18982
	VALUE ADDED TAX — restaurant and takeaway — observations and cashing-up exercise — assessment based on comparison of cashing-up with other trading days — whether reasonable to base assessment covering several years on one day’s takings — whether day’s takings unusually high — whether alleged shortcomings of observations established — whether any shortcomings in observations undermine assessment — whether Respondents motivated by personal animosity — appeal dismissed

	PENALTY — dishonest evasion — whether dishonesty established — yes —appeal dismissed

MANCHESTER TRIBUNAL CENTRE

 
 	HUSSAIN SHAH & MOHAMMED NAZIR
	trading as SHABAB RESTAURANT	Appellant
	
	- and -

	THE COMMISSIONERS OF CUSTOMS AND EXCISE	Respondents

				Tribunal:	 Colin Bishopp (Chairman)
						 Gilian Pratt
						 Alban Holden	
						
Sitting in public in Manchester on 13 to 16 December 2004

The Appellant Hussain Shah in person

Simon Taylor, counsel, instructed by Irwin Mitchell for Mohammed Nazir

Nigel Poole, counsel, instructed by Solicitor’s office for HM Customs and Excise for the Respondents 

	© CROWN COPYRIGHT 2005

DECISION

1.	In this appeal, Hussain Shah and Mohammed Nazir challenge an assessment to tax of £241,427 and a penalty imposed upon them for dishonest evasion amounting to £217,291.68. At all material times, Mr Shah and Mr Nazir traded in partnership under the name “Shabab Restaurant” at premises in Huddersfield, West Yorkshire. They took over the business as a going concern on 13 February 1991, and the assessment to tax, made in accordance with section 73 of the Value Added Tax Act 1994, covers the entire period from that date until 31 October 1998. Separate penalties have been imposed for each of the prescribed accounting periods included within the tax assessment. In every case, the Commissioners have mitigated the maximum 100 per cent penalty by 10 per cent and the aggregate penalty imposed, after allowing for some rounding, is the sum we have mentioned. 
2.	Mr Shah attended the hearing to represent himself, whilst Mr Nazir was represented by Simon Taylor of counsel. Although Mr Shah and Mr Nazir put forward rather different arguments, this was not a case in which each was blaming the other. The Respondents were represented by Nigel Poole of counsel. We had bundles of documents. As is usual when a penalty for an alleged dishonesty has been imposed, we heard the Respondents’ evidence first.
3.	That evidence was directed first at a series of observations undertaken by Customs—externally on 9 September, 26 September and 11 October 1998 and internally on 30 October 1998—when the officers concerned made notes of the numbers of customers whom they saw entering and leaving the Appellant’s restaurant. They attempted to divide those whom they observed into customers purchasing takeaway meals and those eating in the restaurant. The observations were followed by an unannounced visit on 16 January 1999, at close of business for the day, when the cashing up of the takings was observed. Various records were taken up on that day, and rather more were provided two days later. 
4.	On 5 February 1999, Mr Nazir was interviewed by Customs officers but Mr Shah was not interviewed because, for reasons to which we will come, he was in prison. During the course of the interview, Mr Nazir and his accountant, Halim Chishtie, who accompanied him to the interview and from whom we were to hear evidence, were handed four schedules, which the interviewing officers had previously prepared, summarising the analysis which they had made of the observations and of the cashing-up. Brief correspondence between the parties followed the interview. Mr Chishtie advanced the argument that the discrepancies between the observed level of trade and the recorded takings were accounted for by errors, and he maintained that all those errors had already been dealt with by way of adjustments to the Appellant’s VAT returns. That explanation was not accepted and an assessment, based upon the schedule which had been produced at the interview and which dealt with the cashing up, was issued in May 1999. It was later realised that the assessment contained an arithmetical error and it was reissued, after amendment, at the lower aggregate sum of £241,427. 
5.	We heard evidence about the observations from a number of Customs officers: Sylvia Jones, Angela McCalmon, Quentin Lewis, Timothy Marshall, Thomas Simmonds, Martin Mummery, Andrew Lumb (who in addition to undertaking some of the observations was also the assessing officer), Milica Trkulja Coles and Stuart Highy. We had also the unchallenged statements of three other officers. 
6.	Mrs Jones’ observations were carried out from the public highway outside the Appellants’ premises, but all of the other external observations were undertaken from a vantage point on the opposite side of the street. All of the officers gave extensive evidence, and were closely cross-examined by Mr Taylor about what they had seen, and what they had recorded. We do not consider it would be of benefit to the parties, or to other readers of this decision, to set out the individual witnesses’ evidence at length. We are satisfied from the evidence that the officers had an adequate view of the entrance to the Appellant’s restaurant, obstructed briefly and intermittently by passing pedestrians (the restaurant is situated in a pedestrian precinct), that the officers were sufficiently close to the restaurant entrance to be able to identify individual customers and that, during the hours of darkness, there was sufficient artificial lighting. Mr Taylor made much of the fact that the entrance