Dhadwal v Revenue & Customs [2012] UKFTT 453 (TC) (17 July 2012)

27. RC/2 was Mr Sagoo’s computer or was at least regularly used by him as emails to and from his email address ([email protected]) show. Documents found on that computer also clearly relate to the fraud. Examples are invoices from Noord-Zuid to the hijacked N&R and documents from the hijacked N&R. These documents were found on RC/2 by the computer experts whose evidence we will consider under the heading of the appellant’s alleged involvement in the fraud.

28. In addition, that evidence of Mr Sagoo’s involvement in the fraud is corroborated by other circumstantial evidence. An address used by the hijacked N&R which was an unoccupied flat with an open letter box was in the same block as a flat owned by Mr Sagoo. Mr Sagoo had known the true owners of N&R for some years and had counselled Mr Jackson the proprietor of WJW in his capacity as counsellor and advisor at Birmingham Enterprises and so was in a position to imitate those businesses.

29. The computer RC/3 was used mainly for faxes and was used extensively by Mr Sagoo. A small number of faxes relating to the appellant but not to the fraud were sent or received via RC/3 but we do not regard that as proof that the appellant was involved in the fraud as they may only have been sent or received in that way for convenience when he was visiting Mr Sagoo.

30. The fact that Mr Sagoo’s computer, or one he used extensively, was used for the purposes of the fraud together with the other corroborative evidence clearly amounts to a prima facie case that he was involved in the fraud and so in light of the fact that the parties to the appeal both agree that he was involved it is sufficient for the purposes of this appeal for us to find that he was involved in the fraud.

Evidence about the appellant’s involvement in the fraud.

31. It is not in doubt that an extensive fraud occurred and we have found that the parties to the appeal were justified in agreeing that Mr Sagoo was involved in it. The respondents’ case against the appellant is that he was also involved and, although under the relevant legislation he could be liable either as the importer or as a person who caused the goods to reach the duty point, the respondents have not put forward a case that he was involved in any other way than as a fellow conspirator in the fraud which, if proved, would certainly be sufficient to establish liability. Mr Young agreed on the appellant’s behalf that there were no legal issues involved in this appeal and that the only issue was the factual one about whether the appellant was involved in the fraud.

32. There are three main grounds put forward by the respondents as evidence that the appellant was involved in the fraud. Firstly, they allege that he put himself forward as Jattinder Singh in dealing with Birmingham Enterprises and Just for Starters. Clearly, if that is proved that would be strong evidence of involvement in the fraud because the occupation of the office by Hexagon Supplies was at least part, indeed a major part, of the operation of the fraud at least up to the point where the computers and other evidence were seized by the police. The information contained in the computers and related discs being used at the Hexagon office have been shown to have been used in the fraud as we have already held in considering Mr Sagoo’s role. The second main allegation made by the respondents is that the appellant is linked to the computer RC/2 by certain entries and that that is circumstantial evidence that he was involved in the fraud. The third main ground was what might be termed general circumstantial evidence consisting of evidence of extensive association with Mr Sagoo and a bad record of unsatisfactory business dealings by the appellant.

33. We have already touched on the fact that the Hexagon Supplies office was occupied under a licence entered into by Jattinder Singh or a person purporting to be him. The respondents’ case was that the appellant had pretended to be Jattinder Singh and that he had entered into a licence agreement with Just for Starters Ltd to occupy an office on behalf of Hexagon Supplies.

34. The respondents relied principally on the evidence of Mr Ansermoz for proof of these allegations. In his witness statements Mr Ansermoz stated that he had been shown passport photographs of Jattinder Singh and Gurdip Singh (who it is agreed by both parties is Mr Dhadwal) and he said that Mr Dhadwal, was “the individual I knew as Jattinder Singh and who signed the Licence agreement as Jattinder Singh t/a Hexagon Supplies”. He also said that he had been shown a photograph of the real Jattinder Singh and that was “not the Jattinder Singh that signed the licence agreement and who I met on several occasions … I told HMRC that Mr Singh produced a copy of his driving licence as proof of identity and that I still had it on file but when I went to retrieve it from my filing system, in the presence of Mr Duxbury, officer, I discovered that it was missing”.

