Commissioners of Customs and Excise v Corbitt (J. H.) (Numismatists) Ltd
| Jurisdiction | England & Wales |
| Judgment Date | 13 June 1978 |
| Date | 13 June 1978 |
| Court | Divisional Court |
Queen's Bench Division.
Mr. H. Woolf (instructed by the Solicitor for Customs & Excise) for the Crown.
Mr. D. Goldberg (instructed by Messrs. Nicholson Martin & Wilkinson) for the taxpayer company.
Before: Neill J.
Value added tax - Margin scheme - Taxpayer's records not complying with Customs' Notice No. 712 - Commissioners' refusal to accept taxpayer's records as sufficient for purposes of scheme - Whether Tribunal entitled to substitute its judgment for that of Commissioners - section 40 subsec-or-para (1)Finance Act 1972, sec. 40(1) (now section 40 subsec-or-para (1)VATA 1983, sec. 40(1)) - Value Added Tax (Works of Art and Scientific Collections) Order 1972,eu-directive notrep article 3(c) article 34art. 3(c) and 4 (now Value Added Tax (Special Provisions) Order 1981,eu-directive notrep article 4art. 4).
This was an appeal by the Crown from a decision of the Manchester Value Added Tax Tribunal that when considering whether a taxpayer's records were sufficient for the margin scheme it was entitled to substitute its own view for that of the Commissioners.
The taxpayer company was a dealer in coins, medals and militaria. In accounting for VAT which it supplied the appellant company operated the "margin scheme" set out in Value Added Tax (Works of Art, Antiques and Scientific Collections) Order 1972, eu-directive notrep article 4art. 4. Although the Commissioners conceded that it was proper, in the case of some goods, for the company to operate the margin scheme they did not consider that the records and accounts kept were sufficient for the purposes of the scheme and so issued an assessment. The company appealed to a VAT Tribunal and, at the hearing of the appeal, the Commissioners contended that where accounts and records, which were not kept in accordance with their Notice No. 702, were produced for the purposes of the margin scheme, it was wholly within the discretion of the Commissioners as to whether they would recognise the records which were kept as being sufficient for the purposes of the scheme. They contended that the Tribunal had no jurisdiction to review their exercise of that discretion. The Tribunal held that it had jurisdiction and had the power to go into all matters relating to the appeal de novo and to substitute its own decision for that of the Commissioners. The Crown appealed.
Held, allowing the Crown's appeal:
The Value Added Tax (Works of Art, Antiques and Scientific Collections) Order 1972 empowered the Commissioners to stipulate what records should be kept by taxable persons operating the scheme. Where such records had not been kept, it was a matter for the discretion of the Commissioners as to whether they would regard the records that had been kept as sufficient for the purposes of the scheme. The Tribunal had no power to review the exercise of that discretion.
Neill J.: This is an appeal from a decision of the VAT Tribunal sitting at Newcastle in April 1977, the decision being notified by a notice dated 21 October 1977. The decision under appeal is a decision by the Tribunal that it had jurisdiction to decide, with reference to supplies which were the subject matter of an assessment made by the Customs on 26 November 1976, whether the company J. H. Corbitt (Numismatists) Limited, (the respondents to this appeal) kept such records and accounts as were required by eu-directive notrep article 3(5)art. 3(5) of the Value Added Tax (Works of Art, Antiques and Scientific Collections) Order 1972. The Tribunal decided that it had jurisdiction to consider the records and accounts to see whether they did comply with that statutory order and from that decision the Customs and Excise appeal to this Court.
VAT is imposed under the Finance Act 1972. It is, as its name implies, a tax which is a multi-stage tax; that is to say, it is imposed at each stage of production, whether of goods or services, on the value which is added at the relevant stage. A taxable person is required to account for tax on all the supplies which he makes to his customers but is allowed to set against the tax which he has to account for, such tax as may be included in the prices which are charged to him by his suppliers. Those two types of tax, the tax which he charges himself and the amount which he is allowed to deduct, are described in theFinance Act 1972, as respectively, "output tax" and "input tax".
In the ordinary way where a registered retailer is dealing in manufactured goods, the retailer is able to set-off against the tax for which he has to account the amount of tax which is included in the prices which are charged to him. In other words, if he is supplied with goods by a wholesaler or manufacturer then he can set-off such element in the price as represents tax, the reason being that the supplier will, in the ordinary way, be a registered trader and therefore himself be accountable for tax. But where one is dealing with second-hand goods a special problem exists. Thus a person dealing in second-hand goods, whether they be collectors' items or not, is likely to obtain his supplies not only from people who are registered traders but to a very considerable extent from private people who are not registered and not accountable for VAT on what they sell. And so, to deal with that situation a scheme has been devised which, to put it in simple terms, enables the trader dealing as a dealer in second-hand goods to be accountable for tax not on the total amount for which he sells the goods to the public but on the margin; the margin being the difference between the price which he has had to pay for the goods in the first place and the sum which he receives upon sale. The scheme as devised is set out in a statutory instrument to which I have been referred - theValue Added Tax (Works of Art, Antiques and Scientific Collections) Order 1972. That Order applies to works of art...
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