to the restaurant is in an alleyway running at 90 degrees from the main pedestrian street. We were to hear some, although rather vague, evidence about rear entrances to shops which are to be found in that alleyway and were invited to infer that staff of those shops, and possibly other visitors to them, had gone to the rear entrances by using the alleyway and had been counted as customers of the restaurant by mistake. We accept that some mistakes of that kind might have occurred, just as we accept too that people apparently calling at the restaurant in order to make a purchase might have been visiting it for other reasons and it is also quite true, as Mr Taylor was able to show, that while the officers attempted to match people seen going into the restaurant with those going out, by the use of descriptions, they were often unsuccessful in doing so. Without descending to fine detail, we can accept that there are several identifiable instances of customers having been recorded to enter the restaurant, but where there is no record of their having come out, and of some coming out who were not recorded as having entered. In some of those cases, there is no ready explanation for the officers’ failure to observe both entry and exit, although since the officers did not remain on watch, on every occasion, until the restaurant completely closed some of the customers whom they had seen enter the restaurant would still be inside, eating a meal, when the officers ceased their observations.
7.	The observations on 30 October 1998 were carried out inside the restaurant. Pairs of officers, some of whom had also been involved in the earlier external observations, entered the restaurant and ate a meal. While in the restaurant they made notes, usually only mental, of the numbers of other diners inside the restaurant; their recollections, if they did not make simultaneous notes, were transferred to paper soon after they left the premises. The objective was two-fold: to note the number of customers, and to determine by a later examination of the Appellant’s records whether the officers’ meals had been included in the declared takings for the day.
8.	It is convenient that at this point we record Mr Shah’s case. He explained that he had at all times been a sleeping partner in the restaurant business (a proposition which Mr Nazir confirmed and Mr Poole did not challenge) and that he had spent much of the relevant period either in Pakistan or in prison, in the United Kingdom. He explained that he had become mixed up with drug smugglers and, in order to escape prosecution within the United Kingdom, he had gone to Pakistan and remained there for some years. While there, he said, he become acquainted with someone whom he described as a Customs go-between, who had offered him, he said, various assurances, on the strength of which he had returned to the United Kingdom, only to find that he was arrested and, after conviction for drug smuggling offences, sentenced to imprisonment. He was serving the term to which he had been sentenced at the time of Mr Nazir’s interview. 
9.	Mr Shah maintained that the investigation, the resulting assessment and the imposition of the penalty were all attributable to Custom’s animosity to him because, feeling he had been misled by the go-between he met in Pakistan, and aggrieved by the fact that he had been sent to prison, he had refused to assist Customs by giving evidence against other drug smugglers whose prosecutions had, in consequence, collapsed. The story might seem fanciful but we are satisfied, not only from what Mr Shah told us, but also from documents which he was able to produce, that it is largely true, although it appeared to us that Mr Shah had attempted to portray himself in the best possible light.
10.	It emerged that Mr Marshall had played a minor part in events relevant to the collapsed prosecution, but we are satisfied that his role (which amounted to securing some seized property) was of no significance. Not only he, but all of the other Customs officers who gave evidence before us, said that they knew nothing of Mr Shah’s involvement in drugs smuggling activities and were not acquainted with the officers—many of whom Mr Shah was able to identify—who had dealt with those matters. It was explained that officers dealing with VAT and officers dealing with drugs enforcement had little contact with each other. Mr Lumb told us that at an early stage in the investigation, in accordance with normal practice, he made an email enquiry to ensure that his investigation would not conflict with or compromise any other investigation and received a message in reply that there had been some interest in Mr Shah but that it was no longer extant. Accordingly, he proceeded with his investigation without, as he explained, giving any further thought to the earlier Customs’ interest in Mr Shah. As we have indicated, we accept that there is truth in what Mr Shah told us about his earlier involvement with Customs and it was very clear to us that, whether or not it is justified, he feels a considerable sense of grievance. However, we are satisfied that his belief that the investigation, the assessment and the penalty are attributable to Customs’ animosity against him is unfounded. We did not detect any hint that this was anything other than a routine investigation. We should perhaps add that Mr Taylor did not argue the contrary.
