Cirdan Sailing Trust Appellant v Commissioner for Customs and Excise
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE PARK |
| Judgment Date | 09 June 2005 |
| Neutral Citation | [2005] EWHC 2999 (Ch) |
| Court | Chancery Division |
| Docket Number | CH/2005/APP/0069 |
| Date | 09 June 2005 |
[2005] EWHC 2999 (Ch).
Chancery Division.
Park J.
Eamon McNicholas (instructed by Jordans VAT Consultancy) for the taxpayer.
Nicola Shaw (instructed by the Solicitor to HM Revenue & Customs) for the Crown.
Value added tax - Zero-rating - Passenger transport - Qualifying ship - Vessel licensed to carry nine passengers - Vessel having capacity to carry more - Whether vessel designed or adapted to carry more than ten passengers so as to qualify for zero-rating - Value Added Tax Act 1994, Sch. 8, Value Added Tax Act 1994 schedule 8 group 8Grp. 8, item 4(a).
This was an appeal by a charitable trust against a decision of the VAT and Duties Tribunal ([2005] BVC 2,246) that a vessel licensed to carry a maximum of nine passengers was not a "qualifying ship" for purposes of zero-rating even though it was in fact capable of carrying more than ten passengers.
The taxpayer charity, a company limited by guarantee, operated four large sailing vessels, each with a paid crew. It entered into charter agreements involving sea trips starting and usually ending in UK ports. The charity derived its income from charter fees and donations. Most of the charter groups were drawn from youth organisations and schools caring for young people who were socially, physically or mentally disadvantaged, and in a typical year some 1,400 people took part in the charters.
In order to qualify for zero-rating under the Value Added Tax Act 1994, Sch. 8, Grp. 8, item 4(a), the supply had to consist of the "transport of passengers in a ship … designed or adapted to carry not less than 10 passengers". It was common ground that all the vessels except one (Duet) qualified under item 4(a). Duet had nine berths and the Small Commercial Vehicle Certificate issued under authority given by the Department of Trade in pursuance of the Merchant Shipping Act stated that nine persons was the maximum number to be carried. However, for day trips there was sitting room for 14 persons and the taxpayer had plans to apply for certification to carry more than ten persons. With regard to Duet, Customs' view was that, since it could not lawfully carry more than seven passengers plus two crew, it was unable to qualify for zero-rating.
The VAT and Duties Tribunal dismissed the taxpayer's appeal against that decision (Decision No. 18,865). The taxpayer appealed to the High Court.
Held, dismissing the appeal:
The evidence was that the vessel could carry 14 passengers on a day trip. However, it was also clear that the vessel could not carry 14 passengers, or at least could not do so in acceptable circumstances, on trips which involved one or more overnight periods. There were only nine berths on the boat, only seven of which were available for passengers. Thus, Duet was a boat which could be said to be capable of carrying ten or more passengers on day trips, but was not realistically capable of carrying ten or more passengers on longer voyages which included overnight passages. There might have been occasional day trips, but the normal use of Duet had been for long voyages which typically included overnight passages. The condition set out in item 4(a), which involved identifying the number of passengers a ship was designed or adapted to carry, had to be applied in a sensible way by reference to the actual and anticipated ways in which the ship would be used. Further, where a vessel was equipped with a significant number of bunks it was realistic to regard those bunks as giving an indication of what the vessel was designed or adapted to do. If a vessel was designed or adapted predominantly or solely for day trips it would be unlikely to have a considerable amount of its space occupied by bunks. On the evidence about how Duet was designed and laid out and in particular how bunk accommodation for nine persons was provided on it, and further in the light of the evidence about how it was typically used, the service provided was the transport of passengers in a ship which was not designed or adapted to carry not less than ten passengers. Therefore, the supply was not zero rated. The certificate was not determinative of the issue but it did represent the view of an authority which might be expected to have an informed opinion on how many persons or passengers the particular vessel could realistically be regarded as suitable for transporting.
Park J:
[1] This case is an appeal from the VAT and Duties Tribunal. The appellant, as matters have turned out, both before the Tribunal and before me, is a trust known as Cirdan Sailing Trust. The respondents to the appeal are now known as Her Majesty's Revenue and Customs. In this judgment, if relevant, I shall refer to them as HMRC. I think that it remains to be seen what conventional abbreviation will come to be used for the newly amalgamated department.
[2] The decision of the Tribunal was released on 8 December 2004 ([2005] BVC 2,246...
To continue reading
Request your trial
-
E-Zec Medical Transport Services Ltd
...[47] There are two authorities that have considered Item 4(a) Schedule 8 Group 8 VATA. [48] In Cirdan Sailing Trust v C & E Commrs [2006] BVC 514, the question was whether a boat, the “Duet”, fell within Item 4(a). The case did not involve wheelchair design or adaptation to the boat, so the......
-
Revenue and Customs Commissioners v British Disabled Flying Association
... ... has jurisdiction to decide whether appellant had legitimate expectation - Held no - Appeal ... [25]We were referred to Cirdan Sailing TrustVAT [2005] BVC 2246 and Davies ... ...
-
Davies (t/a Special Occasions/2XL Limos) v Revenue and Customs Commissioners
...judgment: Boss Holdings Ltd v Grosvenor West End PropertiesUNKWLR [2008] UKHL 5; [2008] 1 WLR 289 Cirdan Sailing Trust v C & E CommrsVAT [2006] BVC 514 R & C Commrs v Stone (The Kei)UNKVAT [2008] EWHC 1249 (Ch); [2008] BVC 635 Value added tax - Zero-rating - Supply of transport to passenger......
-
The Commissioners for HM Revenue and Customs v Jigsaw Medical Services Ltd
...the Note to it have been the subject of some consideration in the cases. In Cirdan Sailing Trust v. Customs and Excise Commissioners [2005] EWHC 2999 (Ch), the question was whether a boat, the “Duet”, fell within Item 4(a). The case did not involve wheelchair design or adaptation to the so ......