35. The copy of the licence to occupy that was produced at the hearing was an unsigned copy found in the Hexagon Supplies office and there is no evidence about who might have removed the original (which was presumably signed) from the filing cabinet.

36. In a second witness statement Mr Ansermoz gave a very similar account of these points of evidence.

37. Mr Young cross examined Mr Duxbury, the officer in charge of the enquiries in this case, at length about issues relating to how he had dealt with enquiries made to various persons connected or tangentially connected with this case. Mr Young put it to Mr Duxbury that he had used heavy handed tactics and veiled threats to encourage those persons to co-operate with his enquiries. Mr Young explained that the relevance of those lines of cross examination was that he would be putting it to Mr Ansermoz that he had been persuaded to give evidence by such tactics and that the content of his evidence was affected by them.

38. In fact when Mr Ansermoz was cross examined he was somewhat critical of Mr Duxbury’s manner, although he said it was no more than typical of the manner adopted by Customs Officers he had dealt with in his years in business and in practice as an accountant.

39. In light of the content of Mr Ansermoz’s evidence to the Tribunal we do not need to make any finding about whether or not there is any substance in these allegations against Mr Duxbury or any affect they might have had on Mr Ansermoz’s evidence. Indeed Mr Young decided in light of Mr Ansermoz’s sworn evidence to the Tribunal that he did not need to call any of the witnesses whose evidence might or might not have been relevant to any such issues.

40. The witness statements already referred to give a clear impression, at least, that Mr Ansermoz was able to assert from his own knowledge that Mr Dhadwal had passed himself off as Jattinder Singh. However when he gave evidence Mr Ansermoz agreed that he had known the appellant only as ‘Mr Singh’ and we find that he had, in effect, assumed it was Jattinder Singh he saw at the premises when he saw the appellant because he knew that was the name of the licensee.

41. Contrary to the impression possibly given in the witness statements, Mr Ansermoz also said in his evidence to the Tribunal that it was not in fact he who had dealt with the creation of the licence agreement so that the appellant cannot have represented himself to Mr Ansermoz as Jattinder Singh when the licence was being negotiated. It follows that Mr Ansermoz’s evidence cannot support any allegation that the appellant represented himself to be Jattinder Singh at that time. In fact we heard no evidence about the actual identity of the person who negotiated the licence agreement from anyone concerned in its negotiation.

42. Mr Ansermoz was also unable to confirm the identity of the person shown on such photographic evidence of identity as had been produced at the time of the negotiation of the licence. The respondents’ case was that a driving licence photograph of Mr Dhadwal had been attached to the licence agreement as proof of his identity, which would have amounted to evidence that he had represented himself as being Jattinder Singh. However the appellant produced evidence from the DVLA which showed that he had not been issued with a photographic driving licence until a date later than the creation of the licence to occupy so that evidence was clearly incorrect. It might have been the case that Mr Ansermoz had simply misremembered what type of photograph he had seen. But in fact when he gave evidence, in addition to it becoming apparent that he had not dealt with the negotiations and so could not have seen any photograph at that stage, Mr Ansermoz also said that such dealings as he had had subsequently with the file in which the licence was kept and which should have contained the photograph, consisted of the routine filing of documents such as copy invoices. At those times he did not claim to have consciously seen the photograph and nor would we have expected him to.

43. We do not doubt Mr Ansermoz’s integrity but as can be seen from the above findings, although he may have believed that the person he dealt with had been Jattinder Singh and he may have believed that the person concerned had so represented himself, the evidence provides no proof that the appellant had in fact represented himself to be Jattinder Singh.

44. Mr Ansermoz’s witness statements omit to mention that he always understood that Mr Sagoo was involved in Hexagon Supplies personally and not just as a counsellor or advisor in his capacity as a sub-contractor to Birmingham Enterprises. It is of some significance that Mr Sagoo was involved in that way because it provides an explanation of how the licence could have come into existence without the involvement of the appellant or for that matter without the involvement of Jattinder Singh.