11.	On Saturday 16 January 1999 Mr Lumb and Mr Highy visited the restaurant to eat a meal. Other officers had eaten meals in the restaurant before them, for the same purposes as that those which led to the observations on 30 October 1998. Mr Lumb and Mr Highy timed their paying of the bill to coincide with the closing of the restaurant and, as they paid the bill, they identified themselves as Customs officers and asked to observe the cashing up of the till. The till was not, in fact, used in the conventional way to record each sale as it was made, but was no more than a cash drawer. The aggregate of the takings for the day was £2,290.95, whereas the average amount declared for Saturday takings in the Appellant’s records of daily gross takings in the period from 1 August 1998 to 9 January 1999 was only £984.38, and the highest amount declared for any one Saturday in that period was £1,762.35. In due course, Mr Lumb decided to use his findings from the cashing up exercise as the basis for the assessment and he treated his analysis of the observations, external and internal, as a cross check on the accuracy of his approach.
12.	The method Mr Lumb used was, first, to identify the proportion which credit card sales bore to each day’s entire takings, as the figures were recorded in the Appellant’s takings records. He and Mr Highy, who undertook some of the calculations, had records going back to 1 August 1995, and they produced tables setting out the amounts recorded for credit card and total sales for each day, with a calculation of the percentage which credit card sales bore to the whole for each of those days. We can see for ourselves from the tables that there are a number of oddities. On several days, the amount recorded for credit card sales exceeds the total recorded for the day. On others, the figure is very low, on one occasion as little as 12 per cent. On 16 January 1999, the proportion was 38 per cent. In the immediately preceding prescribed accounting period, 10/98, declared credit card sales over the whole three months amounted to 77.89 per cent of total declared sales. By taking Saturdays alone, Mr Lumb was able to calculate a corresponding figure of 78.77 per cent. He concluded, he told us, that the difference between the 78 per cent revealed by the declarations and the 38 per cent which he had discovered was indicative of suppression, and the similarity between the percentage of declared credit card sales over the whole accounting period, when compared with the figure derived from taking the Saturday sales alone, indicated that there had been suppression at a reasonably constant rate, that is to say Saturdays were not unrepresentative. He proceeded upon the assumption that the true proportion of credit card sales to the whole was, on average, 38 per cent and, by a calculation whose arithmetic was not challenged, arrived at an overall suppression rate of 51 per cent – that is to say, of total sales only 49 per cent have been declared. He then examined the Appellants’ declarations for the whole of their period of trading, and could detect, he said, no indication that suppression of takings might have started at any particular time, or might have accelerated over the years. Relying upon the fact that if the Appellants’ under-declarations were due to dishonesty, he was not constrained by a three-year time limit, he decided to raise an assessment covering the entire period for which the Appellants had owned the restaurant, and did so by assuming that the declared takings in each prescribed period represented 49 per cent of the true figure. 
13.	Mr Lumb made two analyses of the observations. In each case he used them to calculate the number of customers, segregated into those eating in the restaurant and those taking away food for consumption elsewhere, and applied the number of customers so derived to the average cost of meals to be eaten in the restaurant and taken away respectively (figures which he calculated from the Appellants’ own records) to arrive at an expected level of takings for the days of the observations, which he then compared to the declared takings for the same days. His first, simple, analysis showed quite wide variations from one day to the other in the amount of suppression, although the average figure at 48.6 per cent was not far removed from the figure that he had achieved by comparing credit card sales to total sales. He then made a rather more sophisticated calculation which involved his determining the proportion which sales for each day of the week bore to the whole of a week’s takings and weighting his calculations accordingly; by this means he arrived at a rate of suppression of 52.91 per cent. Having made those calculations, he told us, he was satisfied that his preferred method (that is, using the credit card sales) was reliable.
14.	Little turns on the interview of Mr Nazir on 5 February 1999. It was conducted principally by Mr Highy, although Mr Lumb was present. At the beginning of the interview Mr Nazir was shown the Commissioners’ Notice 730, which is used when it is suspected that  a trader has been guilty of dishonest evasion, and explains the Commissioners’ practice when they decide to consider the imposition of a civil penalty (which has been imposed in this case) rather than a prosecution. The notice invites the trader to cooperate with Customs in return for a reduction in the penalty. There was in this case only one interview and, although Mr Nazir must have realised, after the observed cashing-up, that his affairs were under investigation, he had no advance warning of the questions he would be asked. The Respondents do not rely on anything Mr Nazir said during the interview, and we detect in the transcript of the interview, which was made available to us, nothing of significance to our decision. We merely record that Mr Nazir made no admissions beyond an acceptance that accounting errors might have occurred. The mitigation of the penalty, of 10 per cent, which the Respondents have offered is attributable to Mr Nazir’s having produced some accounting records, and to his attending the interview. The Respondents maintain that he has not otherwise assisted them in their investigation.
