been made than as part of the process of assessment itself. He submits that this approach is supported by the terms of the VAT655.

As to Mr Cordara’s reliance on the computer checks as indicating that the process of assessment extends beyond the completion of a VAT641, Mr Parker points out that in the instant case there was no variation between the figures in the VAT641 and the figures as notified by Mr Gurd in his letter dated 16 December 1999. He further submits that there is no evidence to suggest that the computer checks are designed in any way to override the assessing officer’s ‘best judgment’ in completing the VAT641.

As to the Commissioners’ internal procedures, Mr Parker accepts that in a normal case the VAT641 is processed, resulting in the generation of a VAT655. However, he submits, the processing stage only becomes relevant for present purposes if (a) the Commissioners themselves treat the generation of a VAT655 as forming part of the process of making an assessment and (b) they do not depart from the normal procedures. In the instant case, he submits, neither of those conditions is fulfilled. The Commissioners plainly did not treat the generation of a VAT655 as forming part of the process of assessment in December 1999, since the VAT641 was never processed; and the procedure adopted on that occasion departed from the normal procedure.

Mr Parker submits that if and to the extent that the judge intended to lay down an absolute rule when he concluded (in paragraph 57 of his judgment) that “an assessment is made when [the VAT641] has been completed and signed off”, he overstated the position, since, as the October 1997 ‘temporary amendment’ demonstrates (see paragraph 13 above), that may not always be the case. Mr Parker accepts, however, that in any case where the existence, as opposed to the timing, of an assessment is challenged, the Commissioners should be in a position to produce the relevant internal document to establish the existence of the assessment, be that document a VAT641 or some other document. (Mr Mantle informed us that as a matter of policy the Commissioners are content to treat an assessment as having been ‘made’ on the date on which the assessment is notified to the taxpayer.)

Mr Parker submits that the procedure adopted in the instant case was a sensible procedure; that Mr Gurd’s letter dated 16 December 1999 set out the position clearly; and that the generation of a VAT655 and a VAT667A (statement of account) would in the circumstances have merely caused confusion.

Turning to the Subsequent Events issue, Mr Parker submits that the Tribunal and the judge were right to regard the May/June 2000 assessments as alternative assessments, for the reasons they gave. As to the events of November/December 2001, he submits (in accordance with the Commissioners’ Respondent’s Notice) that the Tribunal’s conclusion (in paragraph 23 of the Decision) that Mr Gurd cannot have intended to make a further assessment in relation to the eight periods in question is the only reasonable conclusion on the evidence, and that it represents a finding of fact with which an appellate court cannot interfere (an appeal from a VAT Tribunal being on a point of law only).

In any event, he submits, even if a further assessment were made in November/December 2001, so that there were two assessments on foot in relation to the same periods, it is the validity of the later assessment, not that of the earlier assessment, which would be subject to question.

The decision to assess

Mr Cordara fastens on the distinction drawn by Dillon LJ in Don Pasquale (at p.562b-d, in the passage quoted in paragraph 35 above) between the decision to assess and the assessment itself as the basis for his submission that no assessment was made in December 1999 because no decision to assess was made. He submits (a) that in acting as he did in December 1999 Mr Gurd was merely following the instructions which he had been given by his colleague; and (b) that in so far as any decision was taken in December 1999, it was a decision merely to issue a ‘protective’ assessment pending the ruling of the ECJ in Primback, and such a decision (he submits) does not amount to a decision to assess.

In my judgment, these submissions are misconceived.

In the first place, Mr Cordara’s reliance on Dillon LJ’s reference in Don Pasquale to the decision to assess as being distinct from the assessment itself is in my judgment misplaced. The distinction between the assessment itself and notification of the assessment to the taxpayer is, of course, clear on the face of section 73. Thus, under section 73(1) the Commissioners are empowered to “assess the amount of VAT due from [the taxpayer] …. and notify it to him”; under section 73(6) time runs from the making of the assessment; and under section 73(9) no debt arises until the assessment has been notified. However, the distinction between the decision to assess and the assessment itself is not one which is expressly drawn by section 73; nor, in my judgment, does section 73 require such a distinction to be drawn. At one extreme, a mere decision to assess which is not reflected in action plainly cannot of itself amount to an assessment. An assessment, after all, has to be capable of being notified to the taxpayer, and on notification it creates a debt: hence a mere executory decision to assess can have no statutory consequences. At the other extreme, where the steps taken by the Commissioners, objectively viewed, constitute the making of an assessment, in my judgment section 73 leaves no room for an issue as to whether the Commissioners decided to make – which is another way of saying, intended to make – the assessment which (objectively) they made.