45. On the basis of the above evidence we find that the respondents have not proved that the appellant represented himself to be Jattinder Singh.

46. The other main strand of evidence on which the respondents relied for proof that the appellant was a conspirator in the fraud was an allegation that the appellant had been actively involved in the use of the computer RC/2 which had been used in connection with the fraud.

47. Initially, the respondents were intending to rely on the evidence of a Mr David Wayne Lack to support their claims about Mr Dhadwal’s use of the computer. By the time Mr Lack made a witness statement he was running a security business which he claimed also specialised in “teaching computer skills, repairing and rebuilding computers, fault diagnosis system analysis as well as data recovery and retrieval”. He did not claim to have any relevant forensic expertise. He had been recruited as a so called expert by HMRC when Mr Duxbury needed an expert in another case and, frustrated by a lack of access to qualified experts used by the Department in more serious cases, he had simply gone out into the streets of Northampton and sought the help of Mr Lack who was at that time running a computer repair shop, after which he was put forward as an expert in this and some other cases.

48. Mr Lack’s evidence was served and was to be relied upon in this appeal. The appellant’s representatives sought to agree that a joint expert should be appointed but that was resisted by the respondents. The appellant’s representatives did not succumb to the temptation to assume that once a computer expert had been appointed there could be no answer to his evidence. No doubt because the appellant was adamant that he had not used that computer and, as he told us in evidence, he had instructed his solicitor that was the case, they prepared for a hearing of this appeal at which Mr Lack was due to give evidence and prepared to challenge his evidence.

49. Shortly before the initial date listed for the hearing of this appeal it came to the attention of the respondents that Mr Lack was being prosecuted for fraudulent benefit claims and they persuaded the Tribunal to adjourn the hearing so that they could obtain the evidence of a different expert. As far as we can tell that was not because they had realised that Mr Lack was not qualified to give expert evidence but was solely because of the prosecution. It is an ironic footnote to this aspect of the case that it appears the prosecution came about because the Department of Work and Pensions became aware of Mr Lack having income he had not declared which consisted of fees for the so called expert opinion given in connection with this case by Mr Lack and paid to him by the solicitors then acting on behalf of the respondents.

50. At the hearing of this appeal Mr Young wanted to explore how what turned out to be the false evidence put forward by Mr Lack had come about. As we will say hereafter there were documents produced, which appear at least, to have been deliberately falsified because they were produced as having been on the computer which the proper experts who were later appointed by both parties agree was not the case.

51. Mr Young wanted to attempt to get to the truth of how that came about. Mr Young suggested that one explanation might have been that Mr Lack had created those documents in an effort to assist the respondents, his clients, and that someone had suggested to him that he should do so. However, not having heard evidence about that from Mr Lack, we are not prepared to make any such finding nor would it be relevant to our decision to do so. This appeal must be decided on the true evidence not on any guesses about how the false evidence came to be produced.

52. One point we consider to be very pertinent is that if it had been someone’s intention to produce false but damning evidence something much more relevant than any of the false evidence that was produced would have served that sinister purpose much better than what was produced. For example a “false cookie” that was produced which might have been intended to show that the appellant had accessed RC/2 to view the Racing Post was hardly damning evidence even if it had proved that he had used RC/2 for that purpose. Given that the appellant undoubtedly visited the Hexagon Office, for whatever reasons, occasional use of a computer there for purposes which are clearly nothing to do with the fraud is barely suspicious let alone damning evidence against him. Had someone wanted to incriminate the appellant and had that person been willing to perjure himself, it would surely have been just as easy to create a false document showing the appellant contacting someone connected with the fraud as it was, or might have been, to create one showing him reading the Racing Post. It is disturbing that false evidence was produced and it seems unlikely that it could have happened innocently but without more evidence about how it occurred we cannot make a finding about who might be responsible.