15.	Neither Mr Shah nor Mr Taylor contended that (assuming the underlying assumptions were correct) there was any flaw in Mr Lumb’s approach or in his arithmetic. Mr Shah advanced the argument which we have already rejected and tacitly adopted Mr Taylor’s other contentions. They were, essentially, that the observation evidence was unreliable and should be ignored; and that the high takings on 16 January 1999 were attributable to unusual factors. 
16.	We have already dealt with the evidence about the observations, and have made some comments about their reliability. It is, in our view, inevitable that some mistakes will be made: people will be identified as customers when they have entered the restaurant for other reasons; they may be thought to have made a purchase of a takeaway meal when they have eaten in the restaurant, or have made no purchase at all; customers buying takeaway meals may be considered to have eaten in the restaurant; and people may be thought to have entered the restaurant when in fact they went to other premises to which the alleyway gives access. The observation records show only what the observing officers believed they had seen, and the officers may have been mistaken. It is, therefore, true that the records may record as customers people who were not in fact customers. But in our view it is equally probable that the officers have failed to observe customers entering or leaving the restaurant, either because their view was obscured at the critical moment or because their attention was diverted. For these reasons observation records can, in our view, give no more than an impression of the volume of trade; it will, only very unusually, be possible to treat them as a wholly accurate record. Here, we accept, they are not wholly accurate, but we are satisfied that they were carried out conscientiously, from positions which afforded the observers an adequate view, and that they represent a reasonable measure of the volume of trade. We are satisfied that Mr Lumb reasonably relied on them, particularly since he treated them, not as the basis for the assessment, but as a cross-check. 
17.	The argument that 16 January 1999 was unusual came principally from Mr Chishtie’s evidence. He was put forward as an expert witness. While we do not doubt that Mr Chishtie has expertise, we cannot accept him as an expert witness in the conventional sense since he has been involved in the case as the Appellants’, or at least Mr Nazir’s, adviser from the outset, and he has acted as a protagonist. Nevertheless, we have taken into account what he told us.
18.	In the report which he prepared in advance of the hearing, Mr Chishtie produced various figures, supported by documentary evidence in the form of press reports and the like, which suggested that in January 1999 there had been an unusually large volume of cash in circulation. There was evidence among the documentation he produced that the volume of withdrawals from cash dispensing machines had been significantly higher than in the previous year—although the information we had related rather more to December 1998 than to January 1999—and there was some further evidence, though rather less clear, that the January sales in 1999 had led to a high volume of sales in the early part of the month, followed by a decline, and then a further surge as the result of additional discounting by retailers. There had been January sales in Huddersfield, as elsewhere, and, Mr Chishtie said, it was a fair inference that there were large numbers of shoppers in the town centre, with substantial quantities of cash, who had patronised the Appellants’ restaurant and had not only increased the volume of sales but had also distorted the ratio of credit card and cash sales. It was, therefore, quite inappropriate to use 16 January 1999 as the yardstick by which the Appellants’ trade, over several years, should be judged.
19.	The difficulty with that argument is that it does not fit the remaining evidence. If the January sales did increase the volume of the Appellants’ trade, and distort the ratio of credit card and cash sales, one would expect to see both signs in the records of the takings on the two preceding Saturdays, 2 and 9 January; but the takings for those days, as declared, were consistent with the average for earlier, recent Saturdays, and the credit card sales represented 72.6 and 89.1 per cent respectively of the entire declared takings. If, as the evidence Mr Chishtie exhibited to his report suggested, there was a high volume of cash in circulation, and it was a significant factor, it would be reasonable to expect that, if the declarations were genuine, credit card sales on those two days would be below the norm, and by a significant amount, because customers would spend their surplus cash. In fact, on one of the days the figure was a little below the norm, while on the other it was considerably higher.
20.	In those circumstances we reject Mr Chishtie’s evidence. It is, we have concluded, no more than speculation and it does not explain either the high level of takings on 16 January 1999, by comparison with previous Saturdays, nor the low proportion which credit card sales bore to the whole on that day.