In my judgment, Mr Cordara is seeking to place more weight on Dillon LJ’s words than they can have been intended to bear. As already noted (see paragraph 35 above) the issue in Don Pasquale was whether there was a single global assessment, or whether there were 25 separate assessments. If Mr Cordara were correct in his approach, one would have expected to find some analysis and discussion in Dillon LJ’s judgment as to what the Commissioners had decided (intended), and in particular as to whether they had decided (intended) to make a single global assessment or 25 separate ones. Yet not only is that aspect not explored at all in Dillon LJ’s judgment, but by his citation from Woolf J’s judgment in International Language Centres Ltd v. Customs & Excise Commrs [1983] STC 394, at 398, Dillon LJ makes it clear that he is approaching the issue as one of construction of the relevant documents.

In my judgment, therefore, if what Mr Gurd did in December 1999 amounted, on an objective analysis, to the making of an assessment (as to which, see below) then there can be no room for any further inquiry as to whether he had decided to do what he did. Conversely, if on an objective analysis what Mr Gurd did in December 1999 did not amount to the making of an assessment, his state of mind cannot alter that fact.

I bear in mind that the ‘best judgment’ requirement in section 73(1) may introduce subjective considerations to the extent that (as Chadwick LJ explained in Pegasus Birds, in the paragraphs from his judgment quoted in paragraph 48 above) an issue may arise as to whether in making an assessment in a particular case the assessing officer had “‘closed his mind’ to any material which did not fit his case”. However, that does not in my judgment affect my conclusion that the question whether an assessment has been made is an objective question, to be resolved by reference to what the Commissioners have in fact done.

In the second place, even if (contrary to the view which I have just expressed) it is appropriate to inquire as to whether a decision to assess was made in December 1999, a consideration of the terms of the VAT641 dated 16 December 1999 leads, in my judgment, to only one conclusion. The form is headed ‘Officer’s Assessment’, and Mr Gurd is described as the ‘Assessing officer’. The columns in which the figures are inserted are headed ‘Assessment of tax (whole pounds only)’. To suggest that, in completing and signing this form, Mr Gurd had not decided to make an assessment (albeit an assessment on a ‘protective’ basis: as to which, see below) seems to me to border on the fanciful. Nor does the fact that he acted as he did on the advice of a colleague (and that he would not have acted as he did but for such advice) lead to the conclusion that he did not exercise his own best judgment in completing the VAT641: manifestly he did. Whether the decision to assess is correctly attributable to Mr Gurd alone (as the judge was disposed to regard it) or whether it was a decision which was split between Mr Gurd and his colleague (as the Tribunal regarded it) is neither here nor there: the point is that the only person who exercised ‘best judgment’ in completing the VAT641 was Mr Gurd. He was the assessing officer: he made the assessment.

In the third place, I agree with the judge that a ‘protective’ assessment, in the sense of an assessment which is made in order to protect the Commissioners’ position in the event of a subsequent appeal being decided in their favour (see the internal guidance quoted in paragraph 14 above), is nonetheless an assessment. As such it will, when notified, create a debt (see s.73(9)). The fact that no steps will be taken to recover the debt so created pending the occurrence of a future contingency cannot, in my judgment, affect the fact that an assessment has been made.

Nor, in my judgment, does the ‘protective’ nature of an assessment render it void or unenforceable on grounds of uncertainty. The epithet ‘protective’ is directed not to the content of the assessment but to the reason for making it.

Lastly on this aspect, I reject Mr Cordara’s submission that the May/June assessments provide some support the suggestion that no assessment was made in December 1999. As noted earlier, the May/June assessments were made because the Commissioners had realised that part of the VAT referred to in Mr Gurd’s letter dated 16 December 1999 was payable in any event, regardless of Primback; and that is reflected in the terms of his letter dated 6 July 2000.

In my judgment, therefore, there is no substance in Mr Cordara’s submissions as to the absence of a decision to assess.

The making of the assessment

The statutory requirement for notification of an assessment to the taxpayer demonstrates that in enacting section 73 Parliament regarded the process of making the assessment itself is an internal matter for the Commissioners. However, given that the time limits in section 73(6) apply to the making of an assessment, as opposed to the notification of the assessment, it is clearly important that the Commissioners’ internal processes and procedures in relation to the making of assessments should, so far as practicable, be standardised; and that in relation to any particular assessment the process which has been followed, and the date or dates on which the various steps comprised in that process were taken, should be readily verifiable by contemporary documentary evidence. (See, generally, the observations of Lawrence Collins J in Cheesman, quoted in paragraphs 43 and 44 above.) The absence of any statutory time limit within which an assessment, once made, must be notified to the taxpayer means that, in theory at least, it is open to the Commissioners to delay notification for some considerable time (see Lawrence Collins J’s reference in paragraph 19 of his judgment (quoted in paragraph 43 above) to the observation of May LJ in House (t/a P & J Autos) v. Customs & Excise Commrs.). However, it is clearly undesirable that that should occur, and the Commissioners’ policy of not relying on any earlier date for the making of an assessment than the date on which the assessment was notified to the taxpayer ensures that no unfairness will be caused to the taxpayer in this respect.

