Commissioners of Customs and Excise v Corbitt (J. H.) (Numismatists) Ltd
| Jurisdiction | England & Wales |
| Judge | THE MASTER OF THE ROLLS,LORD JUSTICE EVELEIGH,SIR STANLEY REES |
| Judgment Date | 01 March 1979 |
| Judgment citation (vLex) | [1979] EWCA Civ J0301-3 |
| Docket Number | SJ/89/78 |
| Court | Court of Appeal (Civil Division) |
| Date | 01 March 1979 |
[1979] EWCA Civ J0301-3
The Master of the Rolls (Lord Denning)
Lord Justice Eveleigh and
Sir Stanley Rees
In The Supreme Court of Judicature
Court of Appeal
On Appeal from The High Court of Justice
Queen's Bench Division
(Mr. Justice Neill)
MR. H.K. WOOLF (instructed by G.F. GLOAK, Esq. Solicitor for the Customs and Excise) appeared on behalf of the Appellants (Respondents).
MR. D. GOLDBERG (instructed by Messrs. Kingsley Napley & Co, London agents for Messrs. Nicholson Martin & Wilkinson, Newcastle upon Tyne) appeared on behalf of the Respondents (Appellants).
Mr. Corbitt is a numismatist. That means he is interested in old coins. He carries on a one-man business in Newcastle-upon-Tyne under the name of his company J.H. Corbitt (Numismatists) Ltd. He deals in fine coins and military medals. He does a good business, and is registered for the purpose of value added tax. Some of his stock is modern and some is old - more than one hundred years old.
There is a difference between the V.A.T. payable on modern and on old. When he sells a modern item he has to pay V.A.T. at the rate of 8 per cent on his selling price - that is the "output" tax. But he can take credit for the V.A.I, which his supplier has included in the price to him - that is the "input" tax. But, when he is selling an article which is an antique more than 100 years old (like a medal from the Napoleonic Wars or the Crimean War) he is in some circumstances entitled to a much reduced rate of V.A.I. The reason for that is because many antiques are acquired from private individuals who have not paid V.A.I. themselves. So the dealer has no credit in those cases by way of an input tax. In order to reduce the burden on secondhand dealers because of that, Parliament has enacted that instead of paying 8 per cent on his own selling price the dealer need only pay on his profit margin - that is, the difference between the price he paid to the private individual and the price at which he sold the item. Thus, if he bought an article from a private individual for £60 and sold it for £100, he does not have to pay the full 8 per cent on it (which would be £8). He only has to pay V.A.T, on the profit margin - that is, 8 per cent on £40, which is £3.20.
Quite a lot of Mr. Corbitt's stock was modern, and he became liable to pay V.A.T. on it. But quite a good deal of it consisted of antiques: and he claimed a reduction on them. Heclaimed the reduction which is allowed under section 14 of the Finance Act 1972. Section 14(1) provides: "The Treasury may by order make provision for securing a reduction of the tax chargeable on the supply of goods of such descriptions as may be specified in the order in cases where no tax was chargeable on a previous supply of the goods and such other conditions are satisfied as may be specified in the order or as may be imposed by the Commissioners in pursuance of the order. That is the legislative provision which enables secondhand dealers to claim a reduction of tax.
In pursuance of that legislative provision the Treasury made an order in 1972. It is Statutory Instrument 1972 No.1971 which gives relief by way of reduced tax for works of art, antiques and collectors' pieces. The relief with which Mr. Corbitt was particularly concerned was "antiques, of an age exceeding one hundred years". In respect of articles of that description, Article 4 of the Statutory Instrument went on to say that V.A.T. was only payable on the profit margin. But there are provisions (and these are the important provisions in this case) which have to be satisfied before the dealer becomes entitled to this relief. There is a provision about keeping invoices. Then there is the following provision which comes in repeatedly in this case. It is Article 3(5) which provides:
"Article 4 does not apply to any supply by a person unless he keeps such records and accounts as the Commissioners may specify in a notice published by them for the purposes of this Order or may recognise as sufficient for those purposes". That is the condition imposed by the Treasury under section 14(1) of the Finance Act 1972.