21.	Mr Nazir told us that the recorded takings might not represent the true takings for the day because of the manner in which he dealt with pre-payments. Sometimes, he said, customers would pay in advance, either by putting down a deposit (or the entire anticipated charge) for a meal to be eaten by a large party, or by paying in advance for a meal to be consumed on a future date by a group of friends. In such circumstances, he said, he dealt with the payment by accepting the cash or, more usually, by processing a credit card transaction when the payment was made, but he did not record the cost of the meal in the Appellants’ records until it was actually taken. If, therefore, an advance payment was made by credit card, the result was that the credit card takings appeared high on the day on which the payment was made, and this factor accounted for some of the high levels of credit card payments which Mr Lumb believed he had detected. The proportion of credit card sales to the whole was therefore distorted, and could not be relied on.
22.	We would be willing to put to one side Mr Nazir’s failure to respect the tax point rules, if what he told us is true, but we find it impossible to accept that what he said is in fact true. He was unable to explain, at least to our satisfaction, how he recorded advance payments which had been made. He produced an example of a “credit note” which consisted of a card bearing the name of the restaurant with the manuscript addition, in his own hand, “paid £65 for 4 meals” and his signature. It may be that the production of the card was treated as sufficient evidence that £65 had been paid in advance; but we were still left with no explanation of what happened to the money in the meantime. Similarly we had a note of what a large party had ordered, some time before the day on which they took their meal, including a note of the expected cost which had been paid in advance. Mr Nazir was unable to explain what he did with cash he received in those circumstances and he likewise could not explain how he reconciled any credit card payments he received in this way to his takings records (a weekly cash account sheet provided by Mr Chishtie’s firm), which contained provision for reconciliation of the recorded takings with the sums paid into the Appellants’ bank each week. We were left with no reason to believe that, instead of adopting the simple (and correct) course of accounting for payments as they were received, Mr Nazir resorted to an unnecessarily complicated system, prone to error. We reject his evidence on this issue. In any event, even if the takings for individual days were distorted in this fashion, the averages over a larger period would be unaffected—a higher proportion of credit card sales in one day would be balanced by lower sales on another—and we are not persuaded that this practice, even if it happened at all, is of significance. In addition, we see no reason to suppose that prepayments were any more likely than other purchases to have been made by credit card rather than in cash.
23.	Secondly, Mr Nazir said, one of his former employees was in the habit of using the credit card machine in order to withdraw cash. He did so by using his credit card to pay for a purported purchase, and then withdrawing the corresponding amount in cash from the till. Mr Nazir said he had tried, with only limited success, to prevent the employee from withdrawing cash in this way. We are prepared to accept that there is some truth in this evidence, and that the credit card sales would, on the day on which a withdrawal was made, appear higher than they really were. However, it was also apparent from Mr Nazir’s evidence that the amount drawn on each occasion was modest, that the occasions were few, and that, overall, the effect would be very small indeed. We are not satisfied that this is even a factor which requires us to consider adjusting the amount of the assessment; it is certainly not sufficient to undermine it altogether.
24.	We were somewhat concerned by the evidence we heard about Mr Nazir’s use of the till. Although there was nothing before us to suggest that it was defective, Mr Nazir used it, as we have already said, as a cash drawer, though he also said that he occasionally used it as a calculator. We are at a loss to understand why, if the business was run honestly, he should adopt that course. The proper use of the till would have provided him with a ready means of adding up each customer’s bill, a record of each sale, and a convenient total at the end of each day of the takings which should be expected. Some mistakes in cash handling might occur, but there would be an independent record, not easily falsified, of the takings to which the cash, cheques and credit card slips in the till could be compared. Proper use of the till would minimise the opportunity for theft by staff, and might have made it more difficult for the former employee to abuse the credit card machine. A daily Z-reading would also have been a convenient means of recording the day’s takings. Instead, he told us, Mr Nazir added up the totals of the meal tickets for the day—themselves added manually—and tried to reconcile that total to the aggregate volume of the cash, occasional cheques and credit card slips in the till. He then transferred the figure he considered to represent the true takings to the daily gross takings record.