Mr Parker submits that the issue in the instant case is not so much as to the precise point in time at which an assessment is made (i.e. is complete); rather, it is as to the existence or otherwise of an assessment in December 1999. In one sense, this is a distinction without a difference since an assessment only ‘exists’ when it is made, and the point in time at which an assessment is made is the relevant point in time for the purposes of the section 73(6) time limits. On the other hand, I agree with Mr Parker that the issue in the instant case falls to be resolved on the basis of the particular facts of the case. In my judgment, given that the making of an assessment is an internal matter for the Commissioners, in respect of which there is no prescribed statutory procedure, it is simply not possible to arrive at a formula which will determine in every case whether or not an assessment has been made. The Commissioners may, for example, decide to treat certain cases as special or exceptional cases, to which their normal internal processes should not apply. Indeed, the instant case is an example of that (I return to this below). Accordingly, I am unable to go as far as the judge when (in paragraph 57 of his judgment) he advanced the seemingly absolute proposition that “an assessment is made when [the VAT641] has been completed and signed off”. In the majority of cases, that may well be so; but there can in my judgment be no absolute rule to that effect. In my judgment the position in this respect is correctly reflected in the internal guidance issued in October 1997 (quoted in paragraph 13 above).

I return, therefore, to the facts of the instant case. In the instant case, it is common ground that there was a departure from the standard internal procedures for making and notifying an assessment, in that the VAT641 was never sent for processing but was retained on Mr Gurd’s file. However, it does not follow that no assessment was made. As to that, I accept Mr Parker’s submission that the departure from the standard internal procedures occurred only after the assessment had been made, and I reject Mr Cordara’s submission that the process of assessment in the instant case was not complete until the VAT641 had been processed and a VAT655 generated. In my judgment the computer checks, and the concomitant possibility of the computer rejecting the VAT641, cannot be said to impact in any way on the statutory requirement of ‘best judgment’ which must lie at the heart of the assessment process. Nor can I discern any sensible reason why the mere generation of a VAT655 should be regarded as part of the assessment process. In my judgment, these were purely ministerial functions (cf. Slade LJ in Burford, in the passage from his judgment quoted in paragraph 38 above). I am accordingly in full agreement with the judge that in the instant case the assessment was complete on the signing off of the VAT641 dated 16 December 1999.

Lastly on this aspect, for reasons already given (see paragraph 103 above) I reject Mr Cordara’s submission that the ‘protective’ nature of the assessment means that it is not an assessment for the purposes of section 73.

I accordingly reject Mr Cordara’s submissions on the Assessment Issue.

The May/June 2000 assessments

I agree with the judge, and with the Tribunal, that the May/June assessments were alternative to the December 1999 assessment “in the sense that, whatever the outcome of the Primback litigation, those later assessments were payable” (see paragraph 65 of the judge’s judgment). This conclusion seems to me to be entirely on all fours with the observations of the Court of Session in Glasgow quoted in paragraph 46 above. Nor is this a case in which the taxpayer could assert, with any degree of credibility, that it was in any doubt as to the true position (an aspect to which I return below).

The events of November/December 2001

In paragraph 70 of his judgment the judge rightly defined the issue as being “whether the proper conclusion to be drawn …. is that any assessments made in December 1999 must be regarded as having been withdrawn, and indeed replaced, by new assessments”.

It is common ground that, objectively viewed, the steps taken by Mr Gurd in November and December 2001 amounted to the making of an assessment. For reasons already given, it must in my judgment follow that an assessment was in fact made, notwithstanding that Mr Gurd may not have realised that the effect of processing the VAT641 was not merely to bring Courts’ ledger account up to date but also to generate, and send out, a VAT655. But, as the judge rightly concluded, that is not the end of the matter. The fact that an assessment was made in November/December 2001, with the result that there were two assessments on foot relating to the same periods, does not lead to the conclusion that the later assessment must automatically cancel or supersede the earlier one. On the contrary, I agree with Mr Parker that, on the face of it, the question-mark will hang over the later assessment rather than the earlier one. The effect of making a duplicate assessment must, however, depend on the facts of the particular case. In the instant case, in my judgment, Mr Gurd’s letter dated 27 November 2001 (quoted in paragraph 26 above) makes it absolutely clear that the December 1999 assessment remained operative, and Courts’ can have been under no misapprehension as to that.

I accordingly reject Mr Cordara’s submissions on the Subsequent Events Issue.

As noted earlier, Mr Cordara included in his skeleton argument a section headed ‘Merits’. I shall follow his example. There are no merits in this appeal. Courts has attempted to construct a case based purely on technicalities, in circumstances where the Commissioners, through Mr Gurd, were doing their best to deal fairly and straightforwardly with Courts, and where Courts can have been in no doubt as to what the Commissioners were attempting to achieve.

I would dismiss this appeal.