Deliverance Ltd v HM Revenue and Customs
| Jurisdiction | UK Non-devolved |
| Judgment Date | 08 February 2011 |
| Neutral Citation | [2011] UKUT 58 (TCC) |
| Date | 08 February 2011 |
| Court | Upper Tribunal (Tax and Chancery Chamber) |
[2011] UKUT 58 (TCC).
Upper Tribunal (Tax and Chancery Chamber).
Proudman J.
Philippa Whipple QC (instructed by RSM Tenon, accountants) for the taxpayer.
Richard Smith (instructed by the Solicitor to HM Revenue and Customs) for the respondents.
The following cases were referred to in the judgment:
Coffee Republic plcVAT No. 20,150; [2007] BVC 4,096
Domino's Pizza Group LtdVAT No. 18,866; [2005] BVC 4,046
Edwards v BairstowELRTAX [1956] AC 14; 36 TC 207
Furniss v DawsonTAX [1984] BTC 71
John Pimblett & Sons Ltd v C & E CommrsVAT (1987) 3 BVC 161
Lewis's Group LtdVAT (1990) 5 BVC 686
Malik (t/a Hotline Foods) v C & E CommrsVAT [1998] BVC 181
R & C Commrs v Procter & Gamble UKVAT [2009] BVC 461
Stewarts Supermarkets LtdVAT No. 13,338; [1996] BVC 4,120
Value added tax - Zero-rating - Food - Supply in course of catering - Supply of hot food for consumption off premises - Meaning of hot food - Whether taxpayer supplied food heated for purposes of enabling it to be consumed hot - Whether food supplied hot to show that it was freshly cooked - Taxpayer's appeal allowed - Value Added Tax Act 1994, Sch. 8, Grp. 1, Value Added Tax Act 1994 schedule 8 group 1Note (3).
This was an appeal by the taxpayer company against a decision of the First-tier Tribunal ([2009] UKFTT 351 (TC); [2010] TC 00289) that food it supplied hot was not entitled to zero-rating.
The taxpayer was a catering company which supplied a wide range of freshly prepared food for delivery to customers. Food was cooked to order and delivered to the customer by motorcycle within 45 minutes of ordering. Most of the food supplied was easily identifiable as hot or cold food, but a dispute arose relating to aromatic crispy duck pancakes, spring rolls with dip, samosas with dip, falafels with dip, sesame prawn toast, onion bhajis, and naan, pitta, garlic and peshwari breads. The menu did not describe those items as hot or cold. The food was heated and put into a padded bag which was transported in a lined box on the motorcycle.
The taxpayer contended that the disputed items were zero-rated for VAT purposes. Its aim was not to provide hot food, but food that was freshly cooked. That was the dominant purpose, even though inevitably the disputed items retained some heat. The fact that the food was hot did not mean that the purpose was to enable it to be consumed hot within VATA 1994, Sch. 8, Grp. 1, Note (3)(b)(i). HMRC took the view that the disputed items were dealt with by the taxpayer in exactly the same way as other food which it accepted was heated for the purpose of enabling it to be consumed hot. They said it was logically impossible to have a purpose of demonstrating that the disputed items were freshly cooked without also having the purpose of enabling them to be consumed hot.
The First-tier Tribunal decided that the food had been heated for the purposes of enabling it to be consumed while hot. Accordingly the disputed items were within the definition of hot food and were not eligible for zero-rating ([2009] UKFTT 351 (TC); [2010] TC 00289).
Held, allowing the taxpayer's appeal:
1. The test under Note (3)(b)(i) was one of the supplier's subjective purpose in heating the items. It was the purpose of the supplier, not the customer, which was in issue. It was not part of the test that the supplier knew that the items would or might be consumed hot. The test was the precise one of the supplier's own purpose in heating the items. The tribunal was entitled to test the evidence and might decline to accept the supplier's assertions as to his purpose. Thus evidence as to the customer's purpose, and evidence about the way in which the supplier dealt with the food after it had been cooked or heated, went to the weight of the evidence, but it was for the tribunal to determine the purpose of the supplier having considered all the circumstances of the case. In the event that the tribunal found more than one purpose, it had to have regard to what was the supplier's dominant purpose, disregarding any inevitable results which might flow from that dominant purpose. A necessary consequence was to be distinguished from the supplier's purpose, even though that might result in different results as to rating as between traders conducting similar businesses. (John Pimblett & Sons Ltd v C & E Commrs (1987) 3 BVC 161 applied.)
2. In the present case, the taxpayer was not seeking to go behind an inference of fact but was asking whether the Pimblett test had been applied correctly. Although the facts of the present case were distinguishable from those in Pimblett, the taxpayer's evidence as to its purpose in heating the items, and also as to the reasons why the items were kept hot, was accepted by the tribunal without qualification. The purpose of demonstrating that the food was freshly-baked and the purpose of enabling the food to be consumed hot were conceptually separate. One might be the consequence of the other but the two formulations were not different ways of describing the same subjective purpose of the supplier. Accordingly the appeal succeeded.
1. This is an appeal by Deliverance Ltd from the First-tier Tribunal (Dr John F Avery Jones CBE and Mr Nicholas Dee), upholding a decision letter rejecting the appellant's claim for repayment of VAT (see [2009] UKFTT 351 (TC); [2010] TC 00289). The issue is...
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