25.	He was asked by Mr Poole about his use of the credit card machine. At first he told us that he did not routinely take a print-out of the credit card transactions, but merely switched off the machine, so as to sever the link with the bank, at the end of the day. He then accepted that he might take such a reading on the following day, before agreeing that, after all, he might take a print-out at the end of the day’s trade, immediately before switching off the machine; this was done on the occasion of the observed cashing-up. Since, as it seemed to us, the machine could produce the print in a matter of seconds—and might even do so automatically whether specifically required to produce one or not—we find it impossible to accept Mr Nazir’s evidence that, instead, he relied on manual addition of the credit card slips.
26.	The conclusion we have reached on this issue is that the till was not used, and the credit card machine print outs discarded, or at least not produced to Customs, because Mr Nazir set out to conceal the true level of the restaurant’s takings and to ensure that no audit trail existed which could be used as a check on the true takings. There is no possible explanation of that conduct other than a dishonest intention by Mr Nazir to conceal the true takings, and Mr Taylor did not suggest that there might be any other explanation.
27.	Mr Taylor also did not put forward any alternative figures; his argument was that the Appellants’ evidence was sufficient to undermine altogether Mr Lumb’s conclusions and the resulting assessment and that we should conclude that there had been no under-declarations; thus the assessment should be discharged. As will be apparent from the foregoing, we reject that argument.
28.	We accept that Mr Lumb’s calculations are unlikely to be accurate but that is not the standard. The Commissioners are required to exercise their best judgment on the material available to them. In our view, Mr Lumb had analysed the material properly, and has chosen for good reason to use the takings of 16 January 1999, rather than the observations, as the basis of the assessment. The evidence—about the level of the takings and the relative shares represented by credit card transactions and cash—is certain and, rejecting as we do the argument that those takings were unrepresentative of the normal takings of the business, they represent a firm basis from which a calculation of the true takings might proceed. It is true that one should be cautious about applying findings derived from the takings of a single day to a period of several years but in this case we can see no reason to suppose that Mr Lumb’s doing so is to be faulted. Like him, we can see nothing in the available evidence—principally the Appellants’ VAT declarations for the period—to suggest that suppression started at some time during the entire period assessed, or that it had accelerated during the period. Rather, we share his conclusion that the Appellants have, throughout, declared only about 50 per cent of their takings and have systematically set out to conceal those takings. We are satisfied that the manner in which the till was used, in particular, was designed to conceal the volume of business. Since there is no material before us on which we could properly reconsider the amount of the assessment we decline to embark on an adjustment. 
29.	We have already made it clear that we are satisfied that Mr Nazir was dishonest. We were not specifically addressed on the question of Mr Shah’s dishonesty. He did not argue that he should be treated differently from Mr Nazir even though he had throughout been a sleeping partner and had not been involved on a day to day basis in running the restaurant—indeed, for a large part of the period assessed, he was abroad or in prison. We heard no evidence about the manner in which the profits and losses of the business were shared—the extracts from the Appellants’ accounts which we had did not deal with the partners’ drawings—and there was nothing before us from which we could draw any conclusions about the manner in which concealed takings were dealt with. Mr Shah did not give evidence that he had received no benefit from the suppression and, in those circumstances, we can see no reason to depart from the normal rule that partners in a business, in the absence of satisfactory evidence that one has cheated the other, should be found equally responsible for the running of that business, notwithstanding that one was an active and the other a sleeping partner. Accordingly, we find that dishonesty has been established against both partners.
30.	The co-operation afforded by Mr Nazir was minimal. He has shown no remorse and has made no attempt to establish the correct amount of tax for the relevant period. Mr Shah, we recognise, was not given the opportunity of assisting the Commissioners because, as he was in prison, they did not attempt to interview him and made no other approach to him before the assessment was made and the penalty imposed. However, there is no material before us that suggests that, had he been given that opportunity, he would have taken it. It was not his own case that he would have done; on the contrary, his argument throughout was that he was a victim of animosity by Customs officers. Though we have rejected the argument, we accept it is what Mr Shah believes; but his belief is, we have concluded, unlikely to have persuaded him that he should cooperate. In those circumstances, we decline to interfere with the level of mitigation allowed by Customs. 
31.	The appeal is accordingly dismissed. As is usual in cases of this kind, Mr Poole applied for a direction in respect of costs. We think it is appropriate that we should make such a direction. The Appellants are to pay the Respondents’ proper costs, to be assessed by a tribunal chairman sitting alone if they cannot be agreed. 

COLIN BISHOPP
CHAIRMAN
Release Date: 2 March 2005

MAN/99/1060