Finnamore (t/a Hanbridge Storage Services) v HM Revenue and Customs
| Jurisdiction | UK Non-devolved |
| Judgment Date | 02 February 2011 |
| Neutral Citation | [2011] UKFTT 216 (TC) |
| Date | 02 February 2011 |
| Court | First Tier Tribunal (Tax Chamber) |
[2011] TC 01081
[2011] UKFTT 216 (TC)
Geraint Jones QC (Chairman); Andrew Perrin.
Mrs Hamilton, counsel, for the Appellant
Mr Joliffe, counsel, instructed by the General Counsel and Solicitor to HM Revenue and Customs, for the Respondents
Exemption - Land - Storage facilities in moveable containers - Whether licence to occupy land - The appellant provided self-storage facilities by allowing customers to use metal storage containers located on open land which he owned - The appellant had 184 containers and these were arranged in such a way as to allow vehicular access to each one so that goods could be loaded or removed with comparative ease - The site was surrounded by a fence and was accessed through a single pair of security gates, which were locked at night - The containers were let under a standard rental agreement, described as a licence agreement, which gave the customer a right to use a specified storage container and the land on which it was situated - Thus, argued the appellant, the terms of the agreement fell within the VAT exemption provided by the 2006 VAT directive (Directive 2006/112), eu-directive 2006/112 article 135art. 135 which was reflected in domestic law as the Value Added Tax Act 1994, Value Added Tax Act 1994 schedule 9 group 1Sch. 9. Grp. 1, item 1 - Some of the argument in the appeal was directed to the issue of whether the appellant was involved in the leasing or letting of immovable property and whether containers were themselves immovable property - However, the tribunal did not consider this to be a significant or relevant issue - It considered the true issue to be whether, as a matter of law, the overall nature of the transaction entered into with a customer was that of granting a licence to occupy land or merely the provision of storage facilities, or whether the overall transaction involved both so that the predominant element must be ascertained before the overall nature of the transaction could be properly characterised - The commissioners contended that the supply was one of standard-rated storage facilities in containers that could not properly be described as immovable property - In support of his contention that the supply was a single one of a licence to occupy land, the appellant pointed to the fact that customers who hired a container to take away were charged only a quarter of the rent of one remaining on the site - He submitted that this demonstrated that the greater part of the licence fee was for the occupation of the land upon which the unit rested - The tribunal observed that the effect of item 1 of Grp. 1 was to exempt from VAT a transaction in which a person was granted any interest in or right over land or any licence to occupy land - There was no doubt that the contract between the appellant and a customer involved the grant of a right to occupy a defined parcel of land and carried with it implied rights of access to that land - The function of the metal container which rested upon the land was to provide storage space, but by far the greater proportion of the monetary consideration was paid for the facility of occupying the defined area of land, with the smaller portion of the payment being for the use of the metal container itself - Held, that each customer had exclusive use of a defined space or parcel of land within the curtilage of the appellant's site, pursuant to a contractual license - Without that licence no storage could take place on the land - The transactions entered into by the appellant, by way of renting out storage facilities, amounted to a single supply or facility, the predominant nature of that supply being the provision of a licence to occupy a defined parcel of land which could be used, or not used, as the customer saw fit for storage purposes - The supply was exempt from VAT under item 1 of Grp. 1 - Appeal allowed.
1.This is an appeal where there are no facts in issue. The outcome of this appeal turns upon an application of undisputed facts to the relevant law. Upon the appellant's case it also involves considering whether implementing United Kingdom legislation has faithfully followed the European Directive to which it gives, or is supposed to give, effect.
2.The issue in this appeal turns upon a mixed question of fact and law. In a nutshell, the issue is whether a business that provides storage facilities for property belonging to third parties, provides a supply of services that is subject to value added tax or whether the supply falls within Item 1 of Value Added Tax Act 1994 schedule 9 group 1Group 1, Schedule 9 to the Value Added Tax Act 1994, in which event the supply will not be subject to value added tax. We were told that there are differing views taken by Her Majesty's Revenue and Customs ("HMRC") in different parts of the country. We say no more than that because the outcome of this appeal does not turn purely upon a true and proper interpretation of a legal provision or statute; it necessarily turns upon an application of the facts to the applicable legal framework.
3.Mr David Finnamore trades as Hanbridge Storage Services from a site at Hanbridge Marina, Littlehampton, West Sussex. He gave evidence in accordance with his witness statement dated the 20 September 2010, which stood as his evidence in chief. He struck us as a truthful, candid and careful witness. We accept the evidence that he gave. Evidence was also given to us by Mrs Watkins on behalf of HMRC in accordance with her witness statement dated 22 September 2010. In our judgement, she equally gave truthful and accurate evidence. There is no conflict between the factual evidence given by the appellant and that given by Mrs Watkins.
4.The appellant's evidence is that he provides self storage facilities by providing containers which are located upon open land which he owns. The containers are of a type with which most of us will be familiar, being large metal containers which are regularly seen on lorries and being transported on ships, in bulk. By their nature they are movable although, we accept, specialist lifting gear is required to move them from place to place or onto a lorry or ship. We have been provided with photographs illustrating the containers. They are of metal construction and at one end there are metal doors that can be opened but, when closed, can be secured with a semi-concealed padlock. The appellant has approximately 184 containers located on his land as illustrated on the site plan which appears at page 52 in the bundle of documents. They are arranged in such a way as to allow vehicular access to each container so that goods may be loaded into or taken from any container with comparative ease.
5.The entire site is surrounded by a fence. Access to the site is through a single pair of matching security gates which are locked at night. People who hire or rent a storage facility can have unrestricted access during normal working hours but outside such hours, can secure access by arrangement with the appellant's on site security team. We should add that the appellant or a company in which he has a substantial interest owns adjacent land and the security arrangements are common in respect of the subject land and the other land owned by the appellant or a company substantially under his control. The security arrangements are not discrete to the appellant's land used for the business that we are considering.
6.The appellant advertises the service and facilities offered at his site, as a self storage facility. Many of us will be familiar with companies that offer such facilities, often within buildings. The appellant's yard is open to the elements and any stored goods are protected from the elements only by the metal container within which they are secured. It was explained to us that each container has venting to allow a flow of air. The appellant told us that he advertises the storage facilities in the local press, telephone directories and on a web site. He readily acknowledges that such advertisements appear in the "storage" section of such advertising material. Upon a simplistic view of this appeal it might be thought instructive to enquire into what the ordinary man in the street would think that he is obtaining when he enters into a storage facility agreement with the appellant. There can be little doubt that the man in the street would say that he has simply rented storage space. Indeed, that is what he has done. However, the man in the street will not have undertaken an analysis of the nature of the legal rights that he has acquired by entering into the storage agreement. Indeed, the nature and extent of those legal rights are likely to turn upon the true and proper construction to be given to the written agreement that is entered into with each customer in...
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