Tag Archives: Audit Scotland

Crofting VATgate

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Hector the Inspector - HMRC Taxman - Crofting VATgate

Who is the VAT Inspector?

In his letter to shareholders at Upper Coll the grazings ‘constable’, Colin Souter (who was illegally appointed in my view, and in the view of others including, ironically, the Crofting Commission themselves) stated:-

Following receipt of legal opinion from Queen’s Counsel, the position of Grazings Committees being able to register for VAT as trading entities in order to reclaim VAT has come under scrutiny. The dialogue with HMRC regarding VAT status remains ongoing and once concluded, I will be able to advise on the outcome.

Why and how on earth was Colin Souter in receipt of legal opinion from Queen’s Counsel on the question of whether common grazings committees could be VAT registered?

A suggestion on this blog that Colin Souter may have instructed the Opinion was met with this response from Mr Souter:-

I should also point out that I have never sought legal advice from Queen’s Counsel in any context, since being appointed as Grazings Constable.

I then asked:-

Perhaps you can enlighten us as to how you came to be in “receipt of legal opinion from Queen’s Counsel” as stated in your letter to the Upper Coll shareholders?

Mr Souter has yet to answer my question.

So who instructed this legal opinion, who paid for it and why?

How did Colin Souter come to be in possession of it and why?

In his dialogue with HMRC is Colin Souter trying to stop VAT registration at Upper Coll Common Grazings and if so why?

It can only be assumed that the attempt to stop VAT registration of common grazings probably lies at the door of the Crofting Commission. Would this not be how a grazings ‘constable’ appointed by them would be in possession of such information?

We are already aware that the Convener of the Crofting Commission, Colin Kennedy, was of the view that common grazings should not receive SRDP funding. This very alarming notion (an issue that did not concern the crofting regulator and/or its convener in any way) was firmly quashed by Fergus Ewing MSP.

It is therefore not a giant leap to think that the Crofting Commission and/or their Convener might be behind this attempt to stop common grazings being VAT registered.

If that should prove to be the case it is scandalous.

Questions regarding whether crofters should be VAT registered or not have absolutely nothing to do with the Crofting Commission. It is a matter between crofters and HMRC.

Public money should not have been spent on the opinion of Queen’s Counsel on such matters. If that has happened Audit Scotland should be investigating the issue. Another one for them to add to the growing list for their next visit to Great Glen House.

But more significantly why is the Crofting Commission and/or their Convener intent on depriving crofters of income? First it was SRDP funding. Now it appears to be VAT.

Under and in terms of the Crofters (Scotland) Act 1993 the Crofting Commission has as one of its functions:-

promoting the interests of crofting

On their website the Crofting Commission state that it:-

regulates and promotes the interests of crofting in Scotland to secure the future of crofting.

This statement links through to a general leaflet on crofting that states:-

The Crofting Commission is working to secure the future of crofting by creating and promoting a well regulated crofting system that positively contributes to the sustainability of rural communities.

By seeking to deprive crofters of SRDP funding and now, possibly, VAT the Crofting Commission cannot be said to be promoting the interests of crofting, securing the future of crofting or positively contributing to the sustainability of rural communities. Quite the contrary.

If Commissioners are acting in such a way, completely contrary to the functions that the Crofting Commission was established to carry out, then those commissioners responsible have no place in that organisation. They should be ashamed of themselves.

They are clearly “unable or unfit to exercise the functions of a member” or “unsuitable to continue as a member”. As such the Scottish Ministers may remove them from office under and in terms of the Crofters (Scotland) Act 1993. There have been repeated calls over recent months for such action to be taken but if ‘Crofting VATgate’ does fall at the door of the Convener and/or any other Commissioners then this surely is the final straw that broke the camel’s back.

Fergus Ewing MSP, as Cabinet Secretary for the Rural Economy and Connectivity with responsibility for Crofting, should immediately launch an investigation to get to the root of ‘Crofting VATgate’, publicise his findings for the benefit of crofters and take appropriate and decisive action against those responsible.

Brian Inkster

Image Credit: Hector the Tax Inspector © HMRC

The cost of the Common Clearances

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The Cost of the Common ClearancesIn my last post I revealed how much the grazings constables (appointed illegally in my opinion and in the opinion of others, including knowingly by the Crofting Commission itself) were being paid.

But what has been the overall cost of the alleged abuse of power within the Crofting Commission that has been dubbed ‘The Common Clearances‘?

A Freedom of Information request has disclosed that as at 1 July 2016:-

  • Colin Kennedy, Marina Dennis, William Swann and David Campbell (all Commissioners) together with a member of staff travelled to Stornoway to attend a meeting of the Mangersta shareholders on 16-17 May 2016 at an overall costs including flights, accommodation and subsistence of £2,005.
  • Donna Smith (Crofting Commission member of staff) and Colin Souter (‘Grazings Constable’) went to visit Upper Coll shareholders on 23 June 2016 at a cost of £852.40.
  • The cost of the ‘grazings constables’ as disclosed in my last post was £5,886.85.
  • Thus adding these figures together gives a total cost of £8,744.25.

But that figure is very much the tip of the iceberg.

There was an earlier visit to Lewis by the Crofting Commission to meet shareholders at Upper Coll before the decision was taken to remove the grazings committee from office.

There is the huge number of hours spent by Scottish Government officials, Crofting Commission officials and Crofting Commissioners on the debacle.

There is the legal expenses incurred by the Crofting Commission which reputedly includes the engagement of external counsel.

One of the grazings constables purports to still be in ‘office’ carrying out wholly unnecessary and dubious activities that he will no doubt still be paid for.

