Commissioners of Customs and Excise v Richmond Theatre Management Ltd
| Jurisdiction | England & Wales |
| Judgment Date | 30 January 1995 |
| Date | 30 January 1995 |
| Court | Queen's Bench Division |
Queen's Bench Division (Crown Office List).
Dyson J.
Kenneth Parker QC (instructed by the Solicitor for Customs and Excise) for the Crown.
The taxpayer did not appear and was not represented.
The following cases were referred to in the judgment:
C & E Commrs v British Telecom plc VAT[1995] BVC 37
C & E Commrs v Faith Construction Ltd VAT(1989) 4 BVC 111
Chase Manhattan Bank NA v Israel-British Bank (London) LtdELR[1981] Ch 105
Space Investments Ltd v Canadian Imperial Bank of Commerce Trust Co (Bahamas) Ltd & Ors WLR[1986] 1 WLR 1072
Webb v Emo Air Cargo (UK) Ltd WLR[1993] 1 WLR 49
Value added tax - Time of supply - Advance payment for theatre tickets - Terms of sale stated that money held on trust pending actual performance - Whether time of supply when performance took place and theatre became entitled to the money or whether advance payment had the effect of bringing forward time of supply - Value Added Tax Act 1983, s. 5(1) (Value Added Tax Act 1994 section 6 subsec-or-para (4)Value Added Tax Act 1994, s. 6(4)).
This was an appeal by Customs against a decision of the VAT tribunal (see (LON/91/2658) No. 10,177; [1993] BVC 872)that the time of supply when VAT was due on advance payment for theatre tickets was not when payment was received, but when the performance took place.
The taxpayer ran a theatre and made advance sales of tickets, receiving the customers' money in accordance with its standard terms and conditions. One of the terms was that the money was held on trust pending the performance and, in the event that the performance did not take place, the money would be refunded. In the meantime the taxpayer might use the money for its own purposes.
The tribunal had held that the effect of the terms and conditions was that the taxpayer received the customer's money on terms that it would not be applied in discharge of the customer's obligation to pay for the right to see the performance unless and until the performance had taken place. Accordingly the taxpayer did not receive a payment within the meaning of the Value Added Tax Act 1983, s. 5(1) when the ticket money was received.
Customs contended that the purported trust was ineffective to give the customer who paid his ticket money in advance of the performance any equitable interest in the money which would entitle him to trace the money in equity if the taxpayer became insolvent. Accordingly, payment was made when the taxpayer received the money. Alternatively, if the trust was effective to create a valid enforceable equitable interest in the money, output tax would be due at the time when the money was received and not at the time of the performance. The customer paid the consideration in full for the future supply of services when the payment was made and fully discharged his liability to pay the consideration.
Held, allowing Customs' appeal:
1. The customer did not retain any proprietary interest in the money which was received as payment for the right to attend the performance so that, pursuant to the Value Added Tax Act 1983, s. 5(1), output tax was due at the time of payment.
2. Assuming that the trust was effective, the terms used in the conditions of sale: "ticket money", "payments received" and "repayment", provided strong support for the proposition that advance payment was made in respect of a supply. The question whether a customer had paid in advance for a supply was conceptually different from the question whether he retained an equitable interest in the money paid. If a person made a payment under a mistake of fact, he retained an equitable interest in the money paid, and yet there was no doubt that a payment had been made. The fact that a customer had an equitable interest in the money paid was not inimical to the proposition that, pursuant to the Value Added Tax Act 1983, s. 5(1), an advance payment was made in respect of a supply which gave rise to a liability to output tax at the time of payment.
The grounds of Customs' appeal against the decision of the VAT tribunal released on 31 March 1993 (chairman Mr R K Miller CB) were that the tribunal had erred in law in holding that the time of supply for VAT purposes where theatre tickets were sold in advance of the performance was when the performance took place, the money having up to that time been held on trust for the customer with an obligation to make a refund if the performance was cancelled.
This is an appeal against a decision of 31 March 1993 of the VAT tribunal (Mr R K Miller CB) allowing the appeal by Richmond Theatre Management Ltd ("Richmond") against assessments for output tax. The appeal concerns advance bookings of theatre tickets, and the issue is one of timing. Customs contend that output tax on ticket sales by Richmond is due when the ticket is sold to the customer and Richmond receives the customer's money. Richmond contends that output tax is not due until the performance, to which the ticket relates, has taken place.
Richmond runs the Richmond Theatre at Richmond, Surrey. It sells tickets to customers and receives the customers' money in accordance with its standard terms and conditions. One condition (cl. 12) purports to impress the money received with a trust in favour of the customer, so that Richmond does not become absolute beneficial owner of the money until the performance has taken place. If (as the tribunal held) a trust was created, then the point of law that arises is of great importance for the operation of VAT since many suppliers of goods and services seek to give protection to customers who pay in advance, by purporting to create trusts in order that in the event of the supplier's insolvency such customers should rank ahead of secured and other unsecured creditors.
The EC Council Directive 77/388 ("the sixth directive") establishes the basic guidelines, and it has been held that the domestic implementing legislation and regulations must be interpreted, so far as possible, consistently with the sixth directive: see Webb v Emo Air Cargo (UK) Ltd WLR[1993] 1 WLR 49 at p...
To continue reading
Request your trial
-
Trustees of the Nell Gwynn House Maintenance Fund v Commissioners of Customs and Excise
...in so far as these contributions serve to fund the trustees' remuneration. As was pointed out by Dyson J in C & E Commrs v Richmond Theatre Management Ltd VAT[1995] BVC 47 at p. 54D: It is well known that the concept of a "trust" is unknown to civil law countries. Having regard to the need ......
-
Leisure Pass Group Ltd v HM Revenue and Customs
...the predecessor provision of Schedule 10A was in force. See for example Customs & Excise Commissioners v Richmond Theatre Management Ltd [1995] STC 257. 20 In this connection I should mention one submission made by Mr Prosser and Mr Hitchmough. It was that the London Pass (giving access, as......
-
Winterthur Life UK Ltd (formerly Provident Life Association Ltd)
...Provident Life Association Ltd) The following cases were referred to in the decision: C & E Commrs v Richmond Theatre Management LtdVAT[1995] BVC 47 Card Protection Plan Ltd v C & E Commrs VAT[1994] BVC 20 Federated Pensions Services Ltd VAT(LON/91/124) No. 8932; [1993] BVC 601 Flood v Iris......
-
Louis Emovbira Williams v Central Bank of Nigeria
...[1913] 2 KB 515 at 521, endorsed by CA in R v Clowes (No.2) [1994] 2 All ER 316 at 325 and applied in Customs and Excise Comrs v Richmond Theatre Management Ltd [1995] STC 257)'." There is no evidence that the Claimant's monies were ever segregated or separately identified in 1993 or at any......