Mohammed Shafiq v Commissioners of Customs and Excise

Facts

The appellant, Mr Mohammed Shafiq, appealed against three decisions of the Commissioners of Customs and Excise concerning the taxi operator business United Private Hire, which had traded from premises at 28 Ainsworth Road, Radcliffe, Manchester for over nineteen years using self-employed drivers. Mr Shafiq had owned the business until September 1997, when he sold it to Mr Mohammed Iqbal for £15,000 and continued driving full-time. Mr Iqbal found within about a year that he could not cope, and in or about September 1998 the business was sold for the same £15,000 to Mr Shafiq's younger brother, Mr Tariq Mahmood, then aged 20 and with a record of criminal convictions, the family hoping to keep him out of trouble. Because of those convictions, the private hire operator's licence, business insurance, rates and utility bills remained in Mr Shafiq's name. Customs officers from the shadow economy team visited the premises unannounced on 15 July 2002 and, concluding that Mr Shafiq was sole proprietor, compulsorily registered him for VAT with effect from 1 November 2000, assessed him under section 73 of the Value Added Tax Act 1994 to £13,517 plus interest for the period 1 November 2000 to 31 January 2003, and imposed a late registration penalty of £2,306, later reduced to £1,778. By the final session of the hearing both parties accepted that the sole remaining issue was the identity of the proprietor.