The conditions imposed by the Commissioners were imposed by a notice which was put out by them. It is Notice No.712.That Notice, which was issued in February 1973, contained provisions by which the Commissioners insisted that proper books should be kept. Paragraph 18 said: "… registered dealers and auctioneers of eligible articles must keep a stock book or similar record showing the information in Appendix C. The description to be recorded in Part A of the stock record must be sufficiently detailed to identify the individual article and, for antiques, it must include the details indicated in paragraph 5 concerning their age". In the appendix there is a description of the books which the dealer has to keep and all the items which he has to note down. He has to show the following 13 matters: "(1) Stock number in numerical sequence. (2) Date of purchase. (3) Purchase invoice number. (4) Seller's name and address. (5) Description of the article (including, for antiques, age details). (6) Date of sale. (7) Sales invoice number. (8) Buyer's name and address. (9) Purchase price (inclusive of any tax). (10) Gross selling price (inclusive of any tax), or method of disposal if not sold. (11) Margin on sale - item 10 less item 9. (12) Tax rate at time of sale. (13)Tax on margin due to Customs and Excise". It is said that they had to keep all those things as a condition of getting the reduced rate of tax.
I do not know how much Mr. Corbitt understood as regards all those requirements. He is quite a small man - a one-man business. He put in his three-monthly returns, as he was required to do. He entered quite a large amount of money which was payable by him for V.A.T. He did this for three years from 1973 to 1976. But then in 1976 Mr. Duffy, an officer of the Customs and Excise, visited his premises and looked at all his books. Mr. Duffy did not think that Mr. Corbitt had kept them properly. He thought that he had claimed for articles which were not eligible for the reduction. He thought that he hadclaimed for articles which were less than a hundred years old, and so forth. As a result, the officer of the Customs and Excise made an increased assessment. But that is one category which does not arise today.
The other trouble was this: The officer said that the books and the records of account did not comply with the requirements of the Notice. They did not include all the 13 items which I hare mentioned. On that account, the officer of the Customs and Excise said that Mr. Corbitt had not fulfilled the conditions on which he could get a reduction. The Commissioners said that, in those circumstances, he was not entitled to any reduction on any items. He would have to pay the full 8 per cent on the selling price.
There was a lot of to-ing and fro-ing, discussions and looking into the accounts; and eventually (and I will miss out a good deal) the officers of the Customs and Excise came to the conclusion that Mr. Corbitt had not paid enough. They said that he should pay £770 more because he was not entitled to a reduction So they made an assessment (and this is important) of the amount which they said he had to pay.
Mr. Corbitt was very upset about this assessment for a further £770. So he appealed to the tribunal. A tribunal has been set up by the statute to hear appeals especially on matters of additional assessment like this. It is section 40(l)(b).
When Mr. Corbitt appealed to that tribunal against the additional assessment, the Commissioners took an objection. They said that the Tribunal of Appeal could not look into all these books to see whether they had been properly or sufficiently kept so as to correspond with the requirements. They said that they, the Commissioners, had an entire discretion of their own. If they said that the books were not sufficiently kept, their dictumwas decisive and could not be made the subject of an appeal. They put in a Statement of Case in which they said: "… their refusal to so recognise is a matter entirely within the exercise of their discretion and not subject to review by the Tribunal".
The tribunal heard argument on that point. Having heard argument, they held by a majority that they were not limited in this way. They held that they could look into these records and see whether or not they were properly kept, and the like. I will read a few sentences from the tribunal's decision. They said: "… in this case the tribunal has express jurisdiction over the subject matter of the appeal, namely an assessment and it is but a short step from there to hold, as does the majority of the tribunal, that once we have jurisdiction over the subject matter of the appeal, then we have power to go into all matters relating to that appeal de novo and to substitute our decision for that of the Commissioners".
There was an appeal from that decision of the tribunal to Mr. Justice Neill. On the 13th June, 1978 Mr. Justice Neill held that the tribunal was wrong: and it was entirely within the Commissioners' discretion to say whether these books and records were properly kept or not and the matter could not be enquired into thereafter by the courts of law.
Mr. Corbitt now appeals to this court from Mr. Justice Neill's decision. We are told that he is supported by the National Federation of Self-Employed and Small Businesses limited because they consider this an important case. They regard it as a test case.
I may say incidentally that other tribunals have held the same way as this tribunal. They have held that they do have a power to look into the whole matter again on an appeal. There has...
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