Bath Taxis (UK) Limited v Her Majesty's Revenue & Customs, V 20974

20974

VAT – ASSESSMENT – Was the Appellant supplying taxi services to account customers as agent or principal? – Appellant had pre-existing business relationship with account customers and bore the risk of bad debts – Appellant acted as a principal – Appeal dismissed

BATH TAXIS (UK) LIMITED Appellant

- and -

Tribunal: MICHAEL TILDESLEY OBE (Chairman)

RICHARD CORKE FCA (Member)

Sitting in public in Bristol on 17 February 2009

David Memery, VAT Consultant for the Appellant

Sarabjit Singh counsel instructed by the Solicitor’s office of HM Revenue & Customs, for the Respondents

© CROWN COPYRIGHT 2009

DECISION

The Appeal

1. The Appellant was appealing against an assessment for unpaid VAT dated 17 April 2007 in the sum of £46,448 plus interest for periods 07/06, 10/06 and 01/07.

2. The Appellant provided taxi services from its premises in Bath. The services were carried out by owner drivers (46 owners at the time of the assessment). There were two categories of customers: cash and account. The cash customer used the Appellant’s taxi services on an ad-hoc basis, and paid the driver a metered fare at the end of each journey. The driver retained the whole of the fare but paid the Appellant a weekly £92 circuit fee for the services provided by the Appellant. The Respondents agreed that the Appellant acted as agent for the drivers in respect of supplies to cash customers, and liable only to account for VAT on the £92 circuit fee.

3. The account customer, on the other hand, did not pay the driver but was invoiced by the Appellant on a monthly basis for the taxi services. The Appellant paid the driver 90 per cent of the fare and retained the remaining 10 per cent for the administrative services associated with account customers. The Appellant considered that it was acting as agent for account customers and accounted for VAT on the 10 per cent administration fee. In contrast the Respondents contended that the Appellant was the principal for the account customers and liable to account for VAT on the whole fare.

4. The dispute was: “Who made the supply of taxi services to the account customers”? There was no dispute about the quantum of the assessment or whether it was made to best judgment.

5. We heard evidence from David Julian Scaramanga, the director for the Appellant and Leah Marcus Jones, the assessing officer for the Respondents. A bundle of documents was presented in evidence.

6. On 1 May 2006 Mr Scaramanga acquired the taxi business from Bath Taxis Limited as a going concern. Mr Scaramanga paid a lump sum plus a monthly charge for seven years for the business. The monthly charge was eventually bought out by Mr Scaramanga. There was apparently no written documentation evidencing the purchase which was negotiated between Mr Scaramanga and Mr Rundle, the director of Bath Taxis Limited. The purchase price was for the goodwill and the telephone number of the business. Mr Scaramanga set up a new company vehicle for the business which was known as Bath Taxis (UK) Limited. Mr Scaramanga had no connection with Bath Taxis Limited. On 30 June 2007 the Appellant discontinued the business of a taxi service and commenced trading as vehicle leasing company, the vehicles being used as taxi cabs.

7. The drivers were self employed owning the taxis. The previous owners, Bath Taxis Limited, had issued the owner drivers with a Principal Statement of Terms and Conditions in which the driver owners agreed...