53. We would note that although the respondents and Mr Duxbury in particular claimed to be unable to locate Mr Lack, who appeared to have left the Northampton area, the appellant’s instructing solicitor was able to locate him in a nearby town by the simple expedient of a Google search for a newspaper report of his criminal case which gave his address. The respondents declined to produce Mr Lack as a witness and having withdrawn his evidence they appear to have considered the matter closed. They rather unrealistically suggested the appellant could have obtained a witness summons to call Mr Lack but it seems clear to us that the appellant could hardly have been expected to do that. When Mr Lack’s address was disclosed to the respondents they sent an officer to interview him but the evidence then produced takes the matter no further in our opinion and the respondents did not call or summons him to give evidence in person.

54. A good deal of evidence was given about a visit the appellant made to Istanbul to attend a football match in which Liverpool FC, the team he supports, won the European Cup. Some of the booking arrangements for that trip were made on the computer RC/2. That in itself is not necessarily suspicious in our opinion. The appellant claimed he was not very computer literate and so asked Mr Sagoo to help him by booking a hotel and flights on that computer. We entertain some doubts as to whether the appellant was unable to make those arrangements himself but even if he exaggerated his evidence by saying that he could not have done it himself on his own computer we do not regard it as very significant that he got a friend or business colleague to help him.

55. The bookings are in no way connected with the fraud and the respondents rely upon them to support a general allegation that the appellant used the computer that was undoubtedly used for the purposes of the fraud. The respondents ask us then to draw the inference that that also goes towards proving that the appellant was involved in the fraud.

56. The respondents allege that the appellant took RC/2, which was a laptop computer, to Istanbul. Some of the times when that computer was used between 24 May and 26 May 2005, which his passport shows were the dates on which the appellant was in or en route to and from Istanbul, appear to have been while the appellant would have been in flight which makes it unlikely that he could have used the computer. No evidence was given about whether the computer would have been usable during the flights or for that matter whether internet access would have been possible in Istanbul. As there was no evidence about how the clock on the computer was set and no evidence about the precise times and durations of the relevant flights we are unable to make any conclusive findings about whether it was used only at times when the appellant would have been on the ground at places where internet access would have been available.

57. The respondents allege that a booking or enquiry made about hiring the services of a prostitute in Istanbul could only have been made by the appellant or one of his three friends who accompanied him to Istanbul. They say that is further proof that the computer must have been in Istanbul. However, the evidence is inconclusive at best because an email from the agency representing the prostitutes requested an email in reply from the potential customer about when and where her services were required but there was no proof that a reply was sent. The appellant denies that he or his friends used the services of a prostitute while in Istanbul and contends that these enquiries about the services of a prostitute were carried out by Mr Sagoo on his own initiative and without the appellant’s knowledge.

58. Although RC/2 was used to enquire about the services of a prostitute for the appellant and his companions during the visit to Istanbul we find that such enquiries as were made did not result in the services of a prostitute being engaged. We find that those enquiries do not prove that the computer was with the appellant in Istanbul or even that the appellant had asked someone else to book a prostitute for him. The use of RC/2 in that way may just as well have been some kind of prank by which the appellant would have been embarrassed by a prostitute turning up at his hotel or some such explanation.

59. Evidence was also given about the use of RC/2 to visit escort agency websites. Evidence proved that the appellant regularly visited such sites on his own computer and the respondents contended that the fact that RC/2 was used to visit escort sites shows he was using RC/2 regularly. However, as Mr Young pointed out, many of the visits to escort agency websites on the appellant’s own computer were to sites specialising in facilitating contact with transsexual escorts whereas none of the sites visited through RC/2 were for transsexual escort sites. Mr Young therefore submitted that the likelihood was that someone other than the appellant had accessed escort agency sites on RC/2 – the obvious candidates being Mr Sagoo or Jattinder Singh if the latter was really involved in the Hexagon Supplies office. We cannot conclude who made the visits to escort sites on RC/2 but we do find that the evidence fails to prove that the appellant used RC/2 for those purposes.

60. The respondents also relied upon evidence which tended to show that the appellant and Mr Sagoo were closely involved in business activities together over a number of years.

61. The respondents also relied on evidence that the appellant had what might be termed a bad record in business having been involved in more than one company that ceased to trade owing the Revenue Departments money and leading to the appellant’s being barred from acting as a director of any company for ten years.