All costs that could and should have been avoided and better spent on the legitimate and proper regulation of crofting.

But perhaps more significant is the human cost. Something that cannot be quantified in pounds, shillings and pence. The devastating affect that the Crofting Commission has wrought on crofting communities with accusations of financial impropriety that have ultimately been withdrawn or still remain hanging.

One final observation: Why did the Crofting Commission meet the costs of their Convener, Colin Kennedy, attending the meeting in Mangersta in May 2016? He was not officially supposed to be there, he had a conflict of interest that was acknowledged but he insisted on attending albeit in silence. Was he doing so in a personal capacity rather than an official one? Whatever the position should the Crofting Commission have been meeting his travel and accommodation costs? A question (amongst many others) for Audit Scotland to answer perhaps.

Brian Inkster

Grazings Constables Risk the Clink

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Frank Serpico would never have accepted a job offer from the Crofting Commission

Frank Serpico would never have accepted a job offer from the Crofting Commission!

The Crofting Commission have, as part of the alleged abuse of power on their part over ‘The Common Clearances‘, been appointing Grazings Constables to replace the grazings committees that they have evicted from office.

I have blogged on the illegality of appointing Grazings Constables in such circumstances. This viewpoint has been backed up by Donald Rennie, an eminent expert in agricultural law and Honorary President of the European Council for Rural Law.

In a letter, that was published in both The Scottish Farmer and the West Highland Free Press last week, Donald Rennie highlights the potential difficulties for both the ‘Grazings Constables’ and the Crofting Commission of these illegal appointments.

With the kind permission of Donald Rennie, I now reproduce his letter here, in its entirety:-

I cannot allow the “Open Letter” from the Chief Executive of the Crofters Commission to pass unchallenged, especially as the Commission have exposed the unfortunates imposed as “Grazings Constables” to the risk of personal liability for tampering with the crofters’ money.

Ms MacLean says that there has been speculation about the interpretation of the Crofters (Scotland) Act 1993 and that “The commission is confident that it is applying the law correctly but this can only be clarified by the Scottish Land Court.” Both of these statements are self evidently false.

It is clear from an honest reading of section 47 of the Act that the Commission has no power to appoint a grazings constable in the present situation.

Their only power to appoint a grazings constable is to be found in section 47(3). That subsection applies where the crofters have not used the democratic provisions of the Act to appoint a grazings committee. In that case the Commission may step in and appoint either a grazings committee or a constable. That is not the situation here.

Under section 47(8), if the Commission are satisfied that the members of a grazings committee are not carrying out properly the duties imposed on them by the Act, the Commission may remove from office any or all such members and may appoint or provide for the appointment of other persons in their or his place. In other words, if the Commission remove one or more members of a committee they may appoint substitute members of the committee. They have no power conferred by this subsection to appoint a grazings constable.

The Commission was created by Act of Parliament. If the Act of Parliament does not give them the authority to do something then they cannot legally do it. subsection 8 is the only part of the legislation which permits the Commission to interfere in the democratic process of the operation of grazings committees. There is nothing in this subsection which permits the appointment of a grazings constable and therefore the actions of the Crofting Commission in purporting to appoint grazings constables are clearly illegal.

There is no point in applying to the Scottish Land Court for a ruling. It is a waste of time and money to seek a judgement to confirm the self evident.

Each purported grazings constable is in bad faith in the holding of his purported appointment. Ignorance of the law is no excuse. In addition it has been explained to the so called constables that their appointments are nullities. They cannot therefore claim ignorance of the illegality of their positions.

Section 47(7) is the only provision dealing with the constable’s right to remuneration. It provides that “The term of office of a grazings constable appointed by the Commission under subsection (3) above shall be such as may be specified in the instrument by which he is appointed, and he shall receive such annual remuneration as the Commission may determine; and such remuneration shall be defrayed by an assessment levied in such manner as the Commission may deem reasonable on the crofters who share in the common grazing.” Nothing is said in this subsection about appointment in terms of subsection 8 which reinforces the view that the appointment is illegal.

If a constable is validly appointed, this is the only provision allowing for his remuneration and it states clearly that the remuneration shall be paid by the crofters. The Commission has no power to use its own funds to remunerate the constable and if they purport to do so then it is a matter for Audit Scotland to investigate.

But these purported constables have not been appointed validly under subsection 3. Therefore there is no basis on which they are entitled to remuneration. From this it follows that if a purported constable takes as much a penny piece from the crofters sharing in the common grazing, with intent permanently to deprive them of that money, he is at serious risk.

Comment from the Crofting Law Blog:-

I wholeheartedly agree with everything Donald Rennie says in his letter. The law on the matter is simple and straightforward as set out clearly by him.

I have asked the Crofting Commission to explain where in law they have the power to appoint Grazings Constables in such circumstances. The only response to date has been:-

The Commission’s understanding is that this was a final decision and the Commission has no authority to revisit its own decisions in these circumstances.

This could imply (in the absence of any argument to the contrary) an acceptance on the part of the Commission that they couldn’t in law appoint a Grazings Constable but, having done so, they had no ability to revisit and reverse that decision. However, as Donald Rennie points out, there is no need for the Commission or anyone else to do so “to confirm the self evident”.

In my next blog post I will reveal the fact that, having stated that it has “no authority to revisit its own decisions in these circumstances“, the Crofting Commission went on to do just that and compounded their first illegal decision with yet another one (or maybe two)!

Brian Inkster

Image Credit: Serpico © Artists Entertainments Complex, Inc. Produzion De Laurentiis International Manufacturing Company S.P.A.