62. The appellant undoubtedly lied about his visit to Istanbul in one major respect. He gave a detailed account of how he and his companions had arrived in Istanbul and had driven straight to a hotel in a taxi. The hotel proved to be unacceptable to them so they went to another hotel and then on to the football match arriving only shortly before the match began leaving no time, as he claimed, for him to have used the laptop. All that was said to have been on 24 May 2005 and as the laptop was used on that day by someone his account of the journey would, if his evidence were accepted, prove that he had not had it with him in Istanbul as he had had no opportunity to use it. However, undisputed evidence was given that the match occurred on 25 May not 24 May so that the appellant’s account of travelling from the airport straight to the match via the hotel without a break during which he could have used the computer is untrue. That does not prove that he did use the computer.

63. The appellant also understated his knowledge and closeness to Mr Sagoo with whom he had had business dealings over many years and with whom had been involved in the same business at one time.

64. We have also already found that the appellant was not as ignorant of the use of computers as he had claimed.

Conclusions.

65. The three main strands of the respondents’ case were firstly that the appellant had represented himself to be Jattinder Singh, secondly that he had used RC/2 to a considerable extent and thirdly the general evidence of association with Mr Sagoo and unsatisfactory business dealings. The first two have not been proved as we have already explained. We hold that the third standing alone comes nowhere near proving the specific fraud alleged.

66. On those grounds we find that the appeal is allowed and the appellant is not liable to pay any of the duty or tax assessed.

Coda.

67. Mr Young asked us to refer the papers in this case to the Director of Public Prosecutions or to take some other action to put in train an inquiry into the propriety of the respondents’ officers’ conduct of this case. It is obviously disturbing to find that the respondents appointed an entirely unsuitable person to act as an expert and indeed put him forward as an expert when he was no such thing. We cannot say that the evidence we have heard proves that any actual wrongdoing occurred though, as far as some of the false documents which were put forward as having been found on the computer but which were not on it are concerned, there must be grave suspicion that they had been produced deliberately.

68. We cannot do more than note that suspicion as we have no powers to direct the respondents to do anything about the shortcomings in their handling of this case or to make enquiries about who may have deliberately falsified evidence.

69. The respondents at first refused to review the duty assessments with which this appeal is concerned because the appellant’s previous legal advisers had failed to request the review in the time allowed by statute and, although the respondents have a discretion to give an out of time review, they had declined to do so until forced to do so by Judicial Review proceedings. They must have realised that their case against the appellant was based only on circumstantial evidence. They no doubt formed a view that that circumstantial evidence proved their case but it must have been obvious that a different view of it might prevail. This was not a case where the evidence could be said to have made it certain that liability would be established. The appellant had a right of appeal in respect of the VAT assessments for which no statutory review was needed and which would have raised the same issues as an appeal relating to a reviewed decision about the duty. In the circumstances the initial refusal to conduct a review appears to us to have been obviously unfair.

Costs.

70. Any application concerning costs is to be made to the Tribunal within 42 days of the release of this decision. Any such application is to be made in principle only at that stage by which we mean that no schedule or detailed statement of the costs need be submitted if an order in principle is sought.

71. This document contains full findings of fact and reasons for the decision. Any party dissatisfied with this decision has a right to apply for permission to appeal against it pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009. The application must be received by this Tribunal not later than 56 days after this decision is sent to that party. The parties are referred to “Guidance to accompany a Decision from the First-tier Tribunal (Tax Chamber)” which accompanies and forms part of this decision notice.

First-tier Tribunal (Tax)

RICHARD BARLOW

TRIBUNAL JUDGE

RELEASE DATE: 17 July 2012

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You are here: BAILII >> Databases >> First-tier Tribunal (Tax) >> Dhadwal v Revenue & Customs [2012] UKFTT 453 (TC) (17 July 2012) URL: http://www.bailii.org/uk/cases/UKFTT/TC/2012/TC02134.html Cite as: [2012] UKFTT 